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Civil Appeal No. 82 of 1971.
From Judgment and Decree dated 26.2.65 of Allahabad High Court in first appeal No. 457 of 1952.
J.P. Goyal and S.K. Jain for the appellants.
V.C. Mahajan and A. Subhashini for the respondents.
The Judgement of the Court was delivered by SEN, J.
This appeal on certificate brought from the judgment and decree of the Allahabad High Court dated February 26, 1965 reversing the judgment and decree of the Civil Judge, Agra dated August 25, 1952 and dismissing the plaintiffs ' suit for recovery of Rs. 26,000 raises a question of some importance upon s.80 of the Code of Civil Procedure, 1908.
The facts giving rise to this appeal may be shortly stated.
On November 12, 1949, the plaintiffs Ghanshyam Dass and his two minor brothers Shree Ram and Mohan Lal brought the suit out of which this appeal arises, in the Court of the Civil Judge, Agra for recovery of a sum of Rs. 26,000 against the Dominion of India through the Defence Secretary, New Delhi.
It was pleaded that their late father Seth Lachman Dass Gupta entered into a contract with the Governor General in Council for the supply of charcoal to the Military Supply Depot at Agra during the period from April 1, 1943 to March, 31, 1944.
In pursuance thereof, he made necessary supplies and received payments for the same at the contractual rates from time to time.
It was pleaded that tho contract contained an escalation clause viz. clause 8, to the effect that in case the price of charcoal increased by more than 10% of the stipulated rate during the subsistence of the contract, the contractor would be entitled to the price at the higher rate.
It was alleged that from 232 the date of the contract, the rate of charcoal went up continuously to 44.8% in July, August and September 1943, 93.1% in October November and December 1943 and 82.7% in January, February and March 1944.
Accordingly Seth Lachman Dass made a demand for payment of price at the increased rate.
The military authorities paid at the enhanced rate for part of the supplies while for the rest they refused to pay at more than the contractual rate.
Seth Lachman Dass served a notice exhibit A 8 on the Dominion of India through the Defence Secretary under s.80 of the Code of Civil Procedure 1908.
lt appears that before his death,.
On or about September 15, 1948 he received a letter from the military authorities rejecting his claim for payments at the enhanced rate but before he could institute any suit he died on October 28, 1949.
Thereafter, on November 12, 1949 the plaintiffs who ale his three sons, brought the suit as his legal heirs and successors claiming the amount.
The defendants contested the claim inter alia on the ground that the notice exhibit A 8 given by Seth Lachman Dass could not inure for the benefit of the plaintiffs and therefore the suit was bad for want of a notice under s.80 of the Code.
The learned Civil Judge, however, held that no further notice under s.80 was necessary as the notice exhibit A 8 served by the plaintiffs ' father Seth Lachman Dass must enure for their benefit.
He found that the plaintiffs were entitled in terms of clause 8 of the contract to receive a sum of Rs. 20,710.50 p. being the difference between the enhanced rate and the contractual rate for the supplies paid for and accordingly decreed the plaintiffs claim to that extent.
But on appeal the High Court, his decision on the point was reversed upon the view that the notice exhibit A 8 given by the plaintiffs ' father was insufficient and was nota valid notice under s.80 of the Code of Civil Procedure insofar as the plaintiffs were concerned.
The short question involved in this appeal is whether the notice exhibit A 8 given by the plaintiffs ' father Seth Lachman Dass Gupta before his death under s.80 of the Code of Civil Procedure, 1908 would enure for the benefit of the plaintiffs.
Section 80 of the Code as it stood on the date of the institution of the suit, insofar as material, is reproduced below: "80.
Notice: No suit shall be instituted against (the Government) or against a public officer in respect of any act purporting to be done by such public officer in his official 233 capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of (a) in the case of suit against the Central Government . . . a Secretary to that Government: ** ** ** ** and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.
" In the celebrated case of Bhagchand Dagadusa & Ors.
vs Secretary of State for India in Council & Ors., the Judicial Committee of the Privy Council held that this section is express, explicit an mandatory and it admits of no implications or exceptions.
The words of Viscount Summer delivering the judgment of the Privy Council have become classical : "Section 80 is express, explicit and mandatory, and it admits of implications or exceptions.
A suit in which (inter alia) an injunction is prayed still "a suit" within the words of the section, and to read any qualification into it is an encroachment on the function of legislation.
Considering how long these and similar words have been read throughout most of the Courts in India in their literal sense, it is reasonable to suppose that the section has not been found to work injustice, but, if this is not so, it is a matter to be rectified by an amending Act.
The Privy Council rejected the contention put forward before them that the section deals with mere procedure and held that the requirements of s.80 are to be strictly complied with and are applicable to all forms of action and all kinds of relief.
It further held that s.80 imposes a statutory and unqualified obligation upon the Court and in the absence of compliance with s.80, the suit was not maintainable, either as to the declaration sought or injunction prayed for.
234 Earlier, in some cases, a liberal construction was put upon the section and it was held that a notice is sufficient if it substantially fulfils its objection in informing the parties concerned of the nature of the suit to be filed, and that a notice is not invalid merely because it is given by two out of three plaintiffs But since the Privy Council judgment in Bhagchand 's case, supra, strict compliance with the terms of s.80 has been enforced and a notice given by one of two plaintiffs has been held to be insufficient.
Again, in a case where the plain tiffs ' father gave notice and then plaintiffs filed a suit after the father 's death, the notice given by the father in respect of the same cause of action was held insufficient : Mahadev Dattatraya Rajarshi vs Secretary of State for India following Buchan Singh vs Secretary of State.
It is plain from the terms of s.80 that the notice must fulfil the requirements set out therein.
It is essential that the notice must state the names, descriptions and places of residence of all the plaintiffs.
A notice must be such as to enable the addressee or the recipient to indentify the claimant.
In Vallayan Chettiar & ors.
vs The Government of the Province of Madras & Anr.
Lord Sumner delivering the judgment of the Privy Council referred to the observations of Lord Sumner in Bhagchand 's case that s.80 is explicit and mandatory and admits of no implications or exemptions, and observed that: "There should be identity of the person who issues the notice and who brings the suit.
To hold otherwise would be to admit an implication or exception for which there is no justification. " .
There, the question was whether a suit brought by two plaintiffs was competent when notice under s.80 was given by only one of them.
The Privy Council having regard to the mandatory requirements of s.80 of the Code held that there was no valid notice and accordingly upheld the judgment of the High Court dismissing the plaintiff 's suit.
So also in Government of the Province Bombay vs Pestonji Ardeshir Wadia & Ors., the Privy Council reiterated the same principles where no notice had been served under s.80 specify 235 ing the names and addresses of all the trustees and therefore the provisions of the section had not been complied with and it was accordingly held that the suit was incompetent.
As to the requirement that the notice must state the cause of action and the reliefs claimed, there is a large body of decisions laying down that a notice under the section should be held to be sufficient if it substantially fulfils its object in informing the parties concerned of the nature of the suit to be filed.
In consonance with this view, this Court in Dhian Singh Sobha Singh & Anr.
vs Union of India, Union of India vs Jeewan Ram, State of Madras vs C.P. Agencies and Amar Nath vs Union of India has held that though the terms of the section have to be strictly complied with, that does not mean that the notice should be scrutinized in a pedantic manner or in a manner divorced from common sense.
On this principle, it has been held that notice which states the cause of action and the reliefs described in the annexed copy of the plaint (which forms part of the notice) though defective in form, complies substantially with the section.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would enable the recipient to avert the litigation.
The relevant passage from the judgment in Dhian Singh Sobha Singh 's case, supra, is set out below: "We are constrained to observe that the approach of the High Court to this question was not well founded.
The Privy Council no doubt laid down in Bhugchand Dagadusa vs Secretary of State that the terms of this section should be strictly complied with.
That does not however mean that the terms of the notice should be scrutinized in a pedantic manner or in a manner completely divorced from common sense.
As was stated by Pollock C.B. in Jones vs Nicholls ; "We must import a little common sense into notices of this kind. ' ' Beaumont C.J. also observed in Chandu Lal Vadilal vs Government of Bombay, ILR "one must construe section 80 with some regard to common sense and to the object with which it appears to have been passed 236 The question as to whether notice under s.80 was invalid for want of identity of the plaintiffs directly arose in the case of S.N. Dutt vs Union of India.
There, a notice was served by the appellant who was the sole proprietor of a business styled S.N. Dutt & Co., (in the name of S.N. Dutt & Co.) and thereafter he filed a suit against the Union of India describing the plaintiff as "Surendra Nath Dutt sole proprietor of a business carried on under the name and style of S.N. Dutt & Co.".
This Court upheld the decision of the Calcutta High Court dismissing the plaintiff 's suit holding that the person who issued the notice was not the same as the person who filed the suit.
The contention that the appellant was carrying on business under an assumed name and therefore the notice was valid as S.N. Dutt & Co. was merely the name and style of the business which he was carrying on, was rejected.
The Court held that since no suit could be filed by S.N. Dutt & Co in that name as it was not a partnership firm, it could not give a valid and legal notice in that name, and a valid notice could only be given in the name of S.N. Dutt.
The decision merely reiterates the rule laid down by this Court in Bhagchand that 'section 80, according to its plain meaning, requires that there should be identity of the person who gives the notice with the person who brings the suit".
The Court distinguished the decisions in Dhian Singh Sobha Singh and C.P. Agencies on the ground that the Court was dealing with defect in describing the cause of action and the relief claimed and where it Concerns the relief and the cause of action, it may be necessary to use common sense to find out whether s.80 of the Code has been complied with, and stated: "But where it is a question o f the name of the plaintiff, there is in our opinion (little scope for the use of common sense,) for either the name of the person suing is there in the notice or it is not.
No amount of common sense will put the name of the plaintiff there, if it is not there." In the case of Raghunath Dass.
v Union of India & Anr.
the same question arose but the Court struck a discordant note there.
There, the notice emanated from M/s Raghunath Dass Mulkhraj and in the body of the notice at several places the expression "we" was used.
Further, the plaintiff had purported to sign for M/s Raghunath Dass Mulkhraj but at the same time he signed the notice as proprietor of M/s Raghunath Dass Mulkhraj.
The Court held 237 that was a clear indication of the fact that M/s Raghunath Dass Mulkhraj was a proprietary concern and the plaintiffs was its proprietor.
In repelling the contention that there was no identity of the person who gave the notice with the person who filed the suit the Court observed: "Whatever doubts that might have been possibly created in the mind of the recipient of the notice, after going through the body of the notice as to the identity of the would be plaintiff, the same would have been resolved after going through the notice as a whole.
" There, the plaintiff had averred in the plaint that he was carrying on his business under an assumed name and style of M/s Raghunath Dass Mulkhraj meaning thereby that the concern was a proprietary concern and that the name given to it was only a trade name.
Me had also stated in the plaint that he had given a notice under s.80 of the Civil Procedure Code.
In the written statement filed on behalf of the Dominion of India, the validity of the notice issued was not challenged.
Regarding the notice in question there was only an averment in the written statement that suit was barred by s.80 of the Code as no notice under that section appears to have been served on the Administration.
In repelling the contention That the suit was bad for want of notice under s 80 of the Code, the Court said: "The object of the notice contemplated by that section is to give to the concerned Governments and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised without litigation.
The legislative intention behind that section in our opinion is that public money and time should not be wasted on unnecessary litigation and the Government and the public officers should be given a reasonable opportunity to examine the claim made against them lest they should be drawn into avoidable litigations.
The purpose of law is advancement of justice.
The provisions in s.80, Civil Procedure Code are not intended to be used as bootstraps against ignorant and illiterate persons.
In this case we are concerned with a narrow question.
Has the person mentioned in the notice as plaintiff brought the present suit or is he someone else ? This question has to be decided by reading the notice as a whole in a reasonable manner.
" 238 In the ultimate analysis, the question as to whether a notice under s.80 of the Code is valid or not is a question of judicial construction.
The Privy Council and this Court have applied the rule of strict compliance in dealing with the question of identity of the person who issues the notice with the person who brings the suit.
This Court has however adopted the rule of substantial compliance in dealing with the requirement that there must be identity between the cause of action and the reliefs claimed in the notice as well as in the plaint.
As already stated, the Court has held that notice under this section should be held to be sufficient if it substantially fulfils its object of informing the parties concerned of the nature of the suit to be filed.
on this principle, it has been held that though the terms of the section have to be strictly complied with, that does not mean that the notice should be scrutinized in a pedantic manner divorced from common sense.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would the recipient to avert the litigation.
In the present case, in the notice exhibit A 8 the name, description and place of residence of the plaintiff Seth Lachman Dass, the father of the plaintiffs, was given but unfortunatory before filing the Suit he died and thereafter within the period of limitation the suit was instituted by his sons on the basis of the said notice.
The notice exhibit A 8 undoubtedly fulfils the requirement of s.80 insofar as the cause of action and the relief claimed are concerned as they are absolutely the same as set out in the plaint.
As stated in Dhian Singh Sobha Singh, the notice must substantially fulfil its work of intimating the parties concerned generally of the nature of the suit intended to be filed and if it does so, it would be sufficient compliance of the section as to the requirement that it should state the name, description and place of residence of the plaintiff, there must be identity of the person who issues the notice with the person who brings the suit Now so far as the name and description of the plaintiff concerned the notice gives the name as Seth Lachman Dass Gupta.
The notice exhibit A 8 duly reached the concerned department and they dealt with the notice.
It is not that the Government had no opportunity to examine the nature of the claim and decide whether its should accept or contest the claim The military authorities served a reply on Seth Lachman Dass before his death that his claim was not acceptable.
There was no other alternative for Seth Lachman Dass but to have brought a suit for the enforcement of his claim.
239 If he could not file a suit due to his death, his right to file the suit A devolved upon his heirs i.e. the plaintiffs.
If the view taken by the High Court is allowed to stand, great injustice would be done to the litigants in the matter of filing suits against the Government.
If fresh notice is insisted upon in such cases, the period of limitation to file a suit may expire in the meantime.
Such a situation is not intended by the Code.
The authorities relied upon by the High Court in non suiting the plaintiffs are of ancient vintage.
In Mahadev Dattattraya Rajarshi 's case, supra, the Bombay High Court relying upon the decision of the Allahabad High Court in Buchan Singh, held that the language of s.424 of the Code of 1882, the predecessor of s.80 of the present Code which was substantially in the same terms, was imperative and absolutely debarred the Courts from entertaining a suit without complying with the provisions of the section.
In Buchan Singh 's case, supra it was observed by the Allahabad High Court at p.191: "If we acceded to this contention, it appears to us that we should be adding words to s.424 which find no place in it.
It would be necessary to add after the words "name and place of abode of the intending plaintiff" some such words as "or of the party through whom such intending plaintiff claims.
" The Court of first instance here tried to distinguish the decision in Buchan Singh on the ground that the word "intending" appearing in s.424 of the 1882 Code had been omitted from s.80 of the present Code, and therefore the word "plaintiff ' j should be construed in a generic sense.
The High Court however following the decision of the Bombay High Court in Mahadev Dattaraya Rajarshi held that the notice must contain the name of the actual plaintiff who could bring the suit adding that "the notice must be given by the person who becomes the plaintiff and by no other".
We are afraid, that is taking too technical a view of the matter.
S.80 of the Code is but a part of the Procedure Code passed to provide the regulation and machinery, by means of which the Courts may do justice between the parties.
It is therefore merely a part of the adjective law and deals with procedure alone and must be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat it.
In Sangram Singh vs Election Tribu 240 nal, Kotah & Anr., Vivian Bose, J. in his illuminating language dealing with the Code of Civil Procedure said: "It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Our laws of procedure are based on the principle that "as far as possible, no proceeding in a court of law should be allowed to be defecated on mere technicalities".
Here, all the requirements of s.80 of the Code were fulfilled.
Before the suit was brought, the Dominion of India received a notice of claim from Seth Lachman Dass.
The whole object of serving a notice under 5.80 is to give the Government sufficient warning of the case which is going to be instituted against it was that the Government, if it so wished, settle the claim without litigation or afford restitution without recourse to a court of law.
That requirement of s.80 was clearly fulfilled in the facts and circumstances of the present case.
It is a matter of common experience that in a large majority of cases the Government or the public officer concerned make no use of the opportunity afforded by the section In most cases the notice given under s 80 remains unanswered till the expiration of two months provided by the section.
It is also clear that in a large number of cases.
as here, the Government or the public officer utilised the section merely to raise technical defences contending either that no notice had been given or that the notice actually given did not comply with the requirements of the section.
It is unfortunate that the defendants came forward with a technical plea that the suit was not maintainable at the instance of the plaintiffs, the legal heirs of Seth Lachman Dass on the ground that no fresh notice had been given by them.
This was obviously a technical plea calculated to defeat the just claim.
Unfortunately, the technical plea so raised prevailed with the High Court with the result that the plain tiffs have been deprived of their legitimate dues for the last 35 years, 241 The Law Commission in the Fourteenth Report, volume 1 on the Code of Civil Procedure, 1908 at p.475 made a recommendation that s.80 of the Code should be deleted.
It was stated as follows: "The evidence disclosed that in a large majority of cases, the Government or the public officer made no use of the opportunity afforded by the section.
In most cases the notice given under section 80 remained unanswered till the expiry of the period of two months provided by the section.
It was also clear that in a large number of cases, Governments and public officers utilized the section merely to raise technical defences contending either that no notice had been given or that the notice actually given did not comply with the requirements of the section.
These technical defences appeared to have succeeded in a number of cases defeating the just claims of the citizens.
" The Law Commission in the Twenty Seventh Report on the Code at pp.21 22 reiterated its earlier recommendation for deletion of s.80 and in the Fifty Fourth Report at p.56 fully concurred with the recommendation made earlier.
In conformity with the recommendation of the Law Commission, s.80 has undergone substantial changes.
By s.27 of the Code of Civil Procedure (Amendment) Act, 1976 which was brought into effect from February 1, 1977, the existing s.80 has been re numbered as s.80(1) and sub ss.(2) and (3) have been inserted.
Sub s.(2).
as inserted has been designed to give an urgent and immediate relief against the Government or the public officer with the leave of the Court.
But the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit.
Proviso to sub s.(2) enjoins that the Court shall, if it is satisfied, after hearing the parties that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub s.(1).
Sub s.(3) as inserted by s.27 of the Code of Civil Procedure (Amendment) Act.
1976 reads as follows : "80(3).
No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity shall be 242 dismissed merely by reason of any error or defect in the notice referred to in sub section (1) if in such notice (a) the name, description and the residence of the plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the appropriate authority specified in sub section (1), and (b) the cause of action and the relief claimed by the plaintiff had been substantially indicated," By sub.s.(3), Parliament has brought in the rule of substantial compliance.
The present suit would be directly covered by sub s.(3) of s.80 so introduced if the suit had been brought after February 1, 1977.
Unfortunately for the plaintiffs, s.97 of the Amendment Act provides that the amendment shall not apply to pending suit and the suits pending on February 1, 1977 have to be dealt as if such amendment had not been made.
Nevertheless the Courts must have due regard to the change in law brought about by sub s.(3) of s.80 of the Code introduced by the Amendment Act w.e.f. February 1, 1977.
Such a change has a legislative acceptance of the rule of substantial compliance laid down by this Court in Dhian Singh Sobha Singh and Raghunath Dass.
As observed in Dhian Singh Sobha Singh 's case, supra, one must construe s.80 with some regard to common sense and to the object with which it appears to have been enacted.
The decision in S.N. Dutt vs Union of India 's case, supra, does not accord with the view expressed by us and is therefore overruled .
Before parting with the case we consider it necessary to refer to one more aspect.
It has frequently come to our notice that the strict construction placed by the Privy Council in Bhagchand 's case, supra, which was repeatedly reiterated in subsequent cases, has led to a peculiar practice in some Courts.
Where urgent relief is necessary the practice adopted is to file a suit without notice under s.80 and obtain interim relief and thereafter to serve a notice, withdraw the suit and institute a second suit after expiry of the period of the notice.
We have to express our strong condemnation of this highly objectionable practice.
We expect that the High Courts will take necessary steps to put a stop to such practice.
243 The result therefore is that the appeal succeeds and is allowed.
The judgment and decree passed by the Allahabad High Court dated February 26, 1965 are set aside and those of the learned Civil Judge, Agra dated August 25, 1952 are restored with costs throughout.
The plaintiffs shall be entitled to further interest on the decretal amount at 6% per annum from August 25, 1952, the date of the decree passed by the Civil Judge, Agra, till realization.
S.R Appeal allowed.
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The plaintiff 's father Seth Lachhman Dass Gupta entered into a contract with the Governor General in Council for the supply of charcoal to the Military Supply Depot, Agra and received payments for the same at the contractual rate from time to time.
The contract contained an escalation clause viz. cl.8 to the effect that in case the price of charcoal was increased by more than 10% of the stipulated rate during the subsistence of the contract, the contractor would be entitled to the price at the higher rate.
During the period of the contract, the rate of charcoal went up continuously.
The military authorities paid at the enhanced rate for the part of supplies while for the rest they refused to pay more than the contractual rate.
He accordingly served a notice to the Government under section 80 of the Code of Civil Procedure, 1908 making a claim for payment of a sum of Rs. 20,710.50 p. in terms of clause 8 of the contract being the difference between the enhanced rate and the contractual rate for the supplies paid for.
But before he could bring the suit against the Government, he died.
Thereupon, the respondents brought a suit as his legal heirs and successors claiming the amount.
The defendants contested the claim inter alia on the ground that the notice given by Seth Lachhman Dass could not ensure for the benefit of the plaintiff 's and therefore the suit was bad for want of notice under section 80 of the Code.
The Court of first instance held that no further notice under section 80 was necessary as the notice served by the plaintiff 's father Seth Lachhman Dass must inure to their benefit.
on appeal, the High Court reversed his decision on the point and held that the notice given by the plaintiff 's father was insufficient and was not a valid notice under section 80 of the Code insofar as the plaintiff 's were concerned.
Against the judgment, the plaintiff 's preferred an appeal by special leave.
Allowing the appeal, the Court 230 ^ HELD: 1.
The question as to whether a notice under section 80 is valid or not is a question of judicial construction.
section 80 of the Code is but a part of the .
Procedure Code passed to provide the regulation and machinery, by means of which the courts may do justice between the parties.
It is therefore merely a part of the adjective law and deals with procedure alone and must be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat it.
As far as possible, no proceedings in a court of law should be allowed to be defeated on mere technicalities.
This is the principle on which ours laws of procedure are based.
[238A, 239G H, 240A C] 2.
The whole object of serving a notice under section 80 is to give the Government sufficient warning of the case which is going to be instituted against it and that the Government, if it so wished can settle the claim without litigation or afford restitution without recourse to a court of law.
Though the terms of section 80 have to be strictly complied with, that does not mean that the notice should be scrutinised in a pedantic manner divorced from common sense.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would enable the recipient to avert the litigation.
If the notice substantially fulfills its work of intimating the parties 'concerned generally of the nature of the suit intended to be filed, it would be sufficient compliance of the section.
While interpreting the pre amended section the courts must have due regard to the change in law brought about by sub section
(3) of section 80, which shows legislative acceptance of the rule of substantial compliance instead of strict compliance.
[240D E, 242C E] Sangram Singh vs Election Tribunal Kotah relied on.
In the present case the requirement of section 80 that there must be identity between the cause of action and the relief claimed in the notice as well as in the plaint, 15 fulfilled.
As regards the requirement of identity of the person who issues the notice with the person who brings the suit, in this case the notice contained the name of the original claimant i.e. the father of the plaintiffs.
The . notice reached the concerned department of the Government where the Government had opportunity to ' examine the nature of the claim and decide whether it should accept or contest the claim.
The concerned Government authorities served a reply on the plaintiff 's father that his claim was not acceptable.
There after he died and his right to file the suit for enforcement of the claim having devolved upon his heirs i.e. the plaintiff 's, the plaintiffs filed the suit for enforcement of the same claim.
In the circumstances, if section 80 is held to have not been complied with, as done by the High Court, great injustice would be done to the plaintiffs in the matter of filing suits to the Government inasmuch as in case of insistence on fresh notice, the period of limitation to file the suit would expire in the meantime.
Such a situation is not intended by the Code.
Thus the requirement of section 80 was clearly fulfilled in this case but the High Court having allowed the technical plea of the defendants, the plaintiffs have been deprived of their legitimate claim for at least 35 years.
[238D H, 239A C, 240G H] S.N. Dutt vs Union of India, [1962]1 S.C.R. 560; Mahadev Dattatraya Rajshri vs Secretary of States for India ; and Bachchu Singh vs Secretary of State for India in Council, , overruled.
231 Raghunath Dass vs Union of India, ; ; Union of India vs A Jeewan Ram A.I.R. 1958 S.C. 905; State of Madras vs C.P. Agencies, A.I.R. 1960 S.C. 1309 and Amar Nath Gogra vs Union of India,[1964]1 S.C.R. 651, affirmed.
Bhagchand Dagadusa vs Secretary of State of India in Council, [1927] I.A. 338; Vallayan Chettiar vs Government of the Province of Madras [1947] I.A. 74: and Government of the Province of Bombay vs Pestonji Ardeshir Wadia [1949] 76 I.A. 57; referred to.
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vil Appeal Nos.
2704 06 of 1979.
From the Judgment and Order dated 1.5.1979 of the Guja rat High Court in Special Civil Appln.
Nos. 133 of 1976, 325 and 384 of 1976.
A.B. Rohatagi, Harish N. Salve, Ms. Palavi Shroff, S.S. Shroff, P.S. Shroff and R. Sasiprabhu for the Appellants.
Kapil Sibbal, Suresh Shelat, P.H. Parekh and Ms. Gitan jali for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These appeals, by certificate, are from a common judgment of the Gujarat High Court giving some monetary benefits to the respondents.
The facts of the case cane be quite shortly stated: The appellant No. 1 is a public trust and other appel lants are its trustees.
The trust was running a science college at Ahmedabad.
The college initially had temporary affiliation to the Gujarat University under the Gujarat University Act, 1949.
From June 15, 1973 onwards, the col lege had permanent affiliation under the said Act as amended by Gujarat Act No. VI of 1973.
The University teachers and those employed in the affiliated colleges were paid in the pay scale recommended by the University Grants Commission.
At one stage, there was some dispute between the University Area Teachers Association and the University about the implementation of certain pay scales.
That dispute, by agreement of parties, was referred to the Chancellor of the University for decision.
On June 12, 1970, the Chancellor gave his award in the following terms: "(1) That the revised pay scales as applicable to teachers who joined before April 1, 1966, should similarly be applicable to those who joined after April 1, 1966.
and they be continued even after April 1, 1971.
(2) That these pay scales be exclu sive of dearness allowance.
Therefore, fixing the pay of the teachers who joined after April 1, 1966, no petition of existing dearness 701 allowance would be merged.
However, with effect from April 1, 1971 in respect of both the categories of teachers i.e. Pre 1966 and Post 1966 teachers, dearness allowance was to be merged with the salary.
(3) That arrears for the period from April 1, 1966 to March 31, 1970 accruing due under the award were to be paid (without interest) in ten equal instalments beginning from April 1, 1971.
(4) The award was to be given effect to from April 1, 1970.
There are other provi sions also.
But we are not concerned with those provisions for our purpose.
" This award of the Chancellor was accepted by the State Government as well as by the University.
The latter issued direction to all affiliated colleges to pay their teachers in terms thereof.
The appellants instead of implementing the award served notice of termination upon 11 teachers on the ground that they were surplus and approached the University for permission to remove them.
But the Vice Chancellor did not accede to their request.
He refused the permission sought for.
There then the management we mean the trust took a suicidal decision.
The decision was to close down the college to the detriment of teachers and students.
The affiliation of the college was surrendered and the University was informed that the management did not propose to admit any student from the academic year 1975 76.
It was again a unilateral decision without approval of the Univer sity.
The college was closed with effect from June 15, 1975 with the termination of services of all the academic staff.
The academic staff under law were entitled to terminal benefits.
In fairness, that ought to have been paid simulta neously while being removed.
But the management did not do that.
The teachers waited with repeated representations only to get a negative reply and ultimately, they moved the High Court with writ petitions for the following reliefs: "To issue a writ of mandamus or writ in the nature of mandamus or any other appro priate writ or direction or order directing the respondent Trust and its trustees respond ents to pay to the petitioners their due salary and allowances, the provident fund and gratuity dues in accordance with the Rules framed by the University and pay them 702 compensation that would be payable to them under Ordinance 120 E and they may be further directed to pay the difference of pay payable to them on the implementation of the U.G.C. pay scales in accordance with Government Resolution as clarified by the Award passed by the Chancellor.
" As is obvious from these reliefs, the retrenched persons were not agitating for their continuance in the service.
They seem to have made a tryst with the destiny and accepted the closure of the college.
They demanded only the arrears of salary, provident fund, gratuity and the closure compen sation which were legitimately due to them.
The trust, however, resisted the writ petitions on every conceivable ground.
The objections raised by the trust may be summarised as follows: (i) The trust is not a statutory body and is not subject to the writ jurisdiction of the High Court; (ii) the Resolution of the University directing payment to teachers in the revised pay scales is not binding on the trust; (iii) The University has no power to burden the trust with additional financial liability by retrospec tively revising the pay scales; (iv) the claim for gratuity by retrenched teachers is untenable.
It is payable only to teachers retiring, resigning, or dying and not to those removed on account of closure of the college; and (v) Ordi nance 120E prescribing closure compensation is ultra vires of the powers of the syndicate.
It is at any rate not bind ing on the trust, since it was enacted prior to affiliation of the college.
The High Court rejected all these submissions, and accepted the writ petitions by delivering a lengthy judg ment.
The High Court thus directed the trust to make pay ments in the following terms: "(1) Amount of the remaining six instalments as per Chancellor 's Award in respect of arrears from 1.4.
1966 to 31.3.
1970 as detailed category No. 1 above, (2) Salary for the period from 1.4.1975 to 14.6.1975 as per revised payscales, (3) Com pensation as per sub clause (a) and (b) of clause (vii) of Ordinance 120 E, (4) Provident Fund dues as per the approved scheme.
" The trust by obtaining certificate has ap pealed to this Court.
Counsel for the appellants mercifully concedes the just right of the teachers to get salary for the period of two and a half months from 703 April 1, 1974 to June 14, 1974.
He has also no objection to pay provident fund dues.
He, however, says that the trust is entitled to get reimbursement from the Government and that question must be determined in these appeals.
As regards the arrears of salary payable under the Chancellor 's Award, the counsel contends that it is the liability of the Government and not of the management of the college.
As regards the closure compensation payable under the Ordinance, he repeats the contention taken before the High Court.
He also main tains that the trust is a private body and is not subject to the writ jurisdiction under Article 226.
Having heard the counsel for both parties, we are left with an impression that the appellants are really trying to side track the issue and needlessly delaying the legitimate payments due to the respondents.
The question whether the State is liable to recompense the appellants in respect of the amount payable to the respondents was not considered by the High Court and indeed could not have been examined since the State was not a party to the proceedings.
However, by the persuasive powers of the counsel in this Court, the State has been impleaded as a party in these appeals.
Per haps, this Court wanted to find out the reaction of the State on the appellants ' assertion for reimbursement.
We heard counsel for the State.
He disputes the appellants ' claim.
In fact, he challenged the claim on a number of grounds.
He says that the State is under no obligation to pay the appellants as against the sum due to the respond ents.
We do not think that we need rule to day on this controversy.
It is indeed wholly outside the scope of these appeals.
We are only concerned with the liability of the management of the college towards the employees.
Under the relationship of master and servant, the management is pri marily responsible to pay salary and other benefits to the employees.
The management cannot say that unless and until the State compensates, it will not make full payment to the staff.
We cannot accept such a contention.
Two questions,however, remain for consideration: (i) The liability of the appellants to pay compensation under Ordi nance 120E and (ii) The maintainability of the writ petition for mandamus as against the management of the college.
The first question presents no problem since we do not find any sustainable argument.
The power of the Syndicate to enact the Ordinance is not in doubt or dispute.
What is, however, argued is that the Ordinance is not binding on the manage ment since it was enacted before the college was affiliated to the University.
This appears to be a desperate contention overlooking the 704 antecedent event.
The 'counsel overlooks the fact that the college had temporary affiliation even earlier to the Ordi nance.
That apart, the benefits under the Ordinance shall be given when the college is closed.
The college in the instant case was closed admittedly after the Ordinance was enacted.
The appellants cannot, therefore, be heard to contend that they are not liable to pay compensation under the Ordinance.
The essence of the attack on the maintainability of the writ petition under Article 226 may now be examined.
It is argued that the management of the college being a trust registered under the Public Trust Act is not amenable to the writ jurisdiction of the High Court.
The contention in other words, is that the: trust is a private institution against which no writ of mandamus can be issued.
In support of the contention, the counsel relied upon two decisions of this Court: (a) Executive Committee of Vaish Degree College, Shamli and Others vs Lakshmi Narain & Ors., ; and (b) Deepak Kumar Biswas vs Director of Public Instructions, the first of the two cases, the respondent institution was a Degree College managed by a registered co operative society.
A suit was filed against the college by the dismissed principal for reinstatement.
It was contended that the Executive Committee of the college which was registered under the Co operative Societies Act and affiliated to the Agra University (and subsequently to Meerut University) was a statutory body.
The importance of this contention lies in the fact that in such a case, reinstatement could be ordered if the dismissal is in violation of statutory obligation.
But this Court refused to accept the contention.
It was observed that the manage ment of the college was not a statutory body since not created by or under a statute.
It was emphasised that an institution which adopts ,certain statutory provisions will not become a statutory body and the dismissed employee cannot enforce a contract of personal service against a non statutory body.
The decision in Vaish Degree College was followed in Deepak Kumar Biswas case.
There again a dismissed lecturer of a private college was seeking reinstatement in service.
The Court refused to grant the relief although it was found that the dismissal was wrongful.
This Court instead granted substantial monetary benefits to the lecturer.
This appears to be the preponderant judicial opinion because of the common law principle that a service contract cannot be specifically enforced.
But here the facts are quite different and, therefore, we need not 705 go thus far.
There is no plea for specific performance of contractual service.
The respondents are not seeking a declaration that they be continued in service.
They are not asking for mandamus to put them back into the college.
They are claiming only the terminal benefits and arrears of salary 'payable to them.
The question is whether the trust can be compelled to pay by a writ of mandamus? If the rights are purely of a private character no mandamus can issue.
If the management of the college is purely a private body with no public duty mandamus will not lie.
These are two exceptions to Mandamus.
But once these are absent and when the party has no other equally conven ient remedy, mandamus cannot be denied.
It has to be appre ciated that the appellants trust was managing the affiliat ed college to which public money is paid as Government aid.
Public money paid as Government aid plays a major role in the control, maintenance and working of educational institu tions.
The aided institutions like Government institutions discharge public function by way of imparting education to students.
They are subject to the rules and regulations of the affiliating University.
Their activities are closely supervised by the University authorities.
Employment in such institutions, therefore, is not devoid of any public charac ter.
(See The Evolving Indian Administration Law by M.P. Jain [1983] p. 266).
So are the service conditions of the academic staff.
When the University takes a decision regard ing their pay scales, it will be binding on the management.
The service conditions of the academic staff are, therefore, not purely of a private character.
It has super added pro tection by University decisions creating a legal right duty relationship between the staff and the management.
When there is existence of this relationship, mandamus can not be refused to the aggrieved party.
The Law relating to mandamus has made the most spectacu lar advance.
It may be recalled that the remedy by preroga tive writs in England started with very limited scope and suffered from many procedural disadvantages.
To overcome the difficulties, Lord Gardiner (the Lord Chancellor) in pursu ance of Section 3(1)(e) of the Law Commission Act, 1965, requested the Law Commission "to review the existing reme dies for the judicial control of administrative acts and omission with a view to evolving a simpler and more effec tive procedure.
" The Law Commission made their report in March 1976 (Law Com No. 73).
It was implemented by Rules of Court (Order 53) in 1977 and given statutory force in 1981 by Section 31 of to Supreme Court Act 1981.
It combined all the former remedies into one proceeding called Judicial Review.
Lord Denning explains the scope of this "judicial review": 706 "At one stroke the courts could grant whatever relief was appropriate.
Not only certiorari and mandamus, but also declaration and injunc tion.
Even damages.
The procedure was much more simple and expeditious.
Just a summons instead of a writ.
No formal pleadings.
The evidence was given by affidavit.
As a rule no cross examination, no discovery, and so forth.
But there were important safeguards.
In par ticular, in order to qualify, the applicant had to get the leave of a judge.
The Statute is phrased in flexible terms.
It gives scope for development.
It uses the words "having regard to".
Those words are very indefinite.
The result is that the courts are not bound hand and foot by the previous law.
They are to 'have regard to ' it.
So the previ ous law as to who are and who are not public authorities, is not absolutely binding.
Nor is the previous law as to the matters in respect of which relief may be granted.
This means that the judges can develop the public law as they think best.
That they have done and are doing." (See The Closing Chapter by Rt.
Hon Lord Denning p. 122).
There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty.
The 'public authority ' for them mean every body which is created by statute and whose powers and duties are defined by statue.
So Government departments, local authori ties, police authorities, and statutory undertakings and corporations, are all 'public authorities '.
But there is no such limitation for our High Courts to issue the writ 'in the nature of mandamus '.
Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs.
This is a striking departure from the English law.
Under Article 226, writs can be issued to "any person or authority".
It can be issued "for the enforcement of any of the fundamental rights and for any other purpose".
Article 226 reads: "226.
Power of High Courts to issue certain writs (1) Notwithstanding anything in article 32, every High Court shall have power, throughout the territories in relation to which it exer cises jurisdiction to issue to any person or authority including in appropriate cases, any Government, within those territories direc tions, orders or writs, includ 707 ing (Writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certi orari, or any of them for the enforcement of any of the rights conferred by Part II and for any other purpose.
XXX XXX XXX XXX " The scope of this article has been ex plained by Subba Rao., in Dwarkanath vs Income Tax Officer, ; at (540 41): "This article is couched in compre hensive phraseology and it ex facie confers a wide power on the High Courts to reach injus tice wherever it is found.
The Constitution designedly used a wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be exercised.
It can issue writs in the nature of prerogative writs as understood in England; but the use of the expression "na ture", for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them.
That apart, High Courts can also issue directions, orders or writs other than the prerogative writs.
It enables the High Courts to mould the reliefs to meet the pecul iar and complicated requirements of this country.
Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to intro duce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of Government into a vast country like India functioning under a federal structure.
Such a construction defeats the purpose of the arti cle itself.
" The term "authority" used in Article 226, in the con text, must receive a liberal meaning unlike the term in Article 12.
Article 12 is relevant only for the purpose of enforcement of fundamental rights under article 32.
Article 226 confers power on the High Courts to issue writs for enforce ment of the fundamental rights as well as nonfundamental rights.
The words "Any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State.
They may cover any other person or body performing public duty.
The form of the body concerned is not very much relevant.
What is relevant is the nature of 708 the duty imposed on the body.
The duty must be judged in the light of positive obligation .owed by the person or authori ty to the affected party.
No matter by what means the duty is imposed.
If a positive obligation exists mandamus cannot be denied.
In Praga Tools Corporation vs Shri C.A. Imanual & Ors., ; , this Court said that a mandamus can issue against a person or body to carry out the duties placed on them by the Statutes even though they are not public offi cials or statutory body.
It was observed (at 778): "It is, however, not necessary that the person or the authority on whom the statu tory duty is imposed need be a public official or an official body.
A mandamus can issue, for instance, to an official or a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their under takings.
A mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities.
(See Halsbury 's Laws of England (3rd Ed.
II p. 52 and onwards).
" Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute.
Commenting on the development of this law, Professor De Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute.
It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." (Judicial Review of Administrative 'Act 4th Ed.
p. 540).
We share this view.
The judicial control over the fast expanding maze of bodies effecting the rights of the people should not be put into water tight compartment.
It should remain flexible to meet the requirements of variable circumstances.
Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found '.
Technicalities should not come in the way of granting that relief under Article 226.
We, therefore, reject the conten tion urged for the appellants on the maintainability of the writ petition.
In the result, the appeals fail and are dismissed but with a direction to the appellants to pay all the amounts due to the respondents as 709 per the judgment of the High Court.
The amount shall be paid with 12 per cent interest.
The balance remaining shall be paid within two months from today.
The appellants shall also pay the costs of the respondents teachers which we quantify at Rs. 26,000.
R.S.S. Appeals dismissed.
|
Appellant No. 1 is a public trust and the other appel lants are its trustees.
The Trust was running a science college at Ahmedabad.
The college initially had temporary affiliation to the Gujarat University.
From June 15, 1973 onwards the college had permanent affiliation.
A dispute between the University Area Teachers Associa tion and the University was referred to the Chancellor of the University who gave his award on June 12, 1970.
The award was accepted by the State Government as well as by the University.
The latter issued direction to all affiliated colleges to pay their teachers in terms of the award.
The appellants instead of implementing the award served notice of termination upon 11 teachers on the ground that they were surplus, and approached the University for permis sion to remove them.
The Vice Chancellor did not accept their request.
Thereupon the Trust decided to close down the college.
The retrenched persons demanded arrears of salary and allowances, provident fund and gratuity dues, and closure compensation.
But the management did not pay these dues.
The employees then moved the High Court to issue a writ of mandamus directing the Trust to pay the retrenched employees their legitimate dues.
The High Court accepted the writ petitions.
Before this Court, the appellants while conceding the just right of the employees to get salary for 2 1/2 months and the provident fund dues, contended that the Trust was entitled to get reimbursement from the Government in lieu of these payments.
As regards the arrears of salary.
698 payable under the Chancellor 's aWard, the appellants con tended that it was the liability of the Government and not of the management of the college.
As regards the closure compensation it was contended that Ordinance 120E prescrib ing compensation was ultra vires, and, at any rate, it was not binding on the Trust since it was enacted prior to the affiliation of the college.
It was further contended that the Trust was a private body and was not subject to the writ jurisdiction under Article 226.
Dismissing the appeals, it was, Held: (1)The Court is only concerned with the liability of the management of the college towards the employees.
Under the relationship of master and servant, the management is primarily responsible to pay salary and other benefits to the employees.
The management cannot say that unless and until the State compensates, it will not make full payment to the staff.
[703E F] (2) The college had temporary affiliation even earlier to the Ordinance 120E.
That apart, the benefits under the Ordinance are to be given when the college is closed which in this case was admittedly after the Ordinance was enacted.
[704A B] (3) If the rights are purely of a private character no mandamus can issue.
If the management of the college is purely a private body with no public duty mandamus will not lie.
These are two exceptions to mandamus.
But once these are absent and when the party has no other equally conven ient remedy, mandamus cannot be denied.
[705B C] (4) Public money paid as Government aid plays a major role in the control, maintenance and working of educational institutions.
The aided institutions, like Government insti tutions, discharge public function by way of imparting education to students.
They are subject to the rules and regulations of the affiliating University.
Their activities are closely supervised by the University authorities Em ployment in such institutions, therefore, is not devoid of any public character.
[705C D] (5) When the University takes a decision regarding the pay scales of the employees of the aided institution, it will be binding on the management.
The service conditions of the academic staff are, therefore, not purely of a private character.
It has super added protection by University decisions creating a legal right duty relationship.
When there 699 is existence of this relationship, mandamus cannot be re fused to the aggrieved party.
[705E] (6) Article 226 confers wide powers on the High Court to issue writs in he nature of prerogative writs.
Under Article 226, writs can be issued to "any person or authority".
It can be issued "for the enforcement of any of the fundamental rights and for any other purpose." [706F G] Executive Committee of Vaish Degree College vs Lakshmi Narain.
, ; ; Deepak Kumar Biswas vs Director of Public Instructions., ; distinguished Dwarkanath vs Income Tax Officer, ; , referred to.
(7) This is a striking departure from the English Law.
Under the English Law, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty, and 'public authority ' there means every body which is created by statute and whose powers and duties are defined by statute.
[706E F] (8) The words "any person or authority" used in Article 226 are not to be confined only to statutory authorities and instrumentalities of the State.
They may cover any other person or body performing public duty.
The form of the body concerned is not very much relevant.
What is relevant is the nature of the duty imposed on the body.
The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means the duty is imposed.
If a positive obligation exists mandamus cannot be denied.
[707G H; 708A B] (9) Mandamns cannot be denied on the ground that the duty to be enforced is not imposed by the statute.
[708B] Praga Tools Corporation vs Shri C.A. Imanual, ; , referred to.
(10) The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into water tight compartment.
It should remain flexible to meet the requirements of variable circumstances.
Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found '.
Technicalities should not come in the way of granting that relief under Article 226.
[708F G] 700
|
Appeal No. 103 of 1950.
Appeal from a Judgment of the Bombay High Court (Chagla C.J. and Tendolkar J.) dated 25th March, 1949, in Income Tax Reference No. 31 of 1948.
M. C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the appellant.
R.J. Kolah, for the respondent.
Oct. 1.
The Judgment of the Court was delivered by KANIA C.J.
This is an appeal from a judgment of the High Court at Bombay and it arises out of the opinion ex pressed by the High Court in respect of a question submitted to it by the Income tax Tribunal.
The material facts are these.
The respondent is a textile mills company carrying on the business of manufacturing and selling textile goods.
For the assessment years 1943 44 and '1944 45, covering the accounting periods ending with the calendar years 1941, 1942 and 1943, the respondent claimed the expenditure incurred by it in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, as revenue expenditure and an allowable deduction out of its income for the said periods, under section 10(2) (xv) of the Indian Income tax Act.
Following the decision of the Bombay High Court in Commissioner of Income tax, Bombay vs The Century Spinning 13 and Weaving and Manufacturing Co. Ltd.(1), the Tribunal allowed the claim of the assessee.
At the desire of the appellant, the Tribunal submitted the following question for the opinion of the High Court : "Whether, on the facts of the case, the expenditure incurred by the assessee company in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, is revenue expenditure and an allowable deduction under section 10(2) (xv) of the Indian Income tax Act ?" The High Court, following its previous decision and finding that the fact of the trade marks having come into use after the 25th of February, 1937, made no difference in the result, answered the question in the affirmative.
The Commissioner of Income tax, Bombay, has come on appeal to us.
It was argued on behalf of the appellant that the ques tion whether a certain disbursement was of a capital or revenue nature, has to be decided according to the principle laid down in British Insulated and Helsby Cables Ltd. vs Atherton(2).
In that case the company which carried on the business of manufacturers of insulated cables established a pension fund for its clerical and technical salaried staff.
The fund was constituted by a trust deed which provided that members should contribute a percentage of their salaries to the fund and that the company should contribute an amount equal to half the contributions of the members; and further that the company should contribute a sum of pound 31,784 to form the nucleus of the fund and to provide the amount necessary in order that past years of service of the then existing staff should rank for pension.
That sum was arrived at by an actuarial calculation on the basis that the sum would ultimately be exhausted when the object for which it was paid was attained.
The House of Lords held that this payment was in the nature of capital expenditure and was therefore not an admissible deduction.
Although in the opinions expressed by the different members of the House of Lords (1) (2) 14 the line of approach is not completely the same, the principle stated by Lord Cave in his speech has been test distinguish capital expenditure from revenue expenditure.
It was recognised that a sum of money expended, not of necessi ty and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carry ing on of business, may yet be expended wholly and exclu sively for the purposes of the trade.
The Lord Chancellor observed that the question appeared to be a question of fact which was proper to be decided by the Commissioners upon the evidence brought before them in each case.
The test that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing that is going to recur every year was considered an useful element in arriving at the decision but was not certainly the deci sive fact.
The Lord Chancellor observed as follows: "But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advan tage for the enduring benefit of the trade, I think that there is very good reason for treating such an expenditure as properly attributable not to revenue but to capital.
" In order to appreciate the true position here Correctly it is next necessary to notice the relevant provisions of the Indian .
It may be noted that before this Act there was no in India but it was recognised that an action lay for infringement of a trade mark independently of an action for passing off goods.
The Act opens with the preamble "whereas it is expedient to provide for the registration and more effective protection of trade marks . "Section 2(1) of the Act defines a trade mark as meaning "a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right to use the mark, whether with or without any indication of the identity of that person.
" Section 14 permits the 15 proprietor of a trade mark to have the trade mark regis tered.
The Attorney General, on behalf of the appellant, relied on sections 20, 21, 28 and 29 in support of his contention.
He argued that before the , although the proprietor of a trade mark could maintain an action for infringement of his trade mark and the cause of action in such a case was quite different from the cause of action in an action for passing off goods, by the the right of the owner of the trade mark is in creased by section 21, and it is made assignable independ ently of the goodwill under sections 28 and 29 of the .
The question thus resolves itself into whether by reason of these two incidents the case falls within the principle laid down by Lord Chancellor Cave, as mentioned above.
In our opinion, the contention urged on behalf of the appellant must fail.
It is not contended that by the a new asset has come into existence.
It was con tended that an advantage of an enduring nature had come into existence.
It was argued that just as machinery may attain a higher value by an implementation causing greater produc tive capacity, in the present case the trade mark which existed before the acquired an advantage of an enduring nature by reason of the and the fees paid for registration thereunder were in the nature of capital expenditure.
In our opinion, this analogy is falla cious.
The machinery which acquires a greater productive capacity by reason of its improvement by the inclusion of some new invention naturally becomes a new and altered asset by that process.
So long as the machinery lasts, the im provement continues to the advantage of the owner of the machinery.
The replacement of a dilapidated roof.
by a more substantial roof stands on the same footing.
The result however of the is only two fold.
By regis tration, the owner is absolved from the obligation to prove his ownership of the trade mark.
It is treated as prima facie proved on production of the registration certificate.
It thus merely saves him the trouble of leading evidence, in the event of a suit, in a court 16 of law, to prove his title to the trade mark.
It has been said that registration is in the nature of collateral security furnishing the trader with a cheaper and more direct remedy against infringers, Cancel the registration and he has still his right enforceable at common law to restrain the piracy of his trade mark.
In our opinion, 'this is neither such an asset nor an advantage as to make payment for its registration a capital expenditure.
In this connec tion it may be useful to notice that expenditure incurred by a company in defending title to property is not considered expense of a capital nature.
In Southern (H. M. Inspector of Taxes) vs Borax Consolidated Limited(1).
it is there stated that where a sum of money is laid out for the acqui sition or the improvement of a fixed capital asset it is attributable to capital, but if no alteration is made in the fixed capital asset by the payment, then it is properly attributable to revenue, being in substance a matter of maintenance, the maintenance of the capital structure or the capital asset of the company.
In our opinion, the advantage derived by the owner of the trade mark by registration falls within this class of expenditure.
The fact that a trade mark after registration could be separately assigned, and not as a part of the goodwill of the business only, does not also make the expenditure for registration a capital expend iture.
That is only an additional and incidental facility given to the owner of the trade mark.
It adds nothing to the trade mark itself.
In the judgment of the High Court some emphasis is laid on the fact that by reason of registration the duration of the trade mark is only for seven years, and it does not thus possess that permanency which is ordinarily required of an expenditure to make it a capital expenditure and in order to prove the existence of a benefit of an enduring character.
The learned Attorney General contended that the view that as the benefit of registration lasted for seven years, i.e., for a limited period, it prevented the expenses of registra tion being treated as capital expenditure, is unsound (1) [1942] 10 I.T.R. Suppl.
17 and for that contention he relied on Henriksen (Inspector of Taxes) vs Grafton Hotel Ltd.(1).
In that case, tenants of licensing premises by agreement with the landlord paid by instalment the monopoly value fixed by the licensing jus tices when granting the licence under section 14 of the Licensing (Consolidation) Act, 1910.
These were sought to be deducted as revenue expenditure but were disallowed by the Court.
Lord Greene M.R. first considered that the pay ment fell into the same class as the payment of a premium on the grant of a lease or the expenditure on improvements to the property which justices may require to be made as a condition of granting a licence.
Having reached that conclu sion he rejected the argument that the payment not being made in one lump sum but by instalments made a difference in the character of the payment.
He observed as follows : "Whenever a licence is granted for a term, the payment is made as on a purchase of a monopoly for that term.
When a licence is granted for a subsequent term, the monopoly value must be paid in respect of that term and so on.
The payments are recurrent if the licence is renewed, they are not peri odical so as to give them the quality of payments which ought to be debited to revenue account.
The thing that is paid for is of a permanent quality although its permanence, being conditioned by the length of the term, is shortlived.
A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease, which is admittedly not deductible.
" The Attorney General relied on these observations to point out that the permanence of the advantage was thus not dependent on the number of years for which it was to enure for the benefit of the proprietor of the trade mark.
In our opinion, these observations have to be read in the context in which they have been made.
The learned Master of the Rolls was discuss ing only the question of payment being made by instalments as not making any difference in the nature of the (1) 3 18 expenditure.
It was first held by him that the payment in question was of a capital nature and of the same character as premium paid on the grant of a lease and was therefore necessarily of a capital nature.
Having come to that conclu sion, he only rejected the contention that because the premium was paid in more instalments than one it lost its character a capital expenditure.
In our opinion, this is an entirely different thing from stating that the fact of the advantage being for a limited time altered the character of the payment in any way.
As observed by Viscount Cave L.C. the question is always one of fact depending on the circumstances of each case individually.
In our opinion, the decision of the High Court reported in Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd.(1) is correct and in the present case also the contention of the appellant must fail.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
|
The expenditure incurred by a company carrying on the manufacture and sale of textile goods in registering for the first time its trade marks which were not in use prior to the 25th January, 12 1937, is revenue expenditure and an allowable deduction under Sec.
10 (2) (xv) of the Indian Income tax Act.
The fact that a trade mark after registration could be sepa rately assigned and not as a part of the goodwill of the business only, does not make the expenditure for registra tion capital expenditure.
It is only an additional and incidental facility given to the owner of the trade mark; it adds nothing to the trade mark itself.
Judgment of the Bombay High Court affirmed.
Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd. ([1947] approved.
British Insulated and Helsby Cables Ltd. vs Atherton ([1926] A.C. 205), Southern vs Borax Con solidated Ltd. ([1942] 10 I.T.R. Supp. 1), Henriksen vs Grafton Hotel Ltd. ([1942] 2 K.B. 184) referred to.
|
ION: Civil Appeal No. 1574 of 1980.
Appeal by Special leave from the Judgment and Order dated the 27.7.1979 of the Allahahad High Court in C.M.W. No. Nil of 1979.
Anil Dev Singh, S.L. Aneja and K.L. Taneja for the Appellant.
M.C. Manchanda, Mrs. Shobha Dikshit and Pramod Swarup for the Respondent.
His attempts to get the said decree executed were stalled sometimes by objections filed by the tenant appellant and sometimes by amendments made 745 in the law with the result that even after 13 years of litigation the landlord respondent was not able to get possession of the premises.
This was because of a statutory amendment which made the decree obtained by him inexecutable and was, therefore, Lying dormant and ineffective.
The legislature having realised the hardship of such landlords came to their rescue by an amendment in 1976 to the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act 1972 (for short, to be referred to as the '1972 Act ') which was expressly given retrospective operation so as to revive the decrees which had become inexecutable.
When the appeal was heard and the arguments were concluded the respondents had made a good gesture in agreeing to allow the tenant two years ' time to vacate the premises on giving the usual undertaking and accordingly we adjourned the case to enable the parties to come to a settlement.
However, we were informed by counsel for the parties that no settlement could be reached; hence we have now to decide the case on merits.
And now to the facts of the case.
The respondent landlord filed a suit for ejectment in the year 1971 and obtained a decree for ejectment against the appellant tenant.
By virtue of the provisions of 1972 Act, the case was transferred to the court of the Judge, Small Causes who tried the case and passed a decree in favour of the respondent on 4.4.1973.
It may be noted that the tenant did not object to the jurisdiction nor did he prefer and appeal or revision against the said judgment dated 4.4.73 and the same became final.
Thereafter, the decree holders filed an execution petition being Execution Case No. 4 of 1973.
The appellant, however, raised a jurisdictional objection on the basis of a judgment of the Allahabad High Court reported in 1975 A.L.R. 360 that the transfer of a suit before conferment.
Of jurisdiction to the Judge, Small Causes Court was not competent and, therefore, the decree was not executable.
Counsel for the respondents under some misconception conceded that the suit would have to be tried all over again and the Execution Case was, therefore, disposed of by an order dated 31.1.1976 passed by the Executing Court.
The Court held that the decree was without jurisdiction.
The respondents, however, took the stand that a concession on a point of law was not binding on him nor was his Advocate authorised to make such a concession.
However, the decree 746 remained inexecutable but by virtue of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Amendment) Act, 1976 (hereinafter referred to as the '1976 Amendment Act '), section 9 of the 1972 Act was made applicable with retrospective effect to remove the injustice and remedy the mischief which had been caused to the decree holders.
The relevant portion of the said amendment may be extracted thus: "26.
Transitory Provision XX XX XX (6) The provision of section 9 of the Uttar Pradesh Civil Laws Amendment Act, 1972 shall apply and shall be deemed always to have applied in relation to suits of the nature referred to therein which before the commencement of that Act had been transferred to a competent court and were pending immediately before the date of commencement of that Act in such transferee court as they apply in relation to suits which were pending in the court in which they were instituted: Provided that any such suit decided by the transferee court between the commencement of the said Act and the commencement of this Act on the assumption that the said Section 9 did not apply to such suits shall be deemed to have been validly decided as if the said section did not apply to such suits.
" As a result of the amendment extracted above, the judgment of the Allahabad High Court reported in 1975 A.L.R. 360 stood overruled and effaced.
In view of this amendment, the respondents filed an application before the Executing Court for revival of the suit and the decree which was accepted by the court and a civil revision filed against the said order was dismissed by the High Court; hence this appeal by special leave in this Court.
In order to understand the implication of the 1976 Amendment Act, it may be necessary to peruse section 26(5) of the said Amendment, which is extracted thus: 747 "(5) Notwithstanding any judgment, decree or order of any court or authority, the provisions of Rule 16 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Rules, 1972 shall be deemed to have been made under the provisions of the principal Act as amended by this Act as if this Act were in force on all material dates.
" A close analysis of the above reveals that the intention of the legislature was to remove the injustice done to the landlords whose decrees became inexecutable.
The logical consequence which flows from an interpretation of clauses (5) and (6) of section 26 of the 1976 Amendment Act would be that all decrees which hitherto had been Lying dormant would revive and the landlord could get the decree executed.
The Executing Court as also the High Court upheld the contention of the respondents and directed execution of the decree.
The sheet anchor of the arguments of the counsel for the appellant was that in view of the Allahabad High Court decision (supra) and the 1972 Act, the decree stood set aside and could not be revived or made executable even by the 1976 Amendment Act.
It is, however, impossible for us to accept this contention because the dominant purpose of the 1976 Amendment Act was to remedy the injustice done to the landlords by the 1972 Act.
Another flaw in the argument of the counsel for the appellant is that it presumes that the decree became completely without jurisdiction and stood set aside.
That, however, could not be the position in law.
Even if the 1972 Act were to apply, the utmost consequence would be that the decree would remain inexecutable but could not be struck off from the records of the case.
This is a clear case where the doctrine of eclipse would apply and in view of the 1976 Amendment Act, the decree will revive and become executable.
This principle has been applied by this Court in several cases and flows from the well known doctrine of eclipse which has been enunciated not only in India but in other countries also.
In Sutherland Statutory Construction by Horack (Vol.
I, 3rd Edn.), the following passages may be noted: "In a majority of the jurisdictions the courts recognise 748 the mistake of the legislature and try to determine and give effect to its intent.
If the legislature has expressed its purpose intelligibly in the amendatory act and provided fully upon the subject considered, a majority of courts hold that it is a reasonable conclusion that the legislature did not intend to make the enforcement of the statute contingent on the continued existence of the repealed statute. (p. 329) The unconstitutional act physically exists in the official statutes of the state and is there available for reference, and as it is only unenforceable, the purported amendment is given effect.
If the law as amended is constitutional, it will be enforced." (p. 335) It is true that the American Constitution as also the American courts have been most reluctant to apply the doctrine of eclipse but this Court has pointed out in more than one case that the American view cannot be applied to our Constitution.
The matter first came up for consideration before this Court in Bhikaji Narain Dhakras & Ors.
vs State of Madhya Pradesh & Anr.
where in a similar situation the doctrine of eclipse was fully applied and the court observed thus: "The true position is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right.
The effect of the Constitution (First Amendment) Act, 1951 was to remove the shadow and to make the impugned Act free from all blemish or infirmity.
Such laws were not dead for all purposes.
They existed for the purposes of pre Constitution rights and liabilities and they remained operative, even after the Constitution, as against non citizens.
In our judgment, after the amendment, of clause (6) of Article 19 on the 18th June 1951, the impugned Act ceased to be unconstitutional and became revivified and enforceable against citizens as well as against non citizens.
But after the amendment of clause (6) the impugned Act immediately became fully operative even as against the citizens." In Deep Chand vs State of U.P. & Ors.
similar observations 749 were made by this Court which may be extracted thus: "As, however, our learned Brother has thought fit to embark upon a discussion of these questions, we desire to guard ourselves against being understood as accepting or acquiescing in the conclusion that the doctrine of eclipse cannot apply to any post Constitution law.
A post Constitution law may infringe, either a fundamental right conferred on citizens only or a fundamental right conferred on any person, citizen or non citizen.
In the first case the law will not stand in the way of the exercise by the citizens of that fundamental right and, therefore, will not have any operation on the rights of the citizens, but it will be quite a effective as regards non citizens.
In such a case, the fundamental right will, qua the citizens, throw a shadow on the law which will nevertheless be on the Statute Book as a valid law binding on non citizens and if the shadow is removed by a constitutional amendment, the law will immediately be applicable even to the citizens without being re enacted.
In other words, the doctrine of eclipse as explained by this Court in Bhikaji Narain Dhakras vs The State of Madhya Pradesh ; also applies to a post Constitution law of this kind.
A pre Constitution law, stating in the words of Das, J., as he then was, exists notwithstanding that it does not exist with respect to the future exercise of the fundamental rights.
That principle has been extended in this decision, by invoking the doctrine of eclipse.
As the law existed on the statute book to support pre Constitution acts, the Court held.
that the said law was eclipsed for the time being by one or other of the fundamental rights and when the shadow was removed by the amendment of the Constitution, the impugned Act became free from all blemish or infirmity." (Emphasis ours) In Mahendra Lal Jaini vs The State of Uttar Pradesh & Ors.
this Court held as follows: "The pre Constitution laws which were perfectly valid when they were passed and the existence of which is recognised in the opening words of article 13(1) revive by the removal of the inconsistency in question.
This in effect is 750 the doctrine of eclipse, which, if we may say so with respect, was applied in Bhikaji Narain 's case So far as pre Constitution laws are concerned, the amendment of the Constitution which removes the inconsistency will result in the revival of such laws by virtue of the doctrine of eclipse, as laid down in Bhikaji Narain 's case, for the pre existing laws were not still born and would still exist though eclipsed on account of the inconsistency to govern pre existing matters." (Emphasis supplied) In two recent decisions, this Court has applied the doctrine of eclipse in similar situations.
In section Anbalagan vs B. Devarajan the following observations were made: "Unless the practice of the caste makes it necessary no expiatory rites need be performed and, ordinarily, he regains his caste unless the community does not accept him.
The practice of caste however irrational it may appear to our reason and however repugnant it may appear to our moral and social sense, is so deep rooted in the Indian people that its mark does not seem to disappear on conversion to a different religion.
If it disappears, it disappears only to reappear on reconversion." (Emphasis ours) Similarly, in the case of Kailash Sonkar vs Smt.
Maya Devi, to which one of us (Fazal Ali, J.) was a party, this Court made the following observation: "In our opinion, when a person is converted to Christianity or some other religion the original caste remains under eclipse and as soon as during his/her life time the person is reconverted to the original religion the eclipse disappears and the caste automatically revives." Thus, applying the rule of law laid down by this Court, there would be no difficulty in upholding the judgments of the courts below in this particular appeal.
By virtue of the 1972 Act, the decree could not have been set aside or invalidated and the only consequence which would ensue is that the decree would be lying dormant and could not be executed.
Once the bar placed by the 1972 Act is 751 removed, by virtue of the doctrine of eclipse the decree will revive and become at once operative and executable.
The courts below have rightly decided that after the 1976 Amendment Act the decree became legally executable.
Some other arguments were also advanced on behalf of the appellant but in view of the express language of the 1976.
Amendment Act and the doctrine of eclipse, they seem to be futile.
For the reasons given above, we uphold the decree for ejectment passed by the courts below against the appellant and dismiss the appeal with costs.
As the litigation has taken more than a decade, it is not possible for us to give any time to the tenant for a vacating the premises and the decree may now be executed forthwith and the landlord put into possession.
N.V.K. Appeal dismissed.
|
The respondent landlord filed a suit for ejectment in the year 1971 and obtained a decree for ejectment against the appellant tenant.
By virtue of the provisions of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, the case was transferred to the court of the Judge, Small Causes, who tried the case and passed a decree in favour of the respondent.
No appeal or revision was filed against the said judgment.
Thereafter, the decree holders filed an execution petition.
The appellant, raised a jurisdictional objection on the basis of the judgment of the Allahabad High Court, (K.K. Saksena vs S.N. Misra to the effect that the transfer of the suit before conferment of the jurisdiction to the Judge, Small Causes Court was not competent and therefore, the decree was not executable.
The respondent 's counsel contended that the suit would have to be tried all over again and the Court held that the decree was without jurisdiction.
Tho decree remained inexecutable, but by virtue of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) (Amendment) Act, 1976 section 9 of the 1972 Act was made applicable with retrospective effect to remove The injustice and remedy the mischief which had been caused to the decree holders.
As a result of the amendment, the aforesaid judgment of the Allahabad High Court stood over ruled and effaced.
In view of the aforesaid amendment, the respondents filed an application before the Executing Court for revival of the suit and the decree, which was accepted by the Court, and a Civil Revision filed against the said order was dismissed by the High Court.
744 In the appeal to this Court, it was contended on behalf of the appellant, that in view of the Allahabad High Court decision and the 1972 Act, the decree stood set aside and could not be received or made executable even by the 1976 Amendment Act.
Dismissing the appeal, ^ HELD: 1.
The courts below have rightly decided that after the 1976 Amendment Act the decree became legally executable.
[747A] 2.
By virtue of the 1972 Act the decree could not have been set aside or invalidated and the only consequence which would ensue is that the decree would be lying dormant and could not be executed.
Once the bar placed by the 1972 Act is removed, by virtue of the doctrine of eclipse the decree will revive and become at once operative and executable.
[750H; 751A] 3 Even if the 1972 Act were to apply, the utmost consequence would be that the decree would remain inexecutable but could not be struck off from the records of the case.
This is clear case where the doctrine of eclipse would apply, and in view of the 1976 Amendment Act, the decree will revive and become executable.
This principle has been applied by this Court in several cases and flows from the well known doctrine of eclipse which has been enunciated not only in India but in other countries also.
[747G H] Bhikaji Narain Dhakras & Ors.
vs Stats of Madhya Pradesh & Anr; ; , Deep Chand vs State of U.P of Uttar Pradesh & Ors; [1963] 1 Supp.
SCR 912, section Anbalagan vs B. Devarajan; , Kailash Sonkar vs Smt.
Maya Devi; , referred to.
|
Civil Appeal No. 1381 of 1980 Appeal by Special leave from the Judgment and order dated the 7th July, 1980 of the Punjab and Haryana High Court in Civil Writ Petition No . 1917 of 1980.
And Civil Appeal No. 2667 of 1983.
Appeal by Special leave from the Judgment and order dated the 8th July, 1980 of the Punjab and Haryana High Court in Civil Writ No. 2349 of 1980.
Jawahar Lal Gupta, Janendralal and B.R. Agarwal for the Appellant.
Randhir Jain for the Respondents.
The Judgment of the Court was delivered by VARADARAJAN, J.
These appeals by special leave are by the Punjab University and directed against two Division Bench judgments of the Punjab and, Haryana High Court in writ Petitions 1917 of 1980 and 2349 of 1980, allowing those Writ Petitions without any order as to costs W P. 2319 of 1980 was allowed at the motion stage on 18.7.1980 as being covered by the decision in W P. 1917 of 1980 which was disposed of on 7.7.1980.
Kulwant Singh Tiwana, J. is a party to both the judgments and he sat with Harbans Lal, J for hearing W.P. 1917 of 1980 and with M.M. Punchi, J. for hearing W.P. 2349 of 1980.
In these circumstances, it is necessary to state only the facts relating to W.P. 1917 of 1980 alone briefly.
The system known as "10 plus 2 plus 3 system" was introduced in the educational institutions in the country some years ago.
The Association of Indian Universities decided the equivalence of this 10+2+3 system with the old 11+3 years degree course system which was prevalent in some States and it suggested that in all States where the pattern of education is such as to require 14 years for the first degree, i e. 11+3 years, the new plus 2 stage of the Central Board of Secondary Education be treated as equivalent to a pass in the first year of the three years degree course or for admission to the first year of the two years degree course.
This suggestion was 818 conveyed by the Association of the Indian Universities to the Chairman of the Central Board of Secondary Education by a letter dated 18.4.1978.
The appellant, Punjab University, decided on 10.2.1977 that the 12th standard examination conducted by the Boards/Universities under the new 10+2+3 system by recognised as equivalent to the Pre Medical/Pre Enginerering/B.A. Part I/B.Sc.
Part I/B.Com Part I examination according to the combination of the subjects.
Subsequently, on 4.6.1978 the Punjab University decided to treat the 11th standard of the new 10+2+3 system as equivalent to the pre University examination of the university.
Copies of those decisions dated 10.2.1977 AND 4.6.1978 were Annexures P. 2 and P. 3 respectively in W.P. 1917 of 1980.
These recognitions of the equivalence of those two examinations continued till the beginning of the year 1980.
But on 18.4.1980 the Punjab University decided that the first year student of the plus 2 course in the 10+2+3 system of the Central Board 's schools who does not take a public examination at the end of the first year should not be considered as equivalent to the student who has passed the pre University examination of the Punjab University for joining the Pre Medical/Pre Engineering/B.A. Part I/B. Sc.
Part I/B.Com.
Part I of the University.
On 7.5.1980, the Punjab University decided that the 12th Standard Examination in the new 10+2+3 system conducted by any recognized Board/Council/University shall be treated as equivalent to the pre University Examination of the University.
These decisions dated 18.4.1980 and 7.5.1980 are Annexures R 2 and R 3 respectively in W.P. 1917 of 1980.
Petitioners 1 to 37 in W.P. 1917 of 1980 had passed the 12th standard examination in the 10+2+3 system of the Central Board of Education and petitioners 38 to 92 in the Writ Petition had been promoted from the 11th standard to the 12th standard in that system.
These 92 petitioners filed W.P. 1917 of 1980 challenging the Punjab University 's decisions (Annexures R 2 and R 3) dated 18.4.1980 and 7.5.1980 contending that in view of the earlier decisions of the University, namely, Annexures P. 2 and P. 3 dated 10.2.1977 and 4.6.1978 respectively they had joined the classes in the plus 2 course with object of joining in the colleges affiliated to the University in the next class of equivalence as also Engineering and Medical Colleges and that the University cannot, therefore, change those decisions by the subsequent decisions, Annexures R 2 and R 3 to their deteriment.
They invoked the doctrine of promissory estoppel in regard to that ground of attack on those two decisions.
The second ground of attack by the petitioners 819 in W.P. 1917 of 1980 was that the decisions Annexures R 2 and R 3 are retrospective in operation and they have taken away their vested right and that the University has no power, either under the Punjab University Act or under any statute, regulation or rule to make any regulation, rule or ordinance adversely affecting their vested rights retrospectively.
The defence of the appellant University was that the decisions, Annexures R 2 and R 3 were taken in the place of the earlier decisions, Annexures P. 2 and P. 3 in the interest of eduction on the ground that the 11th standard examination in the new 10+2+3 system was not a public examination and the standard of education in the schools where that system was in vague was low and even the marking system in the examination was lenient.
The University further contended that even the syllabi in the equivalent examination in the schools and colleges were not the same.
The University stated that the Committee of Experts which was constituted by the Vice Chancellor of the University when the students in the engineering colleges started an agitation, went into the question and submitted a report suggesting the change in regard to equivalence in view of the difference in the syllabi and the deficiency in the teaching imparted in some subjects in the schools.
The University, therefore contended that the new decisions Annexures R. 2 and R. 3 were taken bonafide and are only prospective in operation and that the doctrine of promissory estoppel pleaded by the petitioners in the Writ Petitions does not apply to the University.
The decisions Annexures P. , R. 2 and R. 3 are of the Syndicate which has power to make rules etc under section 20 (5) of the Punjab University Act in the same manner as the Senate has similar power under section 31 of that Act.
The learned Judges of the Division Bench rejected the contention of the petitioners before them that the Syndicate has no power which the Senate has under section 31 of the Act and held that the Syndicate has similar powers under section 20 (5) of the Act They rejected the further contention that there is any bar of promissory estoppel against the University in regard to the.
matter and, however, held that petitioners 1 to 37 had joined the 10+2 course in the Central Schools lying within the territorial jurisdiction of the Punjab University in 1978 and passed the 12th Standard Examination and had planned their education in a particular manner to join the colleges affiliated to the Punjab University in the second year of the 3 year degree course and other courses after passing the 12th standard examination in the plus 2 820 system.
They found that similar is the case of petitioners 38 to 92 in W.P. 1917 of 1980 who had been promoted from the 11th to the 12th standard in the plus 2 system.
They held that Annexure R. 3 will deprive petitioners 1 to 37 and Annexure R. 2 will deprive petitioners 38 to 92 of the right to seek admission in Engineering and Medical Colleges after passing the 12th Standard in the 10+2 system, and Annexures R. 2 and R. 3 take away that right and are retrospective in nature.
In coming to this conclusion the learned Judges of the Division Bench relied very strongly upon the decision of a full Bench of the Punjab and Haryana High Court in Punjab University vs Subhash Chander.
The learned Judges accordingly allowed W.P. 1917 of 1980 on the sole ground, namely, that Annexures R. 2 and R. 3 are bad as being retrospective in operation without an order as to costs and held that Annexures R. 3 and R. 2 will not stand in the way of petitioners 1 to 7 and 38 to 92 respectively before them from seeking admission to higher classes or in Engineering and Medical Colleges on the basis of the old decisions, Annexures P. 2 and P. 3.
The Other Division Bench which heard W.P. 2349 of 1980 allowed that petition without any order as to costs as being covered by the decision in W P. 1917 of 1980.
We are of the opinion that these appeals have to be allowed.
The learned Judges of the High Court allowed the Writ Petitions only on the ground that the new decisions Annexures R. 2 and R. 3 are retrospective in operation and that they cannot affect the writ petitioners before them from seeking admission to higher classes or in Engineering or Medical Colleges on the basis of tile earlier decisions Annexures P. 2 and P. 3, relying mainly upon the decision of the Full Bench in Punjab University vs Subhash Chander (supra).
We have, in our separate judgment delivered today in C.A. 2828 of 1977, which arose out of that Full Bench decision, reversed that decision and held that there is nothing retrospective in the order challenged in that case.
In that case one Subhash Chander was admitted to the integrated M.B.B.S course in the Daya Nand Medical College, Ludhiana in the year 1965.
At the time of his admission, under Regulation 25 read with r. 7.1, a student who fails in one subject/paper was entitled to grace marks at 1 per cent of the total aggregate marks of all the subjects for which he appeared.
But in 1970 the rule was amended to the effect that the grace marks will be 1 per cent of the total aggregate marks for any particular subject of the examination in which he has failed Subhash Chander appeared for the Final M.B.B.S. examination in 1974 and secured 821 106 out of 200 marks in the practical examination and 95 out 200 marks in the theory examination in Midwifery, which was one of the four subjects for which he appeared.
at that time.
He had passed the examinations in the other three subjects for which the total aggregate was 1200 marks.
Under the old rule he would have been entitled to 16 grace marks at 1 per cent of the total aggregate of all the four subjects, namely, 1600 marks.
But he was allowed only 4 grace marks under the new rule being 1 per cent of, the aggregate for the subject in which he had failed namely, Midwifery.
The High Court accepted his contention that amendment of the rule made in 1970 was retrospective in operation though it was made applicable to Subhash Chander only in 1974 merely because he had joined the integrated course in 1965 when the rule regarding the award of grace marks was more liberal.
In allowing the appeal against the judgment of the Full Bench we have held that (there was no question of the rule having any retrospective operative as it was framed in 1970 and it did not say that it was operative from any earlier date and it was applied to Subhash Chander only in 1974.
It could not be stated to be retrospective ill operation merely because it was applied to Subhash Chander who had joined the course in 1965 before the amendment was made in 1970.
In the present case also the new decisions are prima facie prospective in operation and they did not become.
retrospective merely because they subsequently appl ed to students who had already started their educational careers.
We, therefore, allow these appeals but without any order as to costs and set aside the judgments of the High Court and dismiss the Writ Petitions.
However, this decision will not effect the right which might have been granted to the petitioners in the writ petitions on the basis of the judgments of the High Court which have been reversed in these appeals.
S.R. Appeals allowed.
|
With the introduction of the system known as "10 plus 2 plus 3" in the educational institutions in the country, the Association of the Indian Universities decided the equivalence of this 10+2+3 system with the old 11+3 years degree course system still prevalent is some.
States and it suggested that in all States where the pattern of education is such as to require 14 years for the first degree i.e. 11+3 years the new plus 2 stage of the Central Board of Secondary Education be treated as equivalent to a pass in the first year of the three years degree course or for admission to the first year of the two years degree Course.
The appellant Punjab University, decided on 10.2.1971 that the 12th standard examination conducted by the Boards/Universities under the new 10+2+3 system be recognised as equivalent to the Pre Medical/Pre Engineering/B.A. Part I/B.Sc.
Part I/B. Com.
Part I examination according to the combination of the subjects.
Subsequently, on 4.6.1978 the Punjab University decided to treat the 11th standard of the new 10+2+3 system as equivalent to the Pre University examination of the University.
These recognitions of the equivalence of these two examinations continued till the beginning of the year 1980.
But on 18.4.1980 the Punjab University decided that the first year student of the plus 2 course in the 10+2+3 system of the Central Board 's schools who does not take a public examination at the end of the first year.
should not be considered as equivalent to the student who has passed the pre University examination of the Punjab University for joining the Pre Medical/Pre Engineering/B.A. Part I/B. Sc.
Part II B. Com.
Part I of the University.
On 7.5.1980, the Punjab University decided that the 12th Standard Examination in the new 10+2+3 system conducted by any recognised Board/Council/University shall be treated as equivalent to the pre University Examination of the University.
The respondents in CA 1977/80, namely 1 to 37 who had passed the 12th Standard Examination in the 10+2+3 system of the Central Board of Education and respondents 38 to 92 who had been promoted from the 11th Standard to the 12th Standard in that system challenged the two decisions 816 of the Punjab University dated 18.4.1980, and 7.5.1980 by filing W.P. 1917 of 1980 contending that in view of the earlier decisions of the University namely, Annexures P. 2 and P. 3 dated 10.12.1977 and 4.6.1978 respectively they had joined the classes in the plus 2 course with the object of joining the colleges affiliated to the University in the next class of equivalence as also Engineering and Medical Colleges and that the University cannot, therefore, change those decisions by the subsequent decisions, (Annexures R. 2 and R. 3) to their detriment.
They invoked the doctrine of promissory estoppel in regard to that ground of attack on those two decisions.
The second ground of attack by the petitioners in W.P. 1917 of 1980 was that the decisions Annexures R. 2 & R. 3 are retrospective in operation and they have taken away their vested right and that the University has no power, either under the Punjab University Act or under any statute, regulation or rule to make any regulation rule or ordinance adversely affecting their vested rights retrospectively.
The learned Judges of the Division Bench rejected the contention of the petitioners before them that the Syndicate has no power which the Senate has under section 31 of the Act and held that the Syndicate has similar powers under section 20 (5) of the Act.
They rejected the further contention that there is any bar of promissory estoppel against the University in regard to the matter and, however, held that petitioners 1 to 37 had joined tho 10+2 course in the Central School lying within the territorial jurisdiction of the Punjab University in 1978 and had passed the 12th Standard Examination and had planned their education in a particular manner to join the colleges affiliated to the Punjab University in the second year of the 3 year degree course and other courses after passing the 12th standard examination in the plus 2 system.
They held that Annexure R. 3 will deprive petitioners I to 31 and Annexure R. 2 will deprive petitioners 38 to 92 of right to seek admission in Engineering and Medical Colleges after passing the 12th Standard in the 10+2 system.
and Annexures R. 2 and R. 3 take away that right and are retrospective in nature.
In coming to this conclusion the learned Judges of the Division Bench relied very strongly upon the decision of the Full Bench of the Punjab & Haryana High Court in Punjab University vs Subhash Chander, In view of their decision in W.P. 1911 of 1980, another Bench allowed another W P. 2349 of 1980 filed by the respondents in C.A. 2667/83.
Hence the appeals by the University.
Allowing the appeal, the Court.
^ HELD: 1.
The decisions dated 10.12.1977, 4.6.1978, 18.4.1980 and 7.5.1980 respectively are intra vires the powers of the Syndicate to make rules etc.
under section 20(5) of the Punjab University Act in the same manner as the Senate can do under section 31 of that Act.
[819F] 2.
In view of the decision of the Supreme Court dated 17.5 1984 rendered in Subhash Chander vs Punjab University (Civil Appeal No. 2828/ 1977 arising out of and reversing the said decision of the Punjab High Court relying on which the two Judgments now under 817 appeal, were passed, in the present case also the two impugned decisions are prima facie prospective in operation and they did not become retrospective merely because they subsequently applied to students who had already started their educational careers.
However, this decision will not effect the right which might have been granted to the petitioners in the writ petitions on the basis of the Judgments of the High Court which have been reversed in these appeals [820F; 821E F]
|
Civil Appeal No. 1746 of 1980.
Appeal by Special leave from the Judgment and Order dated the 4th September, 1979 of the Punjab and Haryana High Court in Civil Writ Petition No. 2780 of 1979.
N.D. Garg, S.K. Bisaria and T.L. Garg for the appellant.
Girish Chandra for Respondent No. 3.
The Judgment of the Court was delivered by CHANDRACHUD, C. J.
In April 1962, the appellant was appointed as a clerk in the Hoshiarpur Central Co operative Bank Ltd., which is respondent 3 to this appeal.
On August 10, 1976 he was transferred as 'Branch Manager ' of the Dholbaha branch of the Bank.
On October 22, 1977 one Labh Singh s/o Harnam Singh opened an account in the Dholbaha Branch under an introduction given by one Bahram Singh.
Two days later, Labh Singh deposited in that account a draft in the sum of Rs. 5,000 issued by the Royal Bank of Canada on the Chartered Bank, New Delhi.
The amount due on the draft was credited by the Bank in Labh Singh 's account on November 14.
On that very day, Labh Singh withdrew a sum of Rs. 2,500 from his account.
Three days later, he withdrew the remaining amount of Rs. 2,500.
Soon thereafter a person claiming to be the real Labh Singh in whose favour the draft was issued by the Royal Bank of Canada, complained to the Chartered Bank, New Delhi, that the draft was stolen and that the money due thereon was fraudulently collected by the person in whose name an account was opened in the Dholbaha branch.
On November 10, 1978, the Executive Committee of respondent 3 Bank resolved that an enquiry be held for fixing responsibility in the matter of the fraudulent encashment of the draft.
The enquiry was held by the Chief Executive officer, Satish Chander Dutt, who was of the rank of the Assistant Registrar in the Co operative department.
As a result of the report submitted by him, the appellant was dismissed from service on December 30, 1978.
The demand raised by the appellant in regard to his dismissal was referred by the Government of Punjab to the Conciliation 319 officer, who recommended that the appellant 's case should be forwarded for adjudication on the question whether his dismissal from service was justified.
The Labour Commissioner of Punjab, exercising the powers of the State Government, declined to refer the dispute for adjudication on the ground that the appellant was not a workman.
The appellant filed a Writ Petition in the High Court of Punjab and Haryana, challenging the decision of the Labour Commissioner, but that Writ Petition was dismissed summarily.
The appellant has filed this appeal by special leave, challenging the decision of the High Court and of the Labour Commissioner.
The State of Punjab and the Labour Commissioner are respondents 1 and 2 to this appeal.
The grievance made by Shri N. D. Garg, who appears on behalf of the appellant, that the Labour Commissioner ought to have given reasons in support of his decision, is justified.
All that the Labour Commissioner has stated in the order is that the post held by the appellant did not fall "within the category of workman".
This, really, is the conclusion to which the Labour Commissioner came but no reasons are given to justify that conclusion.
We are of the opinion that the Labour Commissioner ought to have given reasons why he came to the conclusion that the appellant is not a "workman" within the meaning of section 2 (s) of the .
We could have remanded the matter to the Labour Commissioner asking him to state his reasons why the appellant is not a workman but, that will entail delay.
Instead, it is advisable from the point of view of not only the appellant but the Bank also that a deference is made either to the Labour Court or to the Industrial Tribunal under section 12 (5) of the , for adjudication of the question as to whether the dismissal of the appellant from the services of the Bank is legal and justified.
Accordingly, we direct that the 2nd respondent, the Laboure Commissioner, Chandigarh, to whom the State Government has delegated its powers under section 12 of the Act shall make a reference to either of the two authorities as he considers proper.
At one stage, we wanted to decide for ourselves the question as to whether the appellant is workman within the meaning of section 2(s) of the .
Considering the time that has gone by, we wish that we could have decided that question but, on the material before us, we find it difficult to do so.
The case of the appellant is that he is a mere matriculate who now possesses a some 320 what exalted and misleading designation of a 'Branch Manager. ' According to him, there are 58 Branches of the Bank in the District of Hoshiarpur, in 29 out of which there are only two officers, one of whom is called the Branch Manager and the other the Cashier.
He contends that the Branch Manager has no administrative or discretionary powers to exercise and is not employed in a supervisory capacity.
His case is that he is a clerk mis called the Branch Manager.
The contention of respondent 3 Bank, on the other hand, is that not only was the appellant 's remuneration in excess of Rs. 500 per mensem but, being employed in a supervisory capacity, he exercised functions mainly of a managerial nature.
It is alleged that he was vested with the power of superintending the working of the office, maintaining registers, sanctioning loans, receiving deposits, borrowing within the limits sanctioned by the Registrar, incurring contingent expenditure, attending meetings of the Board of Directors, the Executive Committee and other Committees constituted under the bye laws and certifying copies of entries in the banker 's books.
The grievance of the appellant is that the Bank did not raise any contention before the Labour Commissioner that he was not a workman within the meaning of the Act with the result that, he had no opportunity to meet that case.
The parties have included in the paper book before us some material bearing on that question but it will be unsatisfactory to decide that question without proper evidence.
After all, the question as to whether the appellant is a 'workman ' is basically a question of fact.
That is why, on the basis of the stray material before us, we do not consider it advisable to decide that question.
When this appeal was argued before us, a prosecution was pending in the Court of the learned Judicial Magistrate, Hoshiarpur, in which three persons were charged for impersonation and cheating in connection with the fraudulent encashment of the draft which led to the dismissal of the appellant.
The appellant was not only not included in the array of the accused in that prosecution but the judgment of the learned Magistrate dated August 19, 1981 shows that during the course of investigation, it was found that the appellant was not responsible for the fraud.
In fact, the appellant was examined as prosecution witness No. 4 in that case.
Two out of the three accused were discharged by the learned Magistrate while accused No. 1, Sham Lal, was convicted under sections 419 and 420 of the 321 Penal Code and was sentenced to undergo rigorous imprisonment for two years and to pay a fine of Rs. 500.
At the instance of the Bank, a reference was made to an Arbitrator under section 55 of the Punjab Co operative Societies Act, 1961, for deciding the question whether the appellant is liable to repay the amount of Rs. 5,000 to the Bank, which was fraudulently withdrawn by Labh Singh.
By an Award dated November 23, 1982 the Arbitrator dismissed the reference, holding that the appellant was not responsible for the fraudulent encashment of the draft.
The Arbitrator observed that the Bank could recover the amount from Sham Lal, who was convicted in the criminal proceedings, but not from the appellant.
We have referred to these two matters, the prosecution and the arbitration proceedings, in order that the Bank may examine whether it is not possible to drop the proceedings against the appellant and take him back in employment.
If the Bank finds that the appellant was merely negligent in the discharge of his duties as a Branch Manager, it may consider whether the appellant could be taken back in employment without the payment of full back wages.
For these reasons, we allow the appeal and direct respondent No. 2, the Labour Commissioner, Chandigarh, to make a Reference under section 12 of the , as directed by us.
The reference shall be make forthwith and it shall be disposed of within two months after its receipt.
There will be no order as to costs.
M.L.A. Appeal allowed.
|
The appellant was dismissed from the post of "Branch Manager" by respondent No. 3, Bank, after an inquiry relating to fraudulent encasement of a draft by one Labh singh.
His demand in regard to his dismissal, was referred by the Govt.
of Punjab to the Conciliation Officer, who recommended that the appellant 's case should be forwarded for adjudication on the question whether his dismissal from service was justified.
The Labour Commissioner, exercising the powers of the State Government, declined to refer the dispute to the Labour Court for adjudication but without giving any reasons for his conclusion that the appellant was not a "workman".
The appellant challenged before the High Court the decision of the Labour Commissioner in writ petition which was dismissed summarily.
Hence this appeal.
The grievance of the appellant is that the Labour Commissioner ought to have given reasons in support of his decision.
Allowing the appeal, ^ HELD: 1.
All that the Labour Commissioner has stated in the order is that the post held by the appellant did not fall within the category of "workman" but no reasons are given to justify that conclusion.
He ought to have given reasons why he came to the conclusion that the appellant is not a "workman" within the meaning of section 2(s) of the .
[319 D E] 2.
In the instant case, the Court keeping in view that remanding the matter to the Labour Commissioner for giving his reasons will entail delay, directed the Labour Commissioner, Chandigarh to make a reference either to the Labour Court or to the Industrial Tribunal section 12(5) of the Industrial 318 Disputes Act 1947 for adjudication of the question as to whether the dismissal of the appellant from the service of the Bank is legal and justified.
[319 E E]
|
Appeal No. 213 of 1956.
Appeal from the judgment and decree dated Septem.
ber 22, 1954, of the Allahabad High Court in Special Appeal No. 8 of 1954 arising out of the judgment and decree dated January 6, 1954 of the said High Court in Civil Miscellaneous Writ Petition No. 651 of 1953.
section P. Sinha and section N. Mukherjee, for the appellant.
G. G. Mathur and C. P. Lal, for respondent No. 2.
756 1957.
March 20.
The Judgment of the Court was delivered by KAPUR J.
The ground on which the appellant company seeks to have the order of the Industrial Tribunal set aside is that no industrial 'dispute existed within the meaning of the expression as used in the U.P. (XXVIII of 1947) (hereinafter called the U.P. Act) and consequently the U.P. Government had no power to make the reference in question.
I Industrial Dispute ' is defined in section 2 of the U.P. Act as having the same meaning assigned to it as in section 2 of the (here inafter termed the Central Act).
There this expression has been defined in section 2 (k) to mean : " any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
" The controversy between the parties arose in the following circumstances: Tajammul Hussain, respondent No. 3 was employed as a lino typist by the appellant company.
He was dismissed on May 8, 1952, on, allegations of incompetence under r. 12 (ii) of the Standing Orders of the appellant company.
It was alleged that the dismissal of Respondent No. 3 was welcomed by his co workers and other workmen in the employ of the appellant company and they made no grievance of it, nor did they espouse his cause.
The case of respondent No. 3 was not taken up by any union of workers of the appellant company nor by any of the unions of workmen employed in similar or allied trades, but the U.P. Working Journalists Union, Lucknow, with which respondent No. 3 had no connection whatsoever, took the matter to the Conciliation Board, Allahabad.
Ultimately, the U.P. Government made a reference to the Industrial Tribunal on June 3, 1953, by notification; the prefatory words of which are: 757 " Whereas an industrial dispute in respect of the matters hereinafter specified exists between the concern known as Newspapers Ltd., Allahabad and its workmen; and whereas in the opinion of the Governor it is necessary so to do for the maintenance of public order and I for maintaining employment.
One of the questions referred was: " ' Whether the services of Sri Tajammul Hussain Lino Operator were wrongfully terminated by the Management On February 13, 1953, the State Industrial Tribunal at Allahabad decided in favour of respondent No. 3 and ordered his reinstatement " without break of continuity of service " and also ordered the payment of his wages for the period during which he "remained dismissed".
An appeal was taken by the appellant company to the Labour Appellate Tribunal, who by its ,order dated February 24, 1953, affirmed the order of the Tribunal with costs.
The appellant company then moved a petition in the Allahabad High Court under article 226 of the Constitution but this was dismissed by Bhargava J. on January 6, 1954, and a Special appeal against this judgment was also dismissed.
The appellant company has come up in appeal with a certificate under article 133 (1) (c) of the Constitution.
The controversy which arises in this case is whether a dispute between an employer and a single workman falls within the definition of I industrial dispute ' as used in the U.P. Act.
In order to resolve this controversy, it is necessary to refer to the scheme of the U.P. Act and the relevant rules made thereunder.
The preamble of the Act runs: " to provide for powers to prevent strikes and look outs, and for the settlement of industrial disputes and other incidental matters ".
Section 3 of the Act confers certain powers on the State Government for the purpose of prevention of strikes, lock outs, etc.
The portion of this section relevant for the purpose of this appeal reads 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 758 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 (c) for appointing industrial courts; (d) for referring any industrial dispute for conciliation or adjudication in the manner provided in the order (g) for any incidental or supplementary matters, which appear to the State Government necessary or expedient for the purpose of the order; " Under section 23 of the Act, the State Government can make rules consistent with the Act for giving effect to the provisions of the Act.
Under clauses (b), (c), (d) and (g) of section 3 and under section 8 of the U.P. Act, rules governing Conciliation Boards and Industrial Tribunals in U.P. were promulgated by Notification No. 615 (LL) XVIII 7 (LL) 1951, dated Lucknow, March 15, 1951.
Rule 4 deals with the reference of disputes to Conciliation Boards.
The relevant portions of this rule are: ,,Any workman or an employer or a registered association or trade union of employers or registered trade union of workmen or any federation of such associations or trade unions or where no registered trade union of workmen exists in any particular concern or industry, the representatives not more than 5 in number of the workmen in that concern or the industry, duly elected in this behalf by a majority of the workmen employed in that concern or industry, as the case may be, at a meeting held for the purpose, may by application in writing move a Conciliation Officer of the area for settlement of any industrial dispute by conciliation.
The application shall clearly state the industrial dispute or disputes.
" Rule 5 deals with proceedings and the power of inclusion of other undertakings.
The proviso to this rule is: " Provided that if the Board of its own motion or on an application made to it, is of the opinion that any question involved in any such dispute or matter affects or is likely to affect more than one workman in the same concern or industry or business or more 759 than one concern in the same industry or business, constituted within the jurisdiction of the Conciliation Board, it shall include in its proceedings relating to such dispute or order every such workman or concern or where there is a registered trade union covering the, majority of such concerns of workmen, such trade unions." Rules 7 to 11 A deal with Industrial Tribunals.
Rule 10 gives power to the Government to make a reference of any dispute to the Industrial Tribunal either on its own motion or after considering the Report of the Conciliation Board made under r. 6.
Rule 15(1) which deals with the representation of parties to the dispute provides: " The parties may in their discretion be represented before a Board or Tribunal or an Adjudicator (1) In the case of a workman by (a) an officer of a registered trade union of which he is a member; (b) an officer of a federation of trade unions to which the trade union referred to in sub clause (a) is affiliated ; (c) Where the workman is not a member of any registered trade union, by an officer of any registered trade union connected with, or by any other workman employed in the same industry or business, if so authorised in writing by the workman.
" The language of section 36(1) of the Central Act is almost identical.
Rule 27 prohibits strikes and look outs; and r. 28 gives finality and conclusiveness to the orders made or directions given.
The use of the word 'workmen ' in the plural in the definition of industrial dispute ' does not by itself exclude the applicability of the Act to an individual dispute because under a. 13(2) of the General Clauses Act subject. . . (2) words in the singular shall include the plural and vice versa," 760 But in order to get its true import it is necessary to view the enactment in retrospect, the reasons for enacting it, the evils it was to end and the objects it was to subserve.
The Act has therefore to be viewed as a whole and its intention determined by construing all the constituent parts of the Act together and not by taking detached sections or to take one word here and another there.
Exposition " ex visceribus actus " is applicable.
Lincoln College 's Case (1).
So construed the provisions of the U.P. Act show that the machinery of the Act has been devised with the object of maintaining industrial peace so as to prevent interference with public safety or public order or with the maintenance of supplies and services essential to the life of the community or of employment.
The Act is based on the necessity of achieving collective amity between labour and capital by means of conciliation, mediation and adjudication.
The object of the Act is the prevention of industrial strife, strikes and lock outs and the promotion of industrial peace and not to take the place of the ordinary tribunals of the land for the enforcement of contracts between an employer and an individual workman.
Thus viewed the provisions of the Act lead to the conclusion that its applicability to an individual dispute as opposed to dispute involving a group of workmen is excluded unless it acquires the general characteristics of an industrial dispute, viz., the workmen as a body or a considerable section of them make common cause with the individual workman and thus create conditions contemplated by section 3 of the U.P. Act which is the foundation of State Governmental action under that Act.
The other provisions which follow that section only subserve the carrying out of the objects of the Acts specified therein.
The use of the word workman in the singular in rr. 4, 5 and 15 forms the basis of the argument for the inclusion of an individual dispute in the expression industrial dispute.
But this suffers from more infirmities than one.
Rule 4 authorises a workman to (1) ; 761 apply to a Conciliation Officer for the settlement of an industrial dispute.
The meaning sought to be given to this word is inconsistent with the language of the latter part of that rule; or where no registered trade union of workmen exists in any concern or industry, the representatives not more than 5 in number of the workmen. . duly elected.
" The first proviso to r. 5 is no surer foundation for the argument because in the context it can only be interpreted to mean that, should there be an industrial dispute then all workmen who may individually be the cause of the dispute or are to be affected by its decision should get notices of the proceedings.
Similarly, r. 15 only provides for the representation of " a workman " even if he is only one by an officer of a trade union or other person mentioned in the rule.
Besides, section 13(2) of the General Clauses Act as to the interpretation of the singular and the plural consider ably reduces the efficacy of the argument, which altogether loses its force in view of r. 26 which is as follows : " During the pendency of any conciliation proceeding or proceedings before the Tribunal or an Adjudicator in respect of any dispute an employer shall not (a) alter to the prejudice of the workmen concerned in such dispute the conditions of service applicable to them immediately before the commencement of such proceedings or (b) discharge or punish, whether such punishment is by dismissal or otherwise, any workman concerned in such dispute save with the express permission in writing of a Conciliation Officer of the area concerned irrespective of the fact whether the dispute is pending before a Board or the Tribunal or an Adjudicator.
" The use of the words " workmen" and " workman in the above rule is indicative of the intention of the Act being applicable to collective disputes and not to individual ones, and this is fortified by the finality and the binding effect to awards by r. 28 and more speciall.v by a. 18 of the Central Act which makes 98 762 awards binding not only on the individuals present or represented but on all the workmen employed in the establishment and even on future entrants.
Another objection to reading these rules in the manner above suggested is that it would be tantamount to enlarging the scope of the expression 'industrial dispute ' and the powers conferred on the State Government under section 3 of the U. P. Act.
The executive cannot under the power of framing rules and regulations clothe itself with powers which the Statute itself does not give and which are inconsistent with the interpretation put on the expression 'industrial dispute '.
The cardinal rule in regard to promulgation of bye laws or making rules is that they must be legi fidei rationi consona, and therefore all regulations which are contrary or repugnant to statutes under which they are made are ineffective.
If the expression I industrial dispute ' as ordinarily understood and, construed conveys a dispute between an employer on the one hand and the workmen acting collectively on the other, then the definition of those words cannot be widened by a statutory rule or regulation promulgated under the Statute or by Executive fiat.
I The notification in the present case was under section 3(c), (d) and (g) and under section 8 which deal with (c) the appointment of industrial Courts, (d) referring any industrial disputes and (g) incidental or supplementary matters.
The Executive may in the exercise of these powers make such regulations which are necessary but under that garb it cannot extend the definition of the term industrial disputes, nor is this extended meaning necessary to subserve the objects of the Act.
I In our opinion therefore rules 4, 5 and 15 of the Rules cannot be a valid foundation for sustaining the argument raised that an individual dispute was within the definition of 'industrial dispute '.
Ordinarily, an award of a tribunal binds or affects the rights of parties to the proceedings but awards of Industrial Tribunals have extended implications and may affect the rights of all workmen of a concern or undertaking end even the future entrants.
This doctrine of 763 representation which enlarges the meaning of 'parties ' in the U.P. & Central Acts is an essential idea associated with industrial disputes and support , collectiveness as opposed to individualism.
See Latham C. J. in Metal Trades Employers Association vs Amalgamated Engineering Union(1).
Then there is the prohibition under r. 26 of the U.P. Act and section 33 of the Central Act against any change in conditions of service during the pendency of the proceedings the object of which is to ensure discipline and industrial truce during that period which also supports the basic idea of collectiveness in 'industrial disputes '.
In Central Provinces Transport Services Ltd. V. Raghunath Gopal Patwardhan (2), this Court observed that decided cases in India disclose three views as to the meaning of 'industrial dispute ' (i) a dispute between an employer and a single workman cannot be an 'industrial dispute '; (ii) it can be an industrial dispute; and (iii) it can not per se be an industrial dispute but may become one if taken up by a trade union or a number of workmen.
This Court discussed the scope of industrial dispute as defined in section 2(k), of the Central Act, and after referring to the conflict of judicial opinion as to its applicability to the case of a dispute between an employer and a single workman further observed: of the last of the three views stated above, and there is considerable reason behind it.
Notwithstanding that the language of section 2(k) is wide enough to cover a dispute between an employer and a single employee, the scheme of the does appear to contemplate that the machinery provided therein should be set in motion, to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject of an adjudication under the Act, when the same had not been taken up by the union or a number of workmen." (1) ; (2) ; 764 Although the question did not directly arise, this Court in D .
N. Banerji vs P. R. Mukherjee and others(1) discussed the meaning of the expression 'industrial dispute ' and was of the opinion that it "conveys the meaning to the ordinary mind that the dispute must be such as would affect large groups of workmen and employers ranged on opposite sides.
But at the same time, having regard to the modern conditions of society where capital an labour have organised themselves into groups for the purpose of fighting their disputes and settling them on the basis of the theory that in union is strength, and collective bargaining has come to stay, a single employee 'section case might develop into an industrial dispute, when as often happens, it is taken up by the trade union of which he is a member and there is a concerted demand by the employees for redress".
This view is in consonance with the basic idea underlying modern industrial legislation.
The interpretation given to the corresponding phrase "trade dispute" in English law and "industrial dispute" in Australian Law also accords with this view and in the absence of an express provision to the contrary or necessary intendment there is no reason to give a different interpretation to the expression in the Indian Statute.
According to English decisions an individual dispute of a workman is not included in 'trade dispute ' which corresponds to 'Industrial Dispute ' in the Indian Act.
In the English Trade Disputes Act of 1906 and 1919 as also in Reg.
58 AA of the Defence (General) Regulation, 1939, 'trade dispute ' was defined in language very similar to 'industrial dispute ' in the Indian Statute.
Dealing with a trade dispute, Lord Shaw in Conway v, Wade (2) said,: " But I cannot see my way to hold that "trade dispute" necessarily includes accordingly every case of person al difference between any one workman and one or more of his fellows.
It is true that after a, certain stage even such a dispute, although originally grounded, (1) ; , 310.
(2) , 520.
765 it may be, upon personal animosity, may come to be a subject in which sides are taken, and may develop into a situation of a general aspect containing the characteristics of a trade dispute; but until it reaches that stage I cannot hold that a trade dispute necessarily exists." Lord Wright observed in National Association of Local Government Officers vs Bolton Corporation (1) " I think the same may be said of the Industrial Courts Act and of reg.
58 AA, in both of which the word 'trade ' is used in the very wide connotation which it bears in the modem legislation dealing with conditions of employment, particularly in relation to matters of collective bargaining and the like. " Ex parte Keable Press Ltd.(2) was an instance of an individual dispute developing into a 'trade dispute ' because.
of the strike by a union to enforce the rein statement of dismissed workman.
That was how this term (trade dispute) was interpreted by the Court of Appeal in R. vs National Arbitration Tribunal(3) after taking into consideration the definition of the word 'dispute '.
In Australian cases also, without specific reference to any definition of the phrase the courts have excluded individual disputes from the scope of industrial disputes.
In Jumbunna Coal Mine vs Victorian Coal Miners Association (4), Griffths C.J. observed: " An industrial dispute exists where a considerable number of employees engaged in some branch of industry make common cause in demanding from or refusing to their employers (whether one or more) some change in the conditions of employment which is denied to them. . . . . . . . . " Similarly in Federated Saw Mills & Co. Employees of Australasia vs James Moore & Son Proprietory Ltd. (5), Griffths C.J. gave the characteristics of an industrial dispute as follows: " It is necessary at the outset to consider the meaning which the term 'industrial dispute ' conveyed (1) , 185.
(2) (3) (4) [1908] 6 C.L.R. 309, 332.
(5) ; , 487, 488.
766 in 1900 to the, minds of persons conversant with the English language. . . . "The word 'industrial denotes two qualities which distinguish them from ordinary private disputes between individuals, namely (2) that on one side at least of the dispute the disputants are a body of men acting collectively and not individually.
" Isaacs J. in George Hudson Ltd. vs Australian Timber Workers ' Union(1) stated: "The very nature of an 'industrial dispute ', as distinguished from an individual dispute, is to obtain new industrisl conditions, not merely for the specific individuals then working It is & 'battle by the claimants, not for themselves alone and not as against the respondents alone, but by the claimants so far.
as they represent their class According to Griffths C.J. "The term "industrial dispute" connotes a, real and substantial difference having some element of persistency, and likely, if not adjusted, to endanger the industrial peace of the community".
Vide Federated Saw Mills Case(2) at p. 488.
The same meaning was attached to the expression by Latham C.J. in Metal Traders Employers Association vs Amwlgamated Engineering Union(3) at p. 403: "Industrial disputes are essentially group contests there is always an industrial group on at least one side.
A claim of an individual employee against his employer is not in itself an industrial dispute We shall now refer to the Indian decisions which bear on this question.
Rajamannar C.J. in Kandan Textile Ltd. vs The Industrial Tribunal,,Madras and another(4) held that the definition of industrial dispute is wide enough to cover a dispute between an employer and an individual workman but taking into consideration section 18 of the Central Act he was of the opinion that such an extended definition cannot be given to it in section 2(k) of the Central Act.
Mack J. agreed with the decision of Rajamannar C. J. but he said that the case of an English language.
, (1) (1923] ; , 441.
(2) ; , 487, 488.
(3) ; , 403.
(4) A.I.R. 1951 Madras 616.
767 individual workman if taken up by the worker 's union makes such a dispute an industrial dispute.
In that case 1 1 items of difference were referred to the Industrial Tribunal.
, One of the items in dispute was the wrongful removal of a workman, Sundaram by name.
In the ', High Court an objection was taken to the legality of the award on the ground that no industrial dispute existed and that there was no material before the Government on the basis of which it could make a reference.
It was held that the dispute as to a single workman was not an industrial dispute.
Kandan Textile Ltd. case (1) was followed in United Commercial Bank, Ltd. vs The Commissioner of Labour, Madras (2) which was a case under section 41 of the Madras Shops and Establishments Act and the right of appeal given to an individual employee against the order of the employer dispensing with his services under section 41(2) of Madras Shops and Establishments Act was challenged on the ground that it had been taken away by the Central Act.
It was held that an individual worker had the right to appeal.
Vishwanatha Sastri J. in his judgment referred with approval to the distinction made between an individual dispute and an industrial dispute in Kandan Textile Ltd. vs Industrial Tribunal, Madras (supra).
The second view that such a dispute falls within the definition of the word "industrial dispute" is supported by a decision of a Full Bench of the Labour Appellate Tribunal Swadeshi Cotton Mills Co. Ltd. vs Their Workmen (3) There the question was mainly decided on the basis of section 33 A of the Central Act (introduced in 1950) which gives the right to an individual workman dismissed or dealt with contrary to section 33 of the Act during an industrial dispute to raise the matter before a tribunal.
The introduction of section 33 A would not alter the construction to be placed on the phrase 'industrial dispute '.
On the contrary it supports the view that an individual dispute is not comprised in that phrase.
In view of what has been said above, we are of the opinion that in so far as that case lay& down (3) 768 that a dispute raised by an individual workman as to his personal grievance is within an industrial dispute, it cannot be said to have been correctly decided.
The cases which support the third view are the following: J. Chowdhury vs M. C. Bannerjee (1) Was a case in which a lino operator was removed from service on the ground of his negligence and arrears of work.
The matter was referred to the Industrial Tribunal under the Central Act.
The Management moved the High Court under article 226 of the Constitution and section 45 of the Specific Relief Act and it was held that the Tribunal had no jurisdiction to entertain the matter as on a perusal of the various sections of the Central Act including sections 10 and 18 the dispute of an individual workman was not covered by the term industrial dispute. ' In Bilash Chandra Mitra vs Balmer Lawrie & Co. a suit was brought for the recovery of arrears of wages on the basis of an award of an Industrial Tribunal and one of the issues raised was ' whether an 'individual dispute ' fell within 'industrial dispute '.
Following the judgment in I. Chowdhury vs M. C. Bannerjee (1), Bose J. held that it did not.
Another case in which this view was held is N. 1.
Assurance Co. vs C. G. I. Tribunal (3).
There the Government referred the question of dismissal of an employee of an Assurance Co. and it was not proved that his case was taken up by the employees association.
The same view was adopted in Standard Vacuum Oil Co. vs Industrial Tribunal (4).
In Lakshmi Talkies, Madras vs Munuswami and Others (5), Balakrishna Ayyar J. held that an industrial dispute ' arises where a case of an individual workman is espoused by a union.
The same view was taken in Lynus & Co. vs Hemanta Kumar Samanta (6).
The view taken in these cases is in accord with the interpretation we have put on the expression 'Industrial dispute ' as defined in the U. P. Act or the Central Act.
(1) (2) [1953] A? C.W.N. tog.
(3) [l953] I.L.R. 32 Patna 181 (4) I.L.R. [1952] Trav.
Co. 432.
(5) [1055] L.L.J. 477. '(6) , 769 Taking into consideration the whole tenor of the Act and the decisions of this Court the decided cases to the extent that they take a contrary view, i.e., an individual dispute is comprised in an 'industrial dispute ' must unless there is something peculiar as to facts, be In spite of the fact that the making of a reference by the Government under the is the exercise of its administrative powers, that is not destructive of the rights of an aggrieved party to show that what was referred was not an 'industrial dispute ' at all and therefore the jurisdiction of the Industrial Tribunal to make the award can be questioned, even though the factual existence of a dispute may not be subject to a party 's challenge.
State of Madras vs C. P. Sarathy (1), It may also be noted that the notification issued by the U. P. Government on January 3, 1953, already quoted proceeds on the assumption that a dispute exists between the "employer and his workmen".
The points of dispute in the reference, however, comprise the wrongful termination of the service of only Tajammul Hussain, a lino operator.
The words used in the first part of the notification show that the Government was labouring under the misapprehension that this dispute was between the employer on the one hand and his workmen on the other, which, in fact it was not.
Tajammul Hussain could not be termed work , men (in the plural) nor could the U. P. Working Journalists Union be called "his workmen" nor is there any indication that the individual dispute had got transformed into an industrial dispute.
The very basis, therefore, of the reference was bad and must be held to be so.
We would, therefore, allow this appeal with costs.
Appeal allowed.
(1) , 347.
|
A dispute between an employer and a single workman does not fall within the definition of " industrial dispute " under the U.P. industrial Disputes Act, 1947.
But though the applicability of the Act to an individual dispute as opposed to a dispute involving a group of workmen is excluded, if the workmen as a body or a consicrerable section of them make common cause with the individual workman then such a dispute would be an industrial dispute.
755 Central Provinces Transport Service Ltd. v Raghunath Gopal Patwardhan, ; and D. N. Banerji vs P. R. Mukherjee; , , referred to.
Swadeshi Cotton Mills Co. Ltd. vs Their Workmen, (1953) I L.L.J. 757, in so far as it decided that a dispute raised by an, individual workman is within an industrial dispute, disapproved.
Case law reviewed.
The third respondent was employed as a lino typist by the appellant company but on allegations of incompetence he was dismissed from service.
His case was not taken up by any union of workers of the appellant company nor by any of the unions of workmen employed in similar or allied trades, but the U.P. Working journalists Union, Lucknow, with which the third respondent had no connection took the matter to the Conciliation Board, Allahabad, and ultimately the Government made a reference to the Industrial Tribunal by a notification in which one of the points for determination referred was as to whether the services of the third respondent were wrongfully terminated by the management.
The legality of the reference was challenged by the appellant and the question was raised as to whether a dispute between an employer and a single workman falls within the definition of "industrial dispute" under the U.P.
Held, that the reference was bad because the dispute was not between the employer on the one hand and his workmen on the other, nor could the U.P. Working journalists Union be called " his workmen ", within the meaning of the U. P.
Though the making of a reference by the Government under the Act is the exercise of its administrative powers, an aggrieved party can question the jurisdiction of the Industrial Tribunal to show that what was referred was not an industrial dispute.
State of Madras vs C. P. Sarathy, , referred to.
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Civil Appeal Nos.
2332 1970, 2432,2784 2877 of 1981 and 7447 to 7497 of 1983 Appeals by Special leave from the Judgment and Order dated the 19th June, 1981 of the Madras High Court in Writ Petition Nos. 338, 4263 of 1977, 4028/80, 2662/78, 4056, 2171, 2170/80, 4136/78,4339/80, 2028/78,2085/80, 2178/78,1590/76,3164, 2426/80, 2122/80, 2452/78, 4414/80, 2073/78, 1598/76, 1596/76, 4257/80, 614/79, 4057, 4254, 4411, 1732/80, 1597/76, 4259/80, 2664/78, 4252, 2175/80,2058/78, 3972/80, 26/79,4410/80,1592/76,3571, 4259, 4058, 3570, 2007/80,2169/78, 2135, 4331/80, 2665/78, 2006, 4255, 4022/80, 1595/76, 4054/80, 1594/76, 4026,2174/80, 2168/78, 3567/80,2172/78, 2133/80, 2469/78, 5470/78, 1593/76, 3569/80, 1551/76, 1591/76, 2008, 3156, 4029, 3165, 4055, 4409, 4408, 2427, 3412, 4024,4023,4412,3166/80,2663/78, 4225, 2134, 3157,4253/80, 2454/78,4027/80,2471/78, 1959/80,1635/76, 2453/78,2172,3163/80,2461/78,3158, 4053,4413/80,2073/78, 3568, 2005/80,1542, 1540, 1378, 1377/78,492, 339,340/77, 1541,1379/78, 3041/77,226/79, 3050,3056,3034 3038,3037/77,3767,4261,3058/77,168/79, 3766, 3039/77,3048, 3035, 3047, 4262, 4259, 3988, 3053, 4260, 4383/77,265/79, 4258, 2967,3055,3052, 3280, 3033, 3032, 3036, 3051,3049,3040,4381,4382, 3042/1977 & 264 of 1979.
WITH Civil Appeal Nos.
2985 87, 3398 3410 of 1981, 369 410, 450 59, 3091 3092 of 1982, 60/83, 2560/83, 10778 of 1983, Appeals by Special leave from the Order of the Appellate Authority, Under the payment of Gratuity Act, Madras dated 29th May, 31st January, 27th February, of 1981, 17th, & 30th April 16th December & 20th December, 1982 in P.G.A. Nos. 24/81, 31/80,90/80,138,132, 131, 134, 139, 129, 137, 92, 133,91,136, 135, of 1980, 19 23, 25 28, 30,29,31 39 of 1981, 61, 69, 101, 98,66, 73, 50, 63, 60, 32, 33, 34, 35, 36, 57, 58, 59, 62, 64, 65; 67,68,74 79, 97, 668 99, 100 & 49 of 1980 2 & 6 of 1981, 458/81, 48/82 and 12 of 1981 AND Civil Appeal No. 2559 of 1984.
Appeal by Special leave from the Judgment and Order dated 22nd March, 1984, of the Appellate Authority and the Regional Labour Commissioner (Central) Madras Under the in Appeal No 17 of 1983.
AND Special Leave Petition (Civil) Nos.
1819, 3324, 11382 84, 14754 of 1982 and 4940 of 1984.
From the Orders dated the 19th July, 1981, 28th July & 12th August, 1982 and 16th February, 1984, of the Appellate Authority and the Regional Labour Commissioner (Central) Madras Under the in P.G.A. Nos. 20/81, 1/77, 9/82, 10 & 11/82 and 16 of 1983 Soli J. Sorabjee, A.N. Haksar, section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CAS.
1970/81 & 2560/83.
Dr. Y.S. Chitale, section Ramasubramaniam, Sanjay Mohan, D.N. Gupta for the Appellants in CAS.
2432/81, 10778/83 & 2559/84.
section Padmanabhan, section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CA.
2332/81 & 2985 of 1981 section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for Appellants in rest of the Appeals and for Petitioners in Special Leave Petitions.
S.H. Mehta & M.C. Tiwari for Respondent No. I in CA.
No. 3091/82.
H.S. Parihar for Respondent in CA.
60 of 1983.
Ambrish Kumar for the Respondent.
The Judgment of the Court was delivered by 669 SEN, J.
These appeals by special leave and the connected special leave petitions from the judgment and order of the Madras High Court dated June 19, 1981 raise a question of substantial importance.
The question is whether the words "fifteen days ' wages" occurring in sub section
(2) of s.4 of the payment of Gratuity Act, 1972 (hereinafter referred to as the 'Act ') in the case of monthly rated employes, can only mean half a month 's wages, i.e., wages which they would have earned in a consecutive period of 15 days or in 13 working days and therefore, in calculating the amount of gratuity payable to such employees, the rate of wages earned by them has to be multiplied by 'thirteen" there being 26 working days in a month and not by "fifteen".
A subsidiary question arises as to whether the words "twenty months ' wages" occurring in sub section
(3) thereof would only mean wages for 520 working days taking the actual working days in 20 months or must mean 600 days taking that a month consists of 30 days.
It is not necessary to state the facts in any great detail.
In all these appeals, the respondent in each case was a monthly rated employee and the appellant, a public limited company, was his employer.
The facts in each of these cases are more or less similar and it will suffice to state the facts in one of them.
In Civil Appeal No. 2332 of 1981 Messrs Jeeva lal (1929) Ltd. vs The Appellate Authority under the , Madras & Ors, the respondent ceased to be an employee on attaining the age of superannuation after completing 35 year of service.
Since he was entitled to payment of gratuity under the Act, the appellant calculated the amount of gratuity payable to him under sub section
(2) of section 4 on the basis that "fifteen days ' wages" meant half of the monthly wages last drawn by him, i.e., for 13 working days, there being 26 working days in a month.
Being dissatisfied with such payment, the respondent made a claim under sub section
(1) of section 7 of the Act before the Controlling Authority, Madras for determination of the amount of gratuity payable to him.
He made a demand for payment of an additional sum as gratuity on the ground that his daily wages should be ascertained on the basis of what he actually got for 26 working days and the amount of "fifteen days ' wages" should be calculated accordingly, not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30.
The appellant contested the claim contending that the words "fifteen days ' wages" occurring 670 in sub section
(2) of section 4 of the Act only meant half a month 's wages and since a month consisted of 26 working days, the amount ' of gratuity was rightly arrived at by multiplying the daily wages by 'thirteen '.
The Controlling Authority by its order dated September 23, 1978 held that for the purposes of calculating "fifteen days ' wages" it was necessary to ascertain one day 's wage and since a month consists of 26 working days, the amount of gratuity should be calculated accordingly, i.e., by dividing the monthly wages last drawn by 26 multiplied by 'fifteen ' and not by just taking half of his wages for a month of 30 days or by dividing such monthly wages by 30.
It accordingly directed the appellant to pay Rs. 6069.00 as gratuity under sub section
(1) of section 4 of the Act.
On appeal the Appellate Authority, Madras by its order dated July 12, 1976 held that there was an error in the mode of computation of the amount of gratuity payable to the respondent.
According to it, the gratuity payable to the respondent would have to be calculated at half of his monthly rate of wages, i.e., wages he would have earned in a consecutive period of 15 days and his daily wages had to be multiplied by "thirteen" and not by "fifteen" for ever completed year of service or part thereof not exceeding six months.
It accordingly reduced the amount of gratuity payable to Rs. 5259.80 p.
It, however, appears that the Appellate Authority in several other cases took a view to the contrary such as the one in Civil Appeal No. 2432 of 1981 relating to the same employer, Messrs Jeevanlal (1929) Ltd. as also in Civil Appeal No. 1970 of 1981 relating to another employer, Messrs Madura Coats Ltd. as also in Civil Appeal No. 2559 of 1984 relating to M/s Binny Ltd. and upheld the orders of the Controlling Authority.
As a result of these conflicting orders passed by the Appellate Authority, the employers in some of these cases and the employes in others had to file petitions in the High Court under Article 226 of the Constitution and they have been disposed of in the judgment under appeal.
The High Court following the decision of this Court in Shri Digvijay Woollen Mills Ltd. etc.
vs Mahendra Prataprai Buch etc.
and that of the Bombay High Court in Lakshmi Vishnu Textile Mills vs P.S. Mavlankar held that in order to determine "fifteen days ' wages" of a monthly rated employee under sub section
(2) of section 4 of the Act, it was necessary 671 to determine one day 's wage last drawn by him and then multiply the same "fifteen" times, and the resultant sum had to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub section
(3) of section 4 of the Act.
It accordingly restored the orders of the Controlling Authority.
In support of these appeals, learned counsel for the appellants submitted that the decision of this Court in Shri Digvijay Woollen Mills Ltd. case does not lay down any principle but, on the contrary the Court expressly observed that ' it was not necessary to go into the question as to the correctness of the conflicting views taken by different High Courts. ' Reliance was placed on the decision of the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Co. Ltd. Kistna Cement Works, Kistna, Guntur Distt.
vs The Appellate Authority under (Regional Assistant Commissioner of Labour, Guntur) & Ors. which was approved by a Division Bench of the same High Court in Swamy & Ors vs Controlling Authority under & Ors.
In all fairness to the learned counsel, it must be said that they also brought to our notice the decisions of the Calcutta High Court in Hukamchand Jute Mills Ltd. vs State of West Bengal & Ors.
that of the Bombay High Court in Lakshmi Vishnu Textile Mills ' case and that of the Gujarat High Court in Shri Digvijay Woollen Mills ' case taking a view to the contrary.
It is urged that the words, 'fifteen days ' wages" occurring in sub s.(2) of s.4 of the Act are clear and unambiguous and must mean half a month 's wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days viz., 26 for determining the daily wages and multiplying the same by "fifteen" to determine the amount representing 15 days wages inasmuch as the wages of a monthly rated employee were for all the 30 days of a month and not 26 working days alone and therefore "fifteen days ' wages" in his case, would amount only to half a month 's wage.
It is further urged that Parliament amended sub s.(3) of s.4 of the Act on recommendation of the Select Committee and raised the ceiling of gratuity from 15 months ' wages to 20 months ' wages and the reason given by the Select Committee was that there should be an incentive for 672 employees to serve beyond a period of 30 years.
It is submitted that by providing for a maximum gratuity of 20 months ' wages the Select Committee meant that it should be payable for a service of 40 years; and that, if the contention of the employees were to prevail, the maximum gratuity would become payable even after completion of 34 years and 8 months instead of 40 years.
We are afraid, this contention cannot prevail.
These submissions, broadly stated, give rise to two question.
The first is whether for the purpose of computation of "fifteen days ' wages" of a monthly rated employee under sub s.(2) of s.4 of the Act, the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis and not by taking the wages for a month af 30 days or fixing his daily wages by dividing his monthly wages by 30.
The second question is whether the words "twenty months ' wages" occurring in sub s.(3) of s.4 of the Act must be construed to mean wages for 520 days taking the actual working in days in twenty months or must mean wages for 600 days taking that a month consists of 30 days.
As regards the first, the answer must be in the affirmative in view of the decision of this Court in Shri Digvijay Woollen Mills 's case, but learned counsel for the appellant want us to take a second look at is as, according to them, nothing was settled in that case.
As regards the second question, the learned counsel contend that sub ss.(2) and (3) of s.4 of the Act must receive a harmonious construction as they provide for the mode of calculating the total amount of gratuity payable to an employee upon termination of his services under sub s.(l) of s.4 of the Act and it is said that a month cannot mean 26 working days for the purpose of sub s.(2) and 30 days for the purpose of sub s.(3).
The is enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments, as a measure of social security.
It has now been universally recognized that all persons in society need protection against loss of income due to unemployment arising out of incapacity to work due, to invalidity, old age etc.
For wage earning population, security of income, when the worker becomes old or infirm, is of consequential importance.
The provisions of social security measures, retiral benefits like gratuity, provident fund and pension (known as the triple benefits) are of special importance.
In 673 bringing the Act on the statute book, the intention of the legislature was not only to achieve uniformity and reasonable degree of certainty, but also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity.
The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit.
As is true in every case involving construction of a statute, our starting point must be the language employed by the legislature.
It is necessary to set out the relevant statutory provisions of the Act.
Sub s.(1) of s.4 of the Act reads: "4(1): Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (b) on his death or disablement due to accident or disease.
Provided that the completion of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs.
Explanation For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement." Sub ss.(2) and (3) of s.4 of the Act provide as follows: "4(2): For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days ' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately proceeding the termination of his employment, 674 and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days ' wages for each season. ' "4(3): The amount of gratuity payable to an employee shall not exceed twenty months ' wages.
" The term 'wages ' is defined in s.2(s) as follows: "2(s): "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
" In dealing with interpretation of sub ss.(2) and (3) of s.4 of the Act, we must keep in view the scheme of the Act.
Sub section
(1) of s.4 of the Act incorporates the concept of gratuity being a reward for long, continuous and meritorious service.
Sub section
(2) of s.4 of the Act provides for payment of gratuity at the rate of "fifteen days ' wages" based on the rate of wages last drawn by the employee concerned for every completed year of service.
The legislative intent is obvious.
Had the legislature stopped with the words "fifteen days ' wages" occurring in sub section
(2) of s.4 of the Act there was something to be said for the submission advanced by the learned counsel for the appellants based upon the decision of learned Single Judge of the Andhra Pradesh High Court in Associated Cement 's case which was later approved by a Division Bench of that Court in Swamy 's case.
But the legislature did not stop with the words "fifteen days ' wages" in sub section
(2) of s.4 of the Act.
The words "fifteen days ' wages" are preceded by the words "at the rate of" and qualified by the words "based on the rate of wages last drawn" by the employee concerned.
The emphasis is not on what an employee would have earned in the course of fifteen days during the month when his employment was last terminated, but on the rate of fifteen days ' wages for every completed year of service, based 675 on the rate of wages last drawn by the employee concerned.
The word 'rate appears twice in sub section
(2) of s.4 and it necessarily involves the concept of actual working days.
In Shri Digvijay Wollen Mills ' case the Court rightly observed that although a month is understood to consist of 30 days, gratuity payable under the Act treating the monthly wages as wages for 26 working days is not new or unknown.
In construing a social welfare legislation, the court should adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed.
When, however, the a language is plain and unambiguous, the Court must give effect to it whatever may be the consequence, for, in that case, the words of the statute speak the intention of the legislature.
When the language is explicit, its consequences are for the legislature and not for the courts to consider.
The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are two methods of construction.
In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none.
It is not correct to say that the decision in Shri Digvijay Woolen Mills ' case does not lay down any principle.
Gupta, J. speaking for the Court set out the following passage from the Judgment of the Gujarat High Court in Shri Digvijay Woollen Mills ' case: "The employer is to be paid gratuity for every completed year of service and the only yardstick provided is that the rate of wages last drawn by an employee concerned shall be utilized and on that basis at the rate of fifteen days wages for each year of service, the gratuity would be computed.
In any factory it is well known that an employee never works and could never be permitted to work for all the 30 days of the month.
He gets 52 Sundays in a year as paid holidays and, therefore, the basic wages and dearness allowance are always fixed by taking into consideration this economic reality.
A worker gets full month 's wages not by remaining on duty for all the 30 days within a 676 month but remaining on work and doing duty for only 26 days.
The other extra holidays may make some marginal variation into 26 working days, but all wage boards and wage fixing authorities or Tribunals in the country have always followed this pattern of fixation of wages by this method of 26 working days.
" And then observed: "The view expressed in the extract quoted above appears to be legitimate and reasonable." The learned Judge then went on to say: "Ordinarily of course a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court cannot be called perverse." He further observed that it was not necessary to consider whether another view was possible and declined to interfere under article 136 in a matter where the High Court had taken a view favourable to the employees and the view taken could not be said to be in any way unreasonable and perverse, and then added: "Incidentally, to indicate that treating monthly wages as wages for 26 working days is not anything unique or unknown.
" We find that the same view has been taken by as many as three High Courts viz. by the Calcutta, Bombay and Gujarat High Courts in the cases referred to at the Bar.
We find no compelling reason to take a view different from the one expressed by this Court in Shri Digvijay Woollen Mills ' case.
The intention of the legislature enacting sub section
(2) of section 4 of the Act was not only to achieve uniformity and reasonable degree of certainty, but also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity as a compulsory, retiral benefit.
The quantum of gratuity payable under sub section (2) of s.4 of the Act has to be fifteen days ' wages based on the rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six 677 months ' subject to the maximum of 20 months ' wages as provided by sub section
(3) thereof.
The whole object is to ensure that the employee concerned must be paid gratuity at the rate of fifteen days ' wages for 365 days in a year of service.
The total amount of gratuity payable to such employee at that rate has to be multiplied by the number of years of his service subject to the ceiling imposed by sub section (3) of s.4 of the Act viz., that such amount shall not exceed 20 months ' wages.
The construction of sub section
(2) of s.4 of the Act adopted by the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Company 's case, and later approved by a Division Bench of that Court in Swamy 's case would make it utterly unworkable.
If the determination of the amount of gratuity payable under sub section
(2) of s.4 depends on the number of calendar days in a month in which the services of the employee concerned terminates, the quantum of gratuity payable would necessarily vary between an employee and an employee, belonging to the same class, drawing the same scale of wages, with like service for the same number of years.
Obviously, this could not have been the legislative intention.
The next question is: whether a month cannot mean 26 working days for purposes of sub section
(2) of s.4 of the Act and 30 days for purposes of sub section
(3) thereof.
It is said that if a month under sub section
(2) connotes 26 working days in a month for purposes of calculating the amount of gratuity, then the rule of harmonious construction requires that the words "20 months ' wages" in sub section
(3) thereof must mean wages for 520 working days taking the actual working days in 20 months and not 600 days taking that a month consists of 30 days.
The contention is wholly misconceived.
Sub sections
(2) and (3) of s.4 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages.
While sub section
(2) provides for the mode of calculation of the amount of gratuity, sub section
(3) seeks to impose a ceiling on the amount of gratuity payable at 20 months wages.
It is meant to provide an incentive to employee to serve for the period of 30 years or more By no rule of construction, sub section
(2) of s.4 of the Act which uses the words "fifteen days ' wages" and not half a months wages, be called in aid for construction of the words "20 months ' wages" appearing in sub section
(3) of s.4 of the Act.
We do not think it necessary to deal at length with the last and 678 third question raised in some of these appeals viz, the objection to the jurisdiction of the Controlling Authority under section 3 of the Act to entertain the claim against some of the appellants.
It is said that Messers Jeevanlal (1929) Ltd. is an all India concern having its branches in more than one State and therefore the 'appropriate government ' within the meaning of s.2 (a) (1) (b) of the Act in relation to them is the Central Government for purposes of section 3.
The appropriate government is the Central Government in relation to an establishment belonging to or under the control of the Central Government or having branches in more than one State or of a factory belonging to, or under the control of the Central Government or in the case of a major port, mine, oil field, or railway company.
Section 2 (a) (1) of the Act reads as follows: "2: In this Act, unless the context otherwise requires (a) "appropriate government" means (i) in relation to an establishment (a) belonging to, or under the control of, the Central Government, (b) having branches in more than one State, (c) of a factory belonging to, or under the control of, the Central Government, (d) of a major port, mine, oil field or railway company, the Central Government, (ii) in any other case, the State Government: It would appear that the definition of appropriate government in s.2 (a) (1) in relation to an establishment makes a distinction between establishments and factories.
In relation to an establishment belonging to, or under the control of, the Central Government and of a factory belonging to, or under the control of, the Central Government, the appropriate government is the Central Government.
But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State.
There is no like provision made in relation to such an establishment having factories in different States.
We feel that the point relating to the jurisdiction of the Controlling Authority under s.3 of the Act.
does not really arise.
It appears that Messrs Jeewanlal(1929) Ltd 679 have their registered and head office at Calcutta and branch offices and factories at Calcutta, Bombay and Madras and sales offices at Delhi, Hyderabad and Cochin.
It has also two factories in Madras viz., Shree Ganeshar Aluminium Works and Messrs Mysore Premier Metal Factory.
It employs about 300 members of clerical staff at the head office and its branch offices throughout the country as well as in its two factories and employs about 1300 workmen in its factories at Calcutta, Bombay and Madras.
We are inclined to the view that the Controlling Authority had jurisdiction to entertain the claim of an employee working in an office attached to a factory as such an office would be an adjunct of the factory but that is not the question before us.
The Controlling Authority has in fact, confined the adjudication of claims in relation to workmen who were employed at the two factories at Madras but declined to entertain the claims of employees who were working either at the branch office at Madras or at the office attached to the factories in question.
That being so, the contention relating to jurisdiction of the Controlling Authority under s.3 of the Act must fail.
It has been our unfortunate experience that a beneficient measure like providing for a scheme of retiral benefit, has been be set with many difficulties in its application.
It need not be over emphasised that a legislation of this kind must not suffer from any ambiguity.
In the recent past, the Court in Lalappa Lingappa and Ors.
vs Laxmi Vishnu Textile Mills Ltd. faced with the problem as to whether the expression "actually employed" in Explanation I to s.2 (c) of the Act must, in the context in which it appeared, meant "actually worked".
The inclusive part of the definition of 'continuous service ' in s.2 (c) is to amplify the meaning of the expression by including interrupted service under certain contingencies which, but for such inclusion, would not fall within the ambit of the expression 'continuous service '.
But the use of the words 'actually employed ' in Explanation 1 to s.2 (c) of the Act created a difficulty.
The Court observed that it was not permissible to attribute redundancy to the words 'actually employed ' and, accordingly, held that the expression 'actually employed ' in Explanation I to s.2 (c) of the Act meant 'actually worked '.
The law declared by this Court in Lalappa Lingappa 's case, supra, resulted in denial of gratuity to a large number of permanent 680 employees, whose short term absence had remained unregularised, due to lack of appreciation of the significance for the purpose of working out their entitlement to gratuity.
It is to be regretted that the Government waited for a period of three years before introducing the Payment of Gratuity (Amendment) Bill, 1984 to remove the lacuna in the definition of continuous service in s.2 (c) of the Act by specifically providing that a period of absence in respect of which no punishment or penalty has been imposed would not operate to interrupt the continuity of service for the purpose of payment of gratuity.
It also amplified the definition of continuous service under s.2 (c) of the Act.
Such a belated legislation must have worked great injustice to a large number of permanent employees.
In these cases now before us, the Court is faced with the problem of determining the mode of calculating the amount of gratuity payable to the employees concerned under sub section
(1) of s.4 of the Act upon the termination of their services.
It turns on the much vexed question as to the true meaning of the words "fifteen days ' wages" occurring in sub section (2) of s.4 of the Act.
The section does not specify how the rate of wages last drawn by such employees are to be determined for the purpose of determining the rate of "fifteen days ' wages" under sub section
(2) of s.4 of the Act.
This gave rise to some doubt and difficulty amongst different High Courts in computation of the retiral benefit.
It is always an unequal struggle between the capital and labour, and these cases furnish an instance where workmen after putting in long and meritorious service for over 30 years or more have been driven from one court to another for the last 12 years due to the reason that the words "fifteen days ' wages" occurring in sub section
(2) of s.4 of the Act were susceptible of two possible conflicting constructions.
In a situation like this, the Government should have intervened at once to introduce a Bill for inserting an appropriate provision in the Act specifying the mode of calculating the rate of wages last drawn by such employees for the purpose of determining the rate of "fifteen days ' wages" under sub section (2) of s.4 of the Act.
In retrospect, we wish to impress upon the Government that whenever such doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures viz., retiral benefits, gratuity, provident fund and pension and the like, 681 they must always introduce legislation to cure the defect rather than wait for judicial interpretation by the highest Court.
We may also add that the Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of such social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society.
In the result the appeals as well as the special leave petitions must fail and are dismissed with costs throughout.
The costs are quantified at the sum of Rs. 10,000 two thirds of which shall be deposited with the Supreme Court Legal Aid Committee of which Shri Subba Rao is the Hony.
Secretary and the remaining one third shall be paid to the respondent.
N.V.K. Appeals and petitions dismissed.
|
The respondent a monthly rated employee of the appellant a public limited company, ceased to be an employee on attaining the age of superannuation after completing 35 years of service.
Since he was entitled to payment of Gratuity under the , the appellant calculated the amount of gratuity payable under sub s.(2) of s.4 on the basis that 'fifteen days ' wages" meant half of the monthly wages last drawn i.e., for 13 working days.
there being 26 working days in a month, The respondent being dissatisfied with this payment, made a claim under sub s(1) of s.7, before the Controlling Authority, for payment of an additional sum of gratuity on the ground that the daily wages should be ascertained on the basis of what he actually got for 26 days and the amount of "fifteen days ' wages" should be calculated accordingly, not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30.
The Controlling Authority held; that for the purpose of calculating "fifteen days ' wages" it was necessary to ascertain one day 's wage and since a 665 month consists of 26 working days, the amount of gratuity should be calculated by dividing the monthly wages last drawn by 26 and multiplying by 'fifteen '; and not by just taking half of the monthly wages or by dividing such monthly wages by 30.
On appeal, the Appellate Authority, held that there was an error in the mode of computation of the amount of gratuity that was payable, and held that the gratuity payable would have to be calculated at half of the monthly rate of wages, i.e. wages earned in a consecutive period of 15 days and the daily wages had to be multiplied by "thirteen" and not by "fifteen" for every completed year of service or part thereof not exceeding six months.
The amount of gratuity payable was accordingly reduced.
The High Court under Article 226, held following the decision of this Court in Shri Digvijay Woollen Mills Ltd. etc.
vs Mahendra Prataprai Buch etc. ; that in order to determine "fifteen days ' wages" of a monthly rated employee under sub s.(2) of s.4 of the Act, it was necessary to determine one day 's wages last drawn by him, and them multiply the same "fifteen ' times.
and the resultant sum has to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub s.(3) of s.4 of the Act.
The orders of the Controlling Authority were restored.
In the Appeals and Special Leave Petitions it was contended on behalf of the Management: that the words "fifteen days ' wages" occurring in sub s.(2) of s.4 of the Act are clear and unambiguous and must mean half a month 's wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days.
Dismissing the Appeals and Special Leave Petitions, ^ HELD: 1.(i) The was enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments as a measure of social security.
The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit.
[672G; 673B] (ii) In construing a social welfare legislation, the Court should adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed.
When the language is plain and unambiguous.
the Court must give effect to it whatever may be the consequence.
The argument of inconvenience and hardship is only admissible in construction where the meaning of the statue is obscure and there are two methods of construction.
In an anxiety to advance the beneficent purpose of the legislation, the Court must not yield to the temptation of seeking ambiguity when there is none.
[675B D] 2.(1) The intention of the Legislature in enacting sub s.(2) of s.4 of the Act was not only to achieve uniformity and reasonable degree of certainty, but 666 also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity as a compulsory, retiral benefit.
The quantum of gratuity payable under sub s(2) of s.4 of the Act has to be "fifteen days ' wages" based on rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six months 'subject to the maximum of 20 months ' wages as provided by sub section
[676G H; 677A] Shri Digvijay Woollen Mills Ltd. etc.
vs Mahendra Prataprai Buch etc.
; , , referred to.
Associated Cement Co. Ltd. Kistna Cement Works, Kistna Guntur Distt.
vs The Appellate Authority under (Regional Assistant Commissioner of Labour, Guntur) & Ors.
and Swamy & Ors.
vs Controlling Authority under & Ors.
, [1978] 52 IFJ 138 over ruled.
(ii) The word 'rate ' appears twice in sub s.(2) of s.4 and it necessarily involves the concept of actual working days.
Although a month is understood to consist of 30 days, gratuity payable under the Act treats the monthly wages as wages for 26 working days.
[675A] (iii) Sub ss.(2) and (3) of the Act are designed to achieve two separate and distinct objects and they operate at two different stages.
While sub section
(2) provides for the mode of calculation of the amount of gratuity, sub s:(3) seeks to impose a ceiling on the amount of gratuity payable at 20 months wages.
It is meant to provide in incentive to employees to serve for the period of 30 years or more.
Sub s.(2) of s.4 of the Act which uses the words "fifteen days ' wages" and not half a months wages, cannot be called in aid for construction of the words "20 month ' wages ', appearing in sub s.(3) of s.4 of the Act.
[677F G] 3.
The definition of 'appropriate government ' in s.2(a)(1) in relation to an establishment makes a distinction between establishments and factories.
In relation to an establishment belonging to, or under the control of, the Central Government and of a factory belonging to, or under the control of, the Central Government, the appropriate government is the Central Government.
But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State.
There is no like provision made in relation to such an establishment having factories in different States.
[678F G] 4.
Whenever doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures, namely, retiral benefits, gratuity, provident fund etc., the Government must always introduce legislation to cure the defect rather than wait judicial interpretation by the highest Court.
[680H] Lalappa Lingappa and Ors.
vs Laxmi Vishnu Textile Mills., Ltd. referred to.
667 5.
The Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society.
[681A B]
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N: Criminal Appeal Nos.
287 & 288 of 1980 Appeals by Special leave from the judgment and Order dated the 27th July & 8th August, 1979 of the Bombay High Court in Crl.
Appeal Nos. 7 of 1977 and 605 of 1978.
781 V.S. Desai, Mrs. J. Wad and Miss Aruna Mathur for the Appellants.
O.P. Rana, K. V. Sree Kumar and M.N, Shroff, for the Respondent.
The Judgment of the Court was delivered by VARADARAJAN, J.
These appeals of Vinayak and Prakash, accused 6 and 5 respectively in Sessions Case 26 of 1976 on the file of the Sessions Judge, Prabhani by special leave, are directed against the judgment of the Bombay High Court in Criminal Appeals 7 of 1977 and 605 of 1978.
Criminal Appeal 7 of 1977 was filed by Sitaram @ Sitya and Vinayak, accused 1 and 6 respectively, against their conviction under section 302 read with section 34 I.P.C. in respect of the murder of one Malan, daughter of Kishan and the sentence of imprisonment for life awarded to them.
Criminal Appeal 605 of 1978 was filed by the State of Maharashtra against the acquittal of Sundar @ Sundarayya, Kishan @ Kishanayya, Gangaram @ Gangayya, Prakash and Shrirang, accused 2, 3, 4, 5 and 7 respectively of the charge under section 302 read with section 34 I.P.C. in respect of the murder of Malan and against their acquittal of the charge framed under section 302 read with section 120B I.P.C.
The State of Maharashtra filed Criminal Appeal 38 of 1977 for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 by the trial court.
After hearing the learned counsel for the parties we allowed the appeal of Prakash, accused 5 and acquitted him and set aside his conviction and the sentence awarded to him.
So far as Vinayak, accused 6 is concerned, we dismissed his appeal on 13.9.1984 for reason to follow.
Now proceed to record our reasons.
Sessions Case 26 of 1977 is stated to be an off shoot of what is known as the 'Manwath murders case ' in which Prakash 's father Uttamrao Barhate and his permanently kept concubine Rukmanibai and 13 others were tried for the murders of 10 girls and women during the period from 14.11.1972 to 4 11.1974 in Manwath village, Prabhani district, Maharashtra State.
In the case the above seven accused were tried for three murders of two young girls and a women alleged to have been committed them and the approver Sheshrao (P.W. 1) during the period from 782 10.11.1975 to 1.1.1976 in Babultara village, Prabhani district.
Charge No. 1 framed in this case was for criminal conspiracy under section 302 read with section 120B I.P.C. on the allegation that between the first week of October 1975 and 2.1.1976 at Babultara and Waghala villages, all the seven accused and the approver P.W. 1.
entered into a criminal conspiracy to commit murders of young girls and women in the vicinity of Babultara village by inflicting injuries on the private parts of the victims or disfiguring their faces in order to make it appear that the accused in the Manwath murders case are not the real culprits and that in pursuance of that conspiracy these seven accused and the approver P.W. 1 committed three murders of Ashamati, aged 9 years, Parubai, aged 40 years and Malan, aged 12 years in Babultara village.
Charge No. 2 framed against accused 1 to 3 was under section 302 read with section 34 I.P.C.
On the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Ashamati on or about 10.11.1975.
Charge No. 3 framed against accused 1 to 4 was under section 302 read with section 34 I.P.C. on the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Parubai on or about 29.11.1975.
The last charge No. 4 framed against accused 1, 6 and 7 was under section 302 read with section 34 I.P.C. on the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Malan on or about 1.1.1976.
The accused pleaded not guilty to the charges framed against them.
The Sessions Judge found, on a consideration of the evidence, all the seven accused not guilty of the charge of conspiracy framed under section 302 read with section 120B I.P.C. and acquitted them.
He found accused 1 to 3 not guilty of charge No. 2 framed against them in respect of the murder of Ashamati and accused 1 to 4 not guilty of charge No, 3 framed against them in respect of the murder of Parubai and acquitted them.
He found accused No. 7 not guilty but accused 1 and 6 guilty of charge No. 4 framed against them in respect of the murder of Malan and acquitted accused 7 and convicted accused 1 and 6 and sentenced them to undergo imprisonment for life under section 302 read with section 34 I.P.C.
The State did not file any appeal against the acquittal of accused 1 and 6 of charge No. 1 framed against them under section 302 read with section 120B I.P.C.
As state earlier, Criminal Appeal 38 of 783 of 1977 was filed by the State for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 in respect of the murder of Malan and Criminal Appeal 605 of 1978 against the acquittal of accused 2, 3, 4, 5 and 7 of charge No. 1 framed under section 302 read with section 120B I.P.C. Thus the acquittal of accused 1 and 6 of charge No. 1 framed against them under section 302 read with section 120B I.P.C. and of accused 1 to 3 of charge No. 2 in respect of the murder of Ashamati and of accused 1 to 4 of charge No. 3 in respect of the murder of Parubai became final.
The High Court considered the evidence and dismissed Criminal Appeal 38 of 1977 filed by the State for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 for the murder of Malan as also Criminal Appeal 7 of 1977 filed by accused 1 and 6 against their conviction and the sentence awarded to them.
The first accused Sitaram @ Sitya has not filed any appeal in this Court against the High Court 's judgment confirming his conviction and sentence awarded to him by the trial court under section 302 read with section 34 I.P.C. for the murder of Malan.
Therefore, his conviction and sentence awarded to him have become final.
Accused 5 and 6 only have filed Criminal Appeal 288 of 1980 and Criminal Appeal 287 of 1980 respectively against the conviction of accused 5 and the sentence of imprisonment for life awarded by the High Court under section 302 read with section 120B I.P.C. and the confirmation of the conviction and sentence awarded to accused 6 by the trial court under section 302 read with section 34 I.P.C. respectively.
In view of the acquittal of all the seven accused by the trial court of charge No. 1 framed under section 302 read with section 120B I.P.C. and the High Court 's dismissal of Criminal Appeal No. 605 of 1978 filed against that acquittal which, as stated earlier, was filed only against accused 2,3,4 and 7 not against accused 1 and 6, in so far as it related to accused 2, 3, 4 and 7, Mr. V. section Desai, learned senior counsel appearing for Prakash, accused 5, contended in his arguments that the conviction of that accused alone for conspiracy under section 302 read with section 120B I.P.C. is unsustainable in law as at least two persons are required for an offence of conspiracy under section 120A I.P.C. and he relied upon a decision of this Court in Topandas vs State of Bombay(1) in support of his contention.
In 784 that case the charge under section 120B I.P.C. was framed against four named persons who had been arrayed as accused 1 to 4.
The High Court acquitted accused 2 to 4 and convicted accused 1 alone of that charge and sentenced him, holding that he and some others had conspired together and fabricated the deed of assignment put forward by accused 1 and that accused 1 alone could not have fabricated that document.
This Court allowed the appeal of accused 1 and set aside his conviction under 120B I.P.C. holding that the conviction of one of the accused alone was unsustainable in law having regard to the requirement of s.120A I.P.C. Mr. O.P. Rana learned senior counsel appearing for the state of Maharashtra sought to support the judgment of the High Court in this case against accused 5 in view of the conviction of accused 1 and 6 for the murder of Malan under s, 302 read with section 34 I.P.C. We repelled that submission of Mr. Rana, in view of the fact that those two accused 1 and 6 had been acquitted by the trial court of charge No. 1 farmed against them under section 302 read with section 120B I.P.C. and no appeal against their acquittal had been filed in the High Court and also the fact that accused 5 was not a party to charge No.4 which was framed only against accused 1, 6 and 7.
It was in view of this technical flaw that we allowed the appeal of accused 5 without going into the evidence regarding the merits of the case against him.
Mr. Rana did not draw our attention in the course of his arguments to the fact that in charge No. 1 even the approver P.W. 1 is alleged to have conspired with the seven accused to commit these three murders or contend that in view of that circumstance and the finding of the High Court that the approver P.W. 1 also was a party to the conspiracy the conviction of accused 5 alone of the charge of conspiracy under section 302 read with section 120B I.P.C. could be sustained.
We were, therefore, not called upon to consider any such question.
As regards accused 6 in the High Court reliance was placed by the prosecution on four pieces of evidence besides the evidence of the approver P.W. 1 and the retracted confession of accused 5.
Those four pieces of evidence are: (1) recovery of the razor blade, article 54, persuant to the confessional statement of accused 6, admitted under section 27, Evidence Act.
The blade was found by the Serologist to be stained with human blood of group B like that of Malan; (2) recovery of the blood stained shirt, article 55, of accused 6 from his house; (3) evidence regarding the presence of accused 785 6 along with accused 7 and P,W. 1 near about the scene of offence before and after the commission of the murder of Malan.
It is the case of the prosecution that Shivram, P.W. 45 saw accused 6 under a vad tree and Abasaheb, P.W. 44, saw him in the rivulet; and (4) retracted judicial confession, Exh. 138 of accused 6.
The High Court found on the evidence of Munjebi, P.W. 50 and Hanumant Salunke, Sub Inspector of Police P.W. 53, that the blood stained shirt, article 54 was recovered from the house of accused 6.
But the Serologist was unable to determine the origin of the blood found on article 55 due to its disintegration.
Therefore, the High Court did not place any reliance on this circumstance, namely, recovery of the blood stained shirt, article 55 from the house of accused 6.
The High Court found that the evidence of P.W. 44 and 45 does not establish beyond reasonable doubt that accused 6 was found in the company of accused 7 and the approver P.W. 1 near about the place of occurrence as alleged by the prosecution before and after the murder of Malan.
But the High Court accepted the evidence of the approver P.W. 1 against accused 6 as reliable and the judicial confession, Exh. 138 of accused 6 as being voluntary and reliable and (both) corroborated by other evidence and it acted also upon the retracted judicial confession of accused 5 in holding that the guilt of accused 6 for the murder of Malan had been proved beyond all reasonable doubt.
We are of the opinion that the retracted judicial confession of accused 5 could not be relied upon against accused 6 in this case in view of the fact that accused 6 who had been tried alongwith accused 5 had been acquitted by the High Court of the charge of conspiracy under section 302 read with section 120B I.P.C. and accused 5 was not charged for the offence of murder of Malan for which only accused 1, 6 and 7 were tried.
The evidence of the approver P.W. 1 and the retracted confession of accused 5, Exh. 138 are amply corroborated by other evidence, namely, recovery of the blood stained razor, article 54 and the medical evidence of Dr. Suresh (P.W. 31) who had conducted autopsy on the body of Malan at 4.15 p.m. on 2.1.1976.
The Doctor found 9 incised wounds on various parts of the body of Malan besides a small incised injury on the right wall of the vagina outside in the middle and a small incised injury on the lower end of the vagina just at the mouth and he is of the opinion that all the 11 injuries were antemortem injuries which might have been caused by sharp cutting weapons, that it is possible that injuries 5 to 7 found on the forehead and right and left side of the parietal eminance were 786 caused by hard and blunt objects, that death must have been instantaneous and that injuries 1 to 7 collectively were sufficient in the ordinary course of nature to cause death.
In these circumstances we found that there is sufficient evidence against accused 6 proving his guilt in respect of charge No. 4 framed regarding the murder of Malan beyond all reasonable doubt and that he had been rightly convicted and sentenced to imprisonment for life under section 302 read with section 34 I. P. C. Accordingly, we allowed the Criminal Appeal 288 of 1980 and acquitted Prakash, accused 5 and directed him to be set at liberty forthwith and dismissed Criminal Appeal 287 of 1980 filed by accused 6 and confirmed the conviction of accused 6 and the sentence awarded to him by the courts below.
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In Sessions Case No. 26 of 1976, seven accused namely Sitarama @ Sitya, Sundera @ Sundarayya, Kishana @ Kishanayya, Gangarama @ Gangayya, Prakash, Vinayak and Shrirang were charged and tried together for offences under section 302 read with section 120B and also under section 302 read with section 34 I.P.C. Charge No. 1 was for criminal conspiracy under section 302 read with section 120B I.P.C. on the allegation that between first week of October, 1975 and 2nd January, 1976 at Babultara and Waghala villages all the seven accused and the approver P.W. 1 entered into a criminal conspiracy to commit murders of young girls and women in the vicinity of Babultara village by injuring the victims or disfiguring their faces in order to make it appear that the accused in an earlier case called the Manwath murders case where 10 girls and women were murdered during the period from 14.11.1972 to 4.11.1974 in Manwath village were not the real culprits.
Charges 2 to 4 were framed under section 302 read with section 34 I.P.C. alleging that in furtherance of their common intention, accused 1 to 3 committed the murder of Ashamati on or about 10th November, 1975, accused 1 to 4 committed the murder of Parubai on or about 29th November, 1975 and accused 1, 6 and 7 committed the murder of Malan on or about 1st January, 1976.
The Sessions Judge on a consideration of the evidence acquitted all the seven accused under charge No. 1; all the accused under charges 2 and 3 and accused 7 under charge No. 4, but convicted accused 1 and 6 under charge No. 4 and sentenced them to undergo imprisonment for life under section 302 read with section 34 I.P.C. Aggrieved by the conviction and sentence accused 1 and 6 filed Criminal Appeal No. 7 of 1977 in the High Court of Bombay, while the State preferred Criminal Appeal No. 38 of 1977 for enhancement of the sentence awarded to them under section 377 Cr.
The State also preferred under section 378 Cr.
P.C. Criminal Appeal No. 605 of 1978 against the acquittal of accused 2, 34, 5 and 7 of charge No. 1 framed under section 302 read with section 120B.
There 780 being no further appeal by the State against acquittal; the acquittal of accused 1 and 6 of charge No. 1 and of accused 1 to 3 of charge No. 2 and of accused 1 to 4 of charge No. 3 became final.
The High Court considered the evidence, in the case, and dismissed Criminal Appeals Nos. 7 of 1977 and the connected Criminal State Appeal No. 38 of 1977 and thereby confirmed the conviction and the sentence awarded to accused Nos. 1 and 6.
The High Court, however accepted the State Appeal No. 605 of 1978 in part and convicted accused 5 and sentenced him to imprisonment for life under section 302 I.P.C. read with section 120B.
Hence the present appeals by accused 5 and 6 only, accused No. 1 not preferring an appeal.
Allowing the appeal No. 288 of 1980 of accused No. 5 and dismissing appeal No. 287 of 1980, the Court.
^ HELD: 1.
In view of the fact (a) that accused 1 and 6 had been acquitted by the trial court of charge No. 1, that is, criminal conspiracy under section 120B read with section 302 I.P.C. (b) that no State Appeal against their acquittal had been preferred and (c) that accused 5 was not a party to charge No. 4 which was framed against accused nos.
1, 6 and 7 the conviction and sentence of accused No. 5 by the High Court is unsustainable in law.
[783FG] Topandas vs State of Bombay referred to. 2.
The retracted judicial confession of accused 5 could not be relied upon against accused 6 in this case in view of the fact that accused 6 who had been tried alongwith accused 5 had been acquitted by the High Court of the charge of conspiracy under section 302 read with section 120B I.P.C. and accused 5 was not a party for the offence of murder of Malan for which only accused nos.
1, 6 and 7 were tried.
[785E F] 3.
However, the conviction and sentence of imprisonment for life under section 302 read with section 341 I.P.C awarded to accused 6 is in order as there is sufficient evidence against him proving his guilt in respect of charge No. 4 framed regarding the murder of Malan beyond all reasonable doubt.
The evidence of the approver P.W. 1 and the retracted confession of accused 6 Exh.
138 with the corroborative evidence namely, the recovery of the bloodstained razor and the medical evidence of Dr. Suresh who conducted the autopsy and deposed that out of the antemortem injuries, injuries 1 to 7 collectively were sufficient to cause death in the ordinary course, conclusively prove the guilt of accused 6.
[786A B; 785F G; 786A]
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Civil Appeal No. 996 of 1979 From the Judgment and Order dated 26.10.78 of the Madhya Pradesh High Court in Misc.
Petition No. 176/74.
S.N. Kacker, S.K. Ghambir and Ashok Mahajan for the appellant.
T.U. Mehta, S.S. Khanduja, R.D. Jain, Mehfooz Khan and Yashpal Dhingra for the respondents.
The Judgment of the Court was delivered by CHANDRACHUD, C.J.
Respondent 1 was appointed as an Agent of the appellant Bank, which is a co operative society registered under and governed by the provisions of the Madhya Pradesh Co operative Societies Act.
By an order dated June 5, 1968 passed by one S.P. Jain, the services of respondent 1 were terminated on the ground that he had over stayed the leave granted to him.
Aggrieved by that order, respondent 1 raised a dispute under section SS(2) of the Act, before the Registrar of the Co operative Societies.
The Registrar referred the matter to the Deputy Register, who by an order dated February 27, 1972, allowed the claim of respondent 1 on the ground that the order terminating the services was not in accordance with Rules 44 and 45 of Co operative Bank Employees Service Rules.
He also ordered the reinstatement of respondent 1 with full back salary and allowances.
In an appeal filed by the Bank, the Addl.
Registrar took the view that the only remedy which was open to respondent 1 was to claim damages for wrongful termination of his services and that, therefore, he could not be reinstated in service Respondent 1 than filed an appeal before the Board of Revenue which held by an order dated August 28, 1974, that, S.P. Jain who held the enquiry against respondent 1 and passed the order terminating his services had no power to do so.
The Board of Revenue set aside the order of termination and remanded the matter to the Bank for disposal in accordance with law.
The writ petition filed by the Bank in the High Court of Madhya Pradesh was dismissed on October 26, 1973.
According to the High Court, since section P. Jain had no authority to hold the enquiry or to pass the impugned order of dismissal, the said order had no existence in the eye of law and, 858 therefore, respondent 1 should be deemed to be in service and be reinstated.
Aggrieved by the judgment of the High Court the Bank has filed this appeal.
We are in agreement with the conclusion to which the High Court has come, though for somewhat different reasons which are as follows: "The Board of Directors of the appellant Bank was superseded by the Registrar of the Co operative Societies by an order dated July 25, 1967 and its powers were vested in Madhya Pradesh State Cooperative Bank, Jabalpur, which is an Apex Bank, as "officer in charge" of the superseded Bank.
By Resolution No. 23 dated May 19, 1968, the Apex Bank confirmed the action of its Chairman/Vice Chairman in deputing, amongst others S.P. Jain as the Chief Executive officer of the superseded Bank.
The Apex Bank had no authority or power so to appoint S.P. Jain for two reasons: In the first place, the Apex Bank, being an appointee of the Registrar, had no authority to divest itself of the power conferred upon it by the Registrar and to invest S.P. Jain with that power.
The only authority which could have conferred the necessary power.
On S.P. Jain was the Registrar.
The Registrar did not confer that power upon S.P. Jain under Section 53(4) of the Act".
In the result, this appeal is dismissed with costs.
We would like to add that as long as 16 years have passed since the impugned order was passed and that too by a person who had no authority to pass it.
Secondly, the consensus of opinion of the various authorities which have dealt with this matter is that, in overstaying the leave granted to him, respondent l was not guilty of "misconduct".
It is desirable and prudent that no further proceedings be taken against respondent 1 for the alleged default on his part, which is the subject matter of the present proceedings.
We modify the order of the High Court by directing that respondent l will be entitled to fifty per cent of the , back wages and i allowances only from June 5, 1968 until September 30, 1984.
The appellant will back respondent 1 in its service with effect from October 1, 1984.
M.L.A. Appeal dismissed.
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The Board of Directors of the appellant bank was superseded by the Registrar of the Cooperative Societies and its powers were vested in the M.P. State Cooperative Bank which is an Apex Bank as "officer in charge" of the superseded bank.
The Apex Bank appointed one S.P. Jain as the Chief Executive officer of the appellant bank.
Respondent No. 1, an employee of the appellant bank, was dismissed from service by S.P. Jain on the ground that he had overstayed the leave granted to him.
The Dy.
Registrar of Cooperative Societies set aside the said order of dismissal and directed reinstatement of respondent No. 1, but it was reversed by the Addl.
Registrar in appeal by the appellant Bank.
In further appeal by Respondent No. 1 the Board of Revenue set aside the order of termination.
The High Court in the Writ Petition filed by appellant Bank agreed with the Board of Revenue and also ordered reinstatement of Respondent No. 1.
Dismissing the appeal by the appellant Bank and modifying the order of the High Court, ^ HELD: The Apex Bank had no authority or power so to appoint S.P. Jain for two reasons: In the first place, the Apex Bank, being an appointee of the Registrar, had no authority to divest itself of the power conferred upon it by the Registrar and to invest S.P. Jain with that power.
The only authority which could have conferred the necessary power on S.P. Jain was the Registrar.
The Registrar did not confer that power upon S.P. Jain under section 53 (4) of the Act.
Therefore the said order had no existence in the eye of law.
[858D E] 857
|
ivil Appeal Nos.
3452 54 and 4030 32 of 1982.
Appeals by Special leave from the Judgment and order dated the 20th November, 1979 of the Punjab and Haryana High Court in L.P.A. Nos.
26,62, 29, 38,39, and 30 of 1978.
R.K. Garg and N.S. Das Bahl for the Appellants in CAs.
Nos 3452 54 of 1982.
M.K. Ramamurthi, and Mrs. Urmila Sirur for the Appellants in CAs.
4031/82 and CAs.
4030 32 of 1982.
P.P. Rao and D.D. Sharma for the Respondents.
The Judgment of the Court was delivered by PATHAK, J.
The appellants, in these appeals by special leave, are aggrieved by the judgment of a Division Bench of the High Court of Punjab and Haryana affirming the dismissal of their writ petitions by a learned Single Judge of that Court.
The appellants are teachers in the service of the State of Punjab.
They claim the grades prescribed in paragraph 2 of the Government Circular letter No. 2036 ED.
1 67/2167 dated July 29, 1967, and in that regard seek the benefit of the Circular letter No. 9/9179 FR (2)/143 dated February 19, 1979 and its clarification by Circular letter No. 8937 5ED.
1179/2659 dated September 20, 1979.
The Circular letter dated July 29, 1967 gave effect to the recommendations of the Kothari Commission with effect from November 1, 1966 in respect of teachers in Government Schools.
Paragraph 2 of the Circular letter provided: "2.
Lectures in Higher Secondary Schools, Punjab Institute of English and Masters/Mistresses with Post 884 graduate qualifications in High/Higher Secondary Schools will be placed in Rs. 300 25 450/25 600 grade provided they have 1st and 2nd Division Master 's Degree.
Those with 3rd Class Master 's Degree will be placed in the grade of Rs. 250 25 400/25 550.
" It was specified that "the number of posts in Lecturer 's grade will be 1517 i.e. 742 posts for the existing school Lecturers and 829 additional posts for other Masters/Mistresses with Post graduate qualifications.
" It was clarified that "the Masters/Mistresses will be eligible to Lecturer 's grade only if they have Post graduate qualifications in the subject of their teaching.
No one will be entitled to those 829 additional posts automatically.
These posts will be allocated to various subjects keeping in view the requirements of the educational institutions and the appointments will be made keeping in view the rules/instructions as amended from time to time.
" Paragraph 3 stated that "all trained graduates and all other Masters with Post graduate qualifications, who are not fitted in the scale of Lecturer, will be in the scale of Rs. 220 8 300 10 400/20 500.
" It is apparent that paragraph 2 of the Circular letter dated July 29, 1967 is concerned essentially with providing for a Lecturer 's Grade: (1) It was intended to have 1571 posts in the Lecturer 's grade, consisting of 742 posts for the existing Lecturers and another 829 posts for Masters or Mistresses.
Masters or Mistresses were eligible for these posts in the Lecturer 's grade only if they possessed Post graduate qualifications in the subject of their teaching.
Those who did not satisfy that criterion were not eligible for those posts.
Moreover, no one was entitled to any of the 829 additional posts automatically.
The additional posts were to be distributed with reference to different subjects, and the distribution would be made having regard to the requirements of the educational institutions and subject to the rules and instructions currently in force.
(2) Existing Lecturers and Masters or Mistresses with Post graduate qualifications, who possessed a Master 's degree in the first or second division, would be entitled to the grade of Rs. 300 25 450/25 600.
Lecturers and 885 Masters or Mistresses with Post graduate qualifications who possessed a Master 's degrees in the third division would be entitled to the grade of Rs. 250 25 400/25 550 .
The appellants say that they are employed as Masters and Mistresses in High and Higher Secondary Schools run by the Punjab Government and possess an M.A. or M.Sc.
or B.T. or B.Ed.
degree and some of them have even acquired an M.Ed.
degree.
They are presently paid according to the pay scale Rs. 220 500.
They claim that they are entitled to either of the higher grades set forth in paragraph 2 of the Circular letter dated July 29, 1967.
From what has gone before it is clear that they can legitimately claim the benefit of those grades only if they are appointed to the posts of Lecturer.
And they do not dispute that they are not incumbents of those posts.
Much reliance has been placed on the decision of this Court in State of Punjab vs Kirpal Singh Bhatia.
In our opinion, that case is of no assistance to the appellants.
That was a case which was primarily concerned with Circular letter No. 5058 FR II 57/5600 dated July 23, 1957.
The Circular letter dated July 29, 1967 operates on a very different plane from the Circular letter dated July 23, 1957.
A brief reference to the historical background of the Circular letter dated July 23, 1957 will suffice.
Concerned at the low salaries granted to certain categories of Government servants, the Punjab Government issued Circular letter No. 5058 FR II/5600 dated July 23, 1957 revising their scales of pay.
Paragraph 3 classified all teachers in the Education Department according to their qualifications in two broad categories, category A being: "B.A./B.Sc./B.Com./B.Sc.
(Agriculture) and B.T./Diploma in Physical Education/Diploma in Senior Basic Training".
and they would now carry the scale of pay: 886 "Rs. 100 8 190 10 250 with a higher start for M.A. or M.Sc.
as at present.
" As is evident, the category was defined by reference to the possession of the specified graduate degree or Diploma.
In the event such a teacher also held a Post graduate degree he was entitled to a higher start in the grade.
The grade, however, remained the same.
It appears that several teacher tiled writ petitions in the High Court claiming revised scales of pay on the ground that they had taken graduate degrees and, therefore, were entitled to the benefit of the grade mentioned against Category in the Circular letter dated July 23, 1957.
In opposition to the writ petitions, the State Government contended that the letter did not contemplate tho grant of the grade to all teachers but only to teachers appointed as Masters.
The High Court held the teachers entitled to the benefit of the revised grade, whether or not they had been appointed as masters, because, in the opinion of the High Court, the qualifying criterion was the possession of a graduate degree.
The judgment of the High Court was affirmed by this Court in Kirpal Singh Bhatia (Suprd).
The State Government found it difficult, having regard to The prevailing burden on its financial resources, to extend the benefit of the Circular letter dated July 23, 1957 to the much wider section of teachers covered in consequence of the Court 's judgement.
Accordingly, the State Government issued Circular letter No. 9/9/79 FR (2)/143 dated February 19, 1979, paragraph 3 of which stated that in order to ensure that "these unintended and large financial implications do not continue arising in future" the whole matter had been reconsidered by the State Government and as a result the government ordered that henceforth the teachers or the Education Department would not automatically be entitled to placement in the higher scales of pay in terms of paragraph 3 of the Circular letter dated July 23, 1957 by the mere circumstance of their improving or acquiring higher qualifications in the course of their service.
The rigour of the restriction was relaxed in some measure.
Paragraph 3 said further: "However, in order to avoid discrimination between teachers who have already been allowed higher scales of pay on account of having improved their qualifications and those who have not yet been allowed this benefit even though they also possess higher qualifications it is decided that all teachers in the Education Department who have 887 improved their qualifications before the issue of this letter may be allowed the benefit of higher scale of on the basis of their qualifications.
" The benefit was not extended to those who were appointed or who had improved their qualifications after the issue of that Circular letter.
The teachers continued to agitate for a more generous dispensation.
The State Government then issued Circular letter.
No. 8937 5ED.1179/2659 dated September 20, 1979.
which declared: "The implementation of the decision contained in Finance Department Circular letter No. 9/9/79 FR (2)/143 dated February 19, 1979 to grant higher pay scales to the teachers on the basis of higher qualifications was kept pending for want of clarification on certain points from the Finance Department which has now become available and is reproduced below: 1.
The higher scale may be allocated from the date of passing the respective higher examination by the concerned teacher where this has already been done.
However, actual payment at enhanced rates should commence from 12 2.79 and the payment of arrears accruing from the date of passing the examination till 13.2.1979 be restricted to the maximum for 38 months.
The ben fit of the higher scale may be allowed from the date a particular teacher is appointed on regular basis or the date of passing the higher examination, which ever is later, but the payment of arrears as a result of grant of such benefit should be restricted to a period of 38 months only, as already mentioned above.
The teachers placed in the higher scale can only be regularly adjusted when corresponding posts in the higher scale become available; in that case such teachers may continue to enjoy the higher scale as a personal measure till they are adjusted against regular posts as and when the same become available.
" It was clarified that the contemplated benefit was confined to 888 the categories of teachers mentioned in the Circular letter No. 5058 FR II 57/5600 dated July 23, 1957.
The appellants claim the benefit of paragraph 2 of the Circular letter dated July 29, 1967, and therefore no reliance can be placed by them on the Circular letters dated February 19, 1979 and September 20, 1979, which relate merely to the scheme embodied in the Circular letter dated July 23, 1957.
The appellants contend that on the principle of "equal pay for equal work", affirmed by this Court in Randhir Singh vs Union of India & Ors.
they are entitled to the grades mentioned in paragraph 2 of the Circular letter dated July 29, 1967.
It is urged that like those Masters or Mistresses who have been given that benefit they have acquired Post graduate qualifications and are doing the same kind of work.
As has been explained earlier, the grades specified in paragraph 2 of the Circular letter dated July 29, 1967 are applicable only to those who specifically hold the posts of Lecturer.
There are a limited number of such posts, and appointment to them is strictly subject to the conditions detailed in paragraph 2 of the Circular letter.
In the result the appeals fail and are dismissed, but in the circumstances of the case there is no order as to costs.
N.V.K. Appeals dismissed.
|
The appellants who were employed as Masters and Mistresses in High and Higher Secondary Schools run by the State Government and possessed an M.A. or M.Sc.
or B.T. or B.Ed.
degree contended in their writ petitions that they were paid according to the pay scale of Rs. 220 500 and claimed that they were entitled to either of the higher grades set forth in paragraph 2 of the State Government Circular Letter dated July 29, 1967 viz. Rs. 300 25 450/25 600 for those with 1st and 2nd Division Master 's Degree and Rs. 250 25 450/25 250 for those with 3rd Class Master 's Degree.
The High Court negatived their contentions and dismissed the writ petition, and this was affirmed by the Division Bench in appeal.
Dismissing the Appeal to this Court, ^ HELD: 1.
The grades specified in paragraph 2 of the Circular Letter dated July, 29, 1967 are applicable only to those who specifically hold the posts of lecturer.
There are a limited number of such posts, and appointment to them is strictly subject to the conditions detailed in paragraph 2 of the Circular Letter.
The contention on behalf of the appellants that on the principle of "equal pay for equal work" Randhir Singh vs Union of India and Ors., ; they are entitled to the grades mentioned in para 2 of the Circular Letter dated July 29, 1967 has there fore to be negatived.
[888 D; C] 2.
The appellants claim the benefit of paragraph 2 of the Circular Letter dated July 29, 1967 and therefore no reliance can be placed by them on the Circular Letters dated February, 19, 1979 and September, 20, 1979 which relate merely (o the scheme embodied in the Circular Letter 883 dated July 23, 1957.
The Circular Letter dated July, 29, 1967 operates on a very different plane from the Circular Letter dated July 23, 1957.
[888 B; 885 E] 3.
The decision of this Court in State of Punjab vs Kirpal Singh Bhatia; , is of no assistance to the appellants.
That was a case which was primarily concerned with Circular Letter dated July, 23, [885 D]
|
: Criminal Appeal No. 50 of 1976.
Appeal by Special leave from the Judgment and order dated the 2nd October, 1975 of the Rajasthan High Court in S.B. Criminal Appeal No. 850 of 1971.
V.B. Raju and N.N. Sharma for the Appellant.
Badri Das Sharma for the Respondent The Judgment of the Court was delivered by RANGANATH MISRA J.
This appeal by special leave seeks to assail the conviction of the appellant under section 161 of the Indian Penal Code as also section 5(1) (d) and section 5(2) of the Prevention of Corruption Act, 1947 ( 'Act ' for short), and a consolidated sentence of two years ' rigorous imprisonment.
Appellant 's conviction by the Special Judge has been upheld in appeal by the Rajasthan High Court.
Appellant at the relevant time was a Head Constable attached to the Bhusawar Police Station within the District of Bharatpur.
Prosecution alleged that PW. 2 Ram Swaroop had given first Information Report of two offences but appropriate investigation was not being furnished to the Court.
He had approached Shanker Lal, Head Constable attached to the Police Station and had, on demand, paid him some money by way of bribe to expedite submission of the charge sheet, Shanker Lal got transferred and appellant came in his place.
When contacted, appellant also demanded money.
2 thereupon informed the Anti Corruption Department about the demand and Kastoori Lal, Dy.
Superintendent of Police attached to the Anti Corruption Department at Jaipur agreed to lay a trap.
Details were fixed up and the trap was laid on March 30, 1969.
An amount of Rs. 50 was to be passed on as the bribe.
Five currency notes each of Rs. 10 denomination with marked initials were made over to PW. 2 to be given as bribe to the accused.
For that purpose 1139 Ram Swaroop, PW. 2, Kastoori Lal, PW. 6, Prabhu Dayal, a literate Constable attached to the Anti Corruption Department, PW. 1, accompanied by two Panch witnesses Girdhari, PW. 3 and Gulji, PW. 4 came to Bhusawar.
Ram Swaroop came to the bus stand adjacent to the Police Station.
Banshi Kumar, the waterman at the bus stand (DW. 1) was requested by PW. 2 to inform the accused at the Police Station that he (Ram Swaroop) had come prepared for the purpose as arranged earlier and accused should came and contact him.
Prosecution further alleged that the accused come pursuant to the request and the money was passed on and the payment of bribe was duly detected.
In due course sanction was obtained and the case came up for trial before the Special Judge.
Prosecution led evidence of 8 witnesses five as indicated above and PW. 5, the Superintendent of Police (Intelligence), Jaipur; PW. 7 Kedar Nath, a literate Constable attached to the Bhusawar Police Station and PW. 8 the Superintendent of Police, Bharatpur, who proved sanction for the prosecution.
Certain documents were also produced to support the charge.
Defence examined four witnesses in support of its stand that the accused had not received any bribe and he was falsely implicated without any basis.
The Special Judge accepted the prosecution case and convicted the appellant in the manner already indicated.
His appeal to the High Court has failed.
Ordinarily the Supreme Court does not enter into re appreciation of evidence in exercise of its jurisdiction under Article 136 of the Constitution (see Ram Parkash Arora vs State of Punjab).
It is also true that in the case of State of Bihar vs Basawan Singh a five Judge Bench of this Court has laid down that if any of the witnesses are accomplices, their evidence is admissible in law but the Judge should indicate in his judgment that he had the rule of caution in mind namely, the danger of convicting the accused on the uncorroborated testimony of an accomplice and give reasons for considering it unnecessary to require corroboration; if, however, the witnesses are not accomplices but are merely partisan or interested witnesses, who are concerned in the success of the trap, their evidence must be tested, in the same way as any other interested evidence is tested, and in a proper case, the Court may look for independent corroboration before convicting the accused person.
There are certain features in this case which appear to have been overlooked both by the trial Court as also the High Court.
The 1140 two panch witnesses have not only turned hostile, but have disclosed fact which support the defence version of the incident.
PW. 2, the decoy witness has stated facts which probabilise the defence stand.
Even the literate Constable PW. 7 who has not been declared hostile has supported the defence version.
The place and the manner in which the bribe is said to have been offered and received make the prosecution story totally opposed to ordinary human conduct a feature which the two Courts have overlooked.
We are of the opinion that this is a case where the evidence has to be looked into with a view to finding out whether the prosecution case can at all be accepted.
The restriction on appreciation of evidence of an appeal by special leave is a self imposed one and is not a jurisdictional bar.
While we reiterate that ordinarily this Court would refrain from reexamining the evidence, in a case where serious injustice would be done if the evidence is not looked into it would not be proper for the Court to shun attention by following the self imposed restriction.
Prosecution has examined 8 witnesses in all.
PW. 5, as already noted, is the Superintendent of Police (Intelligence) at Jaipur who is not a material witness at all.
Similarly, PW.8 being the Superintendent of Police of Bharatpur, is connected with sanction for prosecution and is not material for any other purpose.
This leaves six witnesses in the field.
Of them, PWs.
1 and 6 are of the Anti Corruption Department, PW. 1 being a literate Constable attached to that establishment and PW. 6 being the Dy.
Superintendent of Police under whose active supervision the trap was laid.
PW. 2 is the decoy witness himself on whose report the trap was laid.
3 and 4 are the Panch witnesses and PW. 7 is a literate Constable attached to the Police Station.
PW. 2 is a supplier of water at the bus stand like DW. 1.
From his own evidence it appears that he has been involved in laying of traps.
In his cross examination he has admitted: "before this occurrence, I took the Dy.
section P. for arresting another employee Shankerlal.
The statement A V in exhibit P. 8 was given by me in the presence of the Deputy Sahib.
" He seems to have made two other complaints before the police and those were found to be false and police had already decided to prosecute him under section 182, I.P.C.
It is after that incident that present move had been taken.
PW. 2 has admitted in his cross examination: "Prior to this I took the Deputy Sahib to get Shankerlal caught but Shankerlal could not be caught and the Deputy said that you have harassed me for nothing.
" It is the case of the prosecution that Shankerlal was the Head Constable 1141 attached to the police station and that PW. 2 had negotiated with him.
PW. 3 who is a Panch witness has stated that the Deputy Superintendent of Police had told him that Ram Swaroop was giving illegal gratification to Shankerlal.
PW. 3 was previously employed in the Police Department, and had been discharged.
According to him, the name of the accused was never discussed and even at the time of payment it was Shankerlal who was supposed to receive the bribe.
PW. 3 has said that he is not a literate person and his statement and signature had been extracted from him under pressure.
PW. 4, the other Panch witness has similarly stated that he had been told that Shankerlal was to be bribed and he made no statement with reference to the accused.
In view of this evidence it becomes doubtful whether the Panch witnesses had really anything to do with the offer of bribe to the present accused.
Since PW. 2 admitted the position that the Deputy Superintendent of Police had been taken previously in respect of a bribe to Shankerlal and the two Panch witnesses have referred to that incident, it appears logical to infer that these two witnesses were really referring to the other incident.
The defence version seems to be that the trap had been arranged with reference to Shankerlal.
Ram Swaroop on reaching the bus stand requested DW. 1 to ask Shankerlal to come but since Shankerlal was absent from the Police Station, the accused who was the senior most of the lot then available within the police station came out.
This part of the defence story has been supported by PW. 7 Kedar Nath, a Constable attached to the Police Station.
He in his cross examination has stated: "Banshi Kumar said that Shankerlal Head Constable is being called at the stand.
There I, Babu Ram, Constable and Khilli Ram (accused) were present.
We said, 'Khilli Ram, you being the Head may go '.
Accordingly he went.
" To that effect is the evidence of DW.
I, the person whose services Ram Swaroop had admittedly taken to call the accused from the police station.
He stated: "Shankerlal was sent for from the police station at 6 p.m. 2 years 20 days ago.
Then one more person was with him.
I went to the Police station Bhusawar.
Shankerlal was not found there.
The two constables and the accused present in the Court were there.
On the advice of the police constables the accused accompanied me to the bus stand.
" The evidence of PW. 7 and DW. 1 thus clearly support the position we have indicated above.
It is quite probable, therefore, that PW. 2 had negotiated with Shankerlal only and so far as the accused is concerned there was no negotiation and he had come out to the bus stand after being told by DW. 1 in the manner and circumstances indicated by PW. 7 and DW. 1.
If that be so, 1142 implicating the accused for the offence of receiving bribe would be without any basis.
PW. 2 stated in his evidence that the appellant had demanded a sum of Rs. 100.
When this was pointed out to him in cross examination he stated that the accused demanded Rs. 100 from him for taking out the application and this was settled between to be paid to the accused.
This part of the story runs counter to the deposition of PW. 6 who stated: "Ram Swaroop came to my office on 30.3.69 and said that Shankerlal has been transferred and in his place Khilli Ram, Head Constable has came and the latter has settled with me to accept bribe of Rs. 50.
" The discrepancy is indeed a material one in the facts of the case.
The defence of the appellant has all throughout been that he never received any bribe.
PW. 1 in his evidence in chief has stated that the Deputy Superintendent of Police demanded the bribe amount to be taken out and the accused stated that he had not received the amount.
To the same effect is the evidence of PW. 2.
This evidence of PWs.
1 and 2 makes it clear that the first reaction of the accused when accosted was a denial of receipt of any bribe.
That has reiterated the same in his examination under section 342, Cr. P. C.
According to the defence version of the matter there was really no passing of any money.
PW. 1, the Constable accompanying the Dy.
Superintendent of Police, according to the prosecution, searched the person of the accused and found the five currency notes.
There is no acceptable evidence that the Constable had given search of his person before he started searching the person of the accused.
PW. 6, the Dy.
Superintendent of Police was at a distance.
He had not seen the actual passing of the money.
Once PWs.
3 and 4 the Panch witnesses did not support the prosecution case, the only evidence for the passing of the money has to rest is of PWs.
1 and 2.
Both of them were vitally interested in the fate of the prosecution and would, therefore, be disposed to support the prosecution case.
We have already indicated that PW. 2 was anxious to satisfy the police as he was about to face the prosecution under section 182, I.P.C. for having made false allegation in two cases.
The Deputy Superintendent of Police has stated that he had taken PW. 2 to task for having brought him once to Bhusawar on the allegation that Shankerlal was to receive the bribe and that had failed.
In these circumstances it is quite likely that these two witnesses would go out of their way to support the prosecution version.
1143 If Shankerlal was the person with whom PW. 2 had negotiated in the matter of taking of the bribe, it would indeed be difficult to accept, the position that the accused readily agreed to receive the amount when offered.
The accused was, according to the prosecution evidence, in full uniform.
He had been called up to the bus stand which is a public place.
There is evidence to show that there were many people moving around and the area was crowded.
There is also evidence that the place where PW. 2 met the accused with the money was close to a hotel where people were standing.
In such a surrounding a police man in uniform would ordinarily not accept a bribe.
The police station was not far away and if the accused wanted actually to receive the bribe he would try to chose a better environment for it than the one where the bribe is said to have been given.
Human compunction would not permit a man in the position of the accused to behave in the manner prosecution has pictured him to have.
There is also evidence that the money had not really been received by the accused and PW. 1 raised shouts that the bribe had been accepted before the amount was paid.
PW. 3 has narrated this part of the story thus.
"There the Deputy Sahib and we all stood at on place and Ram Swaroop (PW. 2) and Prabhu Dayal (PW. 1) went towards the police station.
Both had some talks.
Prabhu Dayal remained this side and Ram Swaroop went inside the police station.
Ram Swaroop returned and looked here and there.
In the meantime Prabhu Dayal constable shouted that the money has been found, come on; come on. " PW. 4 stated that he did not see anybody giving or taking illegal gratification.
DW. 1 has stated: "I told pointing toward Ram Swaroop and his companions that they are summoning.
Thereupon the companion of Ram Swaroop (refereeing to Prabhu Dayal) shouted near the 'Imli ' tree that 'caught, caught '.
He took out from the pocket of his pant notes like and putting them in his hand shouted, 'caught, caught '.
" DW. 3 the hotelier has stated: "I and the Inspector went together, then the notes were in the hand of a Constable." He has further said that the Constable was shouting that the amount had been recovered from Khilli Ram.
DW. 4, an independent witness 1144 described this part of the story thus: "At the same time, Banshi waterman and Killi Ram accused present in the Court came from the side of Police Station.
The man standing near Ram Swaroop (obviously Prabhu Dayal), shouted: 'caught, caught '.
He took out the currency notes of Rs. 50 from his (witness ') pocket and raised this alarm." In cross examination this witness stated that the person who raised the cry said that the notes have been recovered from Khilli Ram but Khilli Ram was saying that he did not take the notes.
Two other aspects are relevant to be indicated here.
According to PW. 1, Kastoori Lal, the Deputy Superintendent of Police ordered him to take the search of the accused whereupon he proceeded to do the needful.
PW. 2, however, stated that it was the Dy.
Superintendent of Police who recovered the notes from the accused.
PW. 6 has, however, indicated that under his orders search was conducted by PW. 1.
There is again material discrepancy as to from where the amount was recovered.
PW. 2 has stated that the accused kept the notes of Rs. 50 given by him in the left side pocket of his shirt.
PW. 6 has stated: "When Prabhu Dayal conducted the search of the accused, Ext.
P 1, 2, 3, 4 and 5 notes of the denomination of Rs. 10 each were found out from the right side pocket of the shirt of the accused." Ext.
P 1 is the recovery memo purported to have been prepared att he spot.
It indicates: "Then the settled five currency notes of the denomination of Rs. 10 each were recovered from the right hand pocket of the worn shirt of khaki uniform.
" There is thus a discrepancy as to the place from where recovery was made.
It was pointed out by this Court in Raghbir Singh vs State of Punjab: "Where a trap is laid for a public servant, it is desirable that the marked currency notes which are used for the purpose of trap, are treated with phenolphthalein powder so that the handling of such marked currency notes by the public servant can be detected by chemical process and the Court does not have to depend on oral evidence which is sometimes of dubious character for the purpose of deciding the fate of the public servant." Ordinarily in cases of this type the powder treatment is made.
There is no material at all on the record to explain why such a 1145 process was not followed in the instant case even though detection is alleged to have been handled by experienced people of the Anti Corruption Department.
PW. 6 was a very senior officer and in fact by the time the trial took place he had retired from service.
It is difficult for us to accept the position that he was not aware of the powder treatment.
It has been in vogue for well over three decades now.
If such powder treatment had been made, the passing of the bribe would indeed not have been difficult to be proved.
We are prepared to agree with counsel to the State of Rajasthan that ordinarily a case of type is difficult to prove and the law is settled that even the uncorroborated testimony of trap witnesses can be acted upon as indicated by this Court in the case of Prakash Chand vs State (Delhi Administration), and Kishan Chand Mangal vs State of Rajasthan, but in the present case the evidence of the panchas is not available to support the prosecution case.
There is discrepancy in many material aspects.
The prosecution story is opposed to ordinary human conduct.
The discrepancies go to the root of the matter and if properly noticed would lead any court to discard the prosecution version.
Without powder treatment, for the absence of which no explanation has been advanced, the prosecution story becomes liable to the rejected.
An overall assessment of the matter indicates that the story advanced by the prosecution is not true and the defence version seems to be more probable.
In these circumstances we are of the view that sufficient material has been brought out to merit interference in this appeal.
We allow the appeal, set aside the conviction of the appellant and acquit him.
He is discharged form his bail bond.
N.V.K. Appeal allowed.
|
The prosecution alleged that PW 2 had given a First Information Report of two offences but appropriate investigation was not being done and charge sheet was not being furnished to the Court.
When PW. 2 contacted the Appellant the Head Constable of the Police Station he demanded money.
2 thereupon informed the Anti Corruption Department about the demand and the Deputy Superintendent of Police agreed to lay a trap.
Details were fixed and the trap was laid.
An amount of Rs. 50 was passed on as the bribe.
Five currency notes each of Rs. 10 denomination with marked initials were made over to PW. 2 to be given as bribe to the accused.
The prosecution further alleged that the accused came pursuant to the request and the money was passed on and the payment of bribe was duly detected.
The Special Judge accepted the prosecution case, convicted the Appellant under section 161 of the Indian Penal Code as also section 5(1)(d) and section 5(2) of the Prevention of Corruption Act, 1947 and imposed a consolidated sentence of two years ' rigorous imprisonment.
The conviction and sentence were upheld in appeal by the High Court.
Allowing the Appeal, to this Court, ^ HELD: 1.
The restriction on appreciation of evidence in an appeal by special leave is a self imposed one and is not a jurisdictional bar.
Whileordnai 1137 rily this Court would refrain from re examining the evidence in a case where serious injustice would be done if the evidence is not looked into it would not be proper for the Court to shun attention by following the self imposed restriction.
[1140C] Ram Prakash Arora vs State of Punjab, [1972] Crl.
L. J. 1293 and State of Bihar vs Basawan Singh ; ; referred to.
In the instant case, certain important features have been overlooked both by the trial Court as also by the High Court.
The two panch witnesses have not only turned hostile, but have disclosed facts which support the defence version of the incident.
PW. 2, the decoy witness has stated facts which probabilise the defence stand.
Even the literate Constable PW. 7 who has not been declared hostile has supported the defence version.
The Place and the manner in which the bribe is said to have been offered and received make the prosecution story totally opposed to ordinary human conduct.
[1139 H; 1140 A B] 2.
Sufficient material has been brought out to merit interference.
The evidence of the panchas is not available to support the prosecution case.
There is discrepancy in many material aspects.
The prosecution story is opposed to ordinary human conduct.
The discrepancies go to the root of the matter and if properly noticed would lead any court to discard the prosecution version.
Without powder treatment, for the absence of which no explanation has been advanced the prosecution story becomes liable to be rejected.
An overall assessment of the matter indicates that the story advanced by the prosecution is not true and the defence version seems to be more probable.
The conviction of the appellant is therefore set aside and he is acquitted.
He is discharged from his bail bond.
[1145 C E] Prakash Chand vs State (Delhi Administration), ; and Kishan Chand Mangal vs State of Rajasthan ; ; referred to.
The accused was, according to the prosecution evidence, in full uniform.
He had been called up to the bus stand which is a public place.
There is evidence to show that there were many people moving around and the area was crowded.
There is also evidence that the place where PW. 2 met the accused with the money was close to a hotel where people were standing.
In such a surrounding a police man in uniform would ordinarily not accept a bribe.
The police station was not far away and if the accused wanted actually to receive the bribe he would try to choose a better environment for it than the one where the bribe is said to have been given.
Human compunction would not permit a man in the position of the accused to behave in the manner prosecution has pictured him to have.
There is also evidence that the money had not really been received by the accused and PW I raised shouts that the bribe had been accepted before the amount was paid.
PW. 3 has also stated that he did not see anybody giving or taking illegal gratification.
[1143 B D] 4.
There is no material at all on the record to explain why the powder treatment process was not followed even though the detection is alleged to have been handled by experienced people of the Anti Corruption Department.
It is difficult to accept the position that PW. 6 was not aware of the powder treat 1138 ment.
It has been in vogue for well over three decades.
If such powder treat ment had been made the passing of the bribe would indeed not have been difficult to be proved.
[1145 A B] Raghbir Singh vs State of Punjab , referred to.
|
ivil Appeal No. 3927 of 1986.
From the Judgment and Order dated 18.6.
1986 of the Bombay High Court in Writ Petition No. 10 of 1980.
S.K. Dholakia, A.M. Khanwilkar and Mrs. V.D. Khanna for the Appellant.
V.M. Tarkunde, Karanjawala, Mrs. Karanjawala and H.S. Anand for the Respondent.
The Judgment of the Court was delivered by: K. JAGANNATHA SHETTY, J.
This appeal by leave is from a decision of the Bombay High Court which allowed the respond ent 's petition for a writ of certiorari.
In so doing the court quashed departmental proceedings initiated against the respondent and the resultant order terminating his services.
The facts are substantially undisputed and may briefly be stated as follows: Respondent Seshrao Balwant Rao Chavan was at the rele vant time the Deputy Registrar of the Marathwada University.
One Mr. Yelikar was working then as Controller of Examina tions.
In or about April 1976, Mr. Yelikar proceeded on leave and the present respondent was directed to discharge the duties of the Controller of Examinations.
Accordingly, he joined his new assignment and continued to hold 458 that post when the controversy which culminated in his dismissal took place.
It is said that one Mr. Swaminathan from Madras was entrusted with the printing works needed to conduct annual examinations of the University for the years 1974 and 1975.
Mr. Swaminathan submitted his bills amounting about Rs.6,00,000 for the work performed by him.
The bills were not cleared immediately, and Mr. Swaminathan complained to the University authorities.
He also submitted a petition to the Prime Minister of India which was forwarded to the University for immediate action.
This led to an enquiry to find out whether the bills were deliberately kept pending with any ulterior motive.
The Executive Council of the University appointed a four member committee including the Vice Chancellor to enquire into the matter.
The committee after investigation submitted a report in November 1977 making some prima facie observations against the respondent.
Thereupon, the Executive Council desired to have the matter thoroughly examined by another committee.
It appointed Mr. N.B. Chavan for the purpose.
Mr. Chavan made a detailed enquiry but found nothing against the respondent.
On Decem ber 23, 1978, he submitted a report stating inter alia that there was no delay in clearing the said bills and if there was any delay, it was justified in the circumstances.
He has stated that the University utilised the time for internal audit in which it was found that the claim of Mr. Swamina than was excessive to the extent of Rs.48,000 and odd.
The report of Mr. Chavan thus gave a clean chit to the respond ent as to his conduct in discharging the duties as Control ler of Examinations.
If the Executive Council had accepted the report and closed the matter that would have been better.
But unfortu nately, it was not done and another chapter was opened.
On March 22, 1979, the report of Mr. Chavan was placed before the Executive Council which without taking any decision entrusted the question to the Vice Chancellor.
The Vice Chancellor was present in that meeting and agreed to take a decision in about a month.
But what he did was entirely different.
Purporting to act under the powers given to him by the Executive Council, he directed departmental enquiry against the respondent.
He appointed Mr. Motale, Advocate as an Inquiry Officer who flamed three charges: First charge impeached the respondent of intentionally delaying the clearance of the bills of Mr. Swaminathan and thus tarnish ing the image of the University.
Second charge alleged that the respondent did not place before the Executive Council, the letters , addressed by the Chancellor of the University on July 23, 1976 and 459 August 19, 1976.
Third charge accused the respondent for not producing all the available papers for scrutiny by the one man committee headed by Mr. Chavan.
On October 25, 1979, Mr. Motale submitted his ' enquiry report to the Vice Chancellor holding the respondent guilty of the charges.
After a usual procedure of giving show cause notice and considering the reply thereto, the Vice Chancel lor decided to dismiss the respondent.
On January2, 1980, he accordingly made an order.
The matter did not rest there.
The respondent moved the High Court under article 226 of the Constitution challenging his dismissal.
When the writ petition first came up for hearing in November 1985, the High Court took a very curious stand.
It observed that the entire matter be placed before the Executive Council for taking an appropriate decision.
As per this observation, the matter came up before the Executive Council in the meeting held on December 26/27, 1985.
The Executive Council passed a resolution inter alia, ratifying the action taken by the Vice Chancellor and confirming the dismissal of the respondent.
This has added a new dimension to the case.
At the final disposal of the writ petition, the High Court, however, examined the merits of the matter.
The High Court held that the action taken by the Vice Chancellor was without authority of law.
As to the ratification made by the Executive Council, the High Court held: "That the acts done by the Vice Chancellor remain the acts without any authority or powers and that defects cannot be cured by the subsequent resolution." With these conclusions, the High Court quashed the departmental proceedings taken against the respondent and also the order of termination of his services.
Being aggrieved by the judgment, the Marathwada Univer sity by obtaining special leave has appealed to this Court.
Learned counsel for the appellant put his contention in two ways: First, he said that on the true construction of the relevant provisions of the Marathwada University Act, 1974, the termination of services of the respondent cannot be assailed for want of power or jurisdiction on the part of the Vice Chancellor.
Counsel next said that if the order was defective or without authority, the ratification by the Executive Council has rendered it immune from any challenge.
In order to appreciate these submissions, we must outline the 460 statutory provisions of the Marathwada University Act, 1974 (called shortly "the Act").
Section 8 specifies the officers of the University.
The Vice Chancellor is one of the offi cers.
Section 10 provides for appointment of the Vice Chan cellor.
He shall be appointed by the Chancellor and shall ordinarily hold office for a term.
of three years.
Section 11 reads, so far as material, as follows: "11(1): The Vice Chancellor shall be the principal executive and academic officer of the University, and shah in the absence of the Chancellor, preside at the meetings of the Senate and at any Convocation of the Universi ty . " "11(3): It shah be the duty of the Vice Chancellor to ensure that the provisions of this Act, the Statutes, Ordinances and Regulations are faithfully observed.
The Chancellor shall, for this purpose, have the power to issue directions to the Vice Chancel lor who shall give effect to any such direc tions.
" 11(4): If there are reasonable grounds for the Vice Chancellor to believe that there is an emergency which requires immediate action to be taken, he shall take such action as he thinks necessary and shall, at the earliest opportunity, report in writing the grounds for his belief that there was an emergency, and the action taken by him, to such authority or body as would in the ordi nary course, have dealt with the matter . ." 11(6)(a): It shall be lawful for the Vice Chancellor, as the principal executive and academic officer, to regulate the work and conduct of the officers, and of the teaching, academic and other employees of the Universi ty, in accordance with the provisions of this Act, the Statutes, Ordinances and Regulations." "11(7): The Vice Chancellor shah exercise such other powers and perform such other duties as are prescribed by the Stat utes, Ordinances and Regulations.
" Section 19 enumerates the authorities of the University.
The Executive Council is one of the authorities specified thereunder.
Section 23 to the extent necessary is in the following terms: 461 "23(1): The Executive Council shall be the principal executive authority of the University, and shall consist of the following members, namely,: (i) the Vice Chancellorex officio Chairman.
" Section 24 deals with the powers and duties of the Executive Council.
These powers and duties are wide and varied and it is sufficient if we read sub sections (1), (xxix) and (xii) of sec.
They are as follows: "24(1): Subject to such conditions as are prescribed by or under this Act, the Executive Council shall exercise the following powers and perform the following duties, namely . . " "24(1)(xxix): appoint officers and other employees of the University, prescribe their qualifications, fix their emoluments, define the terms and conditions of their service and discipline and where necessary, their duties." "24(1)(x1i): delegate, subject to the approval of the Chancellor, any of its powers (except the power to make Ordinances), to the Vice Chancellor, the Registrar or the Finance Officer, or such other officers or authority of the University or a committee appointed by it, thinks fit." Two other provisions are material, namely, secs.
37 and 84.
Section 37, omitting the unnecessary, is in these terms: Sec.
37 Subject to the conditions prescribed by or under this Act, the Senate may make the Statutes to provide for all or any of the following matters namely: (xvi): The term of office, duties and condi tions of service of officers, teachers and other employees of the University, the provi sions of pension, insurance and provident fund and the manner of termination of their service and other disciplinary action and their quali fications, except those of teachers.
" Section 34 is as follows: "Delegation of powers: Subject to the provi sions of 462 this Act and Statutes any officer or authority of the University may, by order, delegate his or its powers, except.the power to make Stat utes, Ordinances and Regulations, to any other officer or authority under his or its control, and subject to the conditions that the ulti mate responsibility for the exercise of the powers so delegated shall continue to vest in the officer or authority delegating them.
" With these provisions, we turn to consider the first question urged for the appellant.
The question is whether the Vice Chancellor was competent to direct disciplinary action against the respondent.
In this context, we may make a few general observations about the position and powers of the Vice Chancellor.
The University Education Commission in its report (Vol.
I December 1948 to August 1949) has summarised the powers and duties as fol lows (at 421): "Duties of Vice Chancellor A Vice Chancellor is the chief academic and executive officer of his university.
He presides over the Court (Senate) in the absence of the Chancellor, Syndicate (Executive Council), Academic Council, and numerous committees including the selection committees for ap pointment of staff.
It is his duty to know the senior members of the staff intimately and to be known to all members of the staff and students.
He must command their confidence both by adequate academic reputation and by strength of personality.
He must know his university well enough to be able to foster its points of strength and to foresee possible points of weakness before they become acute. ' He must be the 'keeper of the university 's conscience ', both setting the highest standard by example and dealing promptly and firmly with indiscipline and malpractice of any kind.
All this he must do and it can be done as constitutional ruler; he has not, and should not have autocratic power.
Besides, this he must be the chief liaison between his univer sity and the public, he must keep the univer sity alive to the duties it owes to the public which it serves, and he must win support for the university and understanding of its needs not merely from potential benefactors but from the general public and its elected representa tives.
Last, he must have the strength of character to resist unflinchingly the many forms of pressure to relax standards of all sorts, which are being applied to universities today.
" 463 This has been approved by the Education Commission, 1964 66.
In the report of the Education Commission, 1971 (pages 610 11 para 13.32) it was stated: "The person who is expected, above all, to embody the spirit of academic freedom and the principles of good management in a university is the Vice Chancellor.
He stands for the commitment of the university to schol arship and pursuit of truth and can ensure that the executive wing of the university is used to assist the academic community in all its activities.
His selection should, there fore, be governed by this overall considera tion.
" Dr. A.H. Homadi in his wise, little study about the role of the Vice Chancellor in the university administration in developing coun tries has this to state (at 49): The President or the Vice Chancellor: "The President must be willing to accept a definition of educational leadership that brings about change to the academic life of the institution.
He must be fired by a deep concern for education.
He should instil a spirit and keeness about growth and develop ment in such a way that the professiriate feels that their goals are interlinked with those of the University, that their success depends upon the success of the University.
The professors should be given detailed infor mation about the jobs that they have to per form and their good performance should be given due recognition by administration lead ership.
Even such small encouragement will boost theft morale to greater heights.
The President should have faith in his own abili ties as well as on the abilities of other professors and administrators and should provide guidelines about the kind of efforts he would like his professors and administra tors to make, setting an example by his own actions and exercises.
The negative force of fear, when used and no one denies that an element of hard headedness is some times required as a persuasive inducement to profes sors and administrators of university should be employed judiciously.
Under no circum stances should the apathy and belligerence of the professors and administrators be aroused.
These call for strong but sympathetic leader ship in the President.
" 464 The Vice Chancellor in every university is thus the conscious keeper of the University and constitutional ruler.
He is the principal executive and academic officer of the University.
He is entrusted with the responsibility of overall administration of academic as well as nonacademic affairs.
For these purposes, the Act confers both express and implied powers on the Vice Chancellor.
The express powers include among others, the duty to ensure that the provisions of the Act, Statutes, Ordinances and Regulations are observed by all concerned.
(Section 11(3)).
The Vice Chancellor has a right to regulate the work and conduct of officers and teaching and other employees of the University (Section 11(6)(a)).
He has also emergency powers to deal with any untoward situation (Section 11(4)).
The power conferred under sec.
11(4) is indeed significant.
If the Vice Chancellor believes that a situation calls for immedi ate action, he can take such action as he thinks necessary though in the normal course he is not competent to take that action.
He must, however, report to the concerned authority or body who would, in the ordinary course, have dealt with the matter.
That is not all.
His pivotal position as the principal executive officer also carries with him the im plied power.
It is the magisterial power which is, in our view, plainly to be inferred.
This power is essential for him to maintain domestic discipline in the academic and non academic affairs.
In a wide variety of situations in the relationship of tutor and pupil, he has to act firmly and promptly to put down indiscipline and malpractice.
It may not be illegitimate if he could call to aid his implied powers and also emergency powers to deal with all such situations.
Counsel for the appellant argued that the express power of the Vice Chancellor to regulate the work and conduct of officers of the University implies as well, the power to take disciplinary action against officers.
We are unable to agree with this contention.
Firstly, the power to regulate the work and conduct of officers cannot include the power to take disciplinary action for their removal.
Secondly, the Act confers power to appoint officers on the Executive Council and it generally includes the power to remove.
This power is located under sec.
24(1)(xxix) of the Act.
It is, therefore, futile to contend that the Vice Chancellor can exercise that power which is conferred on the Executive Council.
It is a settled principle that when the Act pre scribes a particular body to exercise a power, it must be exercised only by that body.
It cannot be exercised by others unless it is delegated.
The law must also provide for such delegation.
Halsbury 's Laws of England (Vol.14th Ed. para 32) summarises these principles as follows: 465 "32.
Sub delegation of powers.
In accordance with the maxim delegatius non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, unless sub delegation of the power is authorised by express words or necessary implication.
There is a strong presumption against construing a grant of legislative, judicial or disciplinary power as impliedly authorising sub delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind.
" The counsel for the appellant next submit ted that the Executive Council in the instant case had delegated its disciplinary power to the Vice Chancellor and the Act provides for such delegation.
In support of the contention he relied upon the following resolution of the Executive Council: "Full power be given to the Vice Chancellor to take a decision on this question and the Vice Chancellor informed the Executive Council that he will take decision in about a month On this decision, Shri Gangadhar Pa thrikar gave his opinion that the Executive Council should take a decision on the note dated 16.1.
1979 submitted by him and other two members and since it was not accepted, he does not agree with the above decision." This resolution, in our opinion, is basically faulty at least for two reasons.
It may be recalled that the Executive Council without considering the report of Mr. Chavan, wanted the Vice Chancellor to take a decision thereon.
It may also be noted that the Vice Chancellor was present at the meeting of the Executive Council when the resolution was passed.
He was given "full power to take a decision" which in the context, was obviously on the report of Mr. Chavan, and not on any other matter or question.
He said that he would take a decision in about a month.
In our opinion, by the power delegated under the resolution, the Vice Chancellor could either accept or reject the report with intimation to the Executive Council.
He could not have taken any other action and indeed, he was not authorised to take any other action.
The other infirmity in the said resolution goes deeper than what it appears.
The resolution was not in harmony with the statutory requirement.
Section 84 of the Act provides for delegation of powers and 466 it states that any officer or authority of the University may by order, delegate his or its power (except power to make Ordinance and Regulations) to any other officer or authority subject to provisions of the Act and Statutes.
Section 24(1)(xii) provides for delegation of power by the Executive Council.
It states that the Executive Council may delegate any of its power (except power to make Ordinances) to the Vice Chancellor or to any other officer subject to the approval of the Chancellor.
(underlying is ours).
The approval of the Chancellor is mandatory.
Without such ap proval the power cannot be delegated to the Vice Chancellor.
The record does not reveal that the approval of the Chancel lor was ever obtained.
Therefore, the resolution which was not in conformity with the statutory requirement could not confer power on the Vice Chancellor to take action against the respondent.
This takes us to the second contention urged for the appellants.
The contention relates to the legal effect of ratification done by the Executive Council in its meeting held on December 26/27, 1985.
The decision taken by the Executive Council is in the form of a resolution and it reads as follows: "Considering the issues, the Execu tive Council resolved as follows: 1.
The Executive Council at its meeting held on March 22, 1979, had by a resolution given full authority to the Vice Chancellor for taking further proceedings and decision in both the cases of the defaulting officers.
In exercise of above authority, the Vice Chancellor appointed an Inquiry Officer and as suggested by the Inquiry Offi cer issued Show Cause notices, obtained re plies from the Officers and lastly issued orders for terminating their services; XXX XXX XXX XXX XXX It was further resolved that (i) There has been no inadequacy in the pro ceedings against both the officers; (ii) The punishment ordered against both the officers is commensurate with the defaults and allegations proved 467 against both the officers; and (iii) The Executive Council, therefore, whol ly, endorses the actions taken by the then Vice Chancellor against both the officers.
" By this resolution, we are told that the Executive Council has ratified the action taken by the Vice Chancellor.
Ratification is generally an act of principal with regard to a contract or an act done by his agent.
In Friedman 's Law of Agency (Fifth Edition) chapter 5 at p. 73, the/principle of ratifica tion has been explained: "What the 'agent ' does on behalf of the 'principal ' is done at a time when the relation of principal and agent does not exist: (hence the use in this sentence, but not in subsequent ones, of inverted commas).
The agent, in fact, has no authority to do what he does at the time he does it.
Subse quently, however, the principal, on whose behalf, though without whose authority, the agent has acted, accepts the agent 's act, and adopts it, just as if there had been a prior authorisation by the principal to do exactly what the agent has done.
The interesting point, which has given rise to considerable difficulty and dispute, is that ratification by the principal does not merely give validity to the agent 's unauthorised act as from the date of the ratification: it is antedated so as to take effect from the time of the agent 's act.
Hence the agent is treated as having been authorised from the outset to act as he did.
Ratification is 'equivalent to an antecedent authority ' .
" In Bowstead on Agency (14th Ed.) at p. 39) it is stated: "Every act whether lawful or unlaw ful, which is capable of being done by means of an agent (except an act which is in its inception void) is capable of ratification by the person in whose name or on whose behalf it is done . .
The words "lawful or unlawful", however, are included primarily to indicate that the doctrine can apply to torts.
From them it would follow that a principal by ratification may retrospectively turn what was previously an act wrongful against the princi ple, e.g. an unauthorised sale, or against a third party, e.g. a wrongful distress, into a legitimate one; or become liable for the tort of another by ratifying.
" 468 These principles of ratification, apparently do not have any application with regard to exercise of powers conferred under statutory provisions.
The statutory authority cannot travel beyond the power conferred and any action without power has no legal validity.
It is ab initio void and cannot be ratified.
The counsel for the appellant, however, invited our attention to the case of Parmeshwari Prasad Gupta vs The Union of India, ; It was a case of termina tion of services of the Secretary of a Company.
The Board of Directors decided to terminate the services of the Secre tary.
The Chairman of the Board of Directors in fact termi nated his services.
Subsequently, in the meeting of the Board of Directors the action taken by the Chairman was confirmed.
In the suit instituted by the Secretary challeng ing the termination of his services, the Court upheld on the principle that the action of the Chairman even though it was invalid initially, could be validated by ratification in a regularly convened meeting of the Board of Directors.
Ma thew, J. while considering this aspect of the matter, ob served [at pp.
307 and 308] "Even if it be assumed that the telegram and the letter terminating the services of the appellant by the Chairman was in pursuance to the invalid resolution of the Board of Direc tors passed on December 16, 1953 to terminate his services, it would not follow that the action of the Chairman could not be ratified in a regularly convened meeting of the BOard of Directors.
The point is that even assuming that the Chairman was not legally authorised to terminate the services of the appellant, he was acting on behalf of the Company in doing so, because, he purported to act in pursuance of the invalid resolution.
Therefore, it was open to a regularly constituted meeting of the Board of Direction to ratify that action which, though unauthorised, was done on behalf of the Company.
Ratification would always relate back to the date of the act ratified and so it must be held that the services of the appellant were validly terminated on December 17, 1953.
The appellant was not entitled to the declaration prayed for by him and the trial court as well as the High Court was right in dismissing the claim.
" These principles of ratification governing transactions of a company where the general body is the repository of all powers not be 469 extended to the present case.
We were also referred to the decision of the Court of Appeal in Barnard vs National Dock Labour Board, [1953] 1 All Eng.
Law Reports 1113 and in particular the observation of Denning L.J., (at 1118 and 1119): "While an administrative function can often be delegated, a judicial function rarely can be.
No judicial tribunal can dele gate its functions unless it is enabled to do so expressly or by necessary implication.
In Local Government Board vs Arlidge (2) the power to delegate was given by necessary implication, but there is nothing in this scheme authorising the board to delegate this function and it cannot be implied.
It was suggested that it would be impracticable for the board to sit as a board to decide all these cases, but I see nothing impracticable in that.
They have only to fix their quorum at two members and arrange for two members, one from each side, employers and workers, to be responsible for one week at a time.
"Next, it was suggested that, even if the board could not delegate their functions, at any rate they could ratify the actions of the port manager, but, if the board have no power to delegate their functions to the port manager, they can have no power to ratify what he has already done.
The effect of ratifica tion is to make it equal to a prior command, but as a prior command, in the shape of dele gation, would be useless, so also is a ratifi cation.
" These observations again are of little assistance to us since we have already held that there was no prior delega tion of power to the Vice Chancellor to take disciplinary action against the respondent.
There was no subsequent delegation either.
Therefore, neither the action taken by the Vice Chancellor, nor the ratification by the Executive Council could be sustained.
In the result, the appeal fails and is dismissed with costs.
N.V.K. Appeal dis missed.
|
The respondent was a Deputy Registrar of the appellant University.
As the Controller of Examinations had proceeded on leave the respondent was discharging the duties of Con troller of Examinations.
A complaint alleging that the respondent had delayed the payment of the bills of an out station party who had printed the question papers for the annual examination was received by the University.
The Executive Council of the University appointed an Enquiry Officer to hold an enquiry to find out whether the bills were deliberately kept pending with any ulterior motive.
The Enquiry Officer gave a clean chit to the respondent as to his conduct in discharging the duties as Controller of Examinations.
The Executive Council of the University did not take any decision on the report of the Enquiry Officer, but entrusted the question to the Vice Chancellor who was present at the meeting.
The Vice Chancellor directed a departmental enquiry against the respondent and appointed an advocate as the Enquiry Officer.
The Enquiry Officer by his report held the respondent guilty of all the charges levelled against him.
The Vice Chancellor after giving a show cause notice and considering the reply of the respondent, dismissed him from service.
The respondent moved the High Court under Article 226 chal 455 lenging his dismissal.
When the writ petition was taken up for hearing the High Court directed the entire matter to be placed before the Executive Council for an appropriate decision.
The Executive Council considered the matter at its meeting and passed a resolution ratifying the action taken by the Vice Chancellor, and confirming the dismissal of the respondent.
At the final disposal of the writ petition, the High Court examined the matter on merits and held that the action taken by the Vice Chancellor being without any au thority or power, these defects could not be cured by rati fication by the Executive Council in its subsequent resolu tion.
The High Court accordingly quashed the departmental proceedings taken against the respondent, and also the order of termination of his services.
In the appeal to this Court, it was contended on behalf of the University: (i)That on a true construction of the several provisions of the Marathwada University Act, 1974, the termination of services of the respondent cannot be assailed for want of power or jurisdiction on the part of the Vice Chancellor, and (2) that if the order was defective or without authority, the ratification by the Executive Council had rendered it immune from any challenge.
Dismissing the Appeal, the Court, HELD: 1.
The Vice Chancellor in every university is the conscious keeper of the University and the constitutional ruler.
He is the principal executive and academic officer of the University.
He is entrusted with the responsibility of overall administration of academic as well as non academic affairs.
[464A B] 2.
As the principal executive officer the Vice Chancel lor also carries with him an implied power, the magisterial power.
This power is essential for him to maintain domestic discipline in the academic and non academic affairs.
In a wide variety of situations in the relationship of tutor and pupil, he has to act firmly and promptly to put down indis cipline and malpractice.
It may not be illegitimate if he could call to aid his implied powers and also emergency powers to deal with all such situations.
[464D E] 3.
The Marathwada University Act, 1974 confers both express and implied powers on the Vice Chancellor.
The express powers include among others, the duty to ensure that the provisions of the Act, Statutes, Ordinances and Regula tions are observed by all concerned.
[Section 11(3)] He has a right to regulate the work and conduct of 456 Officers and teaching and other employees of the University [Sec. 11(b)(a)].
He has also emergency powers to deal with any untoward situation [Section 11(4)] a very significant power.
If he believes that a situation calls for immediate action, he can take such action as he thinks necessary, though in the normal course he is not competent to do so.
However he must report to the concerned authority or body, who would, in the ordinary course, have dealt with the matter.
[464B C] 4.
The power 'to regulate the work and conduct of the officers ' cannot include the power to take disciplinary action for their removal.
[464F] 5.
When a statute prescribes a particular body to exercise a power, it must be exercised only by that body.
[464G] Halsbury 's Laws of England Vol. 1, 4th Edn.
page 32, re ferred to.
The Marathwada University Act confers power to appoint officers on the Executive Council and it generally includes the power to remove.
This power is located under Section 24(1) (XXIX) of the Act.
[464F G] 7.
The resolution of the Executive Council at a meet ing, at which the Vice Chancellor was also present, gave full power to the Vice Chancellor 'to take a decision on this question '.
By the power delegated under the resolution, the Vice Chancellor could either accept or reject the report with intimation to the Executive Council.
He could not have taken any other action and indeed, he was not authorised to take any other action.
[465F G] : 8.
The resolution was also not in harmony with the statutory requirement.
Approval of the Chancellor to the delegation of power by the Executive Council to the Vice Chancellor was mandatory under section 24(1)(xii) read with section/84 of the Marathwada University Act.
The resolution not being in conformity with the statutory requirement could not confer power on the Vice Chancellor to take action j against the respondent.
[465H; 466A C] 9.
Ratification is generally an act of principal with regard to a contract or an act done by his agent.
The prin ciples of ratification in the context of the law of agency apparently do not have any application with regard to exer cise of power conferred under statutory provisions.
The statutory authority cannot travel beyond the power conferred and 457 any action without power has no legal validity.
It is ab initio void and cannot be ratified.
[468A B] Friedman 's Law of Agency (5th Edn.) Chapter 5at page 73, Bowstead on Agency (14th Ed.) at page 39, Parmeshwari Prasad Gupta vs Union of India, ; and Bernard vs National Dock Labour Board, [1953] 1 All Eng.
Law Reports 1113.
In the instant case, there was no prior delegation of power to the Vice Chancellor to take disciplinary action against the respondent.
There was no subsequent delegation either.
Therefore, neither the action taken by the Vice Chancellor, nor the ratification by the Executive Council could be sustained.
[469F]
|
Appeal No. 92 of 1952.
Appeal by special leave from the Judgment and Order dated 16th May, 1951, of the High Court of Judicature at Calcutta (Harries C. J. and Das J.) in Appeal from Original Order No. 136 of 1949 arising out of Judgment and Order dated the 25th April, ' 1949, of the said High Court (Banerjee J.) in Extra ordinary Suit No. 2 of 1948.
N. C. Chatterjee (B. Sen, with him) for the appellant.
section P. Sinha (A. K. Dutt, with him) for the respondent.
February 27.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal, which has come before us on special leave, is directed against a judgment of an Appellate Bench of the Calcutta High Court, dated the 16th May, 1951, by which the learned Judges dismissed an appeal taken against an order, made by a single Judge on the Original Side of that Court,, under clause 13 of the Letters Patent, on the preliminary ground that the appeal was not competent in law.
There is no dispute about the material facts of the case which lie with in a short compass.
On 7th August, 1947, a suit was filed by the respondent Kumar Rupendra Deb Raikot in the Court of the Subordinate Judge at Jalpaiguri in West Bengal,being Title Suit No. 40 of 1947,for recovery of possession of a large estate known as Baikunthapur Raj situated in that district, on the allegation that he, being the eldest son of late Prosanna Deb Raikot, the last holder of the estate, became entitled to the properties on the I death of his father under a custom of the family which excludes all females from inheritance and follows the rule of Iineal 1161 primogeniture in matters of succession.
Prosanna died in December, 1946, and Asrumati Debi, the appellant before us, is admittedly his widow.
There was no son born to her and her only child is a daughter named Prativa.
According to the plaintiff respondent, his mother Renchi Debi, who is a Lepcha by birth was another lawfully wedded wife of Prosanna and was married to the latter in what is known as the " Gandharba form.
Prosanna had three sons by this wife, the plaintiff being the eldest.
Asrumati, it is alleged, took possession of the bulk of the properties comprised in the estate on the death of her husband, although she had no legal right to the same and it was to evict her from these properties that this suit was brought.
Besides Asrumati, the plaintiff also impleaded three other agnatic relations of the deceased (who are defendants Nos. 2 to 4) and also his own two younger brothers as defendants to the suit.
Asrumati filed her written statement on January 19, 1948, and the main defence put forward by her was that there was no legal marriage between her husband and the plaintiff 's mother, the latter being only one of the several mistresses of her husband.
She denied that there was any custom in the family under which females were excluded from inheritance.
The defendants 2 to 4 also filed written statements, challenging the legitimacy of the plaintiff and his claim to succession, and put forward their own rights as heirs under the customary law obtaining in the family.
On 30th April, 1948, the plaintiff presented an application in the Original Side of the High Court of Calcutta under clause 13 of the Letters Patent, praying for transfer of the suit filed in the Jalpaiguri court to the High Court to be tried in its Extraordinary Original Civil Jurisdiction.
This application was heard by Banerjee J. sitting singly and by his order dated the 25th of April, 1949, the learned Judge allowed the application, substantially on the ground that having regard to the atmosphere of prejudice that was created in the locality by supporters of the defendant, who wielded 1162 considerable influence in the district, the plaintiff might have a legitimate apprehension that he would not get fair trial in the district court.
Against this decision the defendant No. 1 took an appeal to the Appellate Bench of the High Court of Calcutta and the learned Judges (Trevor Harries C. J. and Das J.) dismissed the appeal on the ground that the order appealed again was not a 'judgment ' within the meaning of clause 15 of the Letters Patent.
It is the propriety of this decision that has been challenged before us in this appeal.
The High Court of Calcutta in holding the appeal before it to be incompetent based its decision entirely upon an earlier pronouncement of a Division Bench of the same court, where it was held by Mookerjee A.C.J. sitting with Fletcher J. that an order for transfer of a suit made under clause 13 of the Letters Patent was not a 'judgment ' within the meaning of clause 15 (1).
Reliance was placed by the learned Judges for this view upon the pronouncement of Sir Richard Couch C. J. in the well known and often cited case of The Justice of the Peace for Calcutta vs The Oriental Gas Company (2), where the learned Chief Justice said as follows: "We think that 'judgment ' in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability.
It may be either final or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.
" The identical question, whether an order for transfer under clause 13 of the Letters Patent is a 'judgment ' for purposes of appeal, was pointedly raised before the Madras and the Rangoon High Courts, and while the Madras High Court (3) answered the question hi the affirmative, a definitely negative answer was given by (1) See Khatizan vs Sonairam, I.L.R. (2) 8 Ben.
L.R. 433.
(3) Vide Krishns Reddi vs Thanikacha, I.L.R 47 Mad.
136. 1163 the Rangoon High Court (1).
The Madras decision purports to be in accordance with the view enunciated a Full Bench of that court in Tuljaram vs Alagappa(2) where Sir Arnold White C. J. sitting with Krishna swami Aiyar and Ayling JJ.
formulated a definition of 'judgment ' in a comprehensive manner differing fro the wide interpretation put upon the term in the earlier case of DeSouza vs Coles (3).
"The test seems me," thus observed the learned Chief Justice, "to be not what is the form of the adjudication, but what is its effect on the suit or proceeding in which it is made.
If its effect, whatever its form may be, and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, I think the adjudication is a judgment within the meaning of the clause.
" This decision, it may be pointed out, has not only been adhered to in Madras since then without any comment, but the Calcutta High Court has in several instances manifested a marked leaning towards it (4).
On the other hand, a Full Bench(1) of the Rangoon High Court presided over by Page C.J. took 'a view altogether different from that of the Calcutta and the Madras High Courts as regards the meaning of the word I judgment ' in clause 13 of the Rangoon Letters Patent, which corresponds to clause 15 of the Letters Patent of the Calcutta and Madras High Courts.
It was held by the Full Bench of the Rangoon High Court that the term 'judgment ' in the Letters Patent means and is a decree in a suit by which the rights of the parties in the suit are determined.
In other words, 'judgment ' is not what is defined in section 2 (9) of the Civil Procedure Code as being the statement given by the judge of the grounds of a decree (1) Dayabhai vs Muyugappa Chettiay, 13 Rang.
457 (F.B.).
(2) 35 M 1 (F.B.).
(3) (4) Vide Muathura Sundari vs Haran Chandra I.L.R. 43 Cal.
857; Chandi Charan vs Jnanendra 29 C.L.J. 225 at 229 Lea Badin vs Upendra Mohan Roy Chaudhury, 1164 or order, but is a judoment in its final and definitive sense embodying a decree.
A final ' judgment is an adjudication which conclusively determines the rights of the parties with regard to all matters in issue in the suit, whereas a preliminary or interlocutory judgment is a decree by which the right to the relief claimed in the suit is decided but under which further proceedings are necessary before a suit in its entirety can be disposed of.
Save and except final and preliminary judgments thus defined, all other decisions are ' orders ' and they do not come within the description of I judgments ' under the relevant clause of the Letters Patent.
No 'order ' is appealable unless an appeal is expressly provided against it by the Civil Procedure code or some other Act of the Legislature.
In this view an ' order ' for transferring a suit from a subordinate court to the High Court could not possibly be regarded as a 'judgment ', and consequently no appeal would lie against such an order.
This definition of ' judgment 'has been accepted in several cases by the Nagpur High Court (1), and substantially this seems to be the view of the Allahabad High Court also (2).
A Full Bench of the Lahore High Court(, '), however, has refused to accept this view and has preferred to follow the tests enumerated by the Calcutta and the Madras High Courts.
The Bombay High Court accepted the Calcutta view from the very beginning (4).
In view of this wide divergence of judicial opinion, it may be necessary for this court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word I judgment ' as it occurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts.
We are, however, relieved from embarking (1) Vide Kunwar Lal Singh vs Uma Devi, A.I.R. 1945 Nag.
156; Shankar Deo vs Kalyani, A.I.R. 1948 Nag. 85.
(2) Vide Shahzadi Begam vs Alakhnath, 57 All.
983 (F.B.) (3) Shaw Hari vs Sonah Mal Beli Ram, I.L.R. , (4) Vide Sonebai vs Ahmedbhai, , 1165 on such enquiry in the present case as we are satisfied that in none of the views referred to above could an order of the character which we have before us, be regarded as a judgment ' within the meaning clause 15 of the Letters Patent.
Couch C.J., as said already, defined 'judgment ' be a decision which determines some right or liability affecting the merits of the controversy between the parties.
It is true that according to the learned Chief Justice an adjudication, in order that it might rank as a 'judgment ', need not decide the case on its merits, but it must be the final pronouncement of the court making it, the effect of which is to dispose of or terminate the suit or proceeding.
This will be apparent from the following observations made by Couch C.J. in the course of his judgment in the case referred to above : " It is, however, said that this court has already put a wider construction upon the word I judgment ' in clause 15 by entertaining appeals in cases where the plaint has been rejected as insufficient, or as showing that the, claim is barred by limitation,, and also in cases where orders have been made in execution.
These however are both within the above definition of a judgment, and it by no means follows that, because we hold the order in the present case not to be appealable, we should be bound to hold the same in the cases referred to.
For example, there is an obvious difference between an order for the admission of a plaint and an order for its rejection.
The former determines nothing, but is merely first step towards putting the case in a shape for determination.
The latter determines finally so far as the court which makes the order is concerned that the suit, as brought.
will not lie.
The decision, therefore, is a judgment in the proper sense of the term .
" It cannot be said, therefore, that according to Sir Richard Couch every judicial pronouncement on a right or liability between the parties is to be regarded 151 1166 as a 'judgment ', for in that case there would be any number of judgments in the course of a suit or proceeding, each one of which could be challenged by way of appeal.
The judgment must be the final pronounce ment which puts an end to the proceeding so far as the court dealing with it is concerned.
It certainly involves the determination of some right or liability, though it may not be necessary that there must be a decision on the merits.
This view, which is implied in the observations of Sir Richard Couch C.J. quoted above, has been really made the basis of the definition of I judgment ' by Sir Arnold White C.J. in the Full Bench decision of the Madras High Court to which reference has been made (1).
According to White C.J. to find out whether an order is a I judgment ' or not, we have to look to its effect upon the particular suit or proceeding in which it is made.
If its effect is to terminate the suit or proceeding, the decision would be a 'judgment ' but not otherwise.
As this definition covers not only decisions in suits or actions but 'orders ' in other proceedings as well which start with applications, it may be said that any final order passed on an application in the course of a suit, e.g., granting or refusing a party 's prayer for adjournment of a suit or for examination of a witness, would also come within the definition.
This seems to be the reason why the learned Chief Justice qualifies the general proposition laid down above by stating that "an adjudication on an application, which is nothing more than a step towards obtaining a final adjudication in the suit, is not a judgment within the meaning of the Letters Patent.
" As stated already, it is not our purpose in the present case to frame an exhaustive definition of the word 'judgment ' as used in clause 15 of the Letters Patent.
We have indicated what the essential features of a I judgment ' are according to both the Calcutta and the Madras High Courts and all that we need say is that, in our opinion, an order under clause 13 of the Letters Patent does not satisfy the tests of a 'judgment ' as formulated by either of these High Courts.
(1) Vide Tuljaram vs Alagappa, , 1167 The question that requires determination in an application under clause 13 of the Letters Patent is, whether a particular suit should be removed from any court which is subject to the superintendence of the High Court and tried and determined by the latter as a court of extraordinary original jurisdiction.
It is true that unless the parties to the suit are agreed on this point, there must arise a controversy between them which has to be determined by the court.
In the present case, a single Judge of the High Court has decided this question in favour of the plaintiff in the suit; but a decision on any and every point in dispute between the parties to a suit is not necessarily a ' judgment '.
The order in the present case neither affects the merits of the controversy between the parties in the suit itself, nor does it terminate or dispose of the suit on any ground.
An order for transfer cannot be placed in the same category as an order rejecting a plaint or one dismissing a suit on a preliminary ground as has been referred to by Couch C.J. in his observations quoted above.
An order directing a plaint to be rejected or taken off the file amounts to a final disposal of the suit so far as the court making the order is concerned.
That suit is completely at an end and it is immaterial that another suit could be filed in the same or another court after removing the defects which led to the order of rejection.
On the other hand, an order of transfer under clause 13 of the Letters Patent is, in the first place, not at all an order made by the court in which the suit is pending.
In the second place, the order does not put an end to the suit which remains perfectly alive and that very suit is to be tried by another court, the proceedings in the latter to be taken only from the stage at which they were left in the court in which the suit was originally filed.
Mr. Chatterjee in the course of his arguments placed considerable reliance upon the pronouncement of the Calcutta High Court in Hadjee Ismail vs Hadjee Mahomed (1), where it was held by Court C.J. and (1) 1168 Pontifex J. that an order refusing to rescind leave to sue granted under clause 12 of the Letters Patent was a 'judgment ' under clause 15 and could be challenged by way of appeal.
This decision was followed by the Bombay High Court in Vaghoji vs Camaji(1); and it is argued by Mr. Chatterjee that there is no difference in principle between an order of that description and an order transferring a suit under clause 13 of the Letters Patent.
The contention of Mr. Chatterjee undoubtedly receives support from the judgment of the Madras High Court in Krishna Reddy vs Thanikachala(2),where precisely the same line of reasoning was adopted.
In our opinion, this reasoning is not sound and there is an essential difference between an order rescinding or refusing to rescind leave to sue granted under clause 12 of the Letters Patent and one removing a suit from a subordinate court to the High Court under clause 13 of the Letters Patent, and this distinction would be apparent from the observations of Sir Arnold White C.J. in the Madras Full Bench case(3) mentioned above, to which sufficient attention does not appear to have been paid by the learned Judges of the same court who decided the later case.
Referring to the decision of the Bombay High Court in Vaghoji vs Camaji(1), White C.J. observed as follows: "As regards the Bombay authorities I may refer to Vaghoji vs Camaji(1), where it was held that an appeal lay from an order dismissing a Judge 's summons to show cause why leave granted under clause 12 of the Letters Patent should not be rescinded and the plaint taken off the file.
Here the adjudication asked for, if made, would have disposed of the suit.
So also would an order made under an application to revoke a submission to arbitration.
I think such an order is appealable." Leave granted under clause 12 of the Letters Patent constitutes the very foundation of the suit which is instituted on its basis.
If such leave is rescinded.
the (1) I.L.R. (2) I.L.R. 47 Mad.
(3) Vide Tuljaram vs Alagappa 1169 suit automatically comes to an end and there is no doubt that such an order would be a judgment.
If, on the other hand, an order is made dismissing the Judge 's summons to show cause why the leave should not be rescinded, the result is, as Sir Lawrence Jenkins pointed out(1), that a decision on a vital point adverse to the defendant, which goes to the very root of the suit, becomes final and decisive, against him so far as the court making the order is concerned.
This brings the order within the category of a 'judgment ' as laid down in the Calcutta cases.
We need not express any final opinion as to the propriety or otherwise of this view.
It is enough for our purpose to state that there is a difference between ail order refusing to rescind leave granted under clause 12 of the Letters Patent and one under clause 13 directing the removal of a suit from one court to another, and there is no good reason to hold that the principle applicable to one applies to the other also.
The result, therefore, is that, in our opinion, the view taken by the High Court is right and this appeal should fail, and is dismissed with costs.
Appeal dismissed.
Agent for the respondent No. 1 : Sukumnar Ghose for P. C. Dutt.
|
An order for transfer of a suit, made under clause 13 of the Letters Patent of the Calcutta High Court is not a "judgment" within the meaning of clause 15 of the Letters Patent and no appeal lies therefrom under the Letters Patent, as it neither affects the merits of the controversy between the parties in the suit itself, nor terminates or disposes of the suit on any ground.
[Meaning of the word "judgment" discussed].
Khatizan vs Sonairam (I.L.R. , Justices of the Peace for Calcutta vs Oriental Gas Co. , Dayabhai vs Murugappa Chettiar (I.L.R. 13 Rang.
457), Tuljaram vs Alagappa (I.L.R. , Mathura Sundari vs Haranchandra (I.L.R. , Chandicharan vs Tnanendra (29 C.L.J. 225), Lea Badin vs Upendra Mohan Boy Chowdhry , Kanwar Lal Singh vs Uma Devi (A.I.R. 1945 Nag. 156), Sankar Deo vs Kalyani (A.I.R. , Shahzadi Begum vs Alaknath (I.L.R. 57 All. 983), Shaw Hari vs Sonahal Beli Ram (I.L.R. 23 1160 Lab. 491), Sonebai vs Ahmedbhai and Vaghoji vs Gamaji (I.L.R. referred to.
Krishna Reddi vs Thanikachala (I.L.R. 47 Mad. 136) disapproved.
|
Civil Appeal No. 1724 of 1982.
From the Judgment and order dated the 15th March, 1982 of the Gauhati High Court (Agartala Bench) in E.P. No. 2 of 1980.
G.L. Sanghi, S K. Nandy and section Parekh, for the Appellant.
R.K. Garg and S.C. Birla for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal arises out of the judgment and an order of the Gauhati High Court in an election petition.
The petitioner appellant was a voter in the West Tripura Parliamentary Constituency from No. 7 Ramnagar Assembly Segment.
He contested the mid term Lok Sabha election held in 1980 from the West Tripura Parliamentary Constituency as a nominee of congress (1).
There were six candidates including the petitioner contesting the said election.
The respondent No. 1 was a C.P.I.(M) candidate.
8th December, 1979 was the date of filing of the nominations.
Nominations were scrutinised on 11th December, 1979 and the withdrawal date was 13th December, 1979.
On 6th January, 1980 the polling was held and the result of the election was declared on 8th January, 1980.
The main contest was between the petitioner/appellant and the respondent No. 1, Ajoy Biswas.
The respondent No. I had secured 198335 votes as against the appellant who had secured 1,42,990 votes.
The respondent No. 1 was declared elected.
The only point on which the election petition by the appellant/ petitioner was pressed before the High Court and the only point urged before us in this appeal, is whether the respondent No. 1 was disqualified for being elected as a member or the House of People as he held an office of profit under the Government of Tripura within the meaning of Article 102(t)(a) of the Constitution.
On the relevant date, respondent No. 1 was the Accountant in charge of the Agartala 53 Municipality.
Therefore, the question involved in this appeal, is, A whether an Accountant in charge of the Agartala Municipality holds all office of profit within the meaning of Article 102(1)(a) of the Constitution In order to determine this question, it will be necessary to refer to certain facts.
Respondent No. 1 was employed in Agartala Municipality and held the post carrying the scale of pay of Rs. 80 180 per month.
The Commissioners of the Agartala Municipality ware superseded by an order of the State Government under Section 553 of the Bengal Municipal Act, 1932 as extended to the State of Tripura in 1975.
The effect of Section 554 of the said Act is that during the period of supersession the powers and duties of the Commissioners and Chairman shall be exercised and performed by the Administrator appointed by the State Government under that section.
The respondent No. 1 who was under suspension at the time of supersession was dismissed from service in the disciplinary proceedings against him by the Administrator of the Agartala, Municipality on 20th December, 1975.
The State Government thereafter had confirmed the order of dismissal.
When the Left Front Government came in power in the State of Tripura, the respondent No. was reinstated to the post of Accountant in charge of Agartala Municipality on 6th May, 1978 with immediate effect by the Administrator.
So at the relevant time he was an Assistant Accountant and was Accountant in charge under the Agartala Municipality drawing a monthly salary of Rs. 200.
It is necessary to briefly note some of the relevant provisions of the said Act in view of the contentions urged in this appeal.
Proviso (ii) to Section 66(2) of the said Municipal Act provides that no appointment carrying a monthly salary of more than two hundred rupees or a salary rising by periodical increments to more than two hundred rupees shall be created without the sanction of the State Government, and every nomination to, and dismissal from, any such nomination shall be subject to confirmation by the State Government.
It appears that the Deputy Secretary to the Government of Tripura by his letter dated 6th May 1978 had conveyed to the Administrator, Agartala Municipality, decision of the Government for cancellation of the order of confirmation of the dismissal communicated to him on l9th December, 1975.
As a result, the cancellation order ceased to be effective and respondent No. I was reinstated and it was further provided that the period between the date of dismissal all the date of reinstatement would he treated as period spent on duty for all purposes.
54 The Act further provides that there shall be established for each Municipality a body of Commissioners consisting of such members or Commissioners not being more than twenty nor less than six as the State Government may specify in the notification constituting the municipality.
Such Commissioners shall be a body corporate by the name of the Municipal Commissioners of the place by reference to which the Municipality is known, having perpetual succession and a common seal, and by that name shall sue and be sued.
The Municipality consists of the elected Commissioners.
A Chairman is elected by the Commissioners from amongst the Commissioners within 30 days from the date of publication of the result of the general election of the Commissioners in the Municipality failing which the State Government has the power to appoint one of the Commissioners to be Chairman.
A Vice Chairman is also to be elected from amongst themselves.
The Chairman is empowered within certain limitations to transact the business connected with the Act and exercise all the powers vested in the Commissioners under the Act, except as otherwise provided.
The Commissioners are to hold office for four years commencing from the date of the first meeting of the newly formed body of Commissioners after a general election of Commissioners in the Municipality at which a quorum is present.
An elected Chairman or Vice Chairman may at any time be removed from his office by a resolution of the Commissioners as laid down in section 61(2) or (3) of the said Act.
The Act also empowered the State Government to remove an elected Commissioner on certain grounds set out in section 62 of the said Act.
In view of the contentions raised in this appeal, it would be relevant to refer and set out section 66 of the said Act which is as follows: "66. APPOINTMENT OF SUBORDINATE OFFICERS.
(1) The Commissioners at a meeting may, subject to the provisions of this Act and the rules made thereunder from time to time, determine what officers and what servants of the Commissioners are necessary for the municipality and may fix the salaries and allowances to be paid and granted to such officers and servants.
(2) Subject to the scale of establishment approved by the Commissioners under sub section (1), the Chairman shall have power to appoint such persons as he may think fit, and 55 from time to time to remove such persons and appoint A others in their places: Provided as follows: (i) a person shall not be appointed to an office carrying a monthly salary of more than fifty rupees or a salary rising by periodical Increments to more than fifty rupees without the sanction of the Commissioners at a meeting, and an officer or servant whose post carries a monthly salary of more than twenty rupees shall not be dismissed without such sanction; (ii) no appointment carrying a monthly salary of more than two hundred rupees or a salary rising by periodical increments to more than two hundred rupees shall be created without the sanction of the State Government, and every nomination to, and dismissal from, any such appointment shall be subject to confirmation by the State Government.
" (iii) no person holding an office carrying a monthly salary of one hundred rupees or more shall be dismissed unless such dismissal is sanctioned by a resolution of the Commissioners passed at a special meeting called for the purpose and, except with the consent of the State Government unless such resolution has been supported by the votes of not less than two thirds of the total number of Commissioners holding office for the time being.
(3) Notwithstanding anything contained in sub section (2), the creation of and nomination to or suspension, removal or dismissal from, the post of Executive officer shall, irrespective of the salary assigned to the post, be subject to confirmation by the State Government.
" The Act further provides that besides the officers and the servants mentioned above, all or any of the officers mentioned in section 67 may be appointed by the Commissioners.
In certain circumstances, the Act provides, that the State Government may have an Executive officer for such period as may be specified in the Notification.
Section 93 provides that as soon as may be after the first 56 day of April in every year not later than such date as may be fixed by the State Government, the Commissioners shall submit to the State Government a report on the administration of the Municipality during the preceding year in such form and with such details as the State Government may direct, and a copy of the report shall also be submitted by the Commissioners to the District Magistrate.
The Commissioners of a Municipality may acquire and hold property within or without the limits of the Municipality, and all property within the Municipality of the nature specified in section 95, other than property maintained by the Central Government or any other local Authority, are vested in and belong to the Commissioners, and are under their direct management and control.
By Section 102 of the said Act, the Commissioners are empowered to purchase, take on lease or otherwise acquire any land for the purposes of the said Act, and may sell, lease, exchange or otherwise dispose of any land not required for such purposes.
They are also empowered to enter into and perform any contract necessary for the purpose of the Act.
A fund called the Municipal fund is constituted for each Municipality and all sums received by or on behalf of the Commissioners under the said Act or otherwise, and the balance, if any, standing at the credit of the Municipal fund of the Municipality at the commencement of the said Act, are credited to the said fund.
The purposes to which the Municipal Fund is applicable are enumerated in section 108 of the Act.
If any work is estimated to cost above ten thousand rupees, the State Government may require the plans and estimates of such works to be submitted for its approval, or for the approval of any servant of the Government before such work, in such form as it might prescribe.
There are provisions for imposing taxes, tolls and fees under section 123 of the said Act and to make assessment of the rate on the annual value of the holdings under section 128 of the said Act.
Powers are conferred to impose taxes.
There are other provisions for raising fund for the Municipality by way of charging fee for registration etc.
The Act empowers raising of funds for the Municipality for carrying out the purposes of the said Act.
In this connection it may be relevant to refer to clause (31) of section 3 of the , and in view of the provisions of the Act it was held by the High Court that Agartala Municipality is a 'Local authority ' within the meaning of that expression as defined in clause (31) of section 3 of the .
We are of the opinion that the High Court was right.
57 In view of the facts narrated before, it was found by the High A Court and in our opinion rightly that the respondent No. I was at the relevant time holding an office of profit under a local municipality.
Section 66 which we have set out here in before indicates that the appointment of persons to the category of post held by respondent No. 1 was to be made by the Commissioners of Municipality, but the appointment was subject to the confirmation by the State Government.
The High Court held and we are of the opinion rightly that the respondent No. 1 was an officer of the Commissioners.
Section 63 of the said Act provides that such officers and servants of the Commissioners shall be subordinates to the Executive officer appointed by the Commissioners.
The respondent No. I was appointed by Commissioners, though sanction of the Government was obtained.
He could be removed by the Commissioners again subject to the sanction of the Government.
He was paid out of the municipal funds which the Municipality was and is competent to raise.
From the analysis of the provisions of the Act it is clear that though the Government exercises certain amount of control and supervision, the respondent No. I was not an employee of the Government nor was he required to perform governmental functions for the Government.
Municipalities are separately mentioned in contradistinction of the State Government as it will be clear from reference to Item S in List II of the VII Schedule of the Constitution.
Therefore, a local authority as such is a separate and distinct entity.
This will become further clear from Article 58(2) of the Constitution.
The question involved in this appeal is whether respondent No. 1 held an office of profit under sub clause (a) of Clause (1) of Article 102 of the Constitution.
Sub clause (a) of Article 102 (1) provides as follows: "article 102 Disqualification for membership. (1) A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament (a) If he holds any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holder;" In contra distinction, clause (2) of Article 58 which mentions disqualifications for election as President provides as follows : 58 "58 Disqualifications for elections President: (1). . (2) A person shall not be eligible for election as President if he holds any office of profit under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments.
" In fact a person who is holding an office of profit either under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments is disqualified from becoming the President but if a person holds an office of profit under the Government of India or the Government of any State he only is disqualified from being a member of Parliament.
A holder of the office of profit under any local or other authority subject to the control of the State or Central Government is as such not disqualified from becoming a Member of Parliament.
Keeping in view these provisions, it is necessary consider the question whether the respondent No. 1 was holding an office of profit under the State Government.
In the case of D. R. Gurushantappa vs Abdul Khuddus Anwar & Ors.
,(l) this Court had to consider whether a candidate employed in a company owned by the Government was disqualified under Article 102(1) (a) and 191 (l)(a) of the Constitution and in this connection considered the relevant provisions of Articles 102(1) (a) and 191(1) (a) of the Constitution.
After discussing the case of Gurugobinda Basu vs Sankari Prasad Ghosal & ors.(a) and the decision in the case of Maulana Abdul Shakur vs Rikhab Chand,(3) this Court come to the conclusion that the mere fact that the Government had control over the Managing Director and other Directors as well as the power of issuing directions relating to the working of the company could not lead to the inference that every employee of the company was under the control of the Government.
The true principle behind this provision in Article 102 (1) (a) is that there should not be any conflict between the duties and the interest of an elected member.
Government controls various activities (1) ; (2) ; (3) 59 in various spheres and in various measures.
But to judge whether A employees of any authority or local authorities under the control of Government become Government employees or not or holders of office of profit under the Government the measure and nature of control exercised by the Government over the employee must be judged in the light of the facts and circumstances in each case so as to avoid any possible conflict between his personal interests and duties and of the Government.
This position was further examined in the case of Surya Kant Royv.lmamul Hai khan.(1) There under Bihar and Orissa Mining Settlement Act, 1920, a Board called the Mines Board of Health may be established to provide for the control and sanitation of any area within which the persons employed in a mine reside and for the prevention therein of the out break and spread of epidemic diseases.
After analysing the facts of that case, this Court held that the mere fact that the candidate was appointed Chairman of the Board by State Government would not make him a person holding an office of profit under the State Government.
There the Supreme Court referred to the decision in the case of Shivamurthy Swami vs Agadi Sanganna Andanappaa.(2) This Court in Surya Kant Roy vs Imamul Hai Khan (supra) observed at page 911 as follows: "Here again it is to be pointed out that the Government does not pay the remuneration nor does the holder perform his functions for the Government.
To hold otherwise would be to hold that local bodies like Municipal Councils per form their functions for the Government though in one sense the functions they perform are governmental functions.
" in the case of D.R. Gurushantappa vs Abdul Khuddus Anwar & Ors.
(supra) mentioned here in before, at page 434 this Court observed as follows: "Thus, in the case of election as President or Vice President, the disqualification arises even if the candidate is holding an office of profit under a local or any other authority under the control of the Central Government or the State Government, whereas, in the case of a candidate for election as a Member of any of the Legislatures, no such disqualification is laid down by the Constitution if the office of profit is held under a local or any other authority under (1) ; (2) 60 the control of the Governments and not directly under any of the Governments.
This clearly indicates that in the case of eligibility for election as a member of a Legislature, the holding of an office of profit under a corporate body like a local authority does not bring about disqualification even if that local authority be under the control of the Government.
The mere control of the Government over the authority having the power to appoint, dismiss, or control the working of the officer employed by such authority does not disqualify that officer from being candidate for election as a member of the Legislature in the manner in which such disqualification comes into existence for being elected as the President or the Vice President.
The Company, in the present case, no doubt did come under the control of the Government and respondent No. I was holding an office of profit under the Company; but, in view of the distinction indicated above, it is clear that the disqualification laid down under article 191 (1) (a) of the Constitution was not intended to apply to the holder of such an office of profit.
" This view was again reiterated by this Court in the case of Madhuker G.E. Panakakar vs Jaswant Chabbildas Rajani & Ors.(1) where this Court observed as follows: "The core question that comes to the fore from the survey of the panorama of case law is as to when we can designate a person gainfully engaged in some work having a nexus with Government as the holder of an 'office of profit ' under Government in the setting of disqualification , for candidature for municipal or like elections.
The holding of an office denotes an office and connotes its holder and this duality implies the existence of the office as an independent continuity and an incumbent there of for the once.
Certain aspects appear to be elementary.
For holding an office of profit under Government one need not be in the service of Government and there need be no relationship of master and servant (Gurugobinda supra).
Similarly, we have to look at the substance, not the form.
Thirdly, all the several factors stressed by this Court as determinative of the holding of an 'office ' under Government, need not be con (1) ; at 851 61 jointly present, the critical circumstances, not the total factors, prove decisive.
A practical view not pedantic basket of tests, should guide in arriving at a sensible conclusion.
" In a recent decision of this Court in the case of Biharilal Dobray vs Roshan Lal Dobray,1 this Court was concerned with the question whether an office profit was held directly under the Government in the facts of that case.
There was an assistant teacher of a Basic Primary School run by U.P. Board of Basic Education under U.P. Basic Education Act, and it was held that it was an office of profit under the State Government within the meaning of Article 191 (1) (a) of the Constitution and therefore he was disqualified from election.
There the respondent was originally employed as an assistant teacher in a Basic Primary School which was being run and managed by the Zila Parishad.
On coming into force of the U.P. Basic Education Act, 1972, he became an employee of the Board of Basic Education under Section 9 (1) of the Act.
While holding the post of an assistant teacher as such he filed his nomination for his election to the State Legislative Assembly.
But the Returning officer rejected his nomination paper on the ground that he was holding an office of profit under the State Government and hence he was disqualified under Article 191 (1) (a) for being elected as an MLA.
Article 191 (1) (a) is in terms pari materia with Article 102 (1) (a) of the Constitution regarding the election to the State Assembly.
The respondent herein filed an election petition and the High Court allowed the same declaring that the election of the appellant by rejecting the nomination of the respondent was void.
The appellant therefore preferred the appeal to this Court.
This Court allowed the appeal and it was held that the respondent was holding an office of profit under the State Government.
As we have mentioned before, the object of enacting provisions like Article 102 (1) (a) and Article 191(1) (a) is that a person who is elected to Parliament or a Legislature should be free to carry on his duties fearlessly without being subjected to any kind of governmental pressure.
The term ' office of profit under the Government" used in clause (a) of Article 1O2(1) is an expression of wider import than a post in connection with the union or of any State which is dealt with in part XIV of the Constitution.
The measure of control by the Government over a local authority should be judged in order to eliminate the possibility of conflict between duty and interest and to (1) [19841 I S.C.C. 155 62 maintain the purity of the elected bodies.
After reviewing various cases, and the provisions of the various sections of the U.P. Basic Education Act, 1972 especially in view of section 13 of the Act, this Court held in the last mentioned case that the measure of control was such that U.P. Education Board was an authority which was not truly independent of the Government and every employee of the Board was in fact holding an office of profit under the State Government.
The statement of objects and Reasons of the U.P. Basic Education Act, 1972 and sections 4, 6, 7, 13 and 19 all of which have been set out in extenso in that decision make that conclusion irresistible.
For determination of the question whether a person holds an office of profit under the Government each case must be measured and judged in the light of the relevant provisions of the Act.
Having regard to the provisions of the Bengal Municipal Act, 1932 as extended to Tripura, the provisions of which have been set out herein before, we are of the opinion that the State Government does not exercise any control over officers like respondent No. 1 and that he continues to be an employee of the Muncipality though his appointment is subject to the confirmation by the Government.
Just by reason of this condition an employee of a local authority does not cease to be an employee of the Muncipality.
Local authority as such or any other authority does not cease to become independent entity separate from Government.
Whether in a particular case it is so or not must depend upon the facts and circumstances of the relevant provisions.
To make in all cases employees of local authorities subject to the control of Government and to treat them as holders of office of profit under the Government would be to obliterate the specific differentiation made under Article 58(2) and Article 102 (1) (a) of the Constitution and to extend disqualification under Article 58 (2) to one under Article 102 (1) (a) to an extent not warranted by the language of the Article.
Having noted the relevant provisions, we are of the opinion that the respondent No. 1 was not at the relevant time a holder of office of profit under the Government.
Some amount of control is recognised oven in a local authority which is taken account of under Article 58.
The High Court held that respondent No. I did not hold office of profit under the Government of Tripura on the date of filing of the nomination on an analysis of relevant provisions of the Act which we 63 have set out hereinbefore.
We are in agreement with this view of the.
High Court.
In the premises, respondent No. 1 was not disqualified from filing his nomination.
The appeal, therefore, fails and is accordingly dismissed with costs.
|
Respondent No. 1 was employed in the Agartala Municipality and held the post of an Assistant Accountant.
The Commissioners of this Municipality were superseded by an order of the State Government under Section 553 of the Bengal Municipal Act, 1932 as extended to the State of Tripura in 1975.
Respondent No, 1 who was under suspension at the time of supersession was dismissed from service in the disciplinary proceedings against him by the Administrator of the Municipality on 20th December, 1975.
The State Government confirmed the order of dismissal.
Respondent No. 1 was however reinstated to the post of Accountant in charge on 6th May, 1978 with immediate effect by the Administrator.
Respondent No. I contested the mid term Lok Sabha election held in 1980 from the West Tripura Parliamentary Constituency, and was declared elected on 8th January, 1980.
The appellant who was a voter filed an Election Petition in the High Court contending that respondent No. 1 was disqualified for being elected as a member of the House of People as he held an office of profit under the Government of Tripura within the meaning of Article 102(1)(a) of the Constitution.
The High Court dismissed the petition holding that Respondent No. 1 held an office of profit under the Government of Tripura.
51 In the appeal to this Court on the question: whether respondent No. 1 A held an office of profit under sub clause (a) of Clause (1) of Article 102 of the Constitution.
Dismissing the Appeal.
^ HELD: 1.
Whether in a particular case a person holds an office of profit under the government or not must depend upon the facts and circumstances of the relevant provisions.
To make in all cases employees of local authorities subject to the control of Government, holders of office of profit under the Government would be to obliterate the specific differentiation made under Article 58(2) of the Constitution and to extend disqualification under Article 102 (1)(a) to an extent not warranted by the language of the Article.
162 E F] In the instant case, having regard to the provisions of the Bengal Municipal Act, 1932 as extended to Tripura, the Government does not control officers like respondent No. I and he continues to be an employee of the Municipality though his appointment is subject to the confirmation by the Government.
He does not cease to be an employee of the Municipality.
Local authority as such or any other authority does not cease to become independent entity separate from Government.
[62 D C] 2.
Respondent No. I was not at the relevant time a holder of office of profit under the Government.
Some amount of control is recognised even in a local authority which is taken account of under Article 58.
The High Court rightly held that respondent No. 1 did not hold office of profit under the Government of Tripura on the date of filing of the nomination on an analysis of relevant provisions of the Act.
[62 G H] 3.
The object of enacting provisions like Article 102(1)(a) and Article 191(1)(a) is that a person who is elected to a Legislature or Parliament should be free to carry on his duties fearlessly without being subjected to any kind of government pressure.
The term "office of profit under the Government" used in clause (a) is an expression of wider import than a post held under the Government which is dealt with in Part XIV of the Constitution.
The measure of control by the Government over a local authority should be judged in order to eliminate the possibility of a conflict between duty and interest and to maintain the purity of the elected bodies.
[61 G H] 4.
It will be clear from reference to Item S in List II of VII Schedule of the Constitution that Municipality are separately mentioned in contra distinction of the State government.
Therefore, a local authority as such is separate and distinct.
This becomes further clear from Article 58(2) of the Constitution.
[57 D] 5.
A person who is holding an office of profit either under the Government of India or the Government of the State or any other local or other authority subject to the control the said Governments is disqualified from becoming a President but if a person holds an office of profit under the Government of India or the Government of any State, he only is disqualified from going a member of Parliament.
A holder of the office of profit under any 52 authority or local authority subject to the control of the State or Central Government is as such not disqualified from becoming a Member of Parliament.
[58 C D] D. R. Gurushantappa vs Abdul Khuddus Anwar & Ors. , Gurugobinda Basu vs Sankari Prasad Ghosal & ors.
; Maulana Abdul Shakur vs Rikhab Chand [1958] S.C.R. 387, Surya Kant Roy vs Immamul Hai Khan [19751 3 S.C.R., 909, and Madhuker G.E. Pankakar vs Jaswant Chobildas Rajni & Ors.
[1975]3 S.C.R. p. 832 at page 851, referred to.
Biharilal Dobray vs Roshan Lal Dodray [1984]1 S.C.C. 551, explained.
|
ce Act 1948 covers all factories or establishment with 20 or more employees and the benefit is intended to be given to institutions with more than that number.
Because the legislation is beneficial it should also apply to factories or establishments with less than 20 employees is not the contention on behalf of the appellant.
If that be not so, in finding out whether a partner would be an employee a liberal construction is not warranted.
[127H, 128A] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3500 of 1984.
Appeal by Special leave from the Judgment and order dated the 3rd August, 1981 of the Kerala High Court in M.F.A. No. 442 of 1979.
M.K. Banerjee, Addl.
General, Girish Chandra and R.N. Poddar for the Appellant.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The short point which arises for determination in this appeal by special leave is as to whether a partner of a firm is an "employee ' within the meaning of Section 2(9) of the (hereinafter called 'the Act ').
Respondent Ramanuja Match Industries which is a firm is engaged in manufacturing of matches within the Trichur area of Kerala State and the question as to whether it is covered under the provisions of the Act fell for consideration.
The Inspector found that there were 18 regular employees and three of the partners who worked regularly for wages were to be put together.
Thus the number of 20 employees as required by the Act was satisfied and the respondent did incur liability for contribution The respondent challenged its liability before the Employees Insurance Court at Calicut by contending that partners were not employees and when the three partners were excluded, the total number of employees did not exceed the statutory minimum.
The 122 Insurance Court found in favour of the respondent and an appeal under the Act was carried to the High Court by the appellant and a Division Bench of that Court following its earlier decision in Regional Director of E.S.I. Corporation vs M/s. Oosmanja Tile Works, Alwaye,(l) held that partners were not employees.
It is against this decision that the present appeal has been carried.
There is no dispute that under the Act, liability to pay contribution arises only when 20 or more persons are employed for wages.
It is also not disputed that in the case of the respondent unless the three partners are included, the basic number of 20 is not reached and no liability under the Act accrues.
The term 'employee ' has been defined in section 2(9) of the Act to mean "any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies and "one of the alternative in clauses (i), (ii) or (iii).
'Wages ' has been defined in sub section
(22) of that section to mean "all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. " It is thus clear that in order that some one may be an employee within the meaning of the Act, he has to be employed for wages.
The concept of wages would bring in the contract of employment.
The Shorter oxford English Dictionary gives the meaning of 'employ ' to be "to use the services of for some special business; to have or maintain in one 's service".
In common parlance the concept of employee would take with it the correlation of the employer.
The term 'employer ' had not been defined in the Act but in the absence of an employer who would provide the employment, there would indeed be no employee.
In fact, that concept is clear in the scheme of the Industrial Disputes Act of 1947 and the definition of the term 'employer ' in section 2(g) of that Act makes the position clear.
It is appropriate that at this stage we refer to the position of a partner qua the firm.
Section 4 of the Partnership Act, 1932 defines 'partnership ' and one of the essential requisites of a partner ship is that there must be mutual agency between the partners.
(1) I.L.R. 1975 (2) Kerala 207.
123 Full Bench of the Patna High Court in Seth Hira Lal & Anr.
vs A Sheikh Jamaluddin and Anr.,(1) rightly emphasised upon the position that an important element in the definition of partnership is that it must be carried on by all or any one of the partners acting for all.
Section 18 of the Partnership Act statutorily declares every partner to be an agent of the firm for the purposes of the business of the firm and Section 19 states that an act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.
A partnership firm is not a legal entity.
This Court in Champaran Cane Concern vs State of Bihar and Anr.
,(2) pointed out that in a partnership each partner acts an agent of the other.
The position of a partner qua the firm is thus not that of a master and a servant or employee which concept involves an element of subordination but that of equality.
The partnership business belongs to the partners and each one of them is an owner thereof.
In common parlance the status of a partner qua the firm is thus different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee.
Learned counsel for the appellant strongly relied on a case of the Rajasthan High Court in Regional Director of E.S.I. Corporation, Jaipur vs P.C. Kasliwal and Anr.
,(3) The learned Single Judge has taken the view that a partner can be employed by the firm and if he draws emoluments within the prescribed limits for the work of the factory, he would be an employee under section 2(9) of the Act.
In the same decision it has also been held that a sleeping partner drawing a monthly allowance merely because he is a partner would not come within the ambit of the Act as an employee and contribution in respect of such partner would not be payable.
As against this view there is a Division Bench decision of the Kerala High Court in Regional Director of E.S.I. Corporation vs M/s. Oosmanja Tile Works, alwaye (supra), where it has been held that a managing partner of a firm is not an employee if merely he receives salary or other remuneration.
Strong reliance has been placed by (1) [1946] 224 Indian Cases 106.
(1) ; (2) [1981] Labour & Industrial Cases 671. 124 the Kerala High Court on the position that such managing partner is not an employee who is working under a contract of service.
In fact, in the present case support has been drawn from this decision of the High Court as a precedent and following the ratio of that decision, the High Court has decided against the appellant.
The Rajasthan High Court has obviously not been alive to the definition of the term 'employee ' in section 2(9) of the Act though the definition has been extracted in extenso.
The status of a partner qua the firm with reference to the provisions of the Partnership Act the concept of "employer" and "employee" and the importance of the definition of "wages" have also been lost sight of in adjudicating whether a partner is an employee.
We are, therefore, not inclined to accept the view of the Rajasthan High Court.
On the other hand, the view taken by the Kerala High Court seems to be the correct one and fits in with the position of a partner qua his firm and the jurisprudential approach to the matter.
The respondent did not choose to appear in this Court to support the order of the High Court.
We have, however, come across several judicial opinions of American and English Courts taking the view that a person cannot be the employee of the firm of which he is a partner.
In Words and Phrases Permanent Edition Vols.
14 and 14A (1974 reprint), several such decisions of the American State Courts have been referred to in support of the view that a partner cannot be an employee of his firm and we propose to refer to some of the more apt ones.
In Dube vs Robinson(1) it has been held that in a partnership each partner is an agent of the others as well as a principal; but he is not in hire as an employee and that he may perform labour even with the employees of the partnership and of the same kind as they perform does not make him an employee of the other partners or of the partnership, and hence such partner cannot be counted to constitute one of the workmen ' necessary for application of the Employers ' Liability and Workman 's Compensation Act to the partnership business.
In United States Fidelity & Guarantee Company vs Neal(2) it has been held that a partner not an employee of the partnership within the Compensation Act though at the time of the injury he was performing special services under contract with his partner, (1) (2) 125 separate and independent from the articles of partnership, and is A being paid compensation therefore in addition to his shale in profits.
Again, in Le Clear vs Smith,(1) it was held that a partner, though he received a salary in addition to his share of the profits, was an employer and an not employee entitled to compensation under the Workman 's Compensation Law, where the insurer did not insure the employers.
In Berger Fidelity Union Casualty Co., vs Texas,(2) it has been held that a member of an employer firm cannot be an employee thereof.
In Wearer vs Weinberger,(3) it was held that "employee" is a person who renders service to another, usually for wages, salary or other financial consideration, and who, in performance of such service, is entirely subject to the direction and control of the other, such other being the employer.
Crooks vs Glena Falls Indemnity Co.
,(4) is an authority for the view that an employee is one who is subject to the absolute control and direction of the employer in regard to any act, labour or work to be done in course and scope of his employment.
In Morici Corporation vs U.S.D.C. California.
,(5) the Court held that the test to determine whether one person is another 's employee, is whether or not he is subject to control of the other person.
In Burker vs Friedman,(6) it was held that partners cannot be regarded as employees rather than as employers who own and manage operation of business, and, hence, cannot be included as employees.
Wright vs Deareter(7) took the view that partners were not employees for purposes of requirement that compensation law be complied with when there are three or more employees.
Though we have not come across any decision of the U.S. Supreme Court on the point, these authorities under various legislations are clearly indicative of the principle that a partner who belongs to the class of employer cannot rank as employee because he also works for wages for the partnership.
Undoubtedly the term employee is the co relative of employer.
(1) (2) 293 S.W. 235.
(3) 392 F. Suppl.
(4) 203.
(5) 500 F. Suppl.
(6) (7) 126 We may usefully refer here to an English decision.
The Court of Appeal in Ellis vs Joseph Ellis & Co.,(1) was called upon to decide whether a partner of a firm could be its employee.
The short facts relevant for our purpose available in the judgment of Collins M.R. are: "The deceased appears to have been a skilled workman and, by agreement with his partners, he worked at the mine, sometimes on the surface and sometimes under ground, for wages; and, while working underground, he met with an accident which occasioned his death.
His representative thereupon claimed compensation under the Workman 's Compensation Act, 1897, on behalf of her self and his children.
The question is whether, having regard to his position as one of the partners, he can be regarded as a workman in the employ of the partnership, and the partners as his employers within the meaning of the Act.
When one looks at the provisions of the Act, they do not appear to be applicable to a case like the present.
The supposition that the deceased man was employed, within the meaning of that term as used in the Act (not very different from the definition here), would appear to involve that he, as one of the partners, must be looked upon as occupying the position of being one of his own employers.
It seems to me that, when one comes to analyse an arrangement of this kind, namely, one by which a partner himself works, and receives sums which are called wages, it really does not create the relation of employers adjusting the amount that must be taken to have been contributed to the partnership assets by a partner who has made what is really a contribution in kind, and does not affect his relation to the other partners which is that of co adventurer and not employee".
Lord Justice Mathew pithily but with emphasis added: "The argument on behalf of the applicant in this appeal appears to involve a legal impossibility, namely, that the same person can occupy the position of being both master and servant, employer and employed." (1) 127 Lord Justice Cozens Hardy also spoke in the same strain: "All that our decision in this case amounts to, I think, is that the Act only applies where there is on one side an employer, and on the other side a workman, who are different persons.
" This is in complete accord with our view.
F.C. Bock and F.F. Manix in their book, the Australian Income Tax Law and Practice (1960 Edn., Vol. 3, page 3092) have said: "The decision of the High Court in Rose vs Federal Commissioner of Taxation(l) established that there is nothing in the relevant income tax legislation to warrant treating a partnership as a distinct legal entity.
A partner cannot therefore, also be an employee of the partnership, for a man cannot be his own employer . . " It is thus clear that in the United States, Great Britain and Australia, a partner is not treated as an employee of his firm merely because he receives a wage or remuneration for work done for the firm.
This view is in complete accord with the jurisprudential approach.
In the absence of any statutory mandate, we do not think there is any scope for accepting the view of the Rajasthan High Court.
Counsel for the appellant emphasised on the feature that the statute is a beneficial one and the Court should not interpret a provision occurring therein in such a way that the benefit would be withheld from employees.
We do not doubt that beneficial legislations should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.
The Act covers all factories or establishment with 20 or more employees and the benefit is intended to be given to institutions with more than that number.
It is not the (1) ; 128 contention of counsel that because the legislation is beneficial it should also apply to factories or establishments with less than 20 employees.
If that be not so, in finding out whether a partner would be an employee a liberal construction is not warranted.
A person who would not answer the definition cannot be taken into account for the purpose of fixing the statutory minimum.
We are therefore, not inclined to accept the contention of counsel that on the basis of the statute being beneficial, a partner should also count as an employee.
Once we hold that the three partners were not employees, on the admitted fact the total number of employees would be less than 20, the Act would not be applicable to the establishment in question.
There is no merit in the appeal and the same is, therefore, to be dismissed.
At the hearing the respondent was not represented; we, therefore, make no direction for costs.
N. V. K. Appeal dismissed.
|
The Respondent firm was engaged in the manufacturing of matches.
The Inspector of the Employees State Insurance Corporation who inspected the firm found that there were 18 regular employees and three of the partners worked regularly for wages.
As the number of employees were over 20 he held that the Respondent firm incurred liability for contribution under the .
The Respondent challenged its liability before the Employees Insurance Court by contending that partners were not employees and that when the three partners were excluded, the total number of employees did not exceed the statutory minimum.
The Insurance Court found in favour of the respondent.
The Employees State Insurance Corporation appealed to.
The High Court, which held following its earlier decision in Regional Director of E.S.I. Corporation vs Mls.
Oosmalua Tiite Works, Alwayes I.L.R. 1975(2) Kerala 201 that partners were not employees.
In the appeal to this Court on the question whether a partner of a firm is an "employee 'l within the meaning of section 2(9) of the , H 120 Dismissinhe Appeal, ^ HELD: 1.
The three partners were not employees.
On this admitted fact the total number of employees would be less than 20.
The would not therefore be applicable to the respondent establishment.
[128C] 2.
The term 'employee ' has been defined in section 2(9) of the to mean any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies. ".
Wages") has been defined in sub section (22) of that section to mean all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. ".
In order that some one may be an employee within the meaning of the Act, he has to be employed for wages.
The concept of wages would bring in the contract of employment, and the concept of employee would take with it the correlation of the employer.
The term 'employer ' has not been defined in the Act.
In the absence of an employer who would provide the employment, there would be no employee.
(122D F) 3.
A partnership firm is not a legal entity.
In a partnership each partner acts as an agent of the other.
The position of a partner qua the firm is thus not that a master and a servant or employer and employee which concept involves an element of subordination but that of equality.
The partnership business belongs to the partners and each one of them is an owner thereof.
In common parlance the status of a partner qua the firm is thus different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee.
Seth Hira Lal & Anr vs
Sheikh Jammaluddin and anr.
[1946] 224 Indian Cases 1O6 & Regional Director of E.S. 1.
Corporation vs M/s. Osmanja Tile Works, Alwaye, I.L.R. 1975 (2) Kerala 207 approved.
Regional Director of E.S.I. Corporation, Jaipur vs P.C. Kasliwal and Anr.
(1931) Labour & Industrial Cases 671 reversed 4.
In the United States, Great Britain and Australia, a partner is not treated as an employee of his firm merely because he receives a wage or remuneration for work done for the firm, which is in complete accord with the jurisprudential approach.
[127D E] Dube vs Robinson 92 N 312.
United States Fidelity Smith & Berger vs Fldility Union Casualty Co, Tayes, 293 S.W. 235 & Weaver vs Wcinberger 392 F. Suppl.
721 Crooks vs Glena Falls Indemnity Co, 203 & Morfci Corporation vs US.D.C. California, 500 F. Suppl.
714 & Burker vs Friedman, ; & Wright vs Deareter Ellies vs Joseph & Co. & Rose vs Federal Commissioner of Taxation ; A referred to.
Beneficial legislation should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.
[127F G]
|
Civil Appeal No. 12 of 1955.
Appeal from the judgment and decree dated September 10, 1953, of the Calcutta High Court (Original Side) in I. T. Reference No. 8 of 1947.
C. K. Daphtary, Solicitor General for India, G. N. Joshi and B. H. Dhebar, for the appellant.
K. P. Khaitan, Rameshwar Nath, section N. Andley and J. B. Dadachanji, for the respondents.
April 24.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This appeal raises a question of importance as to whether amounts shown by an insurance company as reserves for unexpired risks on pending policies are liable to be deducted under r. 2 of Sch.
II to the Excess Profits Tax Act (XV of 1940) hereinafter referred to as the Act.
The respondent is a company carrying on life, fire, marine and general insurance business, and the present dispute relates to the assessment of excess profits tax on its income from business other than life insurance for the chargeable accounting periods ending December 31, 1940, and December 31, 1941.
To appreciate the contentions raised, it is necessary to state that the policies of insurance with which these proceedings are concerned, are, unlike life insurance policies, issued in general for short periods or ad hoc in relation to a specified voyage or event.
To take the most important of them, fire insurance policies, they are issued normally for one year, and the whole of the premium due thereon is received when the policies are actually issued.
In any given year, while the premiums due on the policies would have been received in full, the risks covered by them would have run only in part and a, part will be outstanding for the next year.
The companies have to prepare annual statements of profit and loss for the purpose of ascertaining their profits and distributing their dividends.
They have also to prepare revenue statements to be sent to the authorities under the provisions of the .
The method 1004 adopted by the respondent in preparing the above statements has been that while the premiums received are all of them included in the assets of the year, a certain proportion ' thereof, usually 40 per cent., is treated as the reserve for unexpired risks, and that is shown as a liability.
To take a concrete example, if in the year 1939 the respondent issued annual fire insurance policies and received a sum of Rs. 1,00,000 as premiums thereof, the whole of it would be shown as income in the statement for the year 1939, and a sum of Rs. 40,000 will be shown as a reserve for unexpired risks.
In the profit and loss statement, the former will be shown as part of the assets and the latter as liability, and it is only the balance that will be included in the net profits.
In 1940, the policies issued in 1939 would all of them have expired, and the sum of Rs. 40,000 shown as reserve in 1939 would be treated as part of the assets in 1940.
There will, of course, be fresh policies issued in 1940, and in the statement of that year, the premiums received on those policies would be shown as part of the income, and 40 per cent.
thereof would be set apart as reserve for unexpired risks.
This ' method of account keeping is what is 'usually adopted by insurance companies, and is in accordance with well recognised and approved practice of accountancy.
Now, the question is whether in the illustration given above, the sum of Rs. 40,000 which is set apart in 1939 as reserve for unexpired risks is liable to be deducted under r. 2 of Sch.
II to the Act from out of the capital employed in business for that year, which would, of course, include the whole of Rs. 1,00,000 received as premiums.
The contention of the appellant is that if all the premiums received are to be treated as capital under r. 1, Sch.
11, then the sums which represent the outstanding liability in respect of the unexpired period of the policies in the illustration given above, Rs. 40,000 should be deducted as a liability under r. 2 of Sch.
The respondent, while claiming that all the premiums received mu ,it be treated as capital, maintains that the provision for unexpired risks is a contingent liability, and that that 1005 is not within r. 2 of Sch.
The Tribunal decided the question against the respondent, but on reference under section 66(1) of the Indian Income tax Act read with section 21 of the Act, the High Court of Calcutta answered the question adversely to the appellant, but granted a certificate under section 66 A, and that is how the appeal comes before us.
The relevant statutory provisions may now be noticed.
Under section 4 of the Act, the charge is on the " amount by which the profits during any chargeable accounting period exceed the standard profits ".
I Standard profits ' are defined in section 6, sub section
(1), and the respondent having exercised his option under the second proviso thereto, they have to be calculated "by applying the statutory percentage to the average amount of capital employed in the business during such chargeable accounting period Schedule II enacts rules for the determination of the average capital employed.
Under r. 1(c), the capital employed will include the value of all assets "I when they became assets of the business ".
Rule 2(1) enacts that any borrowed money and debts shall be deducted from out of the value of the assets.
There is a further provision in r. 2(1), which is what is material for the purposes of the present appeal, and it runs as follows: " The debts to be deducted under this sub rule shall include any such sums in respect of accruing liabilities as are allowable as a deduction in computing profits for the purposes of excess profits tax ; and the said sums shall be deducted notwithstanding that they have not become payable.
" For this clause to apply, two conditions must be satis fied.
The sums to be deducted should be allowable as a deduction in computing the profits for the purposes of the Act, and further they should be in respect of accruing liabilities.
Rule 1 of Sch.
1 enacts that, " The profits of a business . . during any chargeable accounting period . . shall, subject to the provisions of this Schedule, be computed on the principles on which the profits of a business are computed for the purposes of income tax under section 10 of the Indian Income tax Act, 1922.
" 1006 Section 10(7) of the Indian Income tax Act provides that, " Notwithstanding anything to the contrary contained in sections 8, 9, 10, 12 or 18, the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the rules contained in the Schedule to this Act.
" Rule 6 of the Schedule provides: "The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the , to be furnished to the Controller of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 of this Act be allowed for in computing the profits and gains of a business.
" It is common ground that the statements furnished to the Controller of Insurance by the respondent for the relevant periods did disclose 40 per cent.
of the premiums received as reserve for unexpired risks on the outstanding policies and that the same has been treated as a liability in its profits and loss statements and allowed in the assessment of income tax.
Thus, one of the conditions required by r. 2 has been satisfied.
The whole controversy between the parties relates to the other condition whether the reserve of 40 per cent.
can be regarded as a sum in respect of accruing liability.
The contention of the learned Solicitor General is that it must be so regarded, and his argument in support of it may thus be stated: A contract of insurance is complete as soon as the policy is issued.
From that time, the risk begins to attach to it, and there is a liability incurred.
Rule 2 does not require that the liability should have actually accrued; it is sufficient that it is accruing.
Liability under a policy must be held to be accruing so long as the policy is in force, because it can ripen into actual liability at any time during the life of the policy on the happening of the specified event.
When the assessee shows a certain amount as the value of that 1007 liability, it is a sum in respect of an accruing liability and must be deducted under r. 2.
In support of this contention, the decision in Sun Insurance Office vs Clark (1) was relied on.
The facts of that case were as follows: A fire insurance company which had been following the practice of entering in its annual statements 40 per cent.
of the total premium receipts as reserve for unexpired risks claimed a deduction therefor in the assessment of its annual profits.
The validity of the claim having been disputed, the question as to its admissibility was referred to the decision of the court.
Bray J., who heard the reference, held that the amounts reserved for unexpired risks should be deducted firstly on the ground that the premium which had been paid in respect of a risk for a whole year could not be said to have been wholly earned, when a portion of the period covered by the policy was still to run, and that the reserve therefore was not income earned, and secondly and in the alternative, on the ground that as the premium had been received burdened with a liability which had been only partially discharged in the year of account, the portion of the liability still outstanding should be valued on the analogy of unpaid price due in respect of property purchased and included in the trading assets.
This decision was taken in appeal, and was reversed by the Court of Appeal, the learned Judges holding that though the reasoning of Bray J. was sound, the question was concluded against the assessee by the decision of the House of Lords in The General Accident Fire and Life Assurance Corporation vs McGowan (2 ).
The case came on further appeal before the House of Lords which agreed with Bray J.that the deduction was admissible, and distinguished the decision in The General Accident Fire and Life Assurance Corporation vs McGowan (2 ) as one turning on the facts of that case and as not laying down that, as a matter of law, the deduction could not be made.
Lord Haldane stated the ground of his decision thus: ". . the case is analogous to one in which if goods are bought their value cannot be treated as (1) ; ; (2) 1008 profit without deducting the value of the liability to pay for them which the buyer has incurred." Lord Alverstone expressed the reasoning on which he based his conclusion as follows: "Premiums are not profits or gains, they are receipts which must be brought into account and out of which, after proper deduction for losses, profits will accrue." Lord Atkinson also rested his decision on the same ground, and observed: " That case (Gresham Life Assurance Society vs Styles) (1) clearly decided that the receipts of a business are not in themselves profit and gains within the meaning of the Income Tax Acts, but that it is what remains of those receipts after there has been deducted from them the cost of earning them which constitute the taxable profits and gains.
Now what is the service which a Fire Insurance Company renders to each insurer in consideration for the premium it receives ? It is only, by rendering this service in each case it earns these receipts.
The service consists in indemnifying the insurer against loss by fire during the continuance of his policy. .
Yet until that time has expired the service for which the Company has been paid has not been completely performed.
If the accounts of the Company are to be rendered before the date of expiry, then some division of the premium must be made, and the proportion to be appropriated to the service which is to be performed thereafter.
I think the description 'unearned premium ' which has been used to describe this latter portion is a very appropriate and accurate description.
" It is also material to note that one of the authorities relied on for the Crown was the decision in Scottish Union and National Insurance Company V. Smiles (2) wherein, discussing how the reserve for unexpired risk in fire policies is to be dealt with in computing the profits, the Lord President observed: " Seeing that fire insurance policies are contracts for one year only, the premiums received for the year (1) (2) 1009 of assessment, or on an average of three years, deducting losses by fire during the same period and ordinary expenses, may be fairly taken as profits and gains of the Company without taking into account or making any allowance for the balance of annual risks unexpired at the end of the financial year of the Company." Referring to this and to another decision, Lord Haldane observed that they " are not, when carefully examined in the light of what appears to be the true principle, reliable as authorities for the proposition which would run counter to the practice and good sense of the commercial community.
" On the strength of the observations quoted above, the argument has been advanced by the learned Solicitor General that the obligation which an insurance company contracts when it issues a policy is to be treated, in computing its profits for the purposes of taxation, as a liability in praesenti.
Mr. K. P. Khaitan, learned counsel for the respondent, disputes the correctness of this contention.
He argues that whatever the position under the English law, a contract of insurance is under the Indian Contract Act merely a contingent contract, that until the event specified in the policy happens, there is no enforceable liability, and that accordingly unexpired risks in pending policies cannot be treated as present liabilities.
He also urges a further contention based on the history of the enactment of r. 2 of Sch.
II to the Act.
That rule as originally passed mentioned only borrowed money and debts, and it was by section 10 of the Excess Profits Tax (Amendment) Act (XLII of 1940) that accruing liabilities were brought within that rule.
And when they were brought in, they did not come as something independent of and distinct from borrowed money and debts.
They came in under a provision, which enacted that the debts to be deducted under the rule included sums in respect of accruing liabilities.
Relying on this circumstance, counsel for the respondent contends that however liberally the expression " accruing liabilities " might be construed, it cannot be interpreted so as to take in liabilities which do not bear the character of debts, and that a liability under a contract of 130 1010 insurance where under risk had not materialised, cannot be held to be a debt, and is therefore not an accruing liability within the rule.
In support of this position, he relies on the decisions in Webb vs Stenton (1) and Israelson vs Dawson (Port of Manchester Insurance Co., Ltd., Garnishees) (2).
In Webb vs Stenton (1), the question was whether a sum which was payable to the judgment debtor under a trust deed but which had not become due could be attached in the hands of the trustees as a debt owing or accruing within 0. 45, R. 2 of the English Rules of Practice.
In holding that it could not be, Lindley L.J. observed: " I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing; but it must be debt, and a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro.
An accruing debt, therefore, is a debt not yet actually payable, but a debt which is represented by an existing obligation.
" Israelson vs Dawson (Port of Manchester Insurance Co., Ltd., Garnishees) (2) was again a decision on 0. 45, R. 2, the Court holding that the amount which became payable under a policy as the result of the accident specified therein having occurred was, nevertheless, not a debt which could be attached under this rule, before the compensation had been determined by the arbitrator in accordance with the conditions of the policy.
The argument of the respondent based on the above decisions is that until the risk specified in the policy materialises and, consequent thereon, the compensation payable thereunder is ascertained, there is only a contingent liability and not a debt, and that such liability is not within r. 2 of Sch.
II to the Act.
In answer, the learned Solicitor General contends that the decisions quoted above are not in point, they having been given on a different statute, that the decision in (1) , 527.
(2) 1011 Sun Insurance Office vs Clark(1) which dealt with the question of assessment for purposes of taxation was directly applicable, and that according to that decision, the amounts reserved for unexpired risks would be sums in respect of accruing liabilities.
That a contract of insurance is a contingent contract does not admit of argument.
That is so under section 31 of the Indian Contract Act, and that is also the law in England where it is termed " conditional contract".
(Vide Pollock on Contracts, 13th Edn., p. 222).
This, however, is not material for the purpose of the present discussion which is how such contracts are to be dealt with in assessing, the taxable profits of an insurance company.
That is a matter which must be determined on the provisions of the taxing statutes and their application to the facts found with reference to the particular assessment.
And it is in this view that the decision in Sun Insurance Office vs Clark (1) becomes important.
Now, what is the ratio of this decision? The law is well settled that a liability which is purely contingent cannot be allowed as a deduction in computing the profits of a business.
And in holding that unexpired risks in respect of pending policies could be estimated and deducted out of the gross premium receipts, the House of Lords must be held to have decided that the obligation of an insurer under such risks was a liability in praesenti.
Reference might be made in this connection to the recent decision of the House of Lords in Southern Railway of Peru Ltd. vs Owen (2).
There, the appellant Company operated a railway in Peru under a statutory scheme under which its employees were entitled to receive from it a lump sum payment on retirement, death or other termination of service.
The Company claimed that it was entitled to value this liability in accordance with "accountancy practice" and to deduct the same from out of its annual profits.
And support for this contention was sought in the decision in Sun Insurance Office vs Clark (1).
In rejecting this claim it was observed by the House of Lords that the accountancy valuation was not necessarily the correct (1) ; ; (2) ; 1012 valuation for purposes of income tax, and that the real point for decision was whether the claim was to be regarded as an essential charge against the trade receipts during the year.
In distinguishing the decision in Sun Insurance Office vs Clark (1), Lord Oaksey made the following observations, which are pertinent to the present discussion: " Reliance was placed, during the argument, on Sun Insurance Office vs Clark (1), in which this House held that a percentage of the premium income of an insurance company might be deferred as a receipt to a future year because it was paid as consideration for future liability, but the principle of that decision is not, in my opinion, applicable to the present case.
The premium income was only deferred and would suffer tax in a future year, whereas, in the present case, if the appellant is permitted to deduct compensation, Which it has not paid and which it may never have to pay, that compensation will escape tax altogether.
There is, in my opinion, a fundamental distinction between a contingent liability and a payment dependent on a contingency.
When a debt is not paid at the time it is incurred its payment is, of course, contingent on the solvency of the debtor but the liability is not contingent.
Similarly, the liability in Sun Insurance Office vs Clark (1) was not, in my opinion, contingent but remained in force throughout the period of the insurance, though payment in pursuance of that liability might, or might not, have to be made.
" The decision in Sun Insurance Office vs Clark (1) and the observations in Southern Railway of Peru, Ltd. vs Owen(1) quoted above do support the contention of the appellant that in computing the profits of an insurance company for purposes of income tax, the unexpired risks are to be treated as a present liability.
But even so, on the footing that r. 6 in the Schedule to the Indian Income tax Act has adopted the law as laid down in Sun Insurance Office vs Clark (1), the question still, remains whether unexpired risk in an outstanding policy is an accruing liability within r. 2 of Sch.
II to the Act.
It is contended for the (1) ; (2) ; 1013 appellant that if that liability is a present liability for purposes of assessing the taxable profits for purposes of income tax, it must logically be the same for purposes of excess profits tax, and must therefore be deducted under r. 2 of Sch.
II to the Act.
That would be so, if the scheme and framework of the Excess Profits Tax Act were the same as those of the Income.
tax Act.
But the fact is that the Excess Profits Tax Act differs, in material respects from the Income tax Act, and the principles applicable in the assessment of profits under section 10 of the latter enactment cannot necessarily be held to be applicable in the ascertainment of the capital employed under rr.1 and 2 of Sch.
II to the former Act.
The object of the Excess Profits Tax Act is to tax profits of a business when they overflow a certain level.
That level is determined thus: A certain,period called the standard period is taken; the capital invested and the profits made in the business during that year are ascertained, and the standard profits are worked out in relation to those two factors.
Then, the capital actually employed in business during the chargeable accounting period is ascertained.
If the capital is the same as that employed in the standard period, then there is no further problem; but if it is more, then the standard profits are increased, and if it is less, they are reduced pro tanto.
Thus, the whole scheme of the Act is to tax profits above a certain level, and that level will move upwards or downwards as the capital employed may be more or less.
It is this that constitutes the distinguishing feature of the Excess Profits Tax Act, and it is the determination of the capital actually employed in business that forms one of the most important and arduous tasks in the ascertainment of taxable profits under the Act.
Rule 1 of Sch.
II to the Act enumerates three categories of properties, which are to be included in the computation of capital.
It is to be noted that this rule does not adopt any legalistic or conventional notion of what is technically termed 'capital '; but it proceeds on a factual basis to include whatever is utilised in business, :whether it be tangible property or intangible 1014 property.
The object of the provision is clearly to confer a benefit on the assessee by enabling him to retain at least in part the profits realised by him by investment of additional capital.
Then there is r. 2, which provides for certain deductions being made out of capital.
Omitting for the present "accruing liabilities", which form the subject of the present controversy, the other two items mentioned therein are borrowed money and debts, and the reasons for their exclusion from capital falling within r. 1 would appear to be this: Money borrowed and debts incurred for the purpose of the business must have been utilised in it, and would be included in the capital employed as defined in r. 1.
The policy of the law being to give some relief to an assessee who invests additional capital in his business, the reason of it requires that that should be limited to capital contributed by the assessee himself.
Otherwise, the benefit intended to be given to him might be abused, and the object of the legislation defeated by large scale employment of borrowed capital.
Borrowed money and debt are therefore to be deducted out of what is capital within r. 1.
We now come to the expression "accruing liabilities".
What does it precisely import ? To decide that, we must have regard to the scope and purpose of rr. 1 and 2 of Sch.
II to the Act and to the context and setting of the expression.
It has been already pointed out that the object of the Act is to tax profits which overflow a certain line indicated by what is termed " standard profits ", that the location of that line varies with the capital employed, that the scheme of r.
I is on a factual basis to treat as capital all assets tangible and intangible which are thrown into a business and contribute to the earning of profits and to exclude therefrom under r. 2 that part of it which came in as a result of borrowing.
Now, obviously.
a deduction under r. 2 can only relate to what is capital under r. 1, and that must be a really profit earning asset, whether tangible or not .
Borrowed money to be deducted under r. 2 is money borrowed for the purpose of the business, and which has gone to swell the capital under r. 1.
That is also the position as regards debts.
And 1015 accruing liabilities which are liable to be deducted under r. 2 must also be of the same character as borrowed money and debts with which they are associated on the principle of noscitur a sociis.
They must be such as can be said to have been utilised in the business and formed part of the really effective trading assets during the chargeable accounting period.
If that is the correct approach, as we conceive it is, the question to be considered is neither, on the one hand, whether the liability amounts in law to a debt for if it is capable of being utilised in business and is so utilised, it will fall under r. 2, even though it is not strictly speaking a debt; nor, on the other hand, whether it is a liability which has been treated as one for the purpose of assessing income tax.
In assessing income from business under section 10 of the Income tax Act, what is allowed as a deduction is any liability incurred solely and exclusively for the purpose of the business, and when that has not matured, its value is to be determined according to rules of accountancy and deducted.
But when a deduction is claimed under r. 2, what has to be seen is whether the obligation is such that it could be regarded as an asset used in the business, such as could conceivably contribute to its profits.
If that is not established, then it cannot be included as capital under r. 1, and cannot be deducted therefrom under r. 2 as an accruing liability.
It should not be overlooked that a deduction under section 10 of the Income tax Act and that under r. 2 of Sch.
11 to the Act proceed on totally different lines and have different objects in view.
Under section 10, the deduction is claimed by the assessee, and that has the effect, when allowed, of reducing the taxable profits.
Under r. 2, it is claimed by the department, and if allowed, it will enhance the liability of the assessee by reducing the capital under r. 1.
Incidentally, how inappropriate the principle laid down in Sun Insurance Office vs Clark (1) would be if it is applied for determining the question of capital employed in business for the purpose of Excess Profits Tax Act will be seen from (1) ; ; 1016 the fact that one of the grounds on which the decision therein was based was that 40 per cent.
of the premiums received and set apart as reserve for unexpired risks was unearned income, and could not therefore be regarded as profits for the purpose of the Act.
If that were the true position under the Excess Profits Tax Act, then the reserve could not be included in the capital of the business, and, indeed, that was one of the contentions urged by the learned Solicitor General.
But that was not the stand taken by the department before the Tribunal and that is directly opposed to the plain language of r. I of Sch.
II, under which all the premiums thrown into the business would be capital employed in the business.
That clearly shows how unsafe it will be to adopt the principles laid down for the purpose of assessing business profits under the Income tax Act to a determination of the question of the capital employed under the Excess Profits Tax Act.
In this view, is the reserve for unexpired risks an "accruing liability " within r. 2 ? The decision in.
Sun Insurance Office vs Clark(1) that it should be allowed as a deduction was based on two grounds.
One was that it should be regarded as " unearned income ", and for the reasons already stated, it cannot avail when the question is one of determining capital under the Act.
And the other was that the reserve represents a liability in the nature of unpaid price of property included in the trading assets.
But apart from the fact that we have to strain the analogy in applying it to the present situation, can that liability be held to be of the character contemplated by r. 2 ? Can it be said that the reserve for unexpired risk was, like borrowed money and debt, part of the real trading assets of the business ? The answer must clearly be in the negative.
The reserve liability could not factually be said to have contributed to the running of the business or the earning of profits.
It was some.
thing in the air, and could have had no effect in the working of the concern, during the chargeable accounting period.
It cannot therefore be held to be an is accruing liability " within r. 2 of Sch.
11 to the Act.
(1) ; ; 1017 A case very much in point is the decision in Northern Aluminium Co. Ltd. vs Inland Revenue Commissioners(1).
There, the question arose whether a conditional liability under a contract was an " accruing liability " within the corresponding provision in the English Excess Profits Tax Act.
The facts were that on December 16, 1939, an agreement was entered into between the Ministry of Aircraft Production and a company engaged in manufacturing aluminium products and supplying them to manufacturers of aircraft for the Government, wherein it was provided that the prices which the latter was then charging to its customers should be reduced for the period July 1, 1939, to June 30, 1940, and that the amount by which the prices paid to the company were in excess of the reduced prices should be paid by the company to the Ministry.
The agreement further provided that negotiations should be started not later than June 30, 1940, for determining the rates to be charged for the periods following June 30, 1940.
The agreement was, in fact, concluded only on October 12, 1942, whereby the prices to be charged by the company were fixed for the years 1941, 1942 and 1943.
In accordance with the agreement entered into on October 12, 1942, a sum of pound 2,743,469 was repaid by the company to the Ministry in 1943 being the difference between the price paid by the customers and that fixed in the agreement.
This amount was actually allowed as a deduction in the assessment of the business income for purposes of income tax, and the dispute related to the question whether it could be deducted in assessing the excess profits tax as an "accruing liability" of the company for the chargeable accounting period which was January 1 to December 31, 1941.
It was held by the Court of Appeal that there was, in fact, no agreement between the parties during the chargeable accounting period, and that therefore no liability was incurred.
In the alternative, it was held that even if the agreement dated December 16, 1939, could be construed as amounting to a conditional agreement for the period subsequent to June 30, 1940, the obligation created thereby could not be (1) , 554.
1018 regarded as an accruing liability within the rule in question.
Lord Greene M.R. stated the reason thus: " A purely conditional liability, which may or may not mature, is not one which falls within that language, for this reason: Quite apart from the actual words, it would be contrary to the whole conception underlying these capital provisions because a purely conditional liability, which may or may not eventuate, is not a thing which affects a company 's capital position, any more than a conditional receipt can affect its capital position.
A receipt which may or may not be received, according as some event does or does not happen, is not a thing with which you can earn profits.
It is the possibility of earning profits on your real capital that these capital provisions are concerned with.
Therefore, in my opinion, even if one could spell such a hypothetical and conditional contract out of these words, the result would not give rise to an accruing liability within the meaning of the section.
" This decision was taken in appeal to the House of Lords and was affirmed.
Vide Inland Revenue Commissioners vs Northern Aluminium Co. Ltd. (1).
This decision establishes that a conditional liability under a concluded contract it is on that footing that the second point arose for decision was not an accruing liability for the purposes of the Excess Profits Tax Act, as the same had no effect on the actual capital position of the company, and the fact that it was allowed for purposes of income tax did not affect the position under the Excess Profits Tax Act.
The learned Solicitor General sought to distinguish this decision on the ground that it did not relate to an insurance business, whereas it was contended that Sun Insurance Office vs Clark (2 ) directly dealt with the question now under consideration whether reserves for unexpired risks in pending policies were liabilities which could be deducted.
We do not see how it makes any difference in the construction of r. 2 of Sch.
II to the Act that the liability sought to be deducted arises under an insurance policy and not under some other contract.
(1) (2) ; ; , 1019 We are of opinion that the principles laid down in Northern Aluminium Co., Ltd. vs Inland Revenue Commissioners (1) and Inland Revenue Commissioners vs Northern Aluminium Co., Ltd. (2 ) are applicable to the decision of the present case, and that a contingent liability in respect of unexpired risk is not an "accruing liability" within r. 2 of Sch.
II to the Act.
The decision appealed from is correct, and this appeal must accordingly be dismissed with costs.
Appeal dismissed.
|
The respondent was a company carrying on life, fire, marine and general insurance business, and the question for determination related to the assessment of excess profits tax on its income other than life insurance.
The method adopted by the company with respect to fire insurance policies was that while the premiums received were all of them included in the assets of the year, a portion thereof, 40 per cent., was treated as reserve for unexpired risks on the outstanding policies, and shown as a liability.
The appellant, the Commissioner for Excess Profits Tax, claimed that the sum set apart as reserve for unexpired risks was liable to be deducted under r. 2 of Sch.
II of the Excess Profits Tax Act, 1940, from out of the capital employed in business for that year.
The respondent, while maintaining that all the premiums received must be treated as capital under r. 1 of Sch.
II to the Act, contended that the provision for unexpired risks was only a contingent liability and that a liability under a contract of insurance where under risk had not materialised could not be held to be a debt and was therefore not an accruing liability within r. 2 of Sch.
II to the Act.
Held, that the reserve liability for unexpired risk, unlike borrowed money and debts, cannot be treated as part of the real trading assets of the business so as to have an effect on the running of the business or the earning of profits, and consequently, as it cannot be included as capital under r. i, it cannot be deducted as an accruing liability within r. 2 of Sch.
II of the Excess Profits Tax Act, 1940.
Sun Insurance 0Office vs Clark; , and Southern Railway of Peru Ltd. vs Owen, (1956) 2 All E.R. 728, distinguished.
Northern Aluminium Co., Ltd. vs Inland Revenue Commis sioners, and Inland Revenue Commissioners vs Northern Aluminium Co. Ltd. (1947) 1 All E. R. 608, relied on. 1003
|
Civil Appeal Nos.
1299 A to 1303 of 1973 From the Judgment and order dated the 3rd February, 1972 of the Andhra Pradesh High Court in case referred No. 61 of 1970 section T. Desai, M. N. Tandon and Miss. A. Subhashini for the Appellant.
A. Subba Rao, for the respondent.
The Judgment of the Court was delivered by PATHAK, J.
These appeals by special leave are directed(.
against the judgment of the High Court of Andhra Pradesh disposing of a reference under Sub section
(1) of section 256 of the Income tax Act, 1961 on the following questions of law: 1.
Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in concluding that the charging of interest indicated that the Income tax officer was satisfied that there was sufficient cause for delay in filing the return of income ? 2.
Whether on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalties levied under section 271 (1) (a) ? The respondent assessee is a partner in the firm, M/s Manik Rao & Brothers.
He filed voluntary returns for the assessment years 1959 60, 1960 61, 1961 62 and 1962 63, all on August 2, 1963.
The return for the assessment year 1963 64 was filed on August 2, 1964.
On account of the delay in filing the returns the Income Tax officer treated the assessee as being in default and imposed penalties under cl.
(2) of Sub section
(1) of section 271 of the Act.
In appeal before the Appellate Assistant Commissioner of Income Tax the assessee contended that as the returns had been furnished before the end of four years from the end of the relevant assessment years, that is to say, the period prescribed by Sub section
(4) of section 139 of the Act, he was not liable to any penalty.
It was also pointed out by the assessee that interest had been levied under clause (iii) of the proviso to Sub section
(1) of section 139 and, therefore, no question arose of imposing a penalty.
Both contentions were rejected by the 218 Appellate Assistant Commissioner.
In second appeal before the A income Tax Appellate Tribunal the assessee raised substantially the same contentions.
The Appellate Tribunal took the view that in cases falling under Sub section
(1), Sub section
(2) and Sub section
(4) of section 139 the Income Tax officer was empowered to grant time for filing a return.
and on such time being granted the assessee would be liable to pay interest.
It pointed out that the assessee had in fact given his reasons for the delay in filing the returns 'both for the purpose of levy of interest under cl.
(1) of section 139 and also the levy of penalty under cl.
(a) of Sub section
(1) of section 271".
It held that as the Income Tax officer had levied interest upto the date of the filing of the returns it must be presumed that the Income Tax officer had extended the time for filing the returns after satisfying himself that it was a case for extension of time.
The presumption was founded in the principle that an officer entrusted with a judicial or quasi judicial duty must be presumed to have discharged his duties in a proper and bona fide manner.
The appellate Tribunal allowed the appeals and cancelled the penalties.
At the instance of the Commissioner of Income Tax, the Appellate Tribunal made a reference to the High Court of Andhra Pradesh.
The High Court held that the Appellate Tribunal was justified in relying upon the presumption that official acts had been regularly performed, and that therefore it must be presumed that the Income Tax officer had extended the time upon grounds made out by the assessee, because otherwise the Income Tax officer could not have charged interest.
Holding that no penalty was livable in the circumstances, the High Court answered the reference in favour of the assessee.
To appreciate the true scope of the questions referred, it is necessary to understand the scheme enacted in section 139 of the Income tax Act, 1961.
Broadly, the scheme envisages a voluntary return by the assessee under Sub section
(1) of section 139, a return consequent upon a notice by the Income Tax officer under Sub section
(2) of section 139 and a return in the circumstances mentioned in Sub section
(4) of section 139.
We are not concerned where with a return under Sub section
(3) of section 139 disclosing a loss nor are we concerned with a revised return under Sub section
(S) of section 139.
In the case of a voluntary return, Sub section
(1) of section 139 prescribes the period within which such returns must be filed.
Where no return can be filed within the prescribed period, 219 the assessee is entitled to apply to the Income Tax officer for extending the date for furnishing the return.
The lncome Tax officer is empowered to extend the date in his discretion.
In a case covered by cl.
(i) of the proviso to Sub section
(1) of section 139 the period may be extended upto September 30 of the assessment year without charging any interest, and in a case covered by cl.
(ii) of the proviso the period may be extended upto December 31 of the assessment year similarly without charging any interest.
But where the period is extended beyond the dates mentioned in clauses (i) and (ii), then under cl.
(iii), the assessee is liable to pay interest from october 1 or January I, as the case may be, of the assessment year to the date of the furnishing of the return on the amount of tax payable on the total income reduced by the advance tax paid and any tax deducted at source.
Similarly, in the case of a return furnished under Sub section
(2) of section 139 the Income Tax officer has power to extend the date for furnishing the return subject to payment of interest in the circumstances set forth in relation to voluntary returns under Sub section
(1) of section 139.
Where, however, the assessee does not furnish a return within the time allowed to him under Sub section
(1) or Sub section
(2) of section 139 then before any assessment is made he may, under Sub s (4) of section 139, furnish a return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates, and in that event the provisions of Sub cl.
(iii) of the proviso to Sub section
(1) of section 139 relating to payment of interest would apply to the case.
Sub section (8) of section 139 was inserted by the Finance Act, 1963 with effect from April 28, 1963.
It declared that notwithstanding anything contained in cl.
(iii) of the proviso to Sub section
(1) of section 139, it was open to the Income Tax officer, in certain prescribed cases and circumstances, to reduce or waive the interest payable by any person under any provision of section 139.
It may be noted that the language of Sub section
(8) of section 139 suffered material change with effect from April 1, 1971.
Now, it will be apparent that delay in filing a return of income results in the postponement of payment of tax by the assessee resulting in the State being deprived of a corresponding amount of revenue for the period of the delay.
It seems that in order to compensate for the loss so occasioned Parliament enacted the provision for payment of interest.
It is apparent also from the language of cl.
(iii) of the proviso that interest becomes payable only upon the 220 Income Tax officer acting on an application made by the assessee for the purpose and extending the date for furnishing the return.
At the relevant time the proviso to Sub section
(1) of section 139 read: Provided that on an application made in the prescribed manner, the Income Tax officer may, in his discretion, extend the date for furnishing the return (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December of the year immediately preceding the assessment year, and in the case of any person referred to in clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, upto the 31st day of December of the assessment year without charging any interest; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at nine per cent per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return (a) in the case of a registered firm or an unregistered firm which has been assessed under cl.
(b) of section 183, on the amount of tax which/would have been payable if the firm had been assessed as an unregistered firm, and (b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any paid or by any tax deducted at source, as the case may be," It is only where the Income Tax officer extends the time for 221 furnishing the return beyond September 30 or December 31, as the case may be, that interest becomes payable.
Now the contention on behalf of the Revenue is that there is no material to warrant the finding that an application had been made by the assessee for extension of time and that upon such application the Income Tax officer extended the time.
It is urged that the imposition of interest does not warrant the assumption that an application for extension of time was made by the assessee and allowed by the Income Tax officer.
The proviso to Sub section
(1) of section 139 requires the assessee to make an application for extension of time in the prescribed manner, and the prescribed form of the application set forth is Form No. 6 pursuant to rule 13 of the Income Tax Rules, which requires the assessee to state the reasons on which the extension of time is sought.
All this, learned counsel contends, contemplates that the Income Tax officer should apply his mind to relevant material before him before deciding, in his discretion, whether the time should be extended.
Learned counsel, however, has not been able to satisfy us why the presumption raised by the Appellate Tribunal, and endorsed by the High Court, should not prevail.
It cannot be disputed that the Income Tax officer could extend the date for furnishing the return in respect of each assessment year.
It was open to him to do so under the statute, and he was entitled to charge interest only on the basis that the extended period fell beyond September 30 or December 31, as the case may be.
In the ordinary course of things, the Income Tax officer could have extended the date only upon being satisfied that there was good reason for doing so, and that would have been on grounds pleaded by the assessee.
We consider that in the circumstances of this case a presumption could validly be raised that all that was done.
No attempt was made by the Revenue to show that the Income Tax officer acted arbitrarily and contrary to the procedure envisaged by the statute.
The Appellate Tribunal considered the matter carefully and found circumstances on the record in favour of raising the presumption.
The High Court approved of the approach adopted by the Appellate Tribunal] and did not find it contrary to law.
We do not see any reason to differ from the opinion expressed by the High Court.
In the instant case, the extension was a matter falling within Sub section
(1) of section 139, and the returns furnished by the assessee must be attributed to that provision.
They were not returns furnished 222 within the contemplation of Sub section
(4) of section 139.
Therefore, the decision of the Gujarat High Court in Additional Commissioner of Income Tax, Gujarat vs Santosh Industries,(l) of the Karnataka High court in M. Nagappa and others vs Income Tax officer, Central Circle l, Bangalore and others,(a) of the Andhra Pradesh High Court in Poorna Biscuit Factory vs Commissioner of Income Tax, A.P.,(3) of the Orissa High Court in Commissioner of Income Tax, Orissa V. Gangaram Chapolia,(4) and of the Allahabad High Court in Metal India Products vs Commissioner of Income Tax, Lucknow( ') cannot be invoked in the instant case.
They are cases dealing with a return filed in the circumstances mentioned in Sub section
(4) of section 139.
our attention has also been drawn to the decision of this Court in Commissioner of Income Tax, Punjab vs Kulu Valley Transport Co. P. Ltd.(") That was a case where the returns were filed under Sub section
3 of section 22 of the Indian Income Tax Act, 1922.
They were not returns furnished within the time allowed by or under Sub section
(1) or Sub section
(2) of section 22 of that Act.
Accordingly, that case also need not be considered.
In the result, we uphold the answer returned by the High Court to the first question raised in the reference.
The second question raises the point whether the Appellate Tribunal was justified in cancelling the penalties levied under cl.
(a) of Sub section
(1) of section 271.
That provision reads: "271 (1) If the Income Tax officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub section
(1) of section 139 or by notice given under Sub section
(2) of section 139 or 9. 148 or has without reasonable cause failed to furnish it within the time (1) [l974] (2) (3) (4) (5) (6) 223 allowed and ni the manner required by Sub section
(1) of section 139 or by such notice, as the case may be, or A b) . (c) . . . . . . . . . ._ he may direct that such person shall pay by way of penalty, (i) . . . . . . . . . _ (ii) . . . . . . . . . (iii). . . . . . . . . .
It is clear that penalty is attracted if the Income Tax officer is satisfied that assessee has, without reasonable cause, failed to furnish the returns "within the time allowed".
The time allowed for furnishing a voluntary return is the time specified in Sub section
(1) of section 139.
We have seen that the proviso to that sub section empowers the Income Tax officer to extend the date for furnishing the return.
It was open to Parliament to specify by express enactment the date by which a return must be filed, and also confer power on the Income Tax officer to extend the date for doing so.
When the Income Tax officer extends the date, he does so in the exercise of authority conferred by the statute, and the additional time available to the assessee consequent upon such extension is, for all relevant purposes, of the same character and as effective as the statutory period specifically enacted by Parliament.
For the purpose of furnishing a return it constitutes an integral part of the time allowed for furnishing a return.
Therefore, where the Income Tax Officer extends the date, then all the time upto that date is the time allowed for furnishing the return.
The additional period consequent upon such extension falls within the expression "the time allowed" in cl.
(a) of Sub section Of section 271.
That being so, the conclusion must follow that the penalty provision does not come into play at all.
In our opinion, the High Court was right in answering the second question also in favour of the assessee.
We express our agreement with the opinion of the High Court a on both the questions referred to it.
Accordingly, these appeals fail and are dismissed with costs.
H.S K. Appeal dismissed.
|
The respondent assessee filed voluntary income tax returns for some assessment years after the date prescribed by Sub s.(l)of.139 of the Income Tax Act, 1961.
The Income Tax officer treated the assessee as being in default and imposed penalties under cl.
(a) of Sub s.(1) of s.271 of the Act.
In appeal before the Appellate Assistant Commissioner of Income Tax the assessee contended that since interest had been levied under cl.(iii) of the Proviso to Sub section
(1) of s.l39, no question arose of imposing a penalty.
The Appellate Assistant Commissioner rejected the contention.
In second appeal the Income Tax Appellate Tribunal held that as the Income Tax officer had levied interest upto the date of the filing of the returns, it must be presumed that the Income Tax officer had extended the time for filing the returns after satisfying himself that it was a case for extension of time.
The Appellate Tribunal allowed the appeals and canceled the penalties.
On a reference being made.
the High Court held that the Appellate Tribunal was justified in relying upon the presumption.
Hence these appeals by the Revenue.
The Revenue contended that there was 216 no material to warrant the finding that an application had made by the assessee A for extension of time and that upon such application the Income Tax officer extended the time.
The Revenue urged that the imposition of interest does not warrant the assumption that an application for extension of time was made by the assessee and allowed by the Income Tax officer.
Dismissing the appeals, ^ HELD: It cannot be disputed that the Income Tax officer could extend the date for furnishing the return in respect of each assessment year.
It was open to him to do so under the statute, and he was entitled to charge interest only on the basis that the extended period fell beyond September 30 or December 31, as the case may be.
In the ordinary course of things, the Income Tax officer could have extended the date only upon being satisfied that there a was good reason for doing so, and that would have been on grounds pleaded by the assessee.
We consider that in the circumstances of this case a presumption could validly be raised that all that was done.
No attempt was made by the Revenue to show that the Income Tax officer acted arbitrarily and contrary to the procedure envisaged by the statute.
The Appellate Tribunal considered the matter carefully and found circumstances on the record in favour of raising the presumption.
The High Court approved of the approach adopted by the Appellate Tribunal and did not find it contrary to law.
We do not see any reason to differ from the opinion expressed by the High Court.
[221E G] Additional Commissioner of Income Tax, Gujarat vs Santosh Industries, , M. Nagappa and others vs Income Tax officer, Central Circle l, Bangalore and others, , Poorna Biscuit Factory vs Commissioner of Income Tax, A.P., , Commissioner of Income Tax, Orissa v Gangaram Chopolia, [1976]103 I.T.R. 613, Metal India Products vs Commissioner of Income Tax, Lucknow, [1978] 113 1.T.R. 830 and Commissioner of Income Tax, Punjab vs Kula Valley Transport Co. P. Ltd., not applicable.
Penalty under cl (a) of Sub s (1) of s.271 of the Income Tax Act is attracted if the Income Tax officer is satisfied that the assessee as, without reasonable cause, failed to furnish the returns "within the time allowed '.
, The time allowed for furnishing a voluntary return is the time specified in Sub s.(l) of s.139.
The proviso so that sub section empowers the Income Tax officer to extend the date for furnishing the return.
When the Income Tax officer extends the date, he does so in the exercise of authority conferred by the statute, and the additional time available to the assessee consequent upon such extension is, for all relevant purposes, of the same character and as effective as the statutory period specially enacted by Parliament.
For the purpose of furnishing a return it constitutes an integral part of the time allowed for furnishing a return.
Therefore, where the Income Tax officer extends the date, then all the time upto that date is the time allowed for furnishing the return.
The additional period consequent upon such extension falls within the expression "the time allowed" in cl.(a) of Sub s.(l) of s.271.
That being so, the conclusion must follow that the penalty provision does not come into play at all.
[223C G] 217
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section 1347 60/81, 132 143, 3405 16, 342Q 22, 3423 25 of 1980, 806 18 of 1981,4251,9500 05, 9511 13 9514 of 1981, 21 23,37 43, 45 56, 63, 91 1 l l, 166 67, 174, 181 192 of 1980, 407 11 of 1979, 412 415, 416 18 of 1979, 193 220, 237 48, 825 36, 7) 1 722 of 1982, 723 39, 3 19 30,969 78, 2171 73 of 1982 and 3864 69 of 1980,1227 33 of 1981,5520 22 of 1980, 1001 07 of 1981, 1109 30 1384,1453 62, 1469 of 1981, 805 24,866, 972, 1453 62, 1498, 4667 68, 975 83, 854, 984, 1469 78, 787, 1319 24, 1400 02, 1504 05, 1608 11, 1621 25, 1934 63, 2172 77, 2228 31, 2251 53, 2374 75, 2327 61 2556 65, 2612 13, 2625 27, 2624, 3070 88, 3178 95, 985, 4158 65 4527 32, 5113 19, 9196 98 of 1982, 5727, 8397, 9583, 9719 22 of 1982, 8262 67 of 1981, 10039, 10223 of 1982, 2682 84 of 1983, 3885 86 of 1983, 66 67, 68 69, 1139 2759 of 1983, 2379 of 1982, 2703, 1119 of 1983, 7993 of 1982, 1172 of 1983, 6498 of 1982 (Under Article 32 of the Constitution of India) 971 FOR THE APPEARING PARTIES Shanti Bhushan, R. K Garg P. R. Mridul R. K. Jain, Pradeep Kumar Jain, B. R. Kapoor, section R. Srivastava.
P. H. Parekh, Miss Nisha Srivastava, Hemant Sharma, Miss Indu Sharma.
K R Mohan, and Geetanjali Moham.
O. P. Rana, D. D. Thakur, E. C. Agarawala, Raju Ramachandran, R. Sathish, V. K Pandita and R. Rana Dr. L. M. Singhvi, L. N Sinha, Y. section Chitale, and G. N. Dikshit.
Miss Shobha Dikshit, Pradeep Mishra, section K. Kulshrestha, and A. M. Singhvi, Advocates Ravindra Bana, Sarva Mittra, Rajiv Datta, B. Tawakley, R. B. Mebrotra, Pramod Swarup, R. N. Poddar & N. N. Sharma.
The following Judgments were delivered VARADARAJAN, J. Writ Petitions 1347 to 1360 of 1981 and Writ Petition 174 of 1982 are by manufacturers of Khandsari sugar in the open pan process and sellers thereof in Uttar Pradesh.
Writ Petitions 21 to 23 of 1982, Writ Petitions 3178 to 3195 of 1982, Writ k. Petitions 3178 to 3195 of 1982, Writ Petitions 4527 to 4532 of 1982 and Writ Petition 3890 of 1983 are by traders in that product in U. P. The pleadings in W. Ps. 1347 to 1360 of 1981 were referred to by the learned counsel for the parties when common arguments were advanced in all the writ petitions.
Therefore, the pleadings in those writ petitions alone are referred to in this judgment.
These W. Ps. 1347 to 1360 of 1981 under Article 32 of the Constitution are for declaring the provisions of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 as ultra vires the Constitution and for restraining the respondents from realising market fee and licence fee from the petitioners under the provisions of that Adhiniyam (hereinafter referred to as 'the Adhiniyam ').
The case of the petitioners/firms which manufacture Khandsari sugar by the open pan process in the State of Uttar Pradesh and sell the same in that State is this.
972 In the process of manufacture of Khandsari sugar there is not only a physical change of the sugarcane used but also a chemical change and the white crystalline sugar of 90 per cent sucros purity is obtained after drying, grading and vagging by eliminating all the ingredients of sugarcane except sucros.
But in the case of desi khandsari, gur, jaggery, rab and shakkar which are all manufactured from raw sugarcane juice, pectins, live saps, motals, minerals, nitrogenous compounds, wages and salts are not removed and there is no chemical change in the manufacturing process.
The Adhiniyam was enacted to reduce multiple trade charges and provide amenities to the producers and sellers of agricultural produce, for certification of accurate weights and scales and for the establishment of market committees to ensure that the agricultural producer has a say in the matter of utilisation of the market funds.
The Adhiniyam applies to agricultural products which according to section 2 (a) are 'such items of produce of agriculture, horticulture, viticulture, sericulture, pisciculture, animal husbandary or forest, as are specified in the schedule, and include and mixture of two or more such items and also include any such item in processed form and further include gur, rab, shakkar, Khandsari and jaggery '.
The Adhiniyam does not define khandsari sugar but it is defined in clause 2 of the U. P. Khandsari Sugar (Levy) Order, 1975 as "whole crystalline sugar containing more than 90 per cent and manufactured at a sulphitation unit by open pan process including a bel".
The khandsari sugar produced by the petitioners who hold licence for operating hydraulic power crushers is not khandsari but crystalline sugar as produced by sugar mills.
The sugar produced by the petitioners is physically and chemically different from sugarcane which is one of the items specified in the schedule to the Adhiniyam and also from gur, rab, jaggery and khandsari and cannot be treated as a processed form of sugarcane. 'therefore, the Adhiniyam cannot apply to the product manufactured by the petitioners which is plantation white sugar.
The petitioners/firms which are producers of sugar are not liable to pay market fee under the Adhiniyam, section 17 (iii) (b) whereof provides that the market committee shall have power to levy and collect market fee which shall be payable on transactions of sale of specified agricultural produce in the market area at seh rates being not less than one per cent and not more than one and a half per cent of the price of the agricultural produce so sold as the State Government may specify by notification.
Section 17 (iii) is ultra vires the Constitution as it permits excessive delegation of legislative power and does not lay down any 973 guideline for the State Government fixing the market fees and only A market committees rendering services can determine the quantum of market fees.
The illegal levy of market fees on the petitioners is violative of Articles 19 (1) (f) and 301 of the Constitution.
The action of the respondents in seeking to apply the provisions of the Adhiniyam to the petitioners leaving out other manufacturers similarly situate is violative of article 14 of the Constitution.
Section 8 of the Adhiniyam is violative of article 14 as it does not provide any guideline regarding the basis on which the State Government can include or exclude any agricultural produce from the list of notified commodities under section 6.
The market fees and licence fees are in the nature of payments for services rendered.
But the market committees render no service at all to the petitioners and therefore the levies are really in the nature of tax.
The levies deprive the petitioners of their right to property without any authority of law and are therefore violative of Articles 265, 31 and 19 (1) (f) and (g) of the Constitution.
It is in these circumstances that the petitioners have prayed for declaration of the provisions of the Adhiniyam as being ultra vires the Constitution and for the issue of a writ of mandamus restraining the respondents from realising market fee and licence fee from the petitioners under the Adhiniyam.
The contentions of the Mandi Samiti/respondents who oppose the petitions are these: The petitioners who are manufacturers of khandsari/khandsari sugar are fully covered by the Adhiniyam in view of the definition of 'agricultural produce ' in section 2 (a).
Khandsari is mentioned in schedule 'Kha ' to the notification No. 584/XII 8 104176 dated 11.4.1978.
Khandsari sugar is not sugar as is evident from the definition of sugar in section 2 (f) of the Sugar (Regulation of Production) Act.
1961 according to which sugar means any form of sugar whether wholly or partially manufactured but does not include khandsari sugar, that is to say, sugar in the manufacture of which neither a vacuum pan process nor a vacuum operator is employed; or palmyra sugar, that is to say, sugar manufactured from jaggery obtained by boiling the juice of palmyra palm. 'Khandsari ' is the short form of 'Khandsari sugar ' in the Adhiniyam and the notification and there is nothing like khandsari different from khandsari sugar in any of the concerned laws or in common parlance.
There as only one khandsari and it is called khandsari sugar and it is manufactured 974 by mechanical power process, The word 'sugar ' has been used everywhere for the sugar manufactured by the vacuum pan process by mills and factories and the words 'khandsari sugar ' have been used for the material produced by open pan process In the Sugarcane (Control) Order, 1966 by clause 2 (d), khandsari sugar is defined as sugar produced by the open pan process Khandsari sugar is defined in clause 2 (f) of the U. r. Khandsari Sugar Manufacturing Order, 1967 as sugar containing more than 90 per cent sucros and manufactured by the open pan process including bels.
There is no chemical change in the process adopted by the petitioners in the manufacture of Khandsari sugar and there is nothing like desi Khandsari sugar.
What the petitioners call desi khandsari is shakkar produced by manual efforts.
It is true that khandsari sugar manufactured by the petitioners contains more than 90 per cent sucros but it is denied that the sugar manufactured by the petitioners is not khandsari or that it is crystalline sugar as produced by sugar mills or that the khandsari sugar produced by the petitioners is not physically and chemically different from the sugar produced by mills.
The produce manufactured by the petitioners is processed form of sugarcane, namely, sugarcane from which the chaff has been removed and the sweet material has been retained for human consumption Gur, rab, jaggery and khandsari sugar are all manufactured by the open pan process while sugar produced by mills is manufactured by the vacuum pan process.
The producers of khandsari sugar by open pan process and the producers of sugar by vacuum pan process have to take out licences under different order namely, U. P. Khandsari Sugar Manufacturing Order, 1967 and U. P. Vacuum Pan Sugar Factories Licensing Order, 1969 Thus khandsari sugar produced by the petitioners is different from sugar produced by sugar mills and it is fully covered by section 2 (a) of the Adhiniyam.
Market fee is not claimed from the petitioners in any manner different from the one stipulated in section 17 (iii) (b) of the Adhiniyam Section 17 (iii) (b) is not ultra vires the Constitution and does not suffer from any excessive delegation of legislative power.
The levy of market fee and licence fee is not violative of any constitutional provision.
article 19 (1) (f) does not exist any longer and article 301 does not confer any fundamental right on the petitioners. 'There is no discrimination against the petitioners and section 8 of the Adhiniyam is not violative of article 14 The market fee and licence fee are fees 975 and not taxes.
A major portion of the funds of the market committees is applied for development of the market area.
The Rajya Krishi Utpadan Mandi Parishad (hereinafter referred to as 'the Parishad '), impleaded as respondent in the petitions has filed separate counter affidavit raising similar contentions as the market committees.
The additional contentions raised by that Board which also opposes the petitions are these: The original definition of agricultural produce in section 2 (a) of the Adhiniyam did not contain the words "and further includes gur, rab, shakkar, khandsari and jaggery".
These words were added in the definition by the U. P. Amendment Act 10 of 1970 in order to remove anomalies in the words "processed agricultural produce".
The Government issued the said notification No. 584/X11 8 10 :176 dated 11.
4. 1978 after considering all the objections raised, specifically mentioning Khandsari along with gur, rab, shakkar and jaggery in the list of 115 commodities liable for the levy of market fees.
The sale of khandsari is free without any Government control and it is effected in the market areas by commission agents by mutual negotiation or open auction while a large part of the sugar produced by the vacuum pan process is controlled by the Central Government.
Sugar and khandsari are distinct and different from each other.
The sugar produced in vacuum pan process is standardized as per India Sugar Standards and graded into A30, B30, C30, D30, E30, A29, B29 C29, D29 and E29 whereas khandsari sugar produced by the open pan process is called khandsari, khandsari sugar, rab and sugar in the market.
There is no levy on khandsari and it is sold in the open market whereas 65 per cent of the sugar produced in the mills by the vacuum pan process is taken by the Central Government for feeding the public distribution system by levy and the remaining 35 per cent along is left with the factories for free sale through wholesale dealers approved under the control orders.
The producers of khandsari sugar are not liable to pay the impugned market fee.
they are liable to pay it only if they also hold licences as commission agents or wholesale dealers and sell the product.
Mr. Shanti Bhushan, learned counsel for the petitioners advanced arguments in these petitions under three main heads, namely (i) whether khandsari sugar manufactured by the petitioners in their mills by the open pan process is an agricultural produce, covered by the Adhiniyam as amended by the U. P. Ace 10 of 1970; (ii) whether khandsari sugar manufactured by the petitioners in their 976 industrial units employing a large number of workmen to whom the Industrial Disputes Act, Employees Provident Fund Act, Factories Act and Minimum Wages Act apply and which is subject to levy of excise duty under the is subject to the levy of market fee under the Adhiniyam and (iii) whether on account of the interpretation of the Adhiniyam, khandsari sugar manufactured by the petitioners could be said to be subject to the levy of market fee under the Adhiniyam there is any difference between khandsari sugar produced by the petitioners in the open pan process, and the plantation white sugar produced by the other mills in the vacuum pan process, and there is no discrimination between khandsari sugar sought to be subjected to the levy of market fee under the Adhiniyam and the plantation white sugar produced by the vacuum pan process which is not subject to the levy under the Adhiniyam.
He clubbed his arguments on points (i) and (ii) and submitted that khandsari sugar produced by the petitioners in their mills by the open pan process is not an agricultural produce contemplated to be covered by the provisions of the Adhiniyam for the purpose of levy of the market fee as it is not produced by the agricultural producer but produced in mills employing modern methods though under the open pan process.
On the third point he submitted that there is no difference between the khandsari sugar produced by the petitioners in their mills by the open pan process and the plantation white sugar produced by the other mills by the vacuum pan process except that khandsari sugar is produced by the open pan process while the plantation white sugar is produced by the vacuum pan process and the difference in the composition of the two products is only as regards CAO, filterability and conductivity and consequently there is discrimination hit by article 14 of the Constitution in leaving plantation white sugar out of the levy and seeking to subject the khandsari sugar produced by the petitioners mills alone to the levy of market fee under the Adhiniyam.
On the other hand, Mr. L. N. Sinha, learned counsel for the Parishad submitted that the original object of the Adhiniyam was protection of agricultural produce as originally defined in the Adhiniyam and that the position has changed now and it has become a marketing legislation covered by entry 28 of List II (Market) of the Seventh Schedule to the Constitution.
He further submitted that if the Adhiniyam has become a marketing legislation as contended by him industrial produce also can be included in the schedule of produce appended to the Adhiniyam and khandsari is genus and 977 khandsari sugar is a specie and it is liable to be subjected to the A levy of market fee under the Adhiniyam.
As regards discrimination Mr. Sinha submitted that similarity is one thing and identity is another and that article 14 will be attracted only in the case of identity and there is difference between Khandsari sugar and plantation white sugar and therefore there is no question of discrimination.
Mr. D. D. Thakur, learned counsel for the Market Committees submitted that it is not the only object of the Adhiniyam to benefit the agricultural producer, but 2 number of other objects are noticeable in the Adhiniyam and that if the object is to protect the agricultural producer alone the levy of market fee would have been confined to the first sale alone.
He further submitted that the Adhiniyam covers sales by producers to traders and sales by traders to other traders subject to the requirement that what is sold is an agricultural produce and no market fee is livable on retail sales etc.
having regard to the proviso to section 17 of the Adhiniyam.
He submitted that the levy is not on khandsari producers but on khandsari traders and that what is contained in the preamble to the Adhiniyam is slightly different from the scheme of the Adhiniyam, and section 2 (a) of the Adhiniyam has to be looked into independently of the preamble which in turn can be looked into only in case of ambiguity.
He too submitted that khandsari is a genus and khandsari sugar is a specie.
He however.
admitted that agriculturists producing khandsari without the use of power need not obtain licence for its remanufacture while producers of khandsari sugar by the open pan process in the khandsari industry are bound to obtain licence.
He contended that what is produced by the petitioners would fall within the ambit of section 2 (a) of the Adhiniyam.
On the question of discrimination he submitted that plantation white sugar manufactured by the vacuum pan process does not require regulation, unlike khandsari sugar produced by the open pan process and that if that is so there is no question of discrimination in not subjecting the plantation white sugar to the levy of market fee under the Adhiniyam.
Dr. Y. S: Chitale, learned counsel for the Parishad, Samiti and Mandi, the respondents in W. Ps.
1348 to 1360 of 1981 submitted that section 2 (a) of the Adhiniyam deals also with traders as held in Laxmi Khandsari Etc.
vs State of U. P. and Others(1) and that what the petitioners produce is khandsari though it may (1) ; 978 be more refined than khandsari produced by the agriculturists with out the aid of power.
On the question of discrimination he submitted that whatever was considered necessary to be regulated was included in the schedule to the Adhiniyam and that there is no discrimination in not subjecting plantation white sugar produced by the vacuum pan process to the levy of market fee under the Adhiniyam. 'I he prefatory note to the Adhiniyam as extracted from the 'Statement of Objects and Reasons may be noted.
It reads: "The present chaotic state of affairs as obtaining in agricultural produce markets is an acknowledged fact.
There are innumerable charges, levies and exactions which the agricultural producer is required to pay without having any say in the proper utilisation of the amount so paid by him.
In matters of dispute between the seller and the buyer, the former is generally put at a disadvantage by being given arbitrary awards.
The producer is also denied a large part of his produce by manipulation and defective use of weights and scales in the market The Government of India and the various committees and commissions appointed to study the condition of agricultural markets in the country have also been inviting the attention of the State Government from time to lime towards improving the conditions of these markets.
The proposal to enact a marketing legislation was first taken up in 1938; but it could not go through as the then Ministry went out of office soon.
after its inception .
The Planning Commission stressed long ago that legislation in respect c f regulation of markets should be enacted and enforced by 1955 56.
Most of the other States have already passed legislation in this respect.
The proposed measure to regulate the markets in this State has been designed with a view to achieving the following direction (i) to reduce the multiple trade charges, levies and exactions charged at present from the producer sellers; (ii) to provide for the verification of accurate weights and scales and see that the producer seller is not denied his legitimate due; 979 (iii) to establish market committees in which the A agricultural producer will have his due representation; (iv) to ensure that the agricultural producer has his say in the utilisation of market funds for the improvement of the market as a whole; (v) to provide for fair settlement of disputes relating to the sale of agricultural produce; (vi) to provide amenities to the producer seller in the market; (vii) to arrange for better storage facilities; (vii) to stop inequitable and unauthorised charges and levies from the Producer seller; and (ix) to make adequate arrangements for market intelligence with a view to posting the agricultural producer with the latest position in respect of the markets dealing with his produce".
(emphasis supplied) The prefatory note shows that the object of the Adhiniyam is to save the agricultural producer from innumerable charges, levies and exactions and to enable him to have a say in the proper utilisation of the amounts paid by him, to reduce the multiple charges, levies exactions charged from producer sellers and generally to help the agricultural producer to sell his produce to his best advantage.
The objects set out in the prefatory note are reflected in a concised form in the preamble to the Adhiniyam which says that it is "An Act to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of markets therefore in Uttar Pradesh".
The preamble also speaks of the necessity to provide for the regulation of sale and purchase of agricultural produce and the establishment, superintendence and control of markets therefore in Uttar Pradesh. 'Thus the object of the Adhiniyam as seen from the prefatory note and preamble is to protect the agricultural producer from exploitation.
Protection of any industrial producer is not the object of the Adhiniyam.
Section 2(p) of the Adhiniyam defines a "producer" as meaning "a person who, whether by himself or through hired 980 labour, produces, rears or catches any agricultural produce, not being a producer who also works as a trader, broker or dalal, commission agent or arhatiya or who is otherwise ordinarily engaged m the business of storage of agricultural produce".
agricultural produce is defined in section 2(a) of the Adhiniyam as meaning "such items of produce of agriculture, horticulture, viticulture, agriculture, siriculture, pisciculture, animal husbandry or forest as are specified in the schedule and includes admixture of two or more of such items and also includes any such item in processed form and further includes gur, rab, shakkar, khandsari and jaggery".
The words "and further includes gur, rab, shakkar, khandsari and jaggery" have been introduced into section 2(a) of the Adhiniyam by the U.P. Amendment Act 10 of 1970.
Trader is defined in section 2(y) of the Adhiniyam as meaning "a person who is engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more principals and includes a person engaged in producing agricultural produce".
Thus it is seen from the definition of producer and trader in the Adhiniyam that emphasis is on the product produced, reared or caught by agriculturists whether by their own or through hired labour and that such producer does not include a producer who also works as a trader, broker, dalal, commission agent or arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce.
Therefore, it is not possible to hold that manufacturer producing khandsari sugar by the modern method in the open pan process is a producer within the meaning of section 2(p) of the Adhiniyam.
The schedule to the Adhiniyam consists of 175 items including paddy, honey, silk, eggs and ghee which were in the schedule from the inception.
But, as stated earlier "Khandsari" is one of the items introduced into the definition of agricultural produce in section 2(a) of the Adhiniyam by the Amendment Act 10 of 1970.
It is seen from Annexure VIII to the counter affidavit of the respondent Parishad filed in W. Ps.
1347 1360 of 1981 that "The technique of sugar manufactured through the indigenous process without the use of complicated machinery has been known in this country from time immemorial.
The sugar thus produced is known as khandsari".
In the counter affidavit of Shri Ram Sharan, Deputy Director (Marketing) of the Parishad filed for the petitioners ' additional affidavit it is admitted that farmers and sugarcane growers produce, what he calls, khandsari sugar with the help of small electric motors, diesel engines or their own tractors.
Mr. Shanti Bhushan submitted that khandsari introduced in section 2(a) of the Andhiniyam by the Amendment Act 10 of 1970 is khandsari produced 981 by agriculturists and sugarcane growers in the old and primitive method and not khandsari sugar produced in khandsari mills in the modern sulphitation open pan process.
Annexure Vl to the counter affidavit filed by the Parishad in W. Ps 1347 1360 of 1981 is the report of the Director of National Sugar Institute, Government of India, Kanpur regarding the approximate composition of khandsari sugar produced by the modern sulphitation process and that of plantation white sugar produced by the vacuum pan sugar factories.
It is extracted for ready reference: Particulars Vacuam pan sugar Khandsari sugar Pol 99.8 to 99.95 99.4 to 99.9 Reducing sugars 0.04 to 0.25 0.10 to 0.40 CAO (Mg/l00 gm) 10 to 35 45 to 80 SO2 (ppm) 2.25 5.25 Viscosity CP 20.30 20.30 Conductivity x 10(6) 3 to 15 50 to 200 Turbidity % 10 to 30 40 to 70 Filterability (FK) 0.3 to 2.5 50 to 400 Shape of crystals Monoclinic Flattened or a cubd Moisture 0.04 to 0.15 00.15 to 0.S0 Water insoluble by wt.
% Colour OD 400 OD 500 0.02 to 0.05 0.04 to 0.015 It is seen from this report that the difference between plantation white sugar produced by the vacuum pan process and khandsari sugar produced by the open pan process in their composition is marked only as regards CAO, filterability, and conductivity and that the other items are more or less the same.
In the aforesaid counter affidavit of Shri Ram Sharan it is stated that "khandsari produced by non sulphur units and khandsari produced by non sulphur units is similar in process, raw materials and sucros contents.
There may be slight difference in colour and crystalline nature of the substance which is attributable to the better clarification method and better equipment adopted by sulphur units which are all improvements and which create no difference in the nature of the product, i.e. khandsari".
982 In the counter affidavit of Shri Zorawar Singh, Secretary, Krishi Utpadan Mandi Samiti, Moradabad filed in W.P.1359 of 1981 it is admitted that the juice of sugarcane boiled in the open pan by the producers and the khandsari sugar manufactured by them contains more than 90 per cent sucros.
In Annexure VIII to the counter affidavit filed in W.P. 1347 1360 of 1981 it is stated that the improved process of khandsari manufacture as evolved by the Gur and Khandsari Research Scheme of the National Sugar Institute, Kanpur is a simplified form of the single sulphitation process as employed in the vacuum pan factories and that as a result of the improvements it is now possible to get a recovery of 7.5 to 8.0 per cent of sugar on cane of average quality and the first sugar produced is quite comparable to ordinary grade crystal sugar produced by the vacuum pan process.
That process which has been set out in that Annexure though brief is quite elaborate and not far different from the one adopted in the manufacture of plantation white sugar by the vacuum pan process.
On an inspection of the samples of khandsari sugar and plantation white sugar produced in the Court during the arguments in these writ petitions it was noticed that both khandsari sugar and plantation white sugar are white in colour and crystalline in form though the plantation white sugar is a little more lustrous than khandsari sugar.
But khandsari produced by the agriculturists or sugarcane growers in the indigenous method is powdery in form and yellowish in colour.
In these circumstances, I am of the opinion that khandsari sugar produced by the petitioners in their mills with the aid of power in the open pan process by employing large number of employees to whom the Industrial Disputes Act, Minimum Wages Act, Factories Act, Employees Provident Fund Act and similar enactments apply is an industrial product which is very different from khandsari produced by agriculturists of sugarcane growers in the old indigenous method.
According to section 2(d) of the Sugarcane (Control) Order, 1966 khandsari sugar means sugar produced by the open pan process.
According to section 2(f) of the U.P. Khandsari Sugar Manufacturers Licensing Order, 1967 khandsari means sugar containing more than 90 per cent sucros and manufactured by the open pan process.
Section 3 of that Order makes it obligatory to obtain a licence for the manufacture of khandsari sugar.
Section 3(4) (a) of that Order regulates the khandsari sugar manufacturing industry in the best interest of that industry.
As mentioned above, it is admitted that no licence is necessary for the manufacture of khandsari by the agriculturists or producers of sugarcane in the indigenous method without the use of power.
It is not disputed that khandsari sugar produced by the petitioners is subject to excise duty under the Sugar (Special 983 Duty) Act, 1959.
Clause (ii) of section 2(c) of that Act illustrates one of the sugars not subjected to the duty, namely, palmyra sugar, that is to say, sugar manufactured from jaggery obtained by boiling the juice of palmyra palm.
The word 'sugar ' has been too broadly employed in the Sugar (Special Duty) Act, 1959.
But it is significant to note that in the Sugarcane (Control) Order, 1966 and the U.P. Khandsari Sugar Manufacturers Licensing Order, 1967, what is covered is khandsari sugar, whereas what has been introduced into s 2(a) of the Act by the Amendment Act 10 of 1970 is "khandsari".
Thus it would appear that what is sought to be subjected to the levy of market fee under the Adhiniyam is khandsari produced by the agriculturist or producer of sugarcane in the old indigenous method and not khandsari sugar produced by persons like the petitioners in their modern mills by the open pan process.
Mr. Lal Narain Sinha, appearing for the Parishad and Mr. Thakur appearing for the Market Committees have, in my view, conceded by their submission that khandsari is genus and khandsari sugar is a speci that what the petitioners produce in their mills by the open pan process is ` 'khandsari sugar" and not "khandsari".
Dr. Chitale appearing for the respondents in W. Ps.
13 8 60 of 1981 has also done so but in a slightly different way by saying that what the petitioners produce is khandsari, whether it is more or less refined than khandsari as such.
Mr. Sinha conceded in the course of his arguments that protection of the agricultural producer was the object when the original idea of the Adhiniyam started and he submitted that the object has now become widened and it is now not a legislation for protecting the interests of only agricultural producers and that it has become a marketing legislation under entry 28 of List II in the Seventh Schedule to the Constitution and industrial products also can be included in the schedule.
There is a further implied submission in this argument of Mr. Sinha that khandsari sugar is an industrial product as it undoubtedly is.
If the original idea as indicated in the prefatory note and preamble of the Adhiniyam was to protect the interests of agricultural producers in disposing of his products such as paddy, rice, silk, eggs, honey, fish and the like, and the Adhiniyam was enacted with that object in my view.
it cannot be converted into a general marketing legislation by the mere inclusion of industrial products, not possible of production by agricultural producers, either in the schedule or in the definition of agricultural produce in section 2 (a) of the Adhiniyam.
Therefore, it is not possible to accept the argument of Mr. Sinha that the Adhiniyam originally intended to protect the interests of agricultural producers has become a marketing legislation under 984 entry 28 of List II in the Seventh Schedule by the mere fact of inclusion of one or more industrial products in the definition of agricultural produce in s 2 (a) of the Adhiniyam.
Mr. Thakur submitted that it is not the only purpose of the Adhiniyam to protect the interests of the agricultural producer that a number of other objects are sought to be achieved by the Adhiniyam and that if the object of the Adhiniyam was to protect the interests of agricultural producers alone, the levy of market foe would have been confined to first sales of agricultural produce.
Mr. Thakur would thus say that the only object of the Adhiniyam is not protection of the interests of the agricultural producer in the disposal of his products to his best advantage.
The question whether the levy of market fee under the Adhiniyam is at a single point or whether it is a multi point levy was not elaborated by Mr. Thakur.
Therefore, it is not possible to draw any inference from his submission based on the point of levy of market fee under the Act though it was pointed out by him that under the scheme of the Adhiniyam sales by producers to traders and by traders to other traders but not retail sales to consumers are subject to the levy of market fee provided that the produce sold is agricultural produce.
Mr. Thakur submitted that the levy under the Adhiniyam is on the khandsari trader and not on khandsari producer.
That would be 80 if the item with reference to which levy is made is one produced by an agricultural producer to protect whose interests the Adhiniyam has been enacted.
Khandsari sugar produced by the petitioners in their mills by the open pan process is not an agricultural produce but an industrial produce.
Mr. Thakur is right in his submission that the preamble could be looked into only in the case of ambiguity.
The prefatory note and the preamble can be looked into only in the present case as there is dispute between the parties on the question whether khandsari sugar" produced by the petitioners, which is not included in the schedule or definition of agricultural produce in the Adhiniyam, while "khandsari" is mentioned in the definition of agricultural produce in section 2(a) thereof can be the subject matter of levy of market fee under the Adhiniyam.
It is not possible to accept the submission of Dr Chitale that what the petitioners produce is an agricultural produce, be it more or less refined than khandsari.
What the petitioners produce in their modern mills by the open pan process is khandsari sugar, an industrial produce, and not an agricultural produce which is produced by agriculturists.
It is admitted by Dr. Chitale that the petitioners ' factories are working under licences and that it is not obligatory on agricultural producers producing khandsari in the indigenous method to obtain licences for producing the same.
985 Reference is made at page 3 in the judgment of my learned A brother Thakkar, J. in these Writ Petitions, to the judgment of a Division Bench of the Allahabad High Court in Special Appeal No. 175 of 1973 filed against the decision of a Single Judge of that court in W P. No. 4636 of 1969.
It is Annexure II to the counter affidavit of the Parishad in W.P. 1350 etc.
Of 1981.
The reliefs claimed in that Writ Petition were a writ of certioraris quashing the U.P. Ordinance 8 of 1979 which was replaced by the Amendment Act 10 of 1970 and a writ of mandamus directing the respondents State of Uttar Pradesh and others not to enforce the Ordinance against the petitioners therein.
The appellants in that case were commission agents carrying on business in the sale and purchase of gur, shakkar and khandsari in the New Mandi, Muzaffarnagar.
The State Government issued a notification dated 8.11.1968 under section 5 (1) of the Adhiniyam declaring their intention to regulate the sale and purchase of specified agricultural produce in the areas including the New Mandi, Muzaffarnagar.
That notification included among other things gur, rab, shakkar and khandsari.
After the issue of that notification the Mandi Samiti authorities required the writ petitioners in that case to obtain licences for carrying on their business in gur, rab, shakkar and khandsari.
Thereupon, a writ petition, out of which Special Appeal No. 49 of 1969 arose, was filed by one Nanak Chand, challenging the enforcement of the Adhiniyam against him.
In that appeal, decided on 11.3.1969 a Division Bench of the High Court held that gur, rab and jaggery are not agricultural produce within the meaning of section 2(a).
It was after that decision that Ordinance No. 8 of 1970 was promulgated including gur, rab, shakkar, khandsari and jaggery in section 2(a) of the Adhiniyam.
The points raised in the aforesaid Special Appeal No. 175 of 1973 were: (1) The State Legislature was not competent to enlarge the definition of agricultural produce so as to include gur, rab, shakkar, khandsari and jaggery within the term 'agricultural produce"; (2) The State Legislature had no legislative competence to enact the U P. Amendment Act 10 of 1970 as that Act was with reference to subject of industries the control of which lay with the Union Government as declared by Parliament by law to be expedient in the public interest within the meaning of entry 52 of List I to the Seventh Schedule; (3) The provisions of the Amendment Act 10 of 1970 are repugnant to the Industries Development and Regulation Act, 1951; (4) The provisions of the Amendment Act 10 of 1970 are discriminatory as vacuum pan sugar is not included in the definition of agricultural produce in section 2(a); and (5) The provisions of the Amendment Act 10 of 1970 infringe the fundamental right guaranteed by article 19(1) (f) and (g) of the Constitution.
986 The High Court held in Special Appeal No. 175 of 1973 relying upon this Court 's decision in Paunakram vs State of Punjab(l) that in view of the extended definition of agricultural produce after the Amendment Act 10 of 1970 an enquiry whether gur, rab, shakkar and khandsari are agricultural produce or not is beyond the purview of the Court and that there is no discrimination as there is essential U difference between gur, rab, shakkar and khandsari under one head and vacuum pan sugar on the other, as the former are manufactured by the open pan process and the latter is manufactured by the vacuum pan process and the vacuum pan process sugar industry is in existence since 1931 and involves big sugar factories whereas industries producing khandsari sugar by open pan process are of recent origin and those units carry on small scale business.
In my view, these may be good reasons for not subjecting khandsari sugar to the levy of market fee and subjecting plantation white sugar to the levy.
It is not necessary to refer to the decision of the High Court on the other three points.
It is sufficient to say that in my view that decision relates to the necessity to obtain a licence under the Adhiniyam for dealing in khandsari sugar and certain other commodities introduced into the definition of agricultural produce by the Ordinance which was replaced by the U.P. Amendment Act 10 of 1970 and it had nothing to do with the liability of khandsari sugar manufacturers sellers to pay market fee under the Adhiniyam.
In these circumstances, I hold that what the petitioners produce in their modern khandsari mills by the open pan process is khandsari sugar, an industrial product like plantation white sugar and not khandsari which is produced by agricultural producers in the indigenous method and that the levy of market fee on sales of khandsari sugar under the Adhiniyam is unwarranted as the Adhiniyam is intended for the protection of agricultural producers in the disposal of their products and only khandsari produced by agricultural producers is included in the definition of agriculture produce in section 2(a) thereof and not khandsari sugar.
On the question of discrimination, Mr. Shanti Bhushan submitted that plantation white sugar produced is by the vacuum pan process, in the same manner as khandsari sugar is produced by the open pan process and that there is 110 major difference between the two industrial products and there is discrimination in so far as plantation white sugar is not sought to be subjected to the levy of market fee under the Adhiniyam where only khandsari sugar is (1) AIR 1995 SC 187.
987 sought t 1 be subjected to the levy.
He submitted that the difference A in the process of manufacture alone is not a distinguishing factor and that the difference in the process of manufacture cannot be a ground for holding that there is no discrimination if the levy could be made on khandsari sugar under the Adhiniyam, leaving plantation white sugar out of its purview.
He further submitted that plantation white sugar is produced in larger quantity than khandsari sugar and that traders in plantation white sugar also derive advantage by the use of the market area in the whole of the State of Uttar Pradesh which has been divided into 250 market areas and no part of that State is left uncovered by the Adhiniyam.
In this connection, Mr. Shanti Bhushan invited the attention of this Court to the decision in Laksmi Khandsari etc.
vs State of U.P. and Ors.(l) where it is observed at page 94 that the restriction may be partial, complete, permanent or temporary but this must bear a close nexus with the object sought to be achieved.
As stated earlier, Mr. Sinha submitted that the two products must be identical for attracting the bar of article 14 of the Constitution and that similarity alone will not do.
But it must be remembered that the Adhiniyam is concerned with the levy of market fee on a variety of products, namely, agricultural produce and that if khandsari sugar produced by the petitioners in their mills by the open pan process out of sugarcane juice could be brought under the purview of the Adhiniyam it is difficult to understand how plantation white sugar for the production of which also sugarcane is the raw material could be exempted from the levy.
The levy of market fee could not be said to depend upon the exact chemical composition of the commodity.
Mr. Thakur submitted that plantation white sugar produced by the vacuum pan process does not require regulation and, therefore, there is no discrimination in not subjecting it to the levy under Adhiniyam.
Similarly, Dr. Chitale submitted that whatever was considered necessary to be regulated was brought under the Adhiniyam and that there is no discrimination.
It is not possible to accept this submission of Mr. Thakur and Dr. Chitale.
Plantation white sugar does not require less regulation than khandsari sugar.
Reference was made to this Court 's decision in Andhra Sugars Ltd. and Anr.
v State of Andhra Pradesh and Ors.(2) where it has been held that factories producing plantation white sugar by the vacuum pan (1) ; at 94.
(2) ; 988 process and khandsari units producing sugar by the open pan process are distinct and separate units.
That case related to imposition of tax on sugar and exemption of khandsari and jaggery from the levy.
The principle underlying the levy of tax cannot be made applicable to the levy of market fee under the Adhiniyam.
Both plantation white sugar and khandsari sugar are industrial products and there is clear discrimination, in my view, against khandsari sugar in seeking to subject it to the levy under the Adhiniyam leaving out plantation white sugar.
For the reasons mentioned above I am of the opinion that the Writ Petitions deserve to succeed They are accordingly allowed but without any order as to costs.
THAKKAR, J.
The petitioners in the Present group of fourteen Writ petitions under Art 32 of the Constitution of India, are owners of Khandsari factories in Uttar Pradesh They seek appropriate relief on the premise that what they produce is 'Khandsari Sugar ' and not 'Khandsari which is covered by the definition of 'Agricultural Produce ' in section 2(a) of U.P. Krishi Utpadan Mandi Adhiniyam Act, 1964 (hereinafter referred to as the 'Act ') which read as under: "agricultural produce" means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture; animal husbandry or forest as are specified in the Schedule, and includes admixture of two or more of such items, and also includes any such item in processed form, and further includes gur, rab, shakkar, khandsari and jaggery; Accordingly they contend that they are not liable to obtain a licence under Rule 67 of the Rules framed in exercise of powers under section 40 of the Act or to pay the licence fees (Rs. 100 per annum) payable for such licence.
So also they contend that the Market Committee (Mandi Samiti) constituted under section 12 of the Act cannot levy and collect market fee of I % of the value, under section 17 (iii) of the Act, on the transactions in respect of what they produce, from the traders who purchase the product from them.
Resistance to the regulation of the trade in 'Khandsari ' and the collection of market fees thereon dates back to 1969.
It was on November 5, 1969 that an Ordinance, U.P. Krishi UtPadan Mandi 989 Adhiniyam, 1964 (Amendment and validation Ordinance No. 1969) A was passed, where under, the definition of 'agricultural produce ' embodied in section 2(a) of the Act was amended by including 'gur, rab, shakkar, khandsari and jaggery '.
The said Ordinance was subsequently converted into U.P. Krishi Utpadan Mandi (Amendment and Validation) Act of 1970.
Thus, 'Khandsari ' stood covered by the definition of section 2(a) of the Act SO amended.
And this provided the starting point of resistance in the form of a Writ Petition on the part of a few Commission Agents carrying on the business of sale and purchase of Khandsari.
They instituted a Writ Petition, being Misc.
Writ Petition No. 4835 of 1969 in the High Court of Allahabad, challenging the validity of the inclusion of 'Khandsari ' in the definition of 'agricultural produce ' contained in section 2(a).
The challenge was made on several grounds but no distinction was sought to be made between Khandsari produced indigenously on the one hand and Khandsari produced in the factories like the petitioners ' factories on the other hands by calling the latter as 'Khandsari Sugar '.
A learned single judge, by his judgment and order dated February 18, 1972, repelled the challenge and dismissed the Writ Petition.
A Division Bench of the Allahabad High Court confirmed the decision in Special Appeal No. 175 of 1973 on September 7, 1977.
The matter appears to have rested there till 1981.
Market fees were being collected in respect of 'Khandsari ' produced by the factories like the Petitioners ' factories under the Act ever since 1969 70.
So also the factory owners were obtaining the requisite licence under the Act since 1969 70 Eleven years later, some of the factory owners, petitioners herein, have woken up to the problem and have renewed the challenge by way of the present petitions.
The definition embodied in section 2(a) of the Act is an inclusive one.
It in terms provides that 'Khandsari is included within the coverage of "agricultural produce" The Act however does not define the term 'Khandsari '.
The owners of the 'Khandsari factories ', petitioners herein, therefore contend that what they produce is "Khandsari Sugar" and not 'Khandsari '.
But then it is not Q sufficient for the petitioners to describe their product as "Khandsari Sugar" in order to successfully contend that it is not 'Khandsari '.
It is further more necessary for them to show that they produce is popularly or commercially known as "Khandsari Sugar" and not as 'Khandsari '.
And this they have failed to establish.
It is not shown that "Khandsari Sugar" is the nomenclature employed in the 990 world of trade and commerce in respect of their product.
Neither the traders, nor the consumers are shown to have done so in their day to day dealings.
It appears that the term "Khandsari Sugar" owes its origin to U.P. KHANDSARI SUGAR MANUFACTURING ORDER of 1977 issued under section 3 of the , 1955.
But then "Khandsari Sugar" was defined by clause 2(f) of the said order as meaning "sugar containing more than 90% sucrose and manufactured by open pan process including bels.
" It is a statutory definition enacted for the 'purpose ' of the aforesaid Control Order issued under section 3 of the which Control Order uses the expression 'Khandsari Sugar '.
It has nothing to do with the meaning and content of the term 'Khandsari as used by the trade in U.P.
Since the term 'Khandsari ' has not been defined by the Act, it must be construed in its popular sense.
That is to say in the sense in which people conversant with the subject matter with which the statute is dealing, would attribute to it.
This principle of construction has been affirmed and reaffirmed by this Court in Commissioner of Income tax, Andhra Pradesh vs Taj Mahal Hotel(1) and Porrits & Spencer (Asia) Ltd. vs State of Haryana(Z) as also in numerous other decisions.
It is unnecessary for the present purpose to cite all the decisions.
Or to undertake a journey through the factual hinterland of each decision.
Or to turn the headlights on the observations made in each of the decisions.
For, the principle, though garbed in different apparel, is simply this.
In legislations pertaining to the world of business and commerce, the dictionary to refer to is the dictionary of the inhabitants of that world.
What they understand by the term 'Khandsari ' is precisely what that term means in the statute designed to regulate their dealings and transactions The best test, therefore, is to ask the question what they themselves have understood by the term 'Khandsari ', how they themselves have interpreted it, and on what basis they themselves have moulded their own conduct, for all these years.
The factory owners similarly situated as petitioners as also the traders in general have understood the term 'Khandsari ' as being applicable to the Khandsari produced by the factories by open pan process as also to Khandsari produced indigenously.
They have been obtaining licence under the Act and paying market (1) at p. 47.
(2) ; 991 fee at 1% of the value since 1969 70 till 1981 without demur.
even A though the coverage of 'Khandsari ' by virtue of the definition of section 2(a) as amended in 1969 70 was challenged in 1969 it was not on this ground.
As mentioned earlier, the challenge initiated in 1969 ended in 1979 with the decision of the Division Bench of the Allahabad High Court rendered in Special Appeal No 175 of 197 3.
A copy of this judgment has been placed on record of the present group of petitions at annexure II.
[t is not necessary to advert to the judgment in detail for the purposes of the discussion of the present point.
Suffice it to say that the challenge was made on five grounds indicated in the judgment and that none of these grounds pertained to the aspect relating to the meaning and content of the term 'Khandsari '.
Thus, for more then ten years even the petitioners have not felt that 'Khandsari ' means something other than what they produce.
The petitioners have not established that their produce is marketed under a different name in the market.
There is no material for holding that the petitioners sell their product under the name "Khandsari Sugar" to the traders.
Or that the traders inter se in transacting their business refer to the same as Khandsari Sugar.
Or that any consumer desirous of purchasing factory produced Khandsari would ask for "Khandsari Sugar".
I is not shown that either the petitioners or the traders or the consumers refer to the product as "Khandsari Sugar".
Nor is it shown that it is not marketed under the name 'Khandsari '.
In other words, it is not shown that in the popular or commercial sense, the product is not known as 'Khandsari ', but is known as Khandsari Sugar.
In this context one significant fact needs to be stressed, namely, that the term "Khandsari Sugar" saw the light of day seven years after the Act was enacted in 1970 when U.P Khandsari Sugar Order of 1977 was born and the artificial nomenclature was coined for the restricted purpose of the Order.
There is no material even to show that this nomenclature was known to the petitioners or to the traders themselves there to before The contention that the article produced by the petitioners is not Khandsari must, therefore, be firmly and unhesitatingly negatived.
The legislature, it is also argued, 'could not have intended ' to cover the produce turned out by producers like the petitioners The principal object of the Act is to protect the producers from exploitation.
Those who own or run Khandsari units, like the petitioners, engaged in large scale production with the aid of relatively modern plant and machinery worth lacs of rupees, and employ a large number of workers, need no such protection.
Such is the 992 argument.
In our opinion the argument is untenable.
The legislature has in terms encompassed 'Khandsari ' within the definition of section 2(a) of the Act.
And the term 'khandsari ' is sufficiently wide to cover all varieties of Khandsari including the article produced by the factories like those of the petitioners.
Besides, the basic premise assured by the petitioners that the object of the Act is merely to protect the producers from exploitation is fallacious.
Of course, one of the main objects of the Act is to protect the producers from being cheated by unscrupulous traders in the matter of price, weight, payment, unlawful market charges etc.
and to render them immune from exploitation as indicated by the 'prefatory note ' and by the provisions contained in sections 16(i), (ii), (iii), (iv), (viii) etc.
While this is one of the objects of the Act, it is not the sole or only object of the Act.
The Act has many more objects and a much wider perspective such as development of new market areas, efficient collection of data, and processing of arrivals in Mandis with a view to enable the World Bank to give substantial economic assistance to establish various markets in Uttar Pradesh, as also protection of consumers and even traders from being exploited in the matter of quality, weight and price This needs no elaboration in view of the pronouncements of this Court.
For instance in Ramesh Chandra vs State of U.P.(1) this Court has observed thus: "The long title of the Act in indicates that it is an Act "to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence, and control of markets therefor in Uttar Pradesh." From the Objects and Reasons of the enactment it would appear that this Act was passed,for the development of new market areas and for efficient data collection and processing of arrivals in the Mandis to enable the World Bank to give a substantial help for the establishment of ' various markets in the state of Uttar Pradesh.
In other States the Act is mainly meant to protect an agriculturist producer from being exploited when he comes to the Mandis for selling his agricultural produce.
As pointed out by the High Court certain other transactions also have been roped in the levy of the fee, in which both sides are traders and neither side is an agriculturist.
This has been done for the effec (1) ; 993 tive implementation of the scheme of establishment of markets mainly for the benefit of the producers. " And in Ramesh Chandra Chandra Kaehardas Porwal & Ors vs State of Maharashtra & Ors.
etc.(1) it has been stated that: "It is true that one of the principal objects sought to be achieved by the Act is the securing of a fair price to the agriculturist for his produce, by the elimination of middle men and other detracting factors.
But, it would be wholly incorrect to say that the only object of the ,Act is to secure a fair price to the agriculturist.
As the long title of the Act itself says, the Act is intended to regulate the marketing of agricultural and certain other produce.
The marketing of agricultural produce is not confined to the first transaction of sale by the producer to the trader but must necessarily include all subsequent transactions in the course of the movement of the commodity into the ultimate hands of the consumer, 80 long, of course, as the commodity retains its original character as agricultural produce.
While middlemen are sought to be eliminated, it is wrong to view the Act as one aimed at legitimate and genuine traders.
Far from it.
The regulation and control order is as much for their benefit as it is t`or the benefit of the producer and the ultimate consumer.
The elimination of middlemen is as much in the interest of the trader as it is in the interest of the producer.
Promotion of grading and standardisation of agricultural produce is as much to his benefit as to the benefit of the producer or consumer.
So also proper weighment.
The provision for settlement of disputes arising out of transactions connected with the marketing of agricultural produce and ancillary matters is also for the benefit of the trader.
It is because of these and various other services performed by the Market Committee for the benefit of the trader that the trader is required to pay a fee.
It is, therefore, clear that the regulation of marketing contemplated by the Act involves benefits too traders to in a large way.
It is also clear to our mind that the regulation of marketing of agricultural produce, if confined to the sales by producers within the market area to traders, will very soon lead to its circum (1) 11981] 2 S.C.R. 866 994 vention in the guise of sales by traders to traders or import of agricultural produce from outside the market area to within the market area.
" In the face of these pronouncements it cannot be success fully urged that the object of the Act is merely to protect the producer from exploitation.
As pointed out in the aforesaid decisions, while the analogous Acts in other States had a limited perspective, so far as Uttar Pradesh is concerned, the Act has a much wider horizon, and even transactions where both the sides are traders and neither side is an agriculturist, are brought within the coverage of the Act.
There is, therefore, no merit in this nuance of the challenge.
The petitioners have next contended that having regard to the definition of 'Producer ' contained in section 2(p) of the Act, this Act could not have been intended to cover the article produced by them We do not see anything in the definition which would justify overriding the clear language of the statute read in the l) light of the perspective of the Act and the history of the levy.
While the term 'Khandsari ' has not been defined it is obviously wide enough to cover Khandsari produced by any process regardless of its quality or variety As discussed earlier, one of the objects of the Act inter alia is to protect the consumer as also the trader.
We need not reiterate the reasoning articulated by us a moment ago in dealing with the first facet of this argument.
The argument based on the supposed intendment of the Act.
in our opinion, is wholly misconceived.
We have, therefore, no hesitation in repelling this contention Lastly section 2(a) of the Act has been challenged on the ground that it is discriminatory and violative of article 14 They have contended that section 2(a) of the Act, in so far as it includes Khandsari in the definition of agricultural produce and thereby subjects the trade in the said product to regulation under the relevant provision of the Act is ultra vires Art 14 of the Constitution of India inasmuch as it introduces a hostile discrimination.
According to the petitioners, the article produced by them, which they call Khandsari sugar, is almost indistinguishable from the plantation sugar mills.
Whether the article produced by the petitioners is very much similar to plantation sugar or not is a moot question.
The other side has controverted this averment.
The process of manufacture is different.
The market price of Khandsari is lower depending on the quality.
995 The most inferior variety would be more like the Khandsari A produced by the indigenous process (yellowish in colour and powdery in form) and would fetch a lesser price in the market.
It would appear from the affidavit that the most superior variety might perhaps be approximate in appearance to the plantation sugar manufactured by the sugar mills but would all the same fetch a somewhat lesser price than the price fetched by plantation sugar It is a different commercial product known by a different name in the trade Be that as it may, the argument that unless both are regulated under the Act article 14 would be offended, is meritless.
This Court has had several occasions to deal with a similar problem in the context of taxing statutes And this Court has consistently taken the view that is the matter of classification the Legislature has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others.
Everything or nothing argument is basically fallacious.
For, the Legislature may tax or regulate the trade in some objects and not in others Or may bring within its net some objects initially and may cast the net wider later on Or may tax or regulate the trade in only such objects which it considers expedient or worthwhile.
The decision, essentially a policy decision, may depend on several factors.
Factors, such as, the felt necessity for such an impost or regulation of a trade in a particular article, likely impact of the decision on the trade, industry, or consumer, viability of the same from the stand point of its own management resources Or from the angle of the net advantage to be secured in the balance sheet of pros and cons taking into account the anticipated administrative and management inputs required to be invested in the exercise.
In substance, it is a policy decision turning on numerous and complex factors.
In East India Tobacco Co. vs State of Andhra Pradesh(t) this Court has quoted with approval the following passage from Willis on Constitutional Law(2): "A State does not have to tax everything in order to tax something.
It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonable .
The Supreme (1) [1963] 1 S.C.R 404 (2) Willis on Constitutional Law p. 857 996 Court has been practical and has permitted a very wide latitude In classification for taxation.
" And this Curt has turned down the plea that in order to respect Art 14, both varieties of tobacco (Virginia tobacco on the one hand and country tobacco on the other) must be taxed or none.
says the Court: "if a State can validly pick and choose one commodity for taxation and that is not open to attack under Article 14 the same result must follow when the State picks up one category of goods and subjects it to taxation.
" In the matter of market regulation also Khandsari and Mill sugar are governed by different regulations As a matter of fact mill sugar is subject to control and regulation of no mean order under Sugar (Control) Order of 1966 where under the sugar mills are obliged to make available a significant quantity of sugar by way of levy at stipulated prices which are very much lower than prevailing open market prices Khandsari ' produced by the petitioners was not subject to similar control, for all these years.
The producers of Khandsari like petitioners, it is obvious have benefited thereby.
It 15 true than for a short period Khandsari was also subjected to levy under Khandsari Sugar (Levy) Order of 1981 on a relatively small portion of its production That however makes little difference from the standpoint of challenge to section 2(a) of the Act on the ground that Mill sugar is not included in the definition of 'agricultural produce and not subjected to the provisions of the Act.
So also the mere fact that both are sweetening agents will not justify condemnation of the classification which is based on a totality of the factors of differentiation There is therefore no substance in the challenge from the standpoint of article 14 of the Constitution of India.
It is not for this Court to question why Khandsari produced by the petitioners is Included when sugar produced by the Mills Is not so included.
It is not a question to which we can legitimately address ourselves, for, essentially it is a question of legislative wisdom and legislative policy dictated by countless and complex considerations.
The Court cannot, and will not, substitute its own wisdom in place of the legislative wisdom in such matters.
The 997 Court will not impose on itself this responsibility, if not for any A other reason, than for the reason that it is beyond its province, The arguments advanced on this wavelength need not, therefore, detain us any a longer.
The petitions, accordingly, fail.
Rule issued in each of the petitions will stand discharged There will be no order regarding costs.
Interim orders will stand vacated.
In view of the majority decision, all the writ petitions are dismissed.
There will be no order regarding costs.
Interim orders will stand vacated.
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An Ordinance, U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (Amendment and Validation Ordnance No. 1969) passed on November 5, 1969 amended the definition of "agricultural produce" embodied in section 2(a) of the U P. Krishi Utpadan Mandi Adhiniyam Act 1964 and 'gur, rab, shakkar, khandsari and jaggery ' were included in the amended definition.
This Ordinance was subsequently converted into U.P. Krishi Utpadan Mandi (Amendment and Validation) Act 1970.
Thus 'Khandsari ' stood covered a by the definition of section 2 (a) of the Act so amended.
The petitioners, who are owners of Khandsari factories, have alleged that what they produce is "Khandsari Sugar" and not 'Khandsari ', which is covered by the definition of "agricultural produce".
It was contended; (1) that they are not liable to obtain a licence under Rule 67 of the Rules framed under s, 40 of the Act or to pay the licence fees (Rs. 100 per 967 annum) payable for such licence; (2) that the Market Committee (Mandi A Samiti) constituted under section 12 of the Act cannot levy and collect market fee of 1% of the value, under section 17(iii) of the Act, on the transactions in respect of what they produce, from the traders who purchase the product from them; and (l) that section 2 (a) of the Act is discriminatory and violative of Article 14 of the Constitution Dismissing the petitions, ^ HELD: (Per Majority) 1.
The definition embodied in section 2(a) of the Act is an inclusive one.
It in terms provides that 'Khandsari ' is included within the coverage of "agricultural produce".
The Act, however. does not define the term 'Khandsari '.
It is not sufficient to contend that what the petitioners produce is "Khandsari Sugar" and not 'Khandsari '.
It has also to be shown by them that what they produce is popularly or commercially known as "Khandsari Sugar" and not as "Khandsari".
And thus they have failed to establish.
It is not shown that "Khandsari Sugar" is the nomenclature employed in the world of trade and commerce in respect of their product.
Neither the traders, nor the consumers are shown to have done so in their day to day dealings.
[989F H; 990A] 1 2.
The term 'Khandsari Sugar" owes its origin to U.P. KHANDSARI SUGAR MANUFACTURING ORDER of 1977 issued under section 3 of the ESSENTlAL COMMODITIES ACT, 1955.
"Khandsari Sugar" was defined by cl. 2(f) of the said Order as meaning "sugar containing more than 90% sucrose and manufactured by open pan process including bels.
" It is a statutory definition enacted for the 'purpose ' of the aforesaid Control Order which uses the expression "Khandsari Sugar".
It has nothing to do with the moaning and content of the term Khandsari ' as used by the trade in U.P. [990B C] 2.
(i) It is unnecessary for the present purpose to cite all the decisions.
Or to undertake a journey through the factual hinterland of each decision.
Or to turn the headlights on the observations made in each of p the decisions.
For, the principle, though Barbed in different apparel, is simply this.
In legislations pertaining to the world of business and commerce, the dictionary to refer to is the dictionary of the inhabitants of that world.
What they understand by the term 'Khandsari ' is precisely what that term means in the statute designed to regulate their dealings and transactions.
The best test therefore is to ask the question what they themselves have understood by the term Khandsari, bow they themselves have interpreted it, and on what basis they themselves have moulded their own conduct, for all these years.
The factory owners similarly situated as petitioners as also the traders in general have understood the term 'Khandsari ' as being applicable to the Khandsari produced by the factories by open pan process as also to Khandsari produced indigenously.
[990E G] Commissioner of Income tax, Andhra Pradesh v Taj Mahal Hotel, at p. 47 and Porrits & Spencer (Asia) Ltd. vs State of Haryana, [1979] I S.C.R. 545, relied on.
968 2.
(ii) Inclusion of Khandsari in the definition of "agricultural produced by virtue of amendment of section 2(a) was challenged by a few commission agents carrying on business of sale and Purchase of Khandsari in 1969 by instituting writ petitions in the High Court of Allahabad.
ever, none of the grounds of challenge pertained to the aspect relating to the meaning and content of the term Khandsari '.
The petitions were dismissed by a Single Judge and that decision was confirmed by the Division Bench.
[989C D] 2.
(iii) Factory owners producing Khandsari have been obtaining licence under the Act and paying, without demur, market fee at 1% of the value since 1969 70 till 1981, when fresh challenge was made through the instant petitions.
For more than ten years even the petitioners have not felt that 'Khandsari ' means something other than what they produce.
It is not shown that in the popular or commercial sense, the product is not known as Khandsari ' but is known as Khandsari Sugar".
The term "Khandsari Sugar" saw the light of day seven years after the Act was enacted in 1970 when U.P. Khandsari Sugar Order of 1977 was born and the artificial nomenclature was coined for the restricted purpose of the order.
There is no material even to show that this nomenclature was known to the petitioners or to the traders themselves there to before.
[990H; 991C; E F] 3.
The Legislature has in terms encompassed 'Khandsari ' within the definition of section 2(a) of the Act.
And the term 'Khandsari ' is sufficiently wide to cover all varieties of Khandsari including the article produced by the factories like those of the petitioners.
Besides, the basic premise assumed by the petitioners that the object of the Act is merely to protect the producers from exploitation is fallacious.
This is one of the objects and not the sole or only object of the Act.
The Act has many more objects and a much wider horizon, and oven transactions where both the sides are traders and neither side is agriculturist, are brought within the coverage of the Act.
[992A D] Ramesh Chandra vs State of U.P., ; and Ramesh Chandra Kachardas Porwal & Ors.
v State of Maharashtra & Ors.
; , , relied on.
There is nothing in the definition of 'Producer ' contained in section 2(p) of the Act which would justify overriding the clear language of the statutes read in the light of the perspective of the Act and the history of the levy.
While the term 'Khandsari ' has not been defined, it is obviously wide enough to cover Khandsari produced by any process regardless of its quality or variety [994D E] 5.
This Court has had several occasions to deal with a similar problem in the context of taxing statutes.
And this Court has consistently taken the view that in the matter of classification the Legislature has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. 'Everything or nothing ' argument is basically fallacious.
For, the Legislature may tax or regulate the trade in some 969 Objects and not in others.
Or may bring within its net some objects A initially and may cast the net wider later on.
Or may tax or regulate the trade in only such objects which it considers expedient or worthwhile.
The decision essentially a policy decision, may depend on several factors.
Factors, such as, the felt necessity for such an impost or regulation of a trade in a particular article, likely impact of the decision on the trade, industry, or consumer, viability of the same from the stand point of its own management resources.
Or from the angle of the net advantage to be secured in the balance sheet of pros and cons taking into account the anticipated administrative and management inputs required to be invested in the exercise.
In substance, it is a policy decision turning on numerous and complex factors.
[99B E] 5 (i) It is not for this court to question why Khandsari produced by the petitioners is included when sugar produced by the Mills is not so included.
It is not a question to which we can legitimately address ourselves, for, essentially it is a question of legislative wisdom and legislative policy dictated by countless and complex considerations.
The Court cannot, and will not substitute its own wisdom in place of the legislative wisdom in such matters.
The Court will not impose on itself this responsibility, if not for any other reason, than for the reason that it is beyond its province.
Hence section 2(a) of the Act is not discriminatory and violative of Article 14.
[996G H; 997Al East India Tobacco Co. vs State of Andhra Pradesh, [1963] I S.C R. 404, relied on.
Willie on Constitutional Law p. 857, referred to.
Per A. Varadarajan, J (Dissenting) 1.
What the petitioners, produce in their modern Khandsari mills by the open pan process is Khandsari sugar, an industrial product like plantation white sugar and not Khandsari which is produced by agricultural producers in the indigenous method and the levy of market fee on sales of khandsari sugar under the Adhiniyam is unwarranted as the Adhiniyam is intended for the protection of agricultural producers in the disposal of their products and only Khandsari produced by agricultural producers is included in the definition of agricultural produce" in section 2(a) thereof and not Khandsari sugar.
[986P G] 2.
A manufacturer producing Khandsari Sugar by the modern method in the open pan process is not a producer within the meaning of section 2(p) of the Adhiniyam.
[980E] 3.
The object of the Adhiniyam as seen from the prefatory note and preamble is to protect the agricultural producer from exploitation.
Protection of any industrial producer is not the object of the Adhiniyam.
[979G] 4.
The Khandsari sugar produced by the petitioners in their mills with the aid of power in the open pan process by employing large number of employees to whom the Industrial Disputes Act, Minimum Wages Act, Factories Act.
Employees Provident Fund Act and similar enactments apply 970 is an industrial product which is very different from Khandsari produced by agricultural or sugarcane growers in the old indigenous method.
[982E F] 5.
The Adhiniyam originally intended to protect the interests of agricultural producers has not become a marketing legislation under entry 28 of List II in the Seventh Schedule by the mere fact of inclusion of one or more industrial products in the definition of agricultural produce in section 2(a) of the Adhiniyam.
[983H; 984A] 6.
The prefatory note and the preamble can be looked into in the present case as there is dispute between the parties on the question whether "Khandsari sugar" produced by the petitioners, which is not included in the schedule or definition of agricultural produce in the Adhiniyam, while "Khandsari" is mentioned in the definition of agricultural produce in section 2(a) thereof can be the subject matter of levy of market fee under the Adhiniyam.
[984F G] 7.
The principle underlying the levy of tax cannot be made applicable to the levy of market fee under the Adhiniyam.
Both Plantation While Sugar and Khandsari Sugar are industrial products and there is discrimination against Khandsari Sugar in seeking to subject it to the levy under the Adhiniyam leaving out plantation White Sugar [988B] Laxmi Khandsari Etc.
vs State of U.P. & others; , Paunakram vs State of Punjab, AIR 1975 SC 187 and Andhra Sugars ltd.& Anr. etc.
vs State of Andhra Pradesh & Ors., [1968] I SCR, 705 referred to.
|
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.
|
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)
|
N: Criminal Appeal Nos.
545 of 1982, 209, and 210 213 of 1983.
From the Judgment and Order dated 13.9.82 of the Gauhati High Court in Crl.
Death Ref No 1/8l and Crl.
Appeal No. l9(j), 24 & 25 of 1981.
Jain and Mrs. K. Kochar for the Appellants.
Nandy for the State of Assam.
537 Rajendra Singh, M/s. M.L. Lahoty, VB.Joshi Hrishikesh Roy & A R. Kathahzarika for the appellants in Criminal Appeal No. 209 of 1983.
Vaidyanathan for the respondents.
Patel for the complainant in Criminal Appeal No. 545 Of 1982.
Singh for the respondents in Criminal Appeal Nos.
210 213 of 1983.
The Judgment of the Court was delivered by VARADARAJAN, J.
These appeals by special leave are against the common judgment of a Division Bench of the Gauhati High Court in Criminal Death Sentence Reference No. 1 of 1981 in regard to two accused persons Henry Westmuller Roberts and Sunil Chandra Biswas and Criminal Appeal No. 19 of 1981 filed by those two condemned persons and Criminal Appeals Nos. 4 and 25 of 1981 filed by Naresh Chandra Ghatani and Anil Chandra Barua respectively.
The Sessions Judge, Dibrugarh in Sessions Case No. 33 (TSK) of 1978, convicted and sentenced Henry Westmuller Roberts and Sunil Chandra Biswas (hereinafter referred to as Henry and Sunil respectively) to death under section 302 read with section 34 I.P.C. for the murder of a boy Sanjay), alias Gettu Agarwala (hereinafter referred to as Sanjay), and to imprisonment for life under section 364 read with section 34 I.P.C. and rigorous imprisonment for seven years under section 201 read with s 34 I.P.C. and those two accused Henry and Sunil and accused Anil Chandra Barua and Naresh Chandra Ghatani (hereinafter referred to as Anil and Naresh respectively) to rigorous imprisonment for five years each separately under section 120B and section 387 read with section 34 I.P.C.
The sentences awarded to all the four accused were directed to run concurrently.
Henry, Sunil, Anil and Naresh were accused 1, 2, 3 and 4 respectively in the Sessions Court.
The High Court allowed Criminal Appeals Nos. 24 and 25 of 1981 in full and acquitted Anil and Naresh and also allowed Criminal Appeal No. 19 of 1981 in full as regards Sunil and acquitted him and rejected the death sentence reference relating to him and allowed the appeal of Henry in part as regards his conviction under section 120B l.
P.C. and dismissed his appeal in other respects 538 and accepted the death sentence reference relating to him.
The result is that the High Court found Henry guilty under sections 302, 364, 201 and 387 I.P.C. and not guilty under section 120B l.
P.C. and maintained the sentence awarded to Henry by the Sessions Court except in regard to the offence under section 120B l.
P.C. and acquitted the other three accused persons in full.
Henry has filed Criminal Appeal 545 of 1982 against his conviction and sentence awarded to him under section 302, 364, 201 and 387 I.P.C.
The deceased Sanjay 's father Chabil Prasad Agarwala has filed Criminal Appeal No. 209 of 1983 against the acquittal of Sunil, Anil and Naresh in entirety.
The State of Assam has filed Criminal Appeal No. 210 of 1983 against the rejection of the death sentence reference in regard to Sunil and Criminal Appeals Nos. 22, 212 and 213 of 1983 against the acquittal of Sunil in Criminal Appeal No. 19 of 1981, Naresh in Criminal Appeal No. 25 of 1981 and Anil in Criminal Appeal No. 24 of 1981.
Henry who had been acquitted by the High Court under section 120B l.
P.C. is not a party to Criminal Appeal Nos.
209 to 213 of 1983.
The case of the prosecution is this: In 1975 Henry, Sunil and Naresh were employees of the Oil and Natural Gas Commission (ONGC) at Sibsagar in Assam.
Henry, an Anglo Burmese was a Laboratory Attendant.
Sunil, a Bengali Hindu was a truck Driver.
Naresh, a Nepalese was a Black smith Anil, an Assamese was a Mohurrir under a con tractor of the ONGC at Sibsagar.
These four accused entered into a conspiracy to kidnap minor children at Sibsagar, Dibrugarh and Tinsukhia with a view to extract ransom.
Chabil Prasad Agarwala, P.W. 23 was doing business in food grains in a shop at Siding Bazar, Tinsukhia situate in Dibrugarh district.
He was living in a dwelling house situate adjacent to his shop with his wife Lilavati Agarwala, P.W. 19 and seven children including Sumita Agarwala, P.W. 21 and the deceased Sanjay who was nine years old and Studying in the Girls ' Hindu School.
There was a day long 'Holi ' (fagua) festival in Tinsukhia town on 26.3.1975.
The people belonging to the Marwari community of Siding Bazar had erected a pandal near a Shiva temple in connection with the ' Holi ' festival.
On that day three 539 persons who came to the temple for darshan at 9 or 9.30 a.m. stayed on in the temple till about 12.30 p.m.
Two of them have been subsequently identified as Henry and Sunil.
A number of children collected in the pandal to participate in the festivities.
Sanjay was in the pandal at about 5 or 5.30 p.m. playing with some children including Anil Kumar Chetri, P.W. 12 and Nirmal Kumar Jain, P.W. 13.
One man, who has been subsequently identified as Henry, came and watched the play and remarked that Sanjay was playing well.
A little later he gave chocolates to P.W. 12 and Sanjay and asked them for the names of their fathers which they readily mentioned.
Soon thereafter Sanjay 's elder sister, P.W. 21 aged about 10 or 11 years came to the pandal in search of Sanjay as directed by her mother, P.W. 19 and called him to go along with her.
Then Henry who was in the pandal called Sunil, who was present there, as 'Driver ' and asked him to bring chocolate.
When P.W. 21 and Sanjay were moving away from the pandal Henry called Sanjay by his name and asked him to come saying that he would give him chocolates.
Thereupon, Sanjay stayed behind after telling his sister, P.W. 21 that he would come a little later.
Sunil brought chocolates which Henry distributed to the children.
Henry asked Sunil whether the car was ready and he answered in the affirmative.
P.W. 13 left the pandal a little later while Henry, Sunil and Sanjay remained in the pandal at about 6 or 6.30 p.m. Sanjay did not return home.
His father, P.W. 23 who came home at about 7 p m.
On that day went out again and returned home only at about 3 a.m. On 27.3.1975.
P.Ws. 19 and 21 told P.W. 23 that Sanjay had not returned home.
Thereafter, P.W. 23 and his men went out searching for Sanjay.
Ramabatar Agarwala, P.W. 20, an accountant in the partnership business of P.W. 23 and Hanuman Prasad Agarwala, P.W. 35 informed the Inspector of Police, Tinsukhia Police Station, P.W. 42 at about 3.30 a.m on 27.3.1975 about Sanjay missing since the previous day.
At about 12 noon on 27.3.1975 when P.W. 23 and others including P.W.42 were in P.W. 23 's shop a message came over telephone No 159 located at the shop demanding a ransom of Rs. 3 lakhs for the return of Sanjay.
P.W. 23 informed P.W. 42 about this demand then and there and later sent a written complaint, exhibit 17 to Tinsukhia Police Station at about 4 30 p.m.
On the same day.
A few minutes before P.W. 42 registered a case on the basis of that report, Brahamadeo Rai, P.W. 29, a rickshawman, came to the 540 Police Station and handed over a packet saying that it was left behind by a passenger in his rickshaw who entered a market and did not turn up.
P.W. 42 opened the packet and found it to contain a pair of a small boy 's shorts, M. exhibit 26, two martons, M. exhibit 28 and an envelope, M. exhibit 1 containing the letter, M. exhibit 2 written in English and addressed to "Shri Chabil Das, Siding" and two other items.
The letter written in capital letters read: "Come with Rs. 3 lakhs to Jewel Hotel tomorrow 6 p.m. (28).
Do not inform police.
Come alone.
If not I kill.
If no money take loan.
" The address on the envelope, M. exhibit I and the body of the letter, M. exhibit 2 have been found by the hand writing expert, P.W. I on a comparison with the specimen hand writing and signatures taken from Henry to be in the hand writing of Henry.
Sanjay 's mother, P.W. 19 identified the shorts, M. exhibit 26 as those which were worn by Sanjay on the day of his disappearance on which she had embroidered the alphabet "sha" in Marwari script.
On 30 3.1975 P.W. 23 received the telegram, M. exhibit 13 addressed to "Chabin Das, Siding T.S." to the effect "I am not satisfied by your performance.
Last chance for transaction.
If you want your item wait instruction Lal", and he informed P.W. 35 and others about it.
exhibit 3 is original of that telegram seized by the police from the lost Master, Moran Post Office, P.W. 9.
On 31.3.1975 Pay.
23 received the bearing envelope, M. exhibit 26 containing the letter, M. exhibit 7 written in Hindi.
The hand writing expert, P.W. 1 has, on a comparison of M. Exs. 3 and 6 with the specimen hand writings of Henry found M. Exs. 3 and 6 to be in the hand writing of Henry.
On 8.4.1975 P.W. 23 received a telephone call from Digboi asking him whether he had received letter and telegram.
When P.W 23 answered the caller in the affirmative he asked P.W. 23 to come to Digboi if he wanted back his son.
P.W. 23 told the caller that he could not pay such a huge amount.
It was ultimately agreed over the phone that P.W. 23 should pay a ransom of Rs. 40,000/.
The caller told P.W. 23 that he should come to the Church gate situate behind Digboi Railway Station and act according to a letter which would be found under a stone by the side of one of the panels of that gate.
P.W. 23 and others accordingly went there and found a plastic cover underneath a stone 541 near the gate, containing the letter, M. exhibit 5 written in English capital letters.
The hand writing expert, P.W. I has found M. exhibit 5, on a comparison with the specimen hand writing of Henry to be in the hand writing of Henry.
The police had deployed some plain clothed police personnel at the Digboi public call office for arresting anyone coming to book a call to Tinsukhia telephone No. 159.
Henry went to that office at about 7.30 or 8 p.m.
On 10.4 1975 and booked a call to that telephone number.
After obtaining confirmation about the booking of the call from the telephone office employee, Ajit Kumar Chakraborti, P.W. 33, the Town Sub Inspector of Police, P.W. 24 with help of two constables P.Ws. 26 and 34 arrested Henry near that lt public call office.
When interrogated by the Investigating Officer, P.W. 42 Henry made a statement, Ex.33 offering to show the place where the dead body of Sanjay had been buried.
On 11.4.1975 Henry took the police party including the Assistant Political Officer and Magistrate, Kanta Das, P.W. 38 to a place situate by the side of a hillock in Bapapung.
There was a mound from which the earth had been disturbed at that place.
Two bones and three ribs were found near that mound and a big bone was found in the bushes and 8 more bones and a jaw bone with some teeth were found nearby.
When the mound was dug a human skull with some hair sticking to it and seven bones were found.
At the Digboi Police Station, P.W 38 obtained specimen hand writing and signatures from Henry, M. Exs.
l l to 14.
The Interrogation of Henry on 10.4 1975 led to the arrest of the other three accused Sunil, Anil and Naresh OD 11.4.1975 at Sibsagar.
Exs. 15 to 17 are the specimen hand writings of Naresh obtained by the Judicial Magistrate, P.W.3 on 27.5.1975.
Ex.2 is the report of the hand writing expert, P.W.1 submitted to the Chief Judicial Magistrate, Dibrugarh on 20.8.1975, containing his opinion about the hand writings.
The Investigating Officer, P. W. 43 who had taken over from P.W.42 produced Henry before the Chief Judicial Magistrate, Dibrugarh on 12.4.1975 for recording his confessional statement which he was in a mood to make, and it was recorded by the Judicial Magistrate, P.W.3 on 12.4 1975 itself after giving him some time for reflection.
Sunil was arrested by the Inspector of Police, 542 P.W.41 on 14.4.1975.
Sunil, Anil and Naresh made their confessional statements, Exs. 7, 8, and 9 on 18.4.124, 1975, 19.4.1975 and 21.4.1975 respectively before the Judicial Magistrate, P.W.3.
The medical Officer, P.W.37 packed the incomplete skeletal remains mentioned above in the presence of the Judicial Magistrate, P.W.3 and sent them to the Forensic Science Laboratory, Gauhati on 24.4.1975 under the direction of the Chief Judicial Maistrate, Dibrugarh along with P.W.37 's autopsy certificate and two photo graphs of Sanjay.
The Assistant Director, Biology Section, Forensic Science Laboratory, Gauhti, P.W.27 obtained some more photographs of Sanjay with their negatives and also a coat and a check shirt of the boy from the Chief Judicial Magistrate, Dibrugarh.
After a study of the skeletal remains P.W.27 found that they related to a 9 to 10 years old boy.
By making super imposition P.W.27 concluded that the skull in question could have been the skull of Sanjay as per his enlarged photographs.
Ex.26 is the report of P.W.27.
The Scientific Officer of the photograph Section of the Forensic Science Laboratory, Gauhati, P.W.28 performed the super imposition experiment of the photograph of the skull, M.Ex.48 and the photo graph of Sanjay, M.Ex. 59 and found them to be of the same per son.
Ex 27 is the report of P.W.28.
The four accused were subjected to test indentification in the parade held by the Second Class Magistrate, P.W.2 on 30.4.1975 and 4.9.1975.
In the parade held on 30.4.1975 Henry was indentified by 12 witnesses without any mistake while Sunil was indentified by 6 witnesses without any mistake and Anil was indentified by two witnesses without any mistake.
Ex.5 is P.W.2 's report relating to the proceedings of 30.4.1975.
In the parade held on 4.9.1975 Henry was identified by Rajender Nath Sharma, P.W.9 and Jiten Barua, P.W.25 without any mistake.
Ex.3 is the report relating to the proceedings of 4.9.1975.
In their statements recorded under s.313 of the Code of Criminal Procedure all the four accused retracted their confessional statements and denied all the circumstances appearing against them in the edvidence.
The learned Sessions Judge, Dibrugarh, on a consideration of the evidence convicted all the four accused and sentenced them as mentioned above, accepting the confessional statements, Exs.
6 to 9.
543 of the four accused recorded by the Judicial Magistrate, P.W.3 and the other evidence in the case.
The learned Sessions Judge has considered these confessions in paras 101 to 110 of his judgment and has observed that there is nothing improbable or unbelievable in them, that they appear to be spontaneous and are studded with vivid facts about the manner of commission of the crimes, that they receive assurance in several material particulars from the circumstantial evidence let in by the prosecution and that they are all voluntary and reliable though it appeared from the cross examination of the prosecution witnesses and from the statements of the accused recorded under section 313 Cr.
P.C. that they are retracted.
But the learned Judges of the High Court rejected all the confessions and the evidence of P.Ws. 10, 11, 16 and 25 regarding the identification of the accused in the test identification parade.
They have considered the confession of Henry in paras 45,55,62 and 64 of their judgment and have observed that the Judicial Magistrate, P.W.3 had failed to act properly in giving only three hours to Henry for reflection before recording his confession, Ex.6 on 12.4.1975.
They have further observed that though it is difficult to lay any hard and fast rule, in Serva Singh Rattan Sing vs State of Punjab(1) it has been held by this Court that generally speaking when an accused is produced under police custody it is reasonable to insist upon giving him at least 24 hours for reflection.
They have held that Henry 's confessional statement, Ex.6 has been obtained by coercion and is not voluntary and that it suffers from serious infirmity and cannot be acted upon.
They have considered Sunil 's confessional statement, Ex.7 in paras 74 and 76 of their judgment and found that he too had been given only three hours for reflection before his confession was recorded by the Judicial Magistrate, P.W. 3 on 18.4.1975 and that it is not voluntary and therefore, it is invalid in law.
They have considered the confession, Ex.8, of Anil in paras 77 and 79 of their judgment and have observed hat the Judicial Magistrate, P.W.3 who recorded it on 19.4.1975 had failed to see whether the accused was going to make the confession voluntarily after comprehending the implications of his admission.
They have considered the confession, Ex 9, of Naresh recorded by the Judicial Megistrate, P.W. 3 on 21.4.1975 in paras 84, 87 and 88 of their judgmemt and found that it has been made due to duress and (1) ; 544 inducement by the police and is not voluntary and that it suffers from serious infirmities and cannot be acted upon.
On a consideration of the other evidence, the learned Judges found that Sanjay had been kidnapped and murdered, and they accepted the trial court 's judgment that the corpus Delecti has been correctly identified to be that of Sanjay.
They accepted the evidence of P.Ws. 12 to 15 and 21 about the presence of Henry and Sunil in the pandal at the temple before Sanjay had disappeared on 26.3.1975.
They accepted the evidence of the rickshawman, P.W. 29 who has identified Henry in the test identification parade held by P.W.2 as the man who had left behind in his rickshaw the packet containing Sanjay 's shorts, M.Ex.26 and certain other things including the letter, M.Ex.2, enclosed in the envelope, M.Ex.1 which he had produced at the police station on 27.3.1975, and found on the evidence of the hand writing expert, P.W.I .Ex.2 to be in the hand writing of Henry.
On the evidence of the Post Master, Moran, P.W.9 Who has identified Henry in the test identification parade hold by P.W.2 as the person who landed over the telegram, exhibit 3, copy whereof, exhibit 13 had been received by P.W. 23, the learned Judges found that Henry had given the telegram, exhibit 3.
On the evidence of the hand writing expert, P.W. ] they found that exhibit 3 is in the hand writing of Henry and they held that exhibit 3 connects Henry with the crime.
The learned Judges found on the evidence of P.W. 23 that he had received a bearing letter, M. exhibit 7 written in Hindi on 31.
3.1975 enclosed in the envelope, M. exhibit 6, but held that it is not proved to be in the hand writing of any of the accused though the address written on the envelope, M. exhibit 6, of that letter is proved by the hand writing expert, P.W. 1 to be in the hand writing of Henry, and they rejected the evidence relating to that letter.
The learned Judges accepted the evidence of P.W. 23 about the telephonic conversation he had with some caller from Digboi at about 8 or 8.30 p.m.
On 8.4.1915 when that caller demanded a ransom of Rs. 3 lakhs for the return of Sanjay and it was ultimately agreed that P.W. 23 should pay Rs. 40,000 for the purpose.
They accepted the prosecution evidence that in accordance with that conversation P.W. 23 accompanied by some police personnel in plain clothes who posted themselves at suitable places went near 545 the gate of the Church situate behind Digboi Railway Station on 9.4.1975 and found the letter, exhibit 5 which has been found by the hand writing expert, P.W. 1, to be in the hand writing of Henry in English capital letters and they held that this was a strong piece of circumstantial evidence against Henry.
The learned Judges found that Henry attempted to run away when he was pointed out by P.W.33 while he was standing near a pan shop in front of the public telephone call office at Digboi on 10.4.1975, waiting for the trunk call booked by him at about 7 or 7.30 p.m on that day to Tinsukhia telephone No. 159 to mature and that he bit the constable, P.W.34 and tried to escape from his hold and that the circumstances under which he was arrested and his conduct at that time unerringly point to his guilt.
The learned Judges accepted the evidence of P.Ws. 14, 15 and 21 about the identification of Henry and Sunil in the test identification parade held by the Judicial Magistrate, P.W.2 as the persons who were present in the pandal before the disappearance of Sanjay on 26.3.1975, observing that these three witnesses had seen the suspects in broad day light and were in a position to notice their physical features correctly.
The learned Judges accepted the prosecution evidence that skeletal remains were recovered at the instance of Henry and pursuant to his confessional statement, exhibit 33 (admissible portion) and found that the evidence of P.Ws.27, 28 and 37, agreeing with the trial court, that the skull bone recovered pursuant to exhibit 33 is that of Sanjay and they have observed that the recovery of the skull bone of Sanjay at the instance of Henry is an important piece of evidence pointing unerringly to his guilt.
The learned Judges accepted the evidence of the witnesses who had identified Henry in the test identification parade held by the Judicial Magistrate, P.W.2 except the evidence of P.Ws. 10, l l, 16 and 25 on the ground that the photographs of Henry had been shown to P. Ws. 10, 11 and 25 before the identification and P.W. 16 could not identify Henry in the court during the trial.
The learned Judges noticed the law relating to circumstantial evidence in para 19 of their judgment thus: 546 "The law regarding circumstantial evidence is well settled.
When a case rests upon circumstantial evidence, such evidence must satisfy three tests: (i) the circumstances from which an inference of guilt is sought to be drawn must be cogently and firmly established; (ii) those circumstances should be of definite tendency unerringly pointing towards the guilt of the accused; and (iii) the circumstances taken cumulatively should form a chain so complete that there is no escape from the conclusion that within all human probability the crime was committed by the accused and none else.
The circumstantial evidence in order to sustain (a) conviction must be complete and incapable of explanation on any other hypothesis than that of the guilt of the accused.
The circumstantial evidence should not only be consistent with the guilt of the accused but should be inconsistent with his innocence.
After thus taking note of the law relating to circumstantial evidence the learned Judges have held in para 146 of their judgment that the circumstantial evidence against Henry taken cumulatively forms a chain so complete that there is no escape from the conclusion that the crime was committed by him and none else and that each of the circumstances established against him is incriminating and they cumulatively prove the complicity of the Henry in the kidnapping and murder of Sanjay.
They found that the evidence is not satisfactory to prove the offence of conspiracy under section 120R I.P.C. against Henry and acquitted him of that charge, but agreed with the trial court in regard to the finding on the other charges and held him guilty under sections 364, 387, 302 and 201 I.P.C. They thus allowed his appeal in part only as regards his conviction under s.120B I.P.C. and dismissed it in other respects and they accepted the death sentence confirmation case against him and confirmed the sentence of death as well as the other sentences awarded to him by the trial court except under section 120B I.P.C. As regards Sunil, apart from the confession, Ex.7 which has been rejected by the learned Judges they found that there was no other evidence except the evidence let in to prove his presence with Henry in the temple and the pandal in the morning and even 547 ing of 26.3.1975 and they held that it is not sufficient to sustain his conviction and that as regards the other two accused, Anil and Naresh there is no evidence except their retracted confessions, Ex.8 and 9 which have been rejected by them.
In that view they acquitted three accused, Sunil, Anil and Naresh of all the charges framed against them and rejected the death sentence confirmation case against Sunil.
The trial court acted upon the judicial confessional statements, Exs.
6 to 9 of all the four accused as being voluntary and reliable.
But the learned Judges of the High Court rejected all of them as not being voluntary or acceptable.
They have held that Henry 's confession, Ex.6 has been obtained by coercion and suffers from serious infirmity.
As regards Anil 's confession, Ex 8 they have observed that the Judicial Magistrate, P.W.3 who had recorded it on 19.4.1975, had failed to see whether Anil was going to make the confession voluntarily after comprehending the implications of his admission.
As regards Naresh 's confession, Ex.9 they have held that it has been made due to duress and inducement by the police and that it suffers from serious infirmities.
In the view we are taking as regards Anil and Naresh, it is not necessary to consider which of the two views, whether of the trial court or of the High Court is correct n regard to their confessional statements, Ex.8 and 9.
The acceptability or otherwise of the confessional statements of the other two accused, Henry and Sunil, has to be considered in detail.
The Judicial Magistrate, P.W.3 who had recorded Exs.6 and 7 on 12.4.1975 and 18.4.1975 respectively had admittedly given only three hours time for reflection before he recorded them.
He has stated in his evidence that after Henry was produced before him by constable Hadi Hussein at 11 a.m.
On 12.4,1975 he told Henry that he is a Judicial Officer and no other person was present inside the court and nobody would harm if he showed any reluctance to confess and that he was not bound to make any confessional statement but if he made one it would be used against him.
He has G stated that after Henry told him that his mind was clear from the time of his arrest and that he wanted to confess out of repentance for what he had done he gave him three hours time for reflection and put him in the custody of a peon of the Chief Judicial Magistrate, Dibrugarh in his own chamber and saw to it that no police officer was allowed to enter the court until the recording of the 548 confessional statement of Henry was over.
He was stated that after Henry was brought before him from his chamber after the said interval he cautioned him as above and that after being satisfied that Henry was going to confess voluntarily he recorded his statement in Ex.6.
As regards Sunil also, P.W.3 has stated that he administered the caution as he did in the case of Henry when he was produced before him at 11.30 a.m.
On 18.4.1975 and that Sunil told him that he wanted to confess because he was repentant for what he had done and that he replied in the negative when he asked him if he had been threatened by the police.
He has stated that after giving him three hours time for reflection he repeated the aforesaid warning to Sunil and that he expressed his willingness to make the confessional statement and he recorded it in Ex.7 after he was satisfied that Sunil was going to confess voluntarily.
It appears that Henry had some injury on his person when he was produced before P.W.3 and that on an earlier occasion Sunil had expressed his unwillingness to make any confessional statement.
The injury found on Henry, according to the entry, exhibit Kal in the jail register was this: "Both hands on the back slight swelling, complains of pain in both legs".
The injury was not serious enough to force Henry to make a false confessional statement It must be remembered that Henry had attempted to run away when the postal employee, P.W.33 pointed him to the police personnel in plain clothes and that after he was caught by the constables, P.Ws.26 and 34 as directed by the Sub Inspector of Police, P.W.24 he bit the hand of P.W.34 (according to P.W.26) before he was put in a police vehicle and taken to the police station.
It was suggested to P.W. 34 ill cross examination that Henry was beaten by the police on or after 10.4.1975, which has no doubt been denied by him.
It is not improbable that Henry was roughed up and given some beating by the police when he tried to escape from the hold of P.Ws. 26 and 34 before he was forcibly put into the police vehicle and taken to the police station, resulting in some injury to his person.
It has to be noted that Henry had not told the Judicial Magistrate, P.W.3 that he was beaten by the police for causing him to make a confessional statement.
It is not possible to hold that Sunil 's confessional statement, Ex.7 was not voluntary from the mere fact that he had a prior occasion declined to make a confessional statement.
The Judicial Magistrate, P.W.3 would have been well advised if he had given more time for reflection to the accused than he has done.
But it is not possible to reject the confessional statements merely because only three hours time had been given for reflection, if they are 549 Otherwise acceptable.
Therefore it is necessary to note what Henry And Sunil have stated in their confessions to find out whether intrinsically they are voluntary statements or tutored ones made under coercion.
We will state in our own words what Henry and Sunil have stated in their confessional statements.
Henry has stated in his confession thus: "I was arrested at Digboi at 7.30 p.m.
On 10.4.1975.
On 26.3.1975 1 and Sunil and Anil went from Dibrugarh to Tinsukia.
Boys were playing in a big pandal in Tinsukhia.
I was waiting a little away from the pandal.
Sunil went near the pandal and called a boy and after asking him for his father 's name he brought the boy to me.
Sunil offered sweets to the boy and asked him to follow me, saying that I would give him many things.
1 took the boy in a rickshaw and proceeded a furlong and Sunil brought a Taxi.
The boy mentioned his name as Sanjay Agarwala.
Sunil told me that the boy could be confined in an abandoned house in Bapapung and we went there.
1 was proceeding ahead of Sunil and the boy.
When we were proceeding towards the Bapapung oil field area I heard moaning sound.
I looked back and found that Sunil had caught hold of the boy 's neck and pulled him down.
Sunil pressed the chest of the boy with his knee and also pressed his mouth.
Ultimately Sunil strangled the boy to death.
There was a hole which looked like a foxhole.
Sunil kept the dead body of the boy inside the hole and filled it up with earth.
Sunil tore off the shirt and pants of the boy and took them with him.
After the murder we came to Digboi.
Next morning l and Sunil came to Tinsukia.
1 rang up the father of the deceased to demand a ransom of Rs. 3 lakhs.
Then at 3 p.m. we sent the pants and the shirt of the deceased to his father through a rickshaw wallah.
We sent a letter along with the clothes.
The letter was written by me in English.
In the letter I mentioned that if the farther wanted the boy back he would have to give three lakhs of rupees, The father was directed to give the money at the Jewel Hotel, Dibrugarh.
On 29.3.1975 I sent a telegram to the father of the boy from Moran Post Office directing him to wait for our instructions.
On 7.4.1975 1 and Sunil went to 550 Dibrugarh and spent the night there.
On the next day T booked a call to the father af the boy.
When the bell rang y Sunil held the receiver and demanded the money to be given positively on the next day, but the father did not turn up.
On 10.4.1975 Sunil asked me to book a call.
I held the receiver in a public phone booth and asked the exchange to book a call to Tinsukhia telephone No. 159.
In the mean time Sunil suspected something and asked me to leave the place and he disappeared.
When I entered the sweepers line, two plain clothed cyclists stopped me and took me to the police station.
On my asking the deceased mentioned the name of his father as Chabil Das Agarwal or something like that.
I have done all this at the instigation of Sunil.
" Sunil has stated in his confessional statement thus: "About one and a half months ago I went to Naresh 's shop to buy provisions as at fair price.
Then Henry came there and said that we had not achieved anything in life by work and that if I follow the line shown by him I would get a lot of money overnight.
When I asked him what the line was, he said that we should kidnap sons of rich people and keep them for two or three days and demand money and return them after getting the money.
There after, on 25.3.1975 I,, Henry and Anil went to Naresh 's shop where Henry said that we should kidnap boys at Dibrugarh and he would bear all the expenses.
We went to Dibrugarh on that day at 5 p.m. and stayed in Kusum Hotel.
On the next day we went to Tinsukhia and spent the night in the railway station platform.
After hunting the whole of next day Henry managed to take away a boy by inducement from a pandal at Tinsukhia and put him in a rickshaw and I followed them in another rick show.
Henry sent Anil for a taxi and when it was brought 1 and Henry boarded it along with the boy near Shivadam, and Anil went away.
We got down near the gate of Bapapung oil field.
While getting down Henry made the boy to stand up leaning against his own body.
When the taxi left Henry took up the boy in his arms.
As the boy 's hands were hanging loose 1 asked what had happened.
Henry told me that the boy had gone to sleep for ever and he 551 had finished him off.
Looking closely I found a length of string tied round the boy 's neck.
Then Henry said that the boy 's disposal should be arranged.
Taking the boy we went to the cremation ground at Bapapung.
Finding a hole there, Henry took off the boy 's pants and shirts and pushed the boy into it.
I and Henry completed the burial by putting earth over the body.
Next morning we went to Tinsukhia by train.
In the platform Henry wrote a letter and placed the boy 's pants with the letter and asked a rickshaw puller to deliver the packet to Chabil Marwari.
Before kidnapping the boy Henry stated that after kidnapping he would demand three lakhs of rupees from his father.
While getting down at Namrup, Henry said that I would have to go to Moran on the next day with Ghatani.
After reaching Sibsagar I went to Moran with Chatani on 27.3.1975 and we met Henry and Anil.
While I was taking tea in a hotel Henry sent a telegram from the post office to Chabil Agarwala informing him that he would let him know when and where the money should be delivered.
Only then Henry said that boy was Sanjay and his father was Chabil Agarwala.
In the Kusum Hotel Henry said that Chabil would deliver the money at the Jewel Hotel.
Henary went into the Jewel Hotel and came back and said that it would not be convenient and that we should move off.
On 6.4.1975 I and Henry went to Digboi and stayed there for the night.
At 6 p.m.
On the next day Henry telephoned Chabil Marwari from the Digboi main post office, informing him that on 8.4.1975 he would leave a letter at the gate of the Church situate behind that railway station and that he should collect that letter after leaving a sum of Rs. 3 lakhs.
At 3 p.m. Chabil came by car and collected the letter and left a letter written in Hindi at the gate.
On 9.4.1975, or 10.4.
1975 Henry wanted to telephone once again and at 6 p.m., I and Henry went to Digboi Post Office.
While I waited near a pan shop Henry booked a call from that post office.
The Post Master said that it would take about ten minutes to put the call through.
Four or five policemen in plain clothes arrested and took away Henry.
I hid myself in the cremation ground from where the police found me and arrested me." 552 A perusal of these confessional statements, Exs. 6 and 7 shows that they are more or less exculpatory of the maker, for Henry had attributed everything to Sunil and stated that he had done every thing at the instance of Sunil while Sunil had attributed the important roll in the crime to Henry.
As pointed out by Mr. Rajender Singh, Senior Counsel appearing for complainant, P.W. 23, this would not normally be the position if the confessions were the result of turoring by the police.
The confessional statement of Henry is quite long while that of Sunil is much longer.
As remarked by the learned Sessions Judge these confessions are full of facts and minute details which would not be there normally if the confessions are the result of tutoring or of compulsion.
The circumstantial evidence relied upon by the trial court and the High Court lend assurance to the genuineness and voluntary nature of these confessions.
They have no doubt been retracted, but in view of the fact that they are generally corroborated by the circumstantial evidence in ample measure, there is no satisfactory reason for the confessions not being accepted and acted upon.
In these circumstances, we agree with the learned Sessions Judge that the confessional statements of Henry and Sunil, Exs. 6 and 7, are voluntary and can be acted upon, together with the circumstantial evidence, for basing a conviction.
We agree with the courts below that the corpus delecti has been correctly established by the prosecution to be that of Sanjay.
The letter M.Ex. 2 (enclosed in the envelope, M.Ex.1) was found in the paper packet delivered by the rickshawman, P.W.29 at the Tinsukhia Police Station on 27.3.1975.
The packet Contained inter alia the pair of shorts, M.Ex 26 which have been identified by Sanjay 's mother, P.W.19 as those which he was wearing on the day of his disappearance.
In that letter, M.Ex.2 addressed to "Shri Chabil Das, Siding", it stated that if the ransom of Rs.3 lakhs is not paid by 6 p.m.
On 28.3.1975 at the Jewel Hotel the person who wrote that letter would "kill".
No doubt it is not mentioned in that letter as to who would be killed if the money was not paid within the time.
The amount which was finally settled at Rs. 40,000 in the telephonic conversation which P.W.23 I ad from some caller from Digboi on 8.4.1975 had not been paid.
In the confessional statements, Exs. 6 and 7 it is stated that Sanjay was killed though the manner, the place and the hands which killed him are mentioned differently.
Pursuant to the confessional 553 statement, Ex.33 (admissible portion) of Henry offering to show the place where the dead body of the boy had been buried some skeletal remains including the skull which have been later found to be that of a nine or ten years old human being were recovered from a pit or hole situate by the side of hillock in the Bapapung oil field area.
Those skeletal remains were sent by the Medical Officer, P.W.37 duly packed in the presence of the Judicial Magistrate, P.W.3 to the Forensic Science Laboratory, Gauhati.
The Assistant Director, Biology Section of that laboratory, P.W. 27 obtained some photographs of Sanjay with their negatives from the boy 's family through the police.
After performing the superimposition test with Sanjay 's enlarged photograph, M.Ex.59 the Scientific Officer of the Photography Section of that laboratory, P.W.28, found the skull, M.Ex. 48 and the photograph, MEx.
59 of Sanjay to be of the same person.
Ex.27 is his report.
In these circumstances, we think that there is no reason to disagree with the findings of the courts below that the corpus delecti recovered from the place pointed out by Henry as per his confessional statements Ex.33 has been proved to be that of Sanjay who had disappeared from the pandal at the temple in Tinsukhia town in the evening of 26.3.1975.
We agree with the courts below and find that the prosecution has proved beyond all reasonable doubt that Sanjay, who was about nine years old at the time of his disappearance, had been kidnapped and murdered.
The case rests purely upon circumstantial evidence, there being no direct evidence about the kidnapping and other offences alleged.
The case of the prosecution is that all the four accused stayed at the Kusum Hotel on 24.3.1975 as shown by the entries in the register of that hotel, M.Ex.10 and that Henry and Sunil were together in the pandal at the Shiva temple in Tinsuk hia town in the forenoon and evening of 26.3 1975.
On the basis of this circumstance and the confessional statements the prosecution has sought to establish its case of conspiracy against the accused.
In his confessional statement, Ex.7 Sunil had stated that when he went to Naresh 's shop about one and a half months prior to 18.4.1975 for buying provisions at fair price Henry cam there and told him that they had not achieved anything in life by work and that if he would follow the line shown by him he would get a lot of money overnight, that when he asked Henry about what that line was he told him that they should kidnap sons of rich people and keep them for two or three days and demand money as ransom and return 554 them after getting the money, and that thereafter on 25.3.
1975 he went along with Henry and Sunil to Naresh 's shop where Henry stated that they should kidnap boys at Dibrugarh and he would meet all the expenses.
He has also stated that Henry told him at the Kusum Hotel that Chabil (P.W. 23) would deliver the money at the Jewel Hotel.
He has mentioned about the presence of Anil and Naresh on some other occasions also in his confessional statement.
In his confessional statement, exhibit 6 Henry has made repeated reference to Sunil but only once to Anil and that is that he went along with Sunil and Anil from Dibrugarh to Tinsukhia on 26.3.1975.
There is no other evidence about the conspiracy.
We agree with the High Court that the evidence adduced by the prosecution is not sufficient to prove that charge.
Mr. Rajender Singh, learned Senior Counsel who appeared for the complainant did not advance any argument regarding the charge of conspiracy.
The admitted that there is no evidence against Anil and Naresh except their retracted confessions and that they may not be sufficient to prove any of the charges against them.
In these circumstance, we find no satisfactory reason to interfere with the conclusion of the learned Judges of the High Court that the charge of conspiracy against all the four accused and the other charges against Anil and Naresh have not been proved satisfactorily.
The circumstances found by the trial court and the learned Judges of the High Court to have been proved satisfactorily against Henry are these: (1) His presence along with Sunil in the pandal at the Shiva temple in Tinsukhia town in the forenoon and afternoon of 2(.3.1975 his offer of sweets to Sanjay and other boys, P.Ws. 12 and 13, during that time; his calling Sanjay when he was moving away from the pandal with his sister, P.W. 21 with an offer of more sweets to him; and his continued stay in the pandal along with Sunil and Sanjay even after P.Ws. 12, 13 and 21 left the place, the last of them at about 5.30 p.m. (2) Receipt at the Tinsukuia Police Station on 27.3.1975, of the packet containing inter alia the pair of shorts, M.Ex. 26 and the letter, M.Ex.
written in English and addressed to "Shri Chabil Das, Siding," demanding a ransom of Rs. 3 lakhs for the return of Sanjay 555 by 6 p.m.
On the next day at the fixed place on pain of murder of the boy in case of default.
The shorts, M. exhibit 26 have been identified by Sanjay 's mother, P.W. 19 to be those which Sanjay was wearing on the day of his disappearance.
The handwriting expert, P.W. 1 has opined in his report, exhibit 2, on a comparison of the hand writing contained in M. exhibit 2 with the speciman hand writing and signatures of Henry, M.Exs.
11 to 14 obtained by P.W. 38 at Digboi Police Station that M.Ex.
2 is in the hand writing of Henry.
(3) Receipt of the telegram, M.Ex 13 by P.W.23 on 30.3.
1975 to the effect "I am not satisfied with your performance.
Last chance for transaction.
If you want your item await instructions.
" M.Ex.3 the original telegram was handed over to the Post Master, Moran, P.W.9 on 29.3.1975 by Henry who has been identified by P.W.9 in the test identification parade held by P.W. 2 as well as in the court during the trial.
The hand writing expert, P.W.I has found M.Ex.3 to be in the hand writing of Henry in his report, M.Ex.l.
(4) On 31.3.1975 P.W,23 had received the bearing envelope, M.Ex.6 containing the letter, M.Ex.7 written in Hindi.
The Hindi writing in exhibit
M.7 has not been proved to be in the hand writing of any of the accused but the hand writing expert, P.W. I has found the address on the envelope, M.Ex.6 to be in the hand writing of Henry in his report, M.Ex.2.
(5) On 8.4 1975 P.W. 23 had received a telephone call from Digboi asking him if he had received the letter and when he answered in the affirmative he was asked by the caller to come to Digboi if he wanted his son back.
In that conversation the amount to be paid by P.W. 23 as ransom for return of his son was fixed at Rs. 40,000 and he was told by the caller that he should come to the gate of the Church at Digboi where he would find a letter underneath a stone and that he should act according to the contents of that letter.
Accordingly, P.W. 23 and others went by a car? and 556 P.W. 23 proceeded towards the gate of the Church alone and found the letter, M.Ex. 5 written in English capital letters.
That letter which has been recovered by the police has been found by the hand writing expert, P.W. t to be in the hand writing of Henry in his report, M.Ex. 2.
(6) On 10.4.1975 at about 7 or 7.30 p.m.
Henry had booked a call from Digboi Public call office to Tinsukhia telephone No. 159 relating to P.W. 23 and was waiting outside for the call to materialise.
Then he was point ed out by the public telephone call office employee, P.W.33 to the police who were keeping a watch in plain clothes.
At the instance of the Sub Inspector of police, P.W. 24 the constables, P. Ws. 26 and 34 caught hold of Henry when he tried to run away from the place.
In the process he kicked P.W. 34 and bit one of his fingers.
However, he was over powered and apprehended.
As soon as P.W. 26 grabbed him he said "I do not know about this matter." He was taken from I here by a police vehicle to the police station.
This is suspicious conduct on the part of Henry.
(7) On 10.4.1975 When interrogated by the Investigating Officer, Henry made.
a statement, exhibit 33 (admissible portion) offering to show the place where the dead body of the boy had been buried.
On the next day Henary took the police party and others including the Political Officer and Executive Magistrate, P.W. 38 to a place situate by the side of a hillock in the ONGC oil field area of Bapapung.
From a mound from which earth had been disturbed and from the surrounding area some skeletal remains including the skull bone, M.Ex. 48 were recovered by the police.
The skull bone, M.Ex.
48 has been found by the super imposition test conducted by the experts, P.Ws. 27 and 28 of the Forensic Science Laboratory, Gauhati to be the skull bone of Sanjay as per P.W. 28 's report, Ex.27 (8) Henry has been identified in the test identification parade held by the Judicial Magistrate, P.W. 2 on 30.4.1975 557 by 12 witnesses without any mistake and on 4.4.1975 by the Post Master, Moran, P.W. 9 without any mistake.
Some of the witnesses who identified Henry in the test identification parade as well as in the court are P.Ws.10, 14, 15, 17, 18, 26 and 29.
The above are very strong circumstances which can safely be relied upon.
They form a complete chain pointing unerringly to the guilt of Henry and are inconsistent with his innocence.
We were taken through the evidence by the learned Counsel for the parties and we also perused the summary of the evidence given by the learned Sessions Judge in paras 13 to 13 (43) of his judgment.
We do not think it necessary to deal with the evidence of the witnesses in detail as we agree with the courts below in regard to these circumstances.
Accordingly, we agree with the courts below that Henry 's guilt has been proved by the prosecution satisfactorily beyond all reasonable doubt in respect of all the charges framed against him except the one under section 120B I.P.C .
As regards Sunil, there is the evidence of P.Ws. 14, 15 and 21 about his presence in the pandal at the Shiva temple in Tinsukhia town in the forenoon and evening of 26.3.1975.
The pujari of the temple, P.W. 14 has identified Henry and Sunil as the persons who were present in the pandal on 26.3. 1975 correctly both in the test identification parade held by the Judicial Magistrate, P.W. 2 and in the court.
P.W. 15, a businessman of Tinsukhia, who had gone to the temple on 26.3.1975 also has identified Henry and Sunil both in the test identification parade held by P.W. 2 as well as in the court as the men who were standing near a bamboo post of the pandal when Sanjay and other boys were playing nearby.
He learnt on the next day about Sanjay missing.
Sanjay 's elder sister, P.W. 21 who went to fetch him from the pandal at about 5 or 5.30 p.m, on 26.3.1975 has stated in her evidence that Henry and Sunil, both of whom she has identified correctly in the test identification parade held by P.W. 2 as well as in the court, were present in the pandal when Sanjay and other boys including P.W. 12 and 13 were playing.
When she called Sanjay to go home with her one of those two men called the other as 'Driver ' and asked him to get chocolates.
Then P.W. 21 left the place along with Sanjay, but after they had covered some distance one of the men called Sanjay by his name and said that he would give him chocolates.
Then Sanjay asked P.W, 21 to go ahead and inform his mother that he would came in a short 558 while.
So P.W. 21 had left the place leaving Sanjay behind.
She has pointed out that it was Henry who sent Sunil to fetch chocolates.
There is no reason for not accepting the evidence of these three witnesses, P.Ws. 14, 15 and 21 about the presence of Sunil along with Henry in the pandal at the Shiva temple in Tinsukhia town on 26.3.1975 when Sanjay was playing there with other boys, P.Ws. 12 and 13.
There is also no reason for not accepting the evidence of P.W. 21 that Henry called Sanjay when he was moving away along with her back to the place saying he would give him chocolates, that he called Sunil as 'Driver ' a few minutes earlier and asked him to get chocolates, and that P.W. 21 left Sanjay behind as desired by him and went away to her house at about 5.30 p.m. on the day of Sanjay 's disappearance.
Sunil has been identified by 6 witnesses in all without any mistake.
There is also the evidence of P.W.41, the then officer in charge of Sibsagar Police Station that he arrested Sunil on 14.4.1975 from a house in Sibsagar town cremation ground after a long chase and that he was until then hunting for him in vain from 11.4.1975.
He has stated that Sunil started to flee as soon as he saw him and that he succeeded in catching him after giving him a chase 1 1/2 or 2 furlongs.
In his confessional statement, Ex.7 Sunil has admitted his presence with Henry in the pandal at Tinsukhia on 26.3.1975 and his arrest from the cremation ground on 14 4.1975.
There are some other circumstances brought out in the evidence and his confessional statement extracted supra pointing to his guilt unmistakably.
Mr. Rajender Singh, learned Counsel for the complainant submitted that circumstantial evidence against Sunil is practically the same as in the case of Henry except that no recovery has been made at his instance and that there is nothing on record by way of his hand writing unlike the case of Henry.
Mr C.B. Singh, learned Counsel who appeared for Sunil as amicus curiae submitted that having regard to Henry 's letter, exhibit 2 in which he had stated that he would kill (the victim) if the ransom amount is not paid by 6 p.m.
On the next day it is probable that Henry might have killed Sanjay.
He submitted that there is no satisfactory material on record to show that Sunil either did anything for killing Sanjay or that he shared the intention of Henry to kill the boy.
He further submitted that Sunil 's intention as reflected in his confessional statement, exhibit 7 was only to kidnap and keep the boy for two or three days and send him back after collecting the 559 ransom.
Having regard to all the circumstances of the case we are inclined to accept this submission of Mr. Singh as being most probable and reasonable.
We hold that the offence proved against Sunil is only kidnapping of Sanjay with intent to secretly and wrongfully confine him, an offence punishable under section 365 I.P.C. Henry had nothing to say when he was examined by the the learned Sessions Judge on the question of the sentences to be awarded to him except that he intended to file an appeal in the High Court.
The learned Sessions Judge has observed that the crimes committed by Henry are heinous and he had held Sanjay for ransom and that lt is a fit case in which the extreme penalty of the law is called for as regards Henry.
Accordingly, he sentenced Henry to death under s.302 read with s 34 I.P.C., imprisonment for life under section 364 read with s.34 I.P.C., rigorous imprisonment for seven years under section 201 read with s.34 I.P.C., and rigorous imprisonment for five years under section 387 read with section 34 I.P.C., and directed the sentences to run concurrently.
The learned Judges of the High Court have agreed completely with reasons given by the learned Sessions Judge for awarding the sentence of death to Henry and they have confirmed all the sentences awarded to him and accepted the death sentence reference relating to him as mentioned above.
We are of the opinion that the offences committed by Henry, the originator of the idea of kidnapping children of rich people for extracting ransom, ate very heinous and pre planned.
He had been attempting to extract money from the unfortunate boy 's father, P.W. 23 even after the boy had been murdered by making the father to believe that the boy was alive and would be returned to him if he paid the ransom.
In our opinion, this is one of the rarest of rare cases in which the extreme penalty of death is called for the murder of the innocent young boy, Sanjay in cold blood after he had been kidnapped with promise to be given sweets.
We, therefore, confirm the sentence of death and the other sentences awarded to Henry by the High Court under sections 302, 364, 201 and 387 I.P.C. and dismiss Criminal Appeal No. 545 of 1982 filed by him.
We allow Criminal Appeal No. 209 of 1983 filed by Chabil Prasad Agarwala, P.W. 23 against the acquittal of Sunil, Anil and Naresh in part and convict only Sunil under s.365 I.P.C. for having kidnapped Sanjay in order to secretly and wrongfully confine him and sentence him to undergo rigorous imprisonment for seven years and dismiss that appeal in other respects.
We reject Criminal Appeal No.210 of 1983 filed by the 560 State of Assam against the rejection of the death sentence reference in regard to Sunil and dismiss Criminal Appeals Nos. 212 and 213 of 1983 filed by the State of Assam against the acquittal of Naresh in Criminal Appeal No.25 of 1981 and of Anil in Criminal Appeal No. 24 of 1981, both on the file of the High Court, and allow Criminal Appeal No.211 of 1983 filed by the State of Assam against the acquittal of Sunil in Criminal Appeal No. 19 of 1981 on the file of the High Court as indicated in Criminal Appeal No.209 of 1983 and dismiss it in other respects.
The sentences of imprisonment awarded to Henry by the trial court and confirmed by the High Court and by us shall run concurrently and merge with the sentence of death.
M.L.A Criminal Apreal Nos.
545/82, 210/83, 212 13/83 disnnssed and Criminal Appeal No. 209 Allowed.
|
The deceased a boy of 9 was playing with the children in the Pandal near a Shiva Temple on 26th March 1975 which was a day of 'Holi ' festival.
The prosecution 's case is that accused Nos. 1 and 2 kidnapped and murdered the deceased with a view to extract ransom from his father.
Accused No. 1 was arrest d on 10th April 1975 and on 11.4.75 he showed the place where the dead body of the deceased had been buried.
His interrogation also led to the arrest of other three accused Nos. 2, 3, and 4.
All the accused made their confessional statements on different dates before a Judicial Magistrate.
The four accused were subjected to test identification in the parade held by the Second Class Magistrate, P.W. 2 on 30.4.1975 and 4.9.1975.
Accused No.
I was identified by 12 witnesses without any mistake while accused No. 2 was identified by six witnesses without any mistake and accused No. 3 was identified by two witnesses without any mistake.
In their statements recorded under section 313 of the Code of Criminal Procedure all the accused retracted their confessional statements and denied all the circumstances appearing against them in the evidence.
The learned Sessions Judge on a consideration of the evidence convicted all the four accused and sentenced accused No. I and accused No. 2 to death under section 302 read with section 34 I.P.C. for the murder of the deceased and to imprisonment for life under section 364 read with section 34 I.P.C. and rigorous imprisonment for seven years under section 201 read with section 34 I.P.C. and those two accused Nos. 3 and 4 to rigorous imprisonment for five years each separately under section 120B and section 387 read with section 34 I.P.C.
The sentences awarded to all the four accused were directed to run concurrently.
On appeals by the four accused.
the High Court rejected the confessional statements of the four accused as not being voluntary or acceptable and held that the circumstantial evidence against accused No. I taken cumulatively forms a chain so complete that there is no escape from the conclusion that the crime was commit 534 ted by him and none else and that each of the circumstances established against him is incriminating and they cumulatively prove the complicity of accused No.1 in the kidnapping and murder of the deceased.
The High Court found that the evidence is not satisfactory to prove the offence of conspiracy under s.120 I.P.C. against accused No 1 and acquitted him of that charge, but agreed with the trial court in regard to the finding on the other charges and held him guilty under ss.364,387, 302 and 201 I.P.C. The High Court thus allowed the appeal of accused No. I in part only 'as regards his conviction under section 120B I.P.C. and dismissed it in other respects and accepted the death sentence confirmation case against him and confirmed the sentence of death as well as the other sentences awarded to him by the trial court except under s.120B I P.C. As regards accused No.2, apart from the confession, which was rejected by the High Court, it found that there was no other evidence except the evidence let in to prove his presence with accused No. I in the temple and the pandal in the morning and evening of 26.3.1975 and it held that it is not sufficient to sustain his conviction and that as regards the other two accused No.3 and 4 there is no evidence except their retracted confessions which were rejected by it.
In that view, the High Court acquitted accused Nos. 2, 3 and 4 of all the charges framed against them and rejected the death sentence confirmation case against accused No. 2.
In appeals to this Court by accused No. I and the State and the father of the deceased, the Court.
^ HELD: 1.
It has to be noted that accused No. 1 had not told the Judicial Magistrate, P.W.3 that he was beaten by the police for causing him to make a confessional statement.
It is not possible to hold that accused No. 2 's confessional statement exhibit 7 was not voluntary from the mere fact that he had on a prior occasion declined to make a confessional statement.
The Judicial Magistrate, P.W. 3 would have been well advised if he had given more time for reflection to the accused than he has done.
But it is not possible to reject the confessional statements merely because only three hours ' time had been given for reflection, if they arc otherwise acceptable.
Therefore, it is necessary to note what accused Nos.
I and 2 have stated in their confessions to find out whether intrinsically they are voluntary statements or tutored ones made under coercion.
A perusal of the confessional statements of accused Nos. 1 and 2 shows that they are more or less exculpatory of the maker, for accused No. 1 had attributed everything to accused No .2 and stated that he had done every thing at the instance of accused No.2 while accused No. 2 had attributed the important role in the crime to accused No. 1.
This would not normally be the position if the confessions were the result of tutoring by the police.
The confessional statement of accused No. 1 is quite long while that of accused No.2 is much longer.
As remarked by the learned Sessions Judge these confessions are full of facts and minute details which would not be there normally if the confessions are the result of tutoring or of compulsion.
Pursuant to the confessional statement, Ex.33 (admissible portion) of accused No. 1 offering to show the place where the dead body of the boy had been buried, some skeletal remains including the skull which have been later found to be that of a nine or ten years old human being were recovered from a Pit or hole situate by the 535 side of a hillock in the Bapapung oil field area.
There is no reason to disagree with the findings of the courts below that the corpus delecti recovered from the place pointed out by accused No. 1 as per his confessional statement, exhibit 33 has been proved to be that of the deceased who had disappeared from the panda I at the temple in Tinsukhia town in the evening of 26.3.
I 975.
The circumstantial evidence relied upon by the trial court and the High Court lend assurance to the genuineness and voluntary nature of these confessions.
They have no doubt been retracted, but in view of the fact that they are gene rally corroborated by the circumstantial evidence in ample measure, there is no satisfactory reason for the confessions not being accepted and acted upon, In these circumstances the learned Sessions Judge was right in holding that the confessional statements of accused Nos. 1 and 2 are voluntary and can be acted upon, together with the circumstantial evidence, for basing a conviction.
[552F H; 553 A C3] 2.
The case rests purely upon circumstantial evidence, there being no direct evidence about the kidnapping and other offences alleged.
There is no evidence against accused Nos. 3 and 4 except their retracted confessions and they may not be sufficient to prove any of the charges against them.
There is also no satisfactory reason to interfere with the conclusion of the learned Judges of the High Court that the charge of conspiracy against all the four accused and the other charges against accused Nos. 1 and 2 have not been proved satisfactorily.
[553F;554D E] 3.
(i) The circumstances found by the trial Court and the High Court against accused No. I are very strong and can safely be relied upon.
They form a complete chain pointing unerringly to the guilt of accused No. I and arc inconsistent with his innocence Accordingly, accused No. I guilt has been proved by the prosecution satisfactorily beyond all reasonable doubt in respect of all the charges framed against him except the one under section 120B l.
P.C. [547C D] 3 (ii) The offences committed by accused No. 1, the originator of the idea of kidnapping children of rich people for extracting ransom, are very heinous and pre planned.
It had been attempting to extract money from the unfortunate boy 's father, P.W. 23 even after the boy had been murdered by making the father to believe that the boy was alive and would be returned to him if he paid the ransom.
Therefore, this is one of the rarest of rare cases in which the extreme penalty of death is called for the murder of the innocent young boy, Sanjay in cold blood after he had been kidnapped with promise to be given sweets.
Therefore, the sentence of death and the other sentences awarded to accused No. 1 by the High Court under sections 302, 364, 201 and 387 I.P.C. are confirmed and Criminal Appeal No. 545 of 1982 filed by him is G dismissed.[559E G] 3.
(iii) As regards accused No. 2, there is the evidence of P.Ws. 14, 15 and 21 about his presence in the pandal at the Shiva temple in Tinsukhia town m the forenoon and evening of 26.3.1975, There is no reason for not accepting the evidence of these three witnesses.
14. 15 and 21 about the 536 presence of accused No. 1 in the pandal at the Shiva temple in Tinsukhia town on 26.3.1976 when the deceased was playing there with other boys, P.Ws. 12 and 13.
There is also no reason for not accepting the evidence of P.W. 21 that accused No. 2 called the deceased when he was moving away along with her back to the place saying he would give him chocolates, that he called accused No. 2 as Driver ' a few minutes earlier and asked him to get chocolates, and that P.W. 21 left the deceased behind as desired by him and went away to her house at about 5.30 p.m.
On the day of the decease 's disappearance.
He has been identified by 6 witnesses in all without any mistake.
There is also the evidence of P.W. 41, the then officer in charge of Sibasagar Police Station that he arrested accused No. 2 on 14.4.
1975 from a house in Sibasagar town cremation ground after a long chase and that he was until then hunting for him in vain from 11.4.1975.
He has stated that he started to flee as soon as he saw him and that he succeeded in catching him after giving him a chase for 11/2 or 2 furlongs.
In his confessional statement, exhibit 7 accused No. 2 has admitted his presence with accused No. 1 in the pandal at Tinsukhia on 26.3.1975 and his arrest from the cremation round on 14.
1. 1975.
There are some other circumstances brought out in the evidence and his confessional statement extracted (supra) pointing to his guilt unmistakably.
But, there no satisfactory material on record to show that accused No. 2 either did anything for killing the deceased or that he shared the intention of accused No. 1 to kill the boy.
It appears that accused No.2 's intention as reflected in his confessional statement, exhibit 7 was only to kidnap and keep the boy for two or three days and send him back after collecting the ransom.
Having regard to all the circumstances of the case the offence proved against accused No. 2 is only kidnapping of Sanjay with intent to secretly and wrongfully confine him, an offence punishable under section 365 l.
P.C. [559B H; 559A] Therefore, Criminal Appeal No. 209 of 1983 filed by the father of the deceased, P.W. 23 against the acquittal of accused Nos. 2, 3 and 4 is allowed in part and only accused No. 2, is convicted under section 365 I.P.C, for having kidnapped Sanjay in order to secretly and wrongfully confine him and he is sentenced him to undergo rigorous imprisonment for seven years and it is dismissed in other respect.
Criminal Appeal No. 211 of 1983 is allowed as indicated in Criminal Appeal No. 209 of 1983 and Criminal Appeals No. 210. 212 and 213 of 1983 are dismissed.
[559G H; 560AB]
|
ition No. 1938 of 1981 (Under Article 32 of the Constitution of India) M. K. Ramamurthy and P. P. Singh for the Petitioners.
M. C. Bhandare, Raju Ramalchandran, R. R. Garg, V. J. Francis and N.M. Popli for the Respondents.
Normally a resolution of such a dispute these two well known groups of service employees would necessitate considereation of various decisions relating to the quota and rota rule and such other allied matters.
We have been relieved of this exercise because We feel that the dispute in this case can be resolved on facts, unaided by precedents on such matters.
The counsel on both sides advisedly, therefore, restrained themselves from citing the relevant authorities before us.
Now the facts: All the 39 petitioners are promotees to the post of Assistant in the Indian Council of Agricultural Research (for short 'the society ') the 1st respondent herein.
The second respondent is the Union of India and respondent Nos. 3 to 31 are direct recruits to the same post.
Respondent Nos. 32 to 88 are also promotees and have been impleaded as proforma respondents.
3 The petitioner originally belonged to the service of the Central Secretariat, Government of India, Ministry of Agriculture.
The Society was a part of that department till 1. 4.
1965 on which date the Government of India decided to re organise the 1067 Society into a fully autonomous organisation with its own secretariat.
The petitioners opted to join the service in the Society on such re organisation.
Respondent Nos. 3 to 31 were directly recruited after an open competitive test, held by the Society in 1967 and 1911.A seniority list was prepared by the Society in 1976 showing the relative positions of the promotees and the direct recruits.
The provocation for filing the writ petition was the publishing of a second seniority list, by the Society by its Memorandum No. 27 (5)/81 Estt.
II dated 7.4.1981.
This list brought changes in the earlier list and pushed down the promotees from the positions they occupied in that list.
The prayer in the writ petition is to quash this seniority list on the ground that it violates Article 1 and 16 of the Constitution of India and to stay its implementation.
The Petitioners ' case is that they came into the Society by virtue of the option exercised by them and that they are entitled to seniority on the basis of the length of their service from the date of option.
According to them, recruitment rules, laying down the terms of service in the Society, were not avilable then and as such seniority had to be fixed on length of service.
The case of the contesting respondents is that seniority has to be fixed not with reference to the date of the reorganisation of Society and the date of option exercised by the petitioners but from the date of their appointment on a regular basis.
They seriously disputed the case of the petitioners that they were entitled to seniority from the date they exercised their option.
According to them the petitioners have to establish that they were duly appointed in the service on a regular basis, when they exercised their option, to claim seniority on the strength of length of service from the date of their option.
We must confess that there was considerable confusion both on the side of the petitioners and on the side of the Society and the Government regarding the existence of rules, regulating the conditions of service in the Society.
Things proceeded in the Society on the basis that there were no recruitment rules in existence till 1974, while the factual position is that rules were in existence from 1964.
It was on this wrong aasumption the that seniority list was prepared on 2nd February, 1979.
In that list, seniority was reckoned with reference to length of service.
It was after realising that a mistake had been committed and that rules, in fact, existed that the impugned list was drawn up on 7th April, 1981.
1068 6.
The petitioners have given a comparative statement as Annexure 9, showing the manner in which the new list has worked to their detriment.
This Annexure show.
the relative potions of the promotees and the direct recruits in the 1976 list and in the 1981 list.
To cite two or three examples; direct recruits who were placed at serial Nos. 4, 20 & 83 in the 1976 list, have gone up as seria Nos. 2, 10 and 22, respectively, in the 1981 list.
While preparing the 1976 list, a deemed date of appointment in the grade was adopted to calculate the length of service.
The petitioners, case is that the direct recurits never questioned their placement in this list and therefore cannot oppose with any justification the petitioners ' request for quashing the impugned list.
Though this submission ' is wholly not unfounded, the petitioners cannot succeed merely on the inaction on the part of the direct recruits but have to satisfy the Court of a right in them to entitle them to seniority from the date they opted and came into the Society 's service.
It is this aspect of the case that needs examination by us in this writ petition.
In this case we do not have the usual picture of great injustice glaring in the face, of promotees being eased out of their places by direct recruits after a long lapse of time.
Here we are dealing with a small Society with a limited number of employees and the dispute relates to a short period from 1965 to 1973.
The petitioners cannot, in this case, put forward either the case of a wholesale reduction of their places, legitimately due to them or the collapse of the quota and rota system as was the case in some of the decided cases.
The short point here is as to when the petitioners were regular appointed in the grade of Assistants and as to whether the petitioners ' rightful places have been robbed by the Society and the direct recruits by the impugned seniority list.
The petitioners were originally Upper Division Clerks with the Agricultural Department of Government of India.
They came to Court with the definite plea that their seniority was fixed on the basis of the principles applicable to Government service in the absence of any rules framed by the society, regulating their service conditions.
It is stated in the petition that they made representations to the authorities for laying down of clear principles to determine the inter se seniority between them and the direct recruits and as a consequence, the Government of India issued a Memorandum dated 20th April, 1970, asking the Govern ment employees to give their option by 30th April.
1970 and 1069 reiterating at the same time that the inter se seniority of the ministerial staff under the reorganised Council would be fixed on the basis of the date of appointment made on a regular basis.
It is significant to note that the petitioners have not produced a single of their appointment orders for this Court to be satisfied as to then they were appointed as Assistants on a regular basis while a specimen appointment order of direct recruits has been produced.
Still the petitioners insist that the crucial date for determining the inter se seniority is 1 4 1965, the date on which the Society was reorganised.
We find it difficult to accept the contention that the length of service has to be reckoned from 1.4.1965 or from the respective dates when they entered the service of the Society on exercise of their option when the Memorandum, produced by them, has clearly stated that the inter se seniority will be fixed on the basis of the date of appointment in the grade on the regular basis.
We have looked into the Memorandum Annexure 4, dated 20th April, 1970.
It clearly states that the date for exercise of option has been extended to 30th April ' 1970 and that the principles determining the inter se seniority of the ministerial staff in the reorganised Council was considered by the Society in consultation with the Ministries of Law and Home Affairs and Finance and that it was decided that the seniority of the ministerial staff in the reorganised Council would be fixed on the basis of " date of appointment to the grade on a regular basis .
" This statement in the Memorandum which finds a place in paragraph 8 of the Writ Petition also shows, according to us, the hollowness of the contention of the petitioners that seniority has to be fixed with reference to the date on which option was exercised by them.
Direct recruitment to the post of Assistants in the Society was made by holding competitive examination in 1967 and 1971.
Upper Division Clerks, like the petitioners who were working with the Agricultural Dept., Govt.
Of India, could very well have appeared for this competitive examination and got themselves directly recruited as Assistants on successfully passing the competitive examination.
We are told that some of the petitioners in fact, appeared for the competitive test without success.
Though this statement made by the counsel for the respondents at the bar was not disputed by the petitioners ' counsel, we do not propose to rely on it since it is not a matter on record.
Those who were successful at the competitive examination and the interview were offered the posts of Assistant by regular appointment as per appointment order produced as 1070 Annexure 5, issued by the Society, containing the terms of appointment.
As already indicated, the petitioners have either by design or by oversight failed to make available to us their orders of appointment on a regular basis in the grade when they exercised option.
It is against this background that the challenge to the 1981 list has to be considered.
If the petitioners can satisfy us that they had greater length of service in equivalent grade than the direct recruits, they are entitled to succeed.
If they fail, the list has to stand despite the fact that the earlier list was not challenged by the direct recruits.
We do not have on record anything to show when the petitioners were regularly appointed in the grade of Assistants.
In the absence of this evidence, can the petitioners succeed ? As already stated the Society and the Union Government were originally under a misapprehension that no rules existed governing the service conditions in the Society.
The petitioners have produced a Memorandum Annexure 3 dated 21st August, 1967 which throws considerable light on the dispute involved in the case.
lt is stated therein that the Government of India have approved of the reorganisation of the Indian Council of Agricultural Research into an office wholly controlled and financed by the Indian Council of Agricultural Research, with effect from a date to be appointed shortly.
As a consequence of the above decision the various posts existing as Government posts in the said Secretariat, will be abolished with effect from the aforesaid date and corresponding number of posts in various cadres will be created as nongovernment posts under the Society.
Paragraph 2 of this Memorandum reads: "The Indian Council of Agricultural Research has, however, agreed to take over such officers as belong to the C.S.S. (holding posts of Section Officer 's grade and Grade IV only), C.S.S.S. and C.S.C.S., employed on date in the Department of Agriculture and its attached offices (including the Indian Council of Agricultural Research) as are willing to serve the Council.
The Indian Council of Agricultural Research will, of course, select from amongst the persons opting for its service only the number of persons required by them, keeping in view the total number of existing posts in the various cadres borne on the Govern _ 1071 ment side of the Indian Council of Agricultural Research.
" Clause VI of Para 2 reads as follows: "The inter se seniority of the staff in Indian Council of Agricultural Research shall be determined in accordance with the rules to be framed for the purpose taking into account, among others, the principles governing the seniority under the Central Government.
" From the passages extracted above, it becomes clear that appointments are to be regularly made to various grades only with effect from a date to be appointed after 21st August, 1967, the date of the Memorandum, which means that the deemed date of appointment mentioned in the 1976 list cannot be relied upon by the petitioners to project a case of their length of service from that date.
The petitioners placed strong reliance on the Memorandum,` Annexure 4 dated 20th April, 1970, and in particular to the following: It has also been decided that 1st April, 1965 shall constitute the crucial date for determining the inter se seniority of the staff finally merging into the reorganised Council.
Accordingly, a combined inter se seniority list will be prepared for each grade of the persons on the basis of the above principle in accordance with the position obtaining in respect of each individual as on 1st April, 1965 and all regular vacancies arising in the Council with effect from 1st April, 1965 upto date, meant to be filled by promotion (including those which have been filled up on ad hoc basis) will be filled up on a regular basis from the 1? inter se seniority list drawn up in the manner indicated above.
Relying on this, the petitioners attempt to contend that their seniority should start from the date they exercised option and that this is correctly reflected in 1976 list.
This submission overlooks the fact that even at that time, there were rules in existence prescribing a ratio of 1: 1 between promotees and direct recruits.
In addition to this, it has to be noted that here also, filling up of vacancies on a regular basis is emphasised.
1072 13.
The Petitioners cannot therefore seek support from this to press a case of seniority from the date of exercise their options or from the deemed date of appointment.
Rights can accrue to them as members of the new service only from the date they are regularly appointed in the grade.
The impugned list instead of continuing the mistake committed in the 1976 list, has only corrected the mistake.
We find from the records that the Union Government and the Society were originally in error in their assumption that no rules existed for regulating the service conditions in the Society.
We have at page 91 as Annexure 6, rules relating to the Indian Council of Agricultural Research before its reorganisation.
The said rules show that the posts of Assistants can be fill d up 50% by direct recruitment and 50% by promotions.
In other words, for every promotee there should be a direct recruit also.
As is seen in the Handbook for personnel officer, the relative seniority of direct recruits and promotees shall be determined according to the rotation of vacancies between direct recruits and promotees which shall be based on the quotas of vacancies reserved for direct recruitment and promotion respectively in the Recruitment Rules.
New recruitment rules for verious posts in the Society including Assistants with which we are concerned, came into force with effect from 1.9.1974.
Under these rules, in the number of posts available for Assistants 50% was to be by way of promotion from amongst the U.D.Cs.
having rendered at least 5 years approved service in the grade on the basis of seniority cum fitness subject to rejection of the unfit on the recommendations of the D.P.C. and 50% by direct recruitment on the basis of the results of competitive examination held by the ICAR.
This method of recruitment was to be with effect from 1.1.1976.
The method of recruitment before this date is also indicated in these rules.
It is provided in these rules that vacancies, arising between 29.8.1973 and 31.12.1975, will be filled wholly (100%) by promotion.
This means that vacancies prior to 2.9.1973 will be filled up in accordance with the 1964 rules and vacancies between 29.8.1973 and 31.12.1975, will be filled by the promotees alone and thereafter in the ratio I :1.
From these rules it is evident 1073 that the Society was conscious of the claims of the promotees and hence safeguarded their interests by providing 100% posts for them between 29.8.1973 and 31.12.1975.
By doing so, justice was done to them in a great measure.
The petitioners have no grievance that in preparing the 1981 list, which is impugned in this writ petition, a departure has been made to their detriment, without adhering to the quota provided in the rules.
Their only grievance is that the earlier list was changed without taking into account the deemed dates of appointment.
We have already indicated that in the absence of satisfactory proof of the date of appointment of the petitioners in the Grade as assistants in the Society, the petitioners cannot successfully urge before us a violation of Article 14 and 16 of the Constitution of India.
A look at the list prepared in accordance with the above rules, fortifies our conclusion that no great injustice was done to the promotees in the preparation of the list.
As one goes through the list, one finds that the gap between the promotees and the direct recruits is of a very short duration and not wide as in other cases.
It is true that direct recruitment was made first only in 1967.
However, to world out the quota system an earlier date of appointment had to be given to the direct recruits.
This could not be avoided.
This according to us, has not done any great injustice to pursuade us to give relief to the petitioners.
The dislocation was limited only to a period between 1965 to 1967 and 1967 to 1971 aod not to a fairly long period of time.
E In our Judgment, therefore, the petitioners are not entitled to succeed.
The writ petition fails and is dismissed.
The parties are directed to bear their costs, N.V.K. Petition dismissed.
|
The 39 petitioners in the writ petition were promotees to the post of Assistant in the Indian Council of Agricultural Research first respondent.
The Nos. 3 second respondent was the Union of India and respondent Nos. 3 to 31 were direct recruits to the same post.
Respondent Nos. 32 to 88 were also promotees and impleaded as proforma respondents.
The petitioners contended that they belonged to the service of the Central Secretariat, (Department of Agriculture) and the society was a part of that Department till 1.4.1965 on which date the Government of India decided to re organise the society into a fully autonomous organisation with its own Secretariat.
The petitioners opted to join the service in the Society on such re organisation.
Respondent Nos. 3 to 31 were directly recruited after an Open competitive test.
The seniority list was prepared by the Society in 1976 showing the relative positions of the promotees and the direct recruits.
A second seniority list was published by the Society on 7.4.1981 and this list brought changes in the earlier list and pushed down the promotees from the positions they occupied in that list.
The petitioners contended that this seniority list should be quashed on the ground that it violated Article 14 and 16 of the Constitution, as recruitment rules laying down the terms of services in the Society were not available seniority had to be fixed on length of service.
They were also entitled to seniority on the basis of the length of their service from the date of they came into the Society by virtue of the option.
The case of the contesting respondents was that seniority has to be fixed not with reference to tho reorganisation of the Society but on the date of their appointment on a regular basis, and that the petitioners had to establish that they were duly appointed in the service on a regular basis when they exercised their option.
Dismissing the Writ Petition.
1065 ^ HELD: 1.
In the absence of satisfactory proof of the date of appointment of the petitioners in the grade as assistants in the Society the petitioners cannot successfully urge violation of Article 14 and 16 of the Constitution.
No great injustice was done to the promotees in the preparation of the list.
Goeing through the list, one finds that the gap between the promotees and the direct recruits is of a very short duration and not wide as in other cases.
Direct recruitment was made first only 1967.
However, to work out the quota system an earlier date of appointment had to be given to the direct recruits.
This could not be avoided.
This has not done great injustice to the petitioners.
This dislocation was limited only to a period between 1965 to 1967 and 1967 to 1971 and not a fairly long period of time.
[1073 C E] 2.
The memorandum Annexure 4 dated 20th April, 1970 clearly states that the principles to determine the inter sc seniority of the ministerial staff in the reorganised Council was considered by the Society and that it was decided that the seniority of the Ministerial staff would be fixed on the basis of "date of appointment made on a regular basis.
" The contention of the petitioners that seniority has to be filed with reference to the date on which option was exercised by them, has no basis.
[1069D.E] 3.
Direct recruitment to the post of Assistants in the Society was made holding competitive examination in 1967 and 1971.
Upper Division Clerks, like the petitioners who were working with the Agricultural Department, could very well have appeared for this competitive examination and got themselves directly recruited as Assistants on successfully passing the competitive examination.
Some of the petitioners in fact appeared for the competitive test without success.
Those who were successful at the competitive examination and the interview were offered the post of Assistant by regular appointment.
[1069F H] 4.
Relying on Annexure 4 Memorandum dated 24.4.70 the petitioners ' attempt to contend that their seniority should start from the date they exercised option and that this is correctly reflected in 1976 list.
This submission overlooks the fact that even at that time, there were rules in existence prescribing a ratio of 1: I between promotees and direct recruits.
In addition to this, it has to be noted that here also, filling up of vacancies on a regular basis is emphasised, [1071 G H] 5.
The Union Government and the Society were originally in error in their assumption that no rules existed for regulating the service conditions in the Society Annexure 6, are rules relating to the Indian Council of Agricultural Research before its reorganisation.
The said rules show, that the posts of Assistants can be filled up 50% by direct recruit also.
The handbook for personnel officer shows that the relative seniority of direct recruits and promotees shall be determined according to the rotation of vacancies between direct recruits and promotees which shall based on the quotas of vacancies reserved for direct recruitment and promotion respectively in the Recruitment Rules.
New recruitment rules came into effect from 1.91974.
This method of recruitment was to be with effect from 1.1.1976.
It further provided that vacancies arising between 29.8.1973 and 31.12.1975 were to be filled wholly (100%) by promotion This 1066 means that vacancies prior to 29.8.1973 and 31.12.1975 will be filled up in accordance with the 1964 rules and vacancies between 29.8.1973 and 31.12 1975 will be filled by the promotees along and thereafter in the ratio 1: 1.
From these rules it is evident that the Society was conscious of the claims of the promotees and hence safeguards their interests by providing 100% posts for them between 29.8.1973 and 31.12.1975.
By doing so, justice was done to them in a great measure.
[1072 C E; G H; 1073]
|
Civil Appeals Nos. 2585 and 2586 of 1978.
From the Judgment and Order dated 14.2.1978 of the Kerala High Court in T.R. C. No. 6 and 9 of 1977.
V.J. Francis for the Appellant.
S.T. Desai (A.C.) for the Respondent.
The Judgment of the Court was delivered by 138 PATHAK, J.
These appeals by special leave are directed against the judgment and order dated February 14, 1978 of the High Court of Kerala dismissing two tax revision petitions arising out of assessments made under the Kerala General Sales Tax Act, 1963.
The respondent, Messrs. K. Kelukutty is a partnership firm dealing in timber.
It consists of six partners.
It filed returns of its taxable turnover for the assessment years 1968 69 and 1969 70 under the Kerala General Sales Tax Act, 1963, and the assessments were completed by the Sales Tax Officer.
Subsequently, the Sales Tax Officer discovered that the partners of the respondent firm owned a Saw Mill, and the Saw Mill was run by a partnership firm Messrs. K.K.K. Sons Saw Mills which consisted of the same partners as the respondent firm.
He found that during the assessment years 1968 69 and 1969 70 they had sold saw dust from the mill, but had not been assessed to sales tax on that turnover.
The Sales Tax Officer took the view that as both Messrs. K. Kelukutty and Messrs. K.K.K. Sons Saw Mills consisted of identical partners, the two businesses carried on respectively by them had to be treated as the business of a single partnership firm and, therefore, the turnover of the sale of saw dust had to be included in the earlier assessments made on the respondent firm.
The assessment orders were upheld by the Appellate Assistant Commissioner, Sales Tax.
Thereafter, the appeals filed by the respondent firm before the Sales Tax Appellate Tribunal were allowed by its order dated March 30, 1976 and the cases were remanded for fresh consideration.
The Revenue applied to the High Court in revision, Tax Revision Cases Nos. 6 and 9 of 1977, on the following two questions: (a) Was the Appellate Tribunal justified in law in holding that the reasoning in the decision reported in is applicable to the instant case and directing a further investigation and denovo disposal of the matter, in the light of the observations contained in paragraph 15 of the order ? (b) In the light of admitted or proved fact that the partners of the assessee 's firm and that of the firm K.K.K. Saw Mills are the same, was the Appellate Tribunal justified in its view that there is no bar in there being two firms with the same partners, carrying on business independently ? Is not the said 139 approach and view against the principles of Partnership Act, and the ratio of the decision reported in 21 STC 72 and ? On February 14, 1978, the High Court of Kerala dismissed the two revision petitions in the view that Messrs. K.K.K. Sons Saw Mills was a partnership firm distinct from the respondent firm for the purposes of sales tax assessment and the turnover of one could not be included in the turnover of the other.
Reliance was placed by the High Court on the decision of this Court in State of Punjab vs M/s Jullunder Vegetables Syndicare.(1) The word "dealer" has been defined by cl.
(viii) of section 2 of the Kerala General Sales Tax Act to mean "any person who carries on the business of buying, selling, supplying or distributing goods. " and the word "person" has been defined by cl.
(vvi A) of section 2 of the Act as including a firm.
Therefore, a partnership firm must be regarded under that Act as an assessable entity separate and distinct from its individual partners.
That would be in line with the view taken by this Court respecting a partnership firm as an assessable entity under the Income Tax Act.
See Commissioner of Income Tax, West Bengal vs A. W. Figgies and Company and Others(2).
The question remains, however, whether when the partners constituting a partnership firm carrying on one business constitute thereafter another partnership firm carrying on a separate and distinct business are there two distinct partnership firms in whose hand the turnover of the two businesses falls to be respectively assessed or is there in law only a single partnership firm liable to assessment on the turnover of both businesses ? Before we proceed to examine this question, reference may be made to some relevant decisions of the Courts.
In Vissonji Sons & Company vs Commissioner of Income Tax, Central,(3) a case under the Indian Income Tax Act, 1922, Beaumont C.J., speaking for the Bombay High Court, expressed the view that in law a firm had no existence independently of its partners, and that if there are two firms consisting of exactly the same partners and they carry on separate businesses, the real position in law is that there is only one firm.
140 Subsequently, however, in Jesingbhai Ujmashi vs Commissioner of Income Tax, Bombay Mofussil, (1) the same High Court speaking through Chagla C.J., observed that the observations of Beaumont C.J. were obiter merely, and that it was perfectly permissible in law that the same partners should constitute two different firms for the purpose of the Income tax law leaving the question open as one of fact whether there are two separate firms or only one firm or whether one of the businesses carried on by one firm was in fact a business carried on by the other firm.
That view was reaffirmed by the Bombay High Court in Jeshingbhai Ujamshi vs Commissioner of Income Tax, Bombay(2) where it was explained that there can be two separate firms in the eyes of the Income tax Act even if the partners are the same in both the firms provided the businesses carried on by the firms are different.
It was further observed that the correct test to determine whether the businesses are the same or different businesses is whether there is any interlocking or interlacing between the two businesses.
The point was considered by the High Court of Punjab and Haryana in R.N. Oswal Hosiery and Mahabir Woollen Mills vs Commissioner of Income Tax, Punjab, (8) which after considering the earlier authorities on the point concurred with the opinion of the Bombay High Court in Jeshingbhai Ujamshi (supra).
A contrary view was taken by a Division Bench of the High Court of Andhra Pradesh in Addl.
Commissioner of Income Tax, A.P. vs M. Venkata Narasimha Rao & Co.(4) but that decision was over ruled by a Full Bench of the same High Court in Commissioner of Income Tax, A.P. III vs G. Parthasarathy Naidu & Sons.(5) where the learned Judges agreed with the view expressed by the High Court of Bombay in Jeshingbhai Ujamshi (supra) and by the High Court of Punjab and Haryana in R.N. Oswal Hosiery and Mahabir Woollen Mills (supra).
This Court in The State of Punjab vs Jullunder Vegetables Syndicate (supra) declared that although under the partnership law a firm is not a legal entity and only consists of the individual partners for the time being, it was a legal entity for the purposes of the Income tax law as well as the Sales tax law.
That was a case where this Court was called upon to consider whether an assessment could be made on a firm under the Punjab Sales tax Act after its dissolution on the turnover of sales affected during its existence.
In our opinion, that question cannot 141 be identified with the one before us.
The Revenue has invited our attention to Mahendra Kumar Ishwarlal & Company vs The State of Madras,(1) but in that case the Madras High Court has assumed that the same partners cannot constitute two different partnership firms, and on that assumption has concluded that no sale transaction could take place between the two firms.
Except for the observations of Beaumont C.J. in Vissonji Sons Company (supra) and the overruled decision of the High Court of Andhra Pradesh in M. Venkata Narasimha Rao & Co. (supra) the High Courts, in the cases mentioned earlier, have proceeded to hold that in the eyes of the tax law you can have two partnership firm composed of the same partners carrying on different businesses.
The corner stone of that view is that for the purposes of the income tax law each partnership firm must be regarded as an assessable entity separate and distinct from its partners.
The approach proceeds upon a conceptual perspective of the tax law and apparently assumes that otherwise, under the partnership law, the conclusion would have been that there is only one partnership firm carrying on two different businesses.
It seems to us that the approach adopted by the High Courts is not sound, and that the true solution has to be found not in the tax law but in the partnership law.
We are concerned here with the Kerala General Sales tax Act.
There is no doubt that under that Act a partnership firm must be regarded as an assessable entity.
What precisely is the significance of that concept ? Does the tax law clothe a partnership firm with juristic personality ? How far does the tax law depart from the fundamental concept embodied in the partnership law that a business carried on by a partnership firm is, in its material essence, a business carried on by individual members in partnership, and that a name given to a partnership firm is nothing more than a compendious description of the partners carrying on the business ? As long ago as Watson and Everitt vs Blundan,(2) Romer L.J. said that for taxing purposes "a partnership firm is treated as an entity distinct from the persons who constituted the firm".
This 142 dictum was approved by the House of Lords in Income Tax Commissioners for City of London vs Gibbs,(1) and was accepted as good law in India in respect of a partnership firm under the Indian Income tax Act, 1922 in A. W. Figgies and Co. (supra).
What that implies is that for the purposes of assessment to tax the income of the partnership firm has to be assessed in the hands of the firm as a single unit, the firm itself being treated as an assessable entity separate and distinct from the partners constituting it.
The firm is an assessable unit separate and distinct from the individual partners, who as individuals constitute assessable units separate and distinct from the firm.
It is on that basis that the provisions of the tax law are structured into a scheme providing for the assessment of partnership income.
We do not think the principle goes beyond the purposes of that scheme.
It does not confer a corporate personality on the firm.
Beyond the area within which that principle operates, the general law, that is to say, the partnership law holds undisputed domain.
Now in every case when the assessee professes that it is a partnership firm and claims to be taxed in that status, the first duty of the assessing officer is to determine whether it is, in law and in fact, a partnership firm.
The definition in the tax law defines an "assessee" or a "dealer" as including a firm.
But for determining whether there is a firm, the assessing officer will apply the partnership law, subject of course, to any specific provision in that regard in the tax law modifying the partnership law.
If the tax law is silent it is the partnership law only to which he will refer.
Having decided the legal identity of the assessee, that it is a partnership firm, he will then turn to the tax law and apply its relevant provisions for assessing the partnership income.
The Kerala General Sales tax Act contains no provision which bears on the identity of a partnership firm.
Therefore, recourse must be had for that purpose to the partnership law alone.
Where it is claimed that they are not one but two partnership firms constituted by the same persons and carrying on different businesses, the assessing authority must test the claim in the light of the partnership law.
It is only after that question has been first determined namely, whether in law there is only one partnership firm or two partnership firms, that the next question arises : whether the turnover is assessable in the hands of the partnership firm as a taxable entity separate 143 and distinct from the partners ? There is first a decision under the law of partnership; thereafter, the second question arises, the question as to assessment under the tax law.
It is clear, therefore, that reference must be made first to the partnership law.
The has, by s.4, defined a "partnership" as "the relation between persons who have agreed to share the profits a business carried on by all or any of them acting for all".
The section declares further that the persons who have entered into partnership with one another are called individually "partners" and collectively "a firm".
The components of the definition of "partnership", and therefore of "a firm" consist of (a) persons, (b) a business carried on by all of them or any of them acting for all and (c) an agreement between those persons to carry on such business and to share its profits.
It is the relationship between those persons which constitutes the partnership.
The relation is founded in the agreement between them.
The foundation of a partnership and, therefore, of a firm is a partnership agreement.
A partnership agreement is the source of a partnership; it also gives expression to the other ingredients defining the partnership, specifying the business agreed to be carried on, the persons who will actually carry on the business, the shares in which the profits will be divided, and the several other considerations which constitute such an organic relationship.
It is permissible to say that a partnership agreement creates and defines the relation of partnership and therefore identifies the firm.
If that conclusion be right, it is only a further step to hold that each partnership agreement may constitute a distinct and separate partnership and therefore distinct and separate firms.
That is not to say that a firm is a corporate entity or enjoys a juristic personality in that sence.
The firm name is only a collective name for the individual partners.
But each partnership is a distinct relationship.
The partners may be different and yet the nature of the business may be the same, the business may be different and yet the partners may be same.
An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the profits therein.
The intention may be to constitute two separate partnerships and therefore two distinct firms.
Or to extend merely a partnership, originally constituted to carry on one business, to the carrying on of another business.
It will all depend on the intention of the partners.
The intention of the partners will have to be decided with reference to the terms of the agreement and all the surrounding circumstances, including evidence as to the interlacing or 144 interlocking of management, finance and other incidents of the respective businesses.
In the present case, there are two businesses, a business in timber and a business in saw dust.
Both businesses are carried on by the same partners, one as a partnership firm called K. Kelukutty, and the other under the name Messrs. K.K.K. Sons Saw Mills, said to be a separate partnership firm.
On the material before us it is not possible to say, in the light of the considerations to which we have adverted, whether there is one firm or two.
That is a question which appropriately falls for examination by the authorities constituted under the Kerala General Sales Tax Act.
While, therefore, we maintain the orders of the High Court dismissing the Tax Revision Cases 6 and 9 of 1977 and confirm the orders of the Sales Tax Appellate Tribunal remanding the cases, we do so for the considerations and upon the reasons set forth in this our judgment.
In order to abridge the time which inevitably will be further taken in disposing of this already protracted litigation, we direct that instead of the cases going back to the assessing officer they shall stand remanded to the Appellate Assistant Commissioner, Sales Tax for taking up the appeals before him again, permitting the parties to lead evidence in the light of the considerations mentioned by us and disposing of those appeals in accordance with law.
These appeals are disposed of accordingly.
There is no order as to costs.
N.V.K. Appeals dismissed.
|
The respondent in the appeal was a partnership firm dealing in timber and consisted of six partners.
It filed returns of its taxable turnover for the assessment years 1968 69 and 1969 70 under the Kerala General Sales Tax Act, 1963 and the assessments were completed by the Sales Tax Officer.
Subsequently, the Sales Tax Officer discovered that the respondent firm owned a Saw Mill and that the Saw Mill was run by another partnership firm which consisted of the same partners as the respondent firm.
It was further noticed that during the relevant assessment years the Saw Mill firm had sold saw dust but had not been assessed to sales tax on that turnover.
The Sales Tax Officer took the view that both she respondents timber firm and the Saw Mill firm consisted of identical partners, the two businesses carried on respectively, by them had to be treated as the business of a single partnership firm and, therefore, the turnover of the sale of saw dust had to be included in the earlier assessments made on the respondent Timber firm.
The assessment orders were upheld by the Appellate Assistant Commissioner.
The appeals filed by the respondent Timber firm before the Sales Tax Appellate Tribunal were allowed and the cases were remanded for fresh consideration.
The Revenue applied to the High Court, but the revision petitions were dismissed.
The High Court relying on the decision of this Court in State of 136 Punjab vs M/s. Jullundur Vegetables Syndicate, [1966] 17 STC 326 held that the Saw Mill partnership firm was a partnership firm distinct from the respondent Timber firm for the purposes of sales tax assessment and the turnover of the one could not be included in the turnover of the other.
Dismissing the Appeals to this Court, ^ HELD: 1.
The approach adopted by the High Court is not sound.
The true solution has to be found not in the tax law but in the partnership law.
The orders of the High Court dismissing the Tax Revision Cases are maintained.
The orders of the Sales Tax Appellate Tribunal remanding the case are confirmed.
Instead of the cases going back to the assessing officer they shall stand remanded to the Appellate Assistant Commissioner.
[144 D E] State of Punjab vs M/s. Jullundur Vegetables Syndicate [1966] 17 S.T.C. 326, distinguished.
In every case when the assessee professes that it is a partnership firm and claims to be taxed in that status, the first duty of the assessing officer is to determine whether it is, in law and in fact, a partnership firm.
For determining whether there is a firm, the assessing officer will apply the partnership law, subject of course, to any specific provision in that regard in the tax law modifying the partnership law.
If the tax law is silent, it is the partnership law only to which he will refer.
Having decided the legal identity of the assessee, that it is a partnership firm, he will then turn to the tax law and apply its relevant provisions for assessing the partnership income.
142 D F] Commissioner of Income Tax, West Bengal vs A. W. Figgies and Company and Others, , Jesingbhai Ujamshi vs Commissioner of Income Tax, Bombay Mofussil, , Jeshingbhai Ujamshi vs Commissioner of Income Tax, Bombay, , R.N. Oswal Hosiery and Mahabir Woollen Mills vs Commissioner of Income Tax, Punjab, , Commissioner of Income Tax, A.P. III vs G. Parthasarathy Naidu & Sons.
, , Income Tax Commissioner for City of London vs Gibbs, 10 I.T.R. Suppl.
121, referred to.
In the instant case, there are two businesses, a business in timber and a business in saw dust.
Both businesses were carried on by the same partners, one as a partnership firm called K. Kelukutty, and the other under the name M/s. K.K.K. Sons Saw Mills, said to be a separate partnership firm.
On the material before the Court, it is not possible to say, whether there is one firm or two.
That is a question which appropriately falls for examination by the authorities constituted under the Kerala General Sales Tax Act, 1963.
144 B C] 3.
Having regard to the definitions of "dealer" and "person" in sections 2 (viii) and 2 (xvi A) of the Kerala General Sales Tax Act, 1963 a partnership firm must be regarded under that Act as an assessable entity separate and distinct from its individual partners.
However, the Act contains 137 no provision which bears on the identity of a partnership firm.
Therefore, recourse must be had for that purpose to the partnership law alone.
Where it is claimed that there are not one but two partnership firms constituted by the same persons and carrying on different businesses, the assessing authority must test the claim in the light of the partnership law.
It is only after that question has been determined namely, whether in law there is only one partnership firm or two partnership firms, that the next question arises: whether the turnover is assessable in the hands of the partnership firm as a taxable entity separate and distinct from the partner ? There is first a decision under the law of partnership, thereafter the second question arises, the question as to assessment under the tax law.
[139 C D; 142 G H; 143 A] 4.
Persons who have entered into partnership with one another are called individually "Partners", and collectively "a firm".
The relationship between those persons constitutes the partnership, and is founded in the agreement between them, the partnership agreement.
A partnership agreement is the source of a partnership, it also gives expression to the other ingredients defining the partnership, viz. specifying the business agreed to be carried on, the persons who will actually carry on the business, the shares in which the profits will be divided etc.
Each partnership agreement may constitute a distinct and separate partnership, and therefore distinct and separate firms.
The firm name is only a collective name for the individual partners but each partnership is a distinct relationship.
The partners may be different and yet the nature of the business may be the same.
An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the profits therein.
The intention may be to constitute two separate partnerships and therefore two distinct firms.
Or to extend merely a partnership originally constituted to carry on one business to the carrying on of another business.
It will all depend on the intention of the partners.
The intention of the partners will have to be decided with reference to the terms of the agreement and all the surrounding circumstances, including evidence as to the interlacing or interlocking of management, finance and other incidents of the respective businesses.
[144 C H]
|
ivil Appeal No. 3342 of 1979.
From the Judgment and Order dated 28.4.1978 of the Allahabad High Court in Second Civil Appeal No. 300 of 1975.
O.P. Rana and Raju Ramachandran for the Appellant.
Vivek Ghambir and Praveen Kumar for the Respondent.
The Judgment of the Court was delivered by PATHAK, CJ.
This is a landlord 's appeal by special leave arising out of a suit for ejectment.
The respondent 's father B.M. Paul, was the tenant of the premises in question.
On his death he left behind the re spondent, his mother, brothers and sisters who in herited the tenancy.
A notice under section 106 of the terminating the tenancy was addressed to the respondent and was served on him.
It was not addressed and served on the other tenants.
A suit for ejectment was filed by the appellant against the respondent.
The validity of the notice to quit was challenged by the respondent.
It was contended that notice should have been addressed to all the members of the family and served on them, and in the absence of notice to all the suit was incompetent.
The trial court upheld the validity of the notice relying upon the decision of the Allahabad High Court in Shrimati Vishnawati vs Bhag wat Vithu Chowdhry, on the footing that the defendants were joint tenants and constituted a single unit and therefore notice to one of the defendants was sufficient to determine the tenancy.
The view proceeded on the basis that the heirs of the original tenant held the tenancy as joint tenants.
When the matter ultimately came to the High Court in second appeal, the High Court took the view that as heirs of the deceased tenant they held the tenancy as tenants in common and not as joint tenants.
Accordingly, the High Court said, notice to quit should have been served on each one of the successor tenants.
In that view, the High Court allowed the appeal and 771 dismissed the suit.
The High Court relied on Ramesh Chand Bose vs Gopeshwar Prasad Sharrna, AIR 1977 'Allahabad 38 where it was held that a tenancy was a heritable property right and the heirs of the deceased tenant became tenants themselves.
In this appeal the entire question is whether the notice addressed to the respondent alone is a valid notice.
It is now well settled that on the death of the original tenant, subject to any provision to the contrary either negativing or limiting the succession, the tenancy rights devolve on the heirs of the deceased tenant.
The incidence of the tenancy are the same as those enjoyed by the original tenant.
It is a single tenancy which devolves on the heirs.
There is no division of the premises or of the rent payable therefor.
That is the position as between the landlord and the heirs of the deceased tenant.
In other words, the heirs succeed to the tenancy as joint tenants.
In the present case it appears that the respondent acted on behalf of the ten ants, that he paid rent on behalf of all and he accepted notice also on behalf of all.
In the circumstances, the notice served on the respondent was sufficient.
It seems to us that the view taken in Ramesh Chand Bose (supra) is erroneous where the High Court lays down that the heirs of the deceased tenant succeed as tenants in common.
In our opinion, the notice under section 106 of the served by the appellant on the respondent is a valid notice and therefore the suit must succeed.
In the result, the appeal is allowed, the judgment and decree of the High Court are set aside and the judgment and decree of the First Appellate Court are restored.
There is no order as to costs.
P.S.S. Appeal allowed.
|
The respondent inherited tenancy of the demised premises alongwith his mother, brothers and sisters from their fa ther.
A notice under section 106 of the terminating the tenancy was served on him.
It was followed by a suit for ejectment against him.
Upholding the validity of the said notice, the trial court took the view that the heirs of the original tenant held the tenancy as joint tenants and, therefore, notice to one of the defendants was sufficient to determine the tenan cy.
Allowing the appeal therefrom, the 'High Court took the view that as heirs of the deceased tenant they held the tenancy as tenants incommon and not as joint tenants.
There fore, the notice to quit should have been served on each one of the successor tenants.
Allowing the appeal by special leave, the Court, HELD: The notice under section 106 of the Transfer of Proper ty Act served by the appellant on the respondent was a valid notice.
[771E] On the death of the original tenant, subject to any provi sion to the contrary either negativing or limiting the succession, the tenancy rights devolve on the heirs of the deceased tenant.
The incidence of the tenancy are the same as those enjoyed by the original tenant.
It is a single tenancy which devolves on the heirs.
There is no division of the premises or of the rent payable therefor.
The heirs thus succeed to the tenancy as joint tenants.
[771C] In the instant case, the respondent acted on behalf of the tenants, he paid rent on behalf of all and accepted notice also on behalf of all.
In the circumstances, the notice served on the respondent was sufficient.
The suit must, therefore, succeed.
[771D] 770 Shrimati Vishnawati vs Bhagwat.
Vithu Chowdhry, , affirmed.
Ramesh Chand Bose vs Gopeshwar Prasad Sharma, AIR 1977 Allahabad 38, overruled.
|
ivil Appeal Nos.
636 639 of 1971.
From the Judgment and Order dated 14.5.1963 of the Allahabad High Court in F.A. Nos.
239/1945, 171/1946, 239/1945, and 171/46 respectively.
V.K.S. Chaudhury, V.V. Misra.
S.S. Khanduja, A.S. Pundir, Dhirendrajit Singh, Mahfooz Khan and Y.P. Dhingra for the Appellants, in C.A. Nos.
636 37 of 1971.
V.K.S. Chaudhury and B.P. Maheshwari for the Appellants in C.A. Nos.
638 39 of 1971.
Vinoo Bhagat for the Lrs. of Appellant No. 1 in C.A. Nos.
638 39 of 1971.
J.P. Goyal, V.K. Verma, Rajash, Raghunath Singh, M.P. Jha, and T.C. Sharma for the Respondents.
The Judgment of the Court was delivered by Misra J.
These appeals by certificate are directed against the common judgment and order of the High Court of Judicature at Allahabad dated May 14, 1963.
As the appeals raise common questions of fact and law they are being disposed of by a common judgment.
The circumstances leading up to these appeals are as follows.
One Lala Gurdin acquired considerable landed property in villages Patara, Mubarakpur Lata, Madanpur, Gosra and Jeora Nawabganj in Kanpur.
He had no male issue.
He died on December 10, 1861 leaving behind his widow Smt.
Amrit Kuer and three daughters: Smt.
Hazaro Kuer from his predeceased wife, and Smt.
Mewa Kuer and Smt.
Prago Kuer from Smt.
Amrit Kuer.
After the death of Gurdin his entire estate came into the hands of his widow, Smt.
Amrit Kuer.
Amrit Kuer also died on August 1, 1880.
During her life time she made certain alienations but those alienations are not relevant in the present appeals.
After her death the three daughters of Lala Gurdin succeeded to the estate left by Smt.
Amrit Kuer, as limited owners.
Soon after the succession the three daughters divided the property amongst themselves and they came in possession of 722 one third share each.
When Smt.
Prago Kuer, one of them, died on July 8, 1907 the estate remained with the two surviving daughters.
When Smt.
Hazaro Kuer, the other daughter, died on January 24, 1914 the estate remained in possession of Smt.
Mewa Kuer, the last surviving daughter.
She also died on June 14, 1923.
During their life time the three daughters had been making various alienations of the property that fell to their exclusive share.
Mewa Kuer also made a number of alienations in favour of different persons at different times.
We are concerned in the present appeals with sale deeds dated July 27, 1901; July 17, 1914 and October 19, 1915.
The sale deed dated July 27, 1901 was executed by Smt.
Mewa Kuer to one Ram Narain in respect of the entire Mahal Mewa Kuer and 2 anna 8 pie share in Mahal Katri.
Ram Narain 's successors in their turn sold the suit property by means of two sale deeds one dated July 14, 1919 in favour of Rai Sahib Lala Gopi Nath who is dead and is represented by defendants 19 to 23 in suit No. 25 of 1935 and the other dated January 2, 1920 in favour of Brahmvart Sanathan Dharam Mahamandal, Kanpur, hereinafter referred to as the trust, and arrayed as defendant No. 8 in suit No. 25 of 1935.
Mewa Kuer further executed a sale deed on July 17, 1914 in favour of two brothers, Kundan Lal Tiwari and Balbhadar Tiwari, hereinafter referred to as the Tiwari brothers, in respect of nine specific plots in Mahal Hazaro Kuer.
Ram Dayal son of Smt.
Mewa Kuar also joined Smt.
Mewa Kuer in the execution of this sale deed.
Tiwari brothers in their turn sold some of the property to Gopi Nath on February 21, 1920.
Tiwari brothers also executed a gift deed dated October 12,1919 in respect of 8 bighas and odd pertaining to Mahal Prago Kuer and 5 bighas and 16 biswas in Mahal Hazaro Kuer to the aforesaid trust.
Mewa Kuer and Ram Dayal again executed a sale deed dated October 19, 1915 in respect of 8 anna share in Mahal Prago Kuer and one anna 4 pie share in Mahal Katri to defendants 4 and 5 in suit No. 25 of 1935.
After the death of Smt.
Mewa Kuer, the last surviving daughter, on July 14, 1923 the succession opened in favour of daughters ' sons of Lala Gurdin, Maharaj Bahadur and Bijay Bahadur, the sons of Smt.
Hazaro Kuer, and Ram Dayal the son of Smt.
Mewa Kuer.
Ram Dayal also died in 1931 leaving behind his son Madho Dayal.
After 723 the death of Ram Dayal the reversioners sought to challenge the various alienations made by the limited owners, some by Smt.
Amrit Kuer and the others made by the daughters of Lala Gurdin.
Suit No. 25 of 1935 was filed by Kunwar Maharaj Bahadur and Kunwar Bijay Bahadur along with their financier Sukhraj Bux Singh for possession in respect of their two third share of the property, for demolition of the valuable constructions raised on the said property and for recovery of mesne profits against the transferees or the subsequent purchasers from those transferees.
Suit No. 34 of 1935 was filed by Madho Dayal son of Ram Dayal for the same reliefs in respect of the remaining one third share.
The alienations were challenged by the plaintiffs on the allegations that there was no legal or pressing necessity for the transfers and that transfer by one of the daughters without the consent of the remaining daughters was void ab initio and no title passed on to the transferees.
It was further alleged that the transferees from the limited owners themselves had no valid title and so they could not pass a better title to others and thus those transfers were also bad.
The suits were contested by the various defendants by filing separate written statements.
It is, however, not necessary to give details of the various written statements filed in the case, suffice it to say that the defence in the main was that the transfers were for legal and pressing necessity and that there has been a complete partition amongst the three daughters of Lala Gurdin and each one of them was in separate possession of one third share of the estate and, therefore, each was competent to transfer the property without the consent of the other limited owners, that some of the defendants viz. the trust, defendant No. 8 in suit No. 25 of 1935 had raised a double storied building of Sanatan Dharam Degree College, Principal 's quarter, quarters for the teachers, hostel for the students, dispensary and library building at a heavy cost of rupees 4 to 5 lacs.
Likewise defendants Nos. 19 to 23 in suit No.25 of 1935 had raised a costly residential building, swimming pool etc.
at a cost of more than a lac of rupees.
It was further asserted that the transfer by one daughter without any objection from the other daughters will be presumed to have been made with the consent of the other daughters.
The defendants also sought the protection of section 43 of the Transfer of Property Act inasmuch as after the death of the two daughters Smt.
Mewa Kuer became the sole heir and the transfers made by her during the life time of other daughters will be protected on the equitable principle of feeding the grant by estoppel.
The 724 Additional Civil Judge who tried the suit found that sale deed dated 27th July 1901 was for legal necessity but as it was executed without the consent of the other two daughters it was invalid and not binding on the plaintiffs.
As regards the sale deeds dated July 17, 1914 and October 19, 1915 the learned Judge found them to be for legal necessity.
These sale deeds had been executed by Smt.
Mewa Kuer when her two sisters had died.
Consequently the trial court dismissed suit No. 25 of 1935 in respect of the sale deeds dated July 17, 1914 and October 19, 1915.
This suit was, however, decreed against defendants Nos. 19 and 20 to 23 for recovery of Rs. 3200 in respect of the plaintiffs share on the present market value of the land of Khata Khewat No. 4 (area 8 bighas) Mahal Mewa Kuer, village Jeora Nawabganj and for recovery of Rs. 10,200 as plaintiffs two third share on the present market value of the 30 plots (total area 15 bighas 17 biswas) entered as Khata Khewat No. 7 of Mahal Mewa Kuer, village Jeora Nawabganj as against the trust, defendant No. 8.
Those defendants were directed to pay the said amounts within six months of the judgment becoming final.
In case of default the plaintiffs shall become entitled to recover the said amount.
The learned Judge did so in view of section 51 of the Transfer of Property Act on the ground that those defendants had made valuable constructions as bona fide purchasers.
The learned Judge has recorded findings with respect to various other transfers against various defendants but they are not relevant for the purposes of the present appeals.
Suit No. 34 of 1935 filed by Madho Dayal in respect of his one third share was also partly decreed and partly dismissed.
As against defendant No. 8, the trust, it was decreed for recovery of Rs. 5100 as plaintiffs one third share on the present market value of 30 plots (total area 15 bighas 17 biswas) entered as Khata Khewat No. 7 of Mahal Mewa Kuer village Jeora Nawabganj.
It was also decreed against defendants Nos. 21 and 22 to 25 for recovery of Rs. 1600 on account of one third share of plaintiffs on the present market value of the land of Mahal Mewa Kuer, village Jeora Nawabganj.
But it was dismissed in respect of Mahal Hazaro Kuer and Mahal Prago Kuer of village Jeora Nawabganj as the plaintiffs ' father was also an executant of the sale deeds along with Mewa Kuer.
The judgment of the learned Judge gave rise to appeals by the plaintiffs and cross objections by the present defendants appellants 725 against that part of the judgment and decree which went against them.
The High Court reversed the finding of the trial court with regard to the sale deeds dated July 17, 1914 and October 19, 1915 and held that they were not for legal and pressing need.
It, however, confirmed the finding of the trial court with regard to sale deed dated July 27, 1901 but held that the plaintiffs should be given an opportunity to make an election under section 51 of the Transfer of Property Act, as to whether they would like to pay the compensation for the super structures standing on the land in question or to sell their share in the land.
Consequently, the High Court allowed the appeals of the plaintiffs in part and remanded the case to the trial court to afford an opportunity to the plaintiffs to make election under section 51 of the Transfer of Property Act.
As the sale deeds dated July 17, 1914 and October 19, 1915 were not for legal necessity the subsequent transfers made by the transferees of Mewa Kuer were also bad.
Shri V.K.S. Choudhury assisted by Shri S.S. Khanduja contended that: 1 The High Court erred in holding that the alienations made by one daughter to the exclusion of the other daughters was a bad transfer inasmuch as: (a) the property having been divided by the three daughters the alienation made by one of them for legal necessity was valid and binding on the other, and (b) the property having been divided there was implied consent of the other daughters for alienations.
2 The sale by one daughter without the consent of the other in any case is not void but voidable.
3 The appellants in any case were entitled to the protection of section 43 of the Transfer of Property Act.
4 The High Court erred in interfering with the exercise of discretion of the trial court under section 51 of the Transfer of Property Act.
726 5 In any case the High Court erred in directing the determination of market value of the property on the date of choice and not on the date of the transfer.
In support of his first contention that the transfer by one daughter without the consent of the other daughters was valid the learned Counsel sought to rely upon the original texts.
Shri J.P. Goel, counsel for the plaintiff respondents, however, supported the judgment of the High Court by referring to the Privy Council decisions of this Court.
As the point involved in this case is no more res integra but has been well settled by the decisions of the Privy Council and of the Indian High Courts we did not permit the counsel to enter into archaeological survey of the original text books.
The learned counsel for the appellants, however, tried to distinguish those cases on the ground that those cases mostly were the cases of co widows but in the instant case we are concerned with the transfers made by the daughters.
In our opinion what is applicable to co widows is equally applicable to the case of daughters.
No distinction can be made on that account.
The Hindu Law by M.R. Raghavachariar, 5th Edn.
1965, p. 585 summarised the legal position in the following terms: "Where two widows succeed as co heiresses to their husband 's estate, one of them cannot alienate the property without the consent of the other even though the alienation is for the necessity of the estate.
They are entitled to obtain a partition of separate portions of the property and deal as each pleases with own life interest, but she cannot alienate any part of the corpus of the estate by gift or will so as to prejudice the rights of the survivor or a future reversioner.
If they act together, they can burden the reversion with any debts contracted owing to legal necessity, but one of them acting without the authority express or implied of the other cannot prejudice the right of survivorship by burdening or alienating any part of the estate.
The mere fact of partition between the two, while it gives each a right to the fruits of separate estate assigned to her, does not imply a right to prejudice the claim of the survivor to enjoy the full fruits of the property during her lifetime and a mortgage by a Hindu widow even for necessary purposes, when she has not even asked 727 her co widow to consent to the granting of the mortgage, is not binding upon the joint estate so as to affect the interest of the surviving widow, and the mere fact that there has been enmity between the co widows is no justification for the failure to ask the consent of the co widow.
But in cases where the concurrence of a co widow has been asked for to a borrowing by the other for necessary purposes and unreasonably refused, a mortgage for such debt granted only by one widow might be held binding on what may be termed the corpus of the estate.
" The question of alienation and co widows has been exhaustively considered with reference to the whole case law thereon in a decision of the Madras High Court in Appalasuri vs Kannamma referred to with approval by the Privy Council in Gauri Nath Kakaji vs Mt. Gaya Kuer in which following propositions of law were laid down: (1) The estate of co widows or other co heiresses in Hindu Law is a joint estate, but it is unlike other joint estates.
It is indivisible.
Strictly it can never be divided, so as to create separate estates such that each sharer is the owner of her share and at her death, the reversioner 's estate falls in.
Such a division is impossible in law.
(2) Such partition as is permissible is merely for the convenience of their enjoyment by the sharers; (i) so as to last during the lifetime of both the widows; (ii) so as to bind them until the death of all of them.
In the latter case, if one of the widows dies before the other, without alienating the property, it passes to the heirs of her private property and not to the other co widow, or their reversioners.
728 (3) By the very nature of the arrangement, there can be no survivorship, if the partition is of the second kind.
But if it is of the first kind, it cannot affect the right of survivorship of other.
(4) One of the co widows can alienate her share, which may be defined or undefined, according as there is a partition or not.
If the alienor dies before the co widow, the alienation ceases to be operative, if there is no partition, or if the partition is of the first kind, the property goes to the co widow by survivorship.
But if the partition is of the second kind, the property continues to be enjoyed by the alienee until the other co widow dies.
(5) Except for the limited purposes mentioned above, i.e., during the lifetime of the alienor in a partition of the first kind, or during the lifetime of all the co widows in a partition of the second kind, there can be no alienation by a widow of her interest, and whether there is necessity or not, an alienation by one co widow cannot bind the reversioner.
(6) If an alienation for necessity is to bind the reversioners, all the co widows must join in it.
" In this view of the legal position it is not open to the counsel for the appellant to take up the matter afresh by referring to the original texts.
The general law is now so well settled that it scarcely requires restatement.
If a Hindu dies leaving behind two widows they succeed as joint tenants with a right of survivorship.
They are entitled to obtain partition of the separate portions of property so that each may enjoy her equal share of the income accruing therefrom.
Each can deal as she pleases with her own life interest but she cannot alienate any part of the corpus of the estate by gift or will so as to prejudice the right of survivorship or a future reversioner.
If they act together they can burden the reversion with any debts owing to legal necessity but one of them acting without the authority of the other cannot prejudice the right of survivorship by alienating any 729 part of the estate.
The mere fact of partition between the two while it gives each a right to fruits of separate estate assigned to her, it does not imply a right to prejudice the claim of the survivor to enjoy full fruits of the property during her lifetime.
It was, however, contended for the appellants that in the circumstances of the present case consent of the other daughters will be presumed.
The alienations made by the daughters separately to different persons was never challenged by the other daughters.
Even the reversioners did not challenge those alienations during the lifetime of their mothers and they sought to challenge the alienations long after the death of the last limited owner Smt.
Mewa Kuer in 1923 and even if the partition between the daughters had no effect on the reversion it can safely be presumed that the transfer made by one of the daughters of the property exclusively in her possession had the consent of the other.
We find considerable force in this contention.
This aspect of the case has been completely lost sight of by the High Court.
The transfer made by one daughter without the consent of the other is only voidable at the instance of the other co limited owners or at the instance of the reversioners.
In any case Smt.
Mewa Kuer after the death of her two sisters came into exclusive possession of the entire estate left by Smt.
Amrit Kuer, widow of Lala Gurdin.
Therefore, the transferees would be entitled to the protection of section 43 of the Transfer of Property Act which substantially amounts to satisfying the equitable principle of `feeding the grant by estoppel '.
This question however loses its importance if once we presume the consent of the other sisters in the circumstances of the present case.
It was contended for the appellants that the plaintiffs had accepted the amount evaluated by the trial court for the land before the filing of the appeal in the High Court and, therefore, it was not open to the plaintiffs to challenge the amount of compensation fixed by the trial court, and in any case the amount of compensation could not be fixed at the market value prevailing at the time of making the choice because the prices of constructions and the lands had gone exorbitantly high and it will not be possible either for the plaintiffs or for the defendants to pay the price according to the present market value.
No wonder in these circumstances the plaintiffs accepted the amount of the compensation fixed by the trial court.
730 The counsel for the respondents, however, contends that the acceptance of the amount fixed by trial court was without prejudice to their rights and, therefore, they cannot be estopped from challenging the same.
In view of the fact that the trust has made valuable constructions involving a cost of 5 to 6 lakh rupees of the college building, the principal 's quarters, teachers quarters, hostel, library, dispensary etc., in our opinion it will be inequitable in the circumstances of the case to ask the appellants to pay the present market value of the land.
The acceptance of the amount by the plaintiffs determined by the trial court will itself amount to making a choice within the meaning of section 51 of the Transfer of Property Act.
From the materials on record and the attending circumstances it is obvious that a the reversioners were neither in a position to pay for the improvements nor inclined to do so and this is why they accepted the amount determined by the trial court.
In the circumstances of the case we are satisfied that the High Court was not justified in remanding the case to the trial court to afford another opportunity to the plaintiffs to make a fresh choice.
The learned counsel half heartedly sought to challenge the finding of the High Court in respect of the sale deeds dated July 17, 1914 and October 19, 1915 on the ground that it had lost sight of the reasons given by the trial court for holding that those transfers will be presumed to have been executed for legal necessity in view of the circumstances enumerated by the trial court.
What quantum of evidence will satisfy a particular court to come to a conclusion is entirely in the discretion of the court.
It is not possible to interfere with the finding of the High Court with regard to the two sale deeds dated July 17, 1914 and October 19, 1915.
For the foregoing discussion the appeals must succeed.
They are accordingly allowed in part and the judgment of the High Court remanding the case to the trial court for affording another opportunity to the plaintiff respondents to make election is set aside and the judgment of the trial court with regard to sale deed dated July 27, 1901 is restored.
There is, however, no order as to costs.
S.R. Appeal partly allowed.
|
One Lala Gurdin, who had acquired extensive landed property in Kanpur died on December 10, 1861 leaving behind his widow Smt.
Amrit Kuer and three daughters: Smt.
Hazarao Kuer from his predeceased wife, and Smt.
Mewa Kuer and Smt.
Prago Kuer from Smt.
Amrit Kuer.
After the death of Gurdin his entire estate came into the hands of his widow Smt.
Amrit Kuer and after her death on August 1,1880, the three daughters of Lala Gurdin succeeded to the estate left by Smt.
Amrit Kuer, as limited owners.
They divided the property amongst themselves, each coming into possession of one third share.
When Smt.
Prago Kuer died on July 8, 1907 the estate remained with the two surviving daughters.
When Smt.
Hazaro Kuer died on January 24, 1914 the estate remained in possession of Smt.
Mewa Kuer, the last surviving daughter.
She also died on June 14,1923.
During their life time the three daughters had been making various alienations of the property that fell to their exclusive share.
Amongst a number of alienations in favour of different persons at different times, three sale deeds dated July 27,1901; July 17, 1914 and October 19,1915 are the subject matter of the appeals and the property covered by the 1901 and 1914 sale deeds are in possession of the appellants trust while the properties covered by the 1915 sale deeds are in the possession of Defendants 4 & 5 of Suit No. 25 of 1935.
The 1914 and 1915 sale deeds were jointly executed by Smt.
Mewa Kuer and her son Ram Dayal.
After the death of Smt.
Mewa Kuer in 1923, her surviving reversioners sought to challenge the various alienations made by the limited owners, some by Smt.
Amrit Kuer and the others made by the daughters of Lala Gurdin by way of two Suits Nos.
25 of 1935 filed by the two sons of Smt.
Hazaro Kuer and Suit No. 34 of 1935 filed by Madho Dayal son of Ram Dayal, on the 719 allegations (i) that there was no legal or pressing necessity for the transfers; (ii) that transfer by one of the daughters without the consent of the remaining daughters was void ab initio and no title passed on to the transferees; and (iii) transferees from the limited owners themselves had no valid title and so they could not pass a better title to others and thus those transfers were also bad.
The suits were contested by the transferees in possession seeking protection of section 43 of the Transfer of Property Act on the equitable principle feeding the Grant by estoppel in as much as even if there was any defect in the of title Mewa Kuer, the same has ceased when her two other sisters died and she become the sale Survivor.
The Additional Civil Judge found that, while sale deeds of 1914 and 1915 were for legal necessity as they had been executed by Smt.
Mewa Kuer when her two sisters had died, the sale deed dated 27th July, 1901 was also for legal necessity but as it was executed without the consent of the other two daughters it was invalid and not binding on the plaintiffs respondent.
Consequently the Trial Court dismissed Suit No. 25 of 1935 in respect of the sale deeds of 1914 and 1915, and partly decreed the suit pertaining to 1901 sale deed in view of the provisions of section 51 of the Transfer of Property Act in as much as these defendants appellants had made valuable constructions as bona fide purchasers and they were entitled to the market value of the constructions.
Suit No 34 of 1935 was also partly decreed and partly dismissed.
In the appeals filed by the present respondents plaintiffs and after perusing the cross objections filed by the present defendants appellants, the High Court reversed the finding of the trial court with regard to sale deeds of 1914 and 1915 held that they were not for legal and pressing need; and while confirming the finding of the trial court with regard to sale deeds dated July 27, 1901 further held that the present plaintiffs respondents should be given an opportunity to make an election under section 51 of the Transfer of Property Act, as to whether they would like to pay the compensation for the superstructures standing on the land in question or to sell their share in the land.
Consequently, the High Court allowed the appeals of the plaintiffs respondents in part and remanded the case to the trial court to afford an opportunity to the plaintiff to make election under section 51 of the Transfer of Property Act.
It was further held that the sale deeds of 1914 and 1915 being not for legal necessity the subsequent transfers made by the transferees of Mewa Kuer were bad.
Hence the appeals by certificate.
Allowing the appeals in part, the Court ^ HELD 1.1 If a Hindu dies leaving behind two widows they succeed as joint tenants with a right of survivorship.
They are entitled to obtain partition of the separate portions of property so that each may enjoy her equal share of the income accruing therefrom.
Each can deal as she pleases with her own life interest but she cannot alienate any part of the corpus of estate by gift or will so as to prejudice the right of survivorship or a future reversioner.
If they act together they can burden the reversion with any debts owing to legal necessity but one of them acting without the authority of the other cannot prejudice the 720 right of servivorship by alienating any part of the estate.
[728 G H] 1.2 The mere fact of partition between the two while it gives each a right to fruits of separate estate assigned to her, it does not imply a right to prejudice the claim of the survivor to enjoy full fruits of the property during her life time.
What is applicable to co widows is equally applicable to the case of daughters.
No distinction can be made on that account.
[726 C D, 729 A B] Gauri Nath Kakaji vs Mt. Gaya Kuer, followed.
Appalasuri vs Kannamma, approved.
2.1 The transfer made by one daughter without the consent of the other is only voidable at the instance of the other co limited owners or at the instance of the reversioners.
[729 D E] 2.2 Here, the alienations made by the daughters separately to different persons was never challenged by the other daughters.
Even the reversioners did not challenge those alienations during the life time of their mothers and they sought to challenge the alienations long after the death of the last limited owner Smt.
Mewa Kuer in 1923 and therefore, even if the partition between the daughters had no effect on the reversion it can safely be presumed that the transfer made by one of the daughters of the property exclusively in her possession had the consent of the other.
Further in any case Smt.
Mewa Kuer after the death of her two sisters came into exclusive possession of the entire estate left by Smt.
Amrit Kuer, widow of Lala Gurdin.
Therefore, the transferees would be entitled to the protection of section 43 of the Transfer of Property Act which substantially amounts to satisfying the equitable principle of 'feeding the grant by estoppel '.
[729 B C, D E] 2.3 In view of the fact that the trust has made valuable constructions involving a cost of 5 to 6 lakh rupees of the college building, the principal 's quarters, teacher 's quarters, hostel, library, dispensary etc.
it will be inequitable in the circumstances of the case to ask the appellants to pay the present market value of the land.
The acceptance of the amount by the plaintiffs respondents as determined by the trial court will itself amount to making a choice within the meaning of section 51 of the Transfer of Property Act.
From the materials on record and the attending circumstances it is clear that the reversioners were neither in a position to pay for the improvements nor inclined to do so and this is why they accepted the amount determined by the trial court.
Therefore, the High Court was not justified in remanding the case to the trial court to afford another opportunity to the plaintiffs to make a fresh choice.
[930 B D] 3.
What quantum of evidence will satisfy a particular court to come to a conclusion is entirely in the discretion of the Court, and therefore, the finding of the High Court with the regard to the two sale deeds of 1914 and 1915 cannot be interfered with.
[930 E F] 721
|
ivil Appeal No. 617 (NL) of 1975.
From the Judgment and Order dated 4.12.1973 of the Madhya Pradesh High Court in Misc.
Petition No. 713 of 1971.
M.K. Ramamurthy, Vineet Kumar and N.D.V. Raju for the Appellant.
G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms. section Kirpalani for the Respondents.
The Judgment of the Court was delivered by KHALID, J.
This is an appeal by certificate, issued by the High Court of Madhya Pradesh under Article 133(1) of the Constitution of India against the Judgment of a Division Bench of that Court setting aside the Order passed by the Labour Court, Ujjain, confirmed in revision by the Industrial Court, Madhya Pradesh, allowing an application filed by the appellant under Section 31 of the Madhya Pradesh Industrial Relations Act, 1960 (hereinafter referred to as the Act) in which he had challenged his termination which challenge was accepted and his reinstatement was ordered.
The facts in brief, necessary for disposal of this appeal are as follows: 2.
The appellant was appointed as Store Keeper Cum Accountant on 14.2.1957, in the Madhya Pradesh Khadi and Village Industries Board, Budhwara, Bhopal.
This Board is a body corporate constituted under the M.P. Khadi and Village Industries Act 1959 and is engaged among others, in activities of encouraging production of Khadi and helping other village industries.
It has 644 different branches in the State of Madhya Pradesh.
One such centre was established at Berdi in Chhindwara district.
The Board supplied raw wool to the Co optative Societies and after getting them woven by the societies into blankets, received back blankets as finished goods.
m e services of the appellant were terminated as per Order dated 23.9.1964, after giving one month 's notice.
He challenged this Order of termination as one amounting to retrenchment, and having been passed without complying with the provisions of the Act that govern his relationship with the Board.
He stated that a charge sheet was given to him on 27.4.1964, based on false and baseless grounds and that there was no enquiry held into the said charges before his removal.
The appellant thereupon moved the Labour Court at Ujjain on 7.6.1975, for his reinstatement with full wages.
The Board contested the application contending inter alia that the Board was not an industry and that neither the M.P. Industrial Relations Act, 1960 nor the applied to it.
The Labour Court, Ujjain framed necessary issues on the rival contentions and after recording evidence, held that the termination of the appellant amounted to retrenchment, set aside the Order of termination and directed the Board to reinstate him with half salary front the date of the Order till reinstatement.
Aggrieved by this Order the Board preferred a revision before the Industrial Court in Madhya Pradesh, Indore, repeating the contentions raised before the Labour Court.
m e Industrial Court by its order dated 3.2.1967, affirmed the order of the Labour Court and dismissed the revision petition.
The Board pursued the matter further by moving the Madhya Pradesh High Court by a petition under Article 226 and 227 of the Constitution of India.
The High Court by its order dated 19.12.1969, allowed the Writ Petition, quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh with due regard to the relevant provisions of the M.P. Industrial Relations Act, 1960.
After remand, the Industrial Court proceeded to decide the question itself after taking fresh evidence and again held in favour of the appellant and against the Board, reaffirming its previous decision to reinstate the appellant.
The matter was taken to the High Court again by the Board by means of a Writ Petition.
The High Court set aside the orders of the Industrial Court and the Labour Court, on the ground that they acted without jurisdiction.
However, since the 645 High Court felt that the matter was not free from doubt and was debatable, granted certificate to the appellant to appeal to this Court.
It is thus that the matter is before us.
In the State of Madhya Pradesh there is a separate Act to regulate the relations of employees in certain matters and to make provisions for settlement of industrial disputes and other connected matters.
mis Act is called the Madhya Pradesh Industrial Relations Act, 1960.
Section 2 (19) defines Industry as under: Industry means (a) any business, trade, manufacture, undertaking or calling of employers; (b) any calling, service, employment, handicraft or industrial occupation or a vocation of employees; and Includes (i) agriculture and agricultural operations; (ii) any branch of any industry or group of industries which the State Government may, by notification, declare to be an industry for the purposes of this Act.
Section 2 (33) defines undertaking as follows: "Undertaking means a concern in any industry .
Thus, any concern, to become an industry, has to satisfy the above definitions to attract the Provisions of the Act.
Such concerns have to satisfy another condition to attract the provisions of the Act and that is about the number of employees the concern employs.
This is provided in a Notification issued under the Act which reads as follows: No. 9952 XVI, dated 31st December, 1960.
In exercise of the powers conferred by `Sub Section (3) of Section 1 of the Madhya Pradesh Industrial Relations Act 1960 (No. 27 of 1960), the State Government hereby directs that all the provisions of the said Act other than section 1 and 112 thereof shall be into 646 force on 31st December, 1960, in respect of undertaking in the industries specified in the schedule below wherein the number of employees on any date during twelve months preceding or on the date of this notification or any day thereafter was or is more than one hundred : SCHEDULE 1.
Textile including cotton, silk, artificial silk staple fibre, jute and carpet.
. . . . . . . . . . . . . . . . . . . . " This notification, thus, makes the provisions of the Act applicable only to undertaking in the industries specified in the schedule, where the number of employees, on the date mentioned therein was or is more than 100.
We are concerned here only with item No. 1 in the schedule and therefore, have left out the other items.
Before considering the rival contentions raised before us, we may extract the relevant sections of the Act under which the Board was constituted, to understand the functions and duties of the Board.
For our purpose it is enough to quote Sections 14 (1) & 14 (2) (a) alone, Clause (b) to (m) are not necessary for the resolution of the dispute involved in this case and hence are omitted.
Functions of Board.
(1) It shall be the duty of the Board to organise, develop and regulate Khadi and Village Industries and perform such functions as the State Government may prescribe.
(2) Without prejudice to the generality of the provisions of the sub section (1) the Board shall also in particular discharge and perform all or any of the following duties and functions namely; (a) To start, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business." 647 With this background we will advert to the facts of the case.
8.The Board resisted the appellant 's case on two grounds (i) that it is not an industry within the meaning of the Act and (ii) that it does not employ more than 100 persons.
It is necessary to note at this stage that the Board had not originally urged any plea that it did not employ sufficient employees to attract the Act.
It was during the course of argument that this plea about the number of appointees was urged by the Board.
However, both the Labour Court and the Industrial Court considered the two jurisdictional questions as to whether the Board was an industry and as to whether it had employed more than 100 persons.
We have gone through the orders passed by the labour Court and the Industrial Court, carefully.
According to us a close examination of the evidence adduced in the case and the discussions bearing on them by the Labour Court in particular and the Industrial Court, admits of no doubt that the Board employed more than 100 persons.
For this purpose, we content ourselves by extracting the following paragraph from the order of the Labour Court while considering the first point namely whether the provisions of the Act are applicable to the Board. "Thus the applicant 's contention that the Parishad 's cloth weaving centres were in existence till 2 years before and his contention in respect of the number of workers engaged at Mandsaur, Gwalior, Anjad entries etc. have not been refuted by the nor applicant.
It is therefore concluded them at (sic) 60, 40, 4 & 3 workers were working at Parishad 's centres situated at Mandsaur, Gwalior, Anjad and Parsinga.
Besides this there were officials working at Chanderi & Maneshwar weaving centres.
The non applicant who is in possession of the records of appointment and who is also not disclosing the exact figures (of the workers), therefore the conclusions go against the non applicant.
This finding on the appreciation of the evidence given by the witnesses concludes the parties according to us, regarding the number of the employees employed by the Board.
Even so, when the matter went before the High Court, the High Court felt that the jurisdictional question was not properly considered by the Labour Court.
Therefore, in the first round the matter was remanded by the High Court, and the High Court made the following observations: 648 "The relevant notification applied the provisions of the Act to undertaking in the industries specified in the schedule wherein the number of employees, was or is more than one hundred.
Evidently, it had no application to smaller establishments of notified industries that employed less than 100 persons.
That being so, it is plain enough that the Courts below misdirected themselves by taking into account the total number of the employees of the Board without regard to the consideration whether they were employed or not in the establishment relating to textiles and the findings recorded by them on the jurisdictional facts do not bear examination and cannot be sustained.
Since the facts bearing on the question have not been properly ascertained it would be right to set aside the order of the Industrial Court and leave it to that Court to decide these facts afresh with due regard to all the relevant provisions of the M.P. Industrial Relations Act, 1960 and then to dispose of the claim made by the respondent 3 on merits.
We may, even at this stage, point out that the High Court could have set aside the order of the Labour Court and the Industrial Court, on the ground that the Board did not, according to it, satisfy the definition of industry without remanding the case to the Industrial Court to determine the number of employees.
We are making this statement in view of an objection taken by the appellant 's counsel before us that the respondent cannot, in this appeal, reagitate that question, he having been concluded by the remand order which was restricted only to the number of employees in the Board.
After remand, the Industrial Court considered the question again.
The Industrial Court understood the remand order and, according to us, rightly, as follows: "After the remand the parties have adduced evidence which is common in both cases.
The exact question I am called upon to answer is, the number of employees employed by the parishad in its textiles activity and not all other activities such as Oil, Paper Carpentry, Gur Tannery, Pottery etc.
me best evidence will be the record kept with the parishad.
The oral evidence will not be of much help, though it may have some additional value.
649 13.
After discussing the evidence in detail, the Industrial Court came to the conclusion thus: "For all these reasons, I hold that in the textile activity of the Board (parishad) the number of employees is or has been over and more than 100 from 1.12.59 to 31.12.60, vide Ex D/1 and, therefore the employees had a right to file the application under the Act.
The Industrial Court again held in favour of the appellant The matter went to the High Court again in the Second round, at the instance of the Board.
On the question of number of employees in the Board, in paragraphs 10 & 11 of the Judgment, the High Court observed thus: ".
Thus from the statement of this witness, there can be no doubt that there were more than 100 persons in all at the wool weaving centres in the State and at some of the centres the number was more than 100.
The witness further stated that there are 16 industries under the Board, such as Paper Industry, Soap Industry, Khadi Industry, Wool Industry and so on.
Similarly, in the connected case, namely M.P. No. 713 of 1971, in pursuance of the remand order, the statement of Gunadeo Patil (Petitioner 's Annexure F) and the other witness, Sadashiv Patil (Petitioner 's Annexure f/1) were recorded.
The statements of these two witnesses were similar to the statements in the main case.
(The High Court was dealing with the case of two employees in Misc.
Petition No. 712/1971 and 713/1971 and that is why mention is MADE about the connected case.) 15.
After holding thus, the High Court spent considerable part of the Judgment for considering the kindred question whether the board was an industry or not.
The appellant 's counsel raised an objection that it was not open to raise this question as it was covered by the remand order (which was confined only to the number of employees).
In our view, this objection is well founded and has to be upheld.
According to us, the appellant is entitled to succeed on this ground alone.
However, we would like to answer 650 the other question also for the purpose of completion of this Judgment and to set at rest possible future controversies on the subject .
The definition clause in the Act is far from satisfactory.
The definition of word 'industry ' in Section 2(19) and the word 'undertaking ' in Section 2(33) does not make happy reading but this unhappy phraseology need not vex us.
If from the evidence available, we can say, that the Board carries on trade or business, it would straightaway become an industry under the Act.
We have already seen that one of the functions of the Board is to support, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or BUSINESS.
What the Board does is to supply raw wool to Cooperative Societies, so that the Societies can engage themselves in useful work.
The Societies after weaving raw wool, convert them into spun blankets and supply them to the Board.
The blankets so spun are not the properties of the Societies.
They have to be given back to the Board.
The blankets so supplied from various centres to the Board, have necessarily to be sold in the open market.
This act of sale would clearly come within the definition of the word trade or business as contemplated in Section 2 (19) of the Act.
This finding of ours is supported by the evidence in the case also.
The appellant in his evidence stated that at the centre where he was posted, weaving of woolen blankets was done by the Societies and other centres constituted at various places and the woven blankets were supplied back to the Board.
Three witnesses were examined on behalf of the Board.
Choudhary, the first witness and Sh.
Patil the next witness, admitted that the spinning and weaving work of cotton and woolen cloth was got done by the Board through various Societies.
These two said witnesses admitted that the looms belonged to the Board and the Board supplied wool and other materials and implements and sold manufactured goods after obtaining them from the Societies.
They also made an important admission that the Society could not sell the goods prepared out of the wool supplied by the Board to anybody else.
The third witness also supported this case though differed from the second witness and stated that the Board extended marketing facilities to the Societies.
We thought it necessary to refer to the evidence in the case to disabuse an impression attempted to be created that the Board did not sell the blankets it got from the various societies spun out of the wool supplied to them.
There is a clear admission by one witness that the Societies cannot sell the blankets 651 prepared out of the wool supplied by the Board to any one else.
No argument is necessary to hold that the blankets received by the Board from various centres have only to be sold and not used by the Board for its own purpose.
this evidence the conclusion is irresistible that the Board engages itself in the business of selling blankets.
It has therefore to be held that the Board is an industry within the meaning of the Act.
The appellant is entitled to succeed on both the grounds.
We set aside the order passed by the High Court and restore the orders passed by the labour Court and the Industrial Court.
The appellant will get his cost from the first Respondent quantified at Rs. 2,500.
A.P.J. Appeal allowed.
|
The appellant was appointed as Store Keeper cum Accountant in one of the branches of the Madhya Pradesh Khadi and Village Industries Board, a body corporate constituted under the M.P. Khadi and Village Industries Act, 1959.
His services were terminated by an Order dated 23.9.1964 after giving one month 's notice.
The termination Was challenged before the Labour Court as amounting to retrenchment because it hat been passed without complying with provisions of the M.P. Industrial Relations Act, 1960, the charge sheet that was given to him on 27.4.1964 was based on false and baseless grounds and no enquiry was held prior to removal.
The appellant claimed reinstatement with full wages.
The Respondent Board contested the application contending that the Board was not an industry and that neither the M.P. Industrial Relations Act, 1960 nor the applied to it.
The Labour Court held that the termination of the services of the appellant amounted to retrenchment, set aside the Order of termination and directed reinstatement with half salary from the date of the Order till reinstatement.
The Board preferred a revision.
The Industrial Court affirm ed the order of the Labour Court and dismissed the revision petition.
642 The Board filed a petition under article 225 and 227.
The High Court allowed the writ petition, quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh.
The Industrial Court after taking fresh evidence, again held in favour of the appellant, reaffirming its previous decision to reinstate the appellant.
The Board again moved the High Court, which set aside the orders of the Industrial Court and the Labour Court on the ground that they acted without jurisdiction.
The appellant appealed to this Court by certificate which was resisted by the Board on two grounds: (i) that it is not an industry within the meaning of the Act and (ii) that it does not employ more than 100 persons.
Allowing the appeal of the appellant employee, ^ HELD: 1.
The order passed by the High Court is set aside and that of the Labour Court and the Industrial Court are restored.
[651 B C] 2.
The M.P. Industrial Relations Act, 1960 is a separate Act in the State of Madhya Pradesh to regulate the relations of employees in certain matters and makes provisions for settlement of Industrial disputes.
Any concern, to become an industry, has to satisfy the definitions of "industry" and "undertaking" as contained in sections 2(19) and 2(33) thereof.
Such concerns have to satisfy yet another condition to attract the provisions of the said Act which relates to the number of the employees the concern employs.
Notification No. 9952 XVI dated 31st December, 1960 issued under sub 8.
(3) of 8. 1 of the Act, makes the provisions of the Act applicable only to an undertaking in the industries specified in the Schedule wherein the number of the employees on any date during Twelve months preceeding or on the date of the notification or any day thereafter was or is more than one hundred.
In the instant case, the evidence on record admits of no doubt that the Board employed more than 100 persons.
[645 A H; 646 A 4; 647 C] 3.
One of the functions of the Board under 8.
14 of the M.P. Khadi and Village Industries Act 1959 is "to support, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business".
The evidence shows that the Board supplies raw wool to Co operative Societies, so 643 that the Societies can engage themselves in useful work.
The Society after weaving raw wool, convert them into spun blankets and supply them to the Board.
The blankets so spun are not the properties of the Societies.
They have to be given back to the Board.
The blankets so supplied from various centres to the Board, have necessarily to be sold in the open market.
This act of sale would clearly come within the definition of the word 'trade ' or 'business ' as contemplated in Section 2(19) of the Act.
m e conclusion is, therefore, irresistible that the Board engages itself in the business of selling blankets.
It has, therefore, to be held that the Board is an 'industry ' within the meaning of the Act.
[650 B D; 651 A B]
|
Civil Appeal No. 625 of 1972.
From the Judgment and Order dated 13.9.1971 of the Punjab & Haryana High Court in L.P.A. No. 254 of 1971.
S.K. Bagga, for the Appellants.
The Judgment of the Court was delivered by MISRA, J.
The present appeal by special leave is directed against the judgment of a Division Bench of the High Court of Punjab and Haryana dated 13th September, 1971 dismissing the letters patent appeal against the judgment of a learned Single Judge dated 17th March, 1971 allowing the writ petition filed by the respondents.
The short question that falls for consideration in the present appeal is whether the amount of loan in question can be 707 recovered as arrears of land revenue by arrest and detention in view of cl. 4 of the loan agreement.
Dera Baba Nanak Co operative House Building Society Ltd., respondent No. 2, was a registered society.
It had 32 members to start with.
The society entered into an agreement with the Government of Panjab whereunder the Government agreed to advance a loan of Rs. 1,02,000 to its members under the lower income group housing scheme for the purpose of constructing residential houses on the site measuring 35, 100 sq.ft.
in Dera Baba Nanak.
The agreement was evidenced by a written document.
Under the terms of the agreement the Govt.
was to advance the loan in three instalments the first instalment of Rs. 20,400 was to be paid by the government on the execution of the deed of agreement, the second instalment of Rs. 51,000 was to be paid on the completion of the house to the plinth level ant the last instalment of Rs. 30,600 on the completion of the house to the roof level.
The members of the society on the other hand had to repay the loan advanced with interest in thirty annual instalments, the first instalment was to become due twelve months after the date of sanctioning the first instalment of loan.
It was further stipulated that the society would mortgage the said sites together with houses erected or to be erected thereon thereafter to the government as security for the repayment of the said loan and interest.
The loan agreement further contemplated that the government would recover the amount of loan first from the property mortgaged and if there was a shortfall then the government shall be entitled to recover the same personally from the borrowers as well as from the movable or other immovable property belonging to the borrowers.
The society pursuant to the terms of the agreement executed the mortgage.
The government in their turn issued a cheque for Rs. 71,400 as payment towards the first two instalments on 24th of March, 1956.
The third ' instalment of Rs. 30,600 was, however, not paid by the government to the society on the ground that it had not furnished the required certificates that the houses had reached the roof level.
The members of the society also failed to repay the loan as stipulated.
In the situation a notice was issued by the Collector of the District to the members of the society to deposit the overdue instalments of loan and to appear before the Deputy Commissioner, Gurdaspur on August 24, 1964 to show cause why the entire amount should not be recovered from them by means of arrest and detention.
The society challenged the notice by filling a writ petition in the High Court.
Its stand was 708 that in the absence of any such stipulation in the loan agreement the amount could not be recovered by arrest of the members of the society in the first instance.
The writ petition remained pending for more than six years but no instalments had been paid by the members of the society to the government during that period.
The claim was resisted by the government.
In writ petition was, however, allowed by the learned Single Judge by his judgment dated 17th March, 1971 holding that the government must resort to the contractual remedy which it reserved to itself when entering into the loan agreement.
m e State preferred a letters patent appeal which was summarily dismissed.
The state has now approached this court by special leave.
The learned counsel appearing for the State relied upon cl.
(b) of 8. 67 of the Punjab Land Revenue Act.
This section provides the process for the recovery of arrears of land revenue and one of the modes prescribed by cl.
(b) of 8. 67 is by arrest sums detention of the borrower 's person.
Reliance was also placed on section 98 of the said Act which enumerates what sums are recoverable as arrears of land revenue and cl.
(dd) of section 98 includes a loan advanced by the State Government towards the cost of the house or site under the government sponsored housing scheme together with interest chargeable thereon and costs, if any in making or recovering the same as land revenue.
The counsel for the respondents on the other hand strenuously relies upon cl. 4 of the agreement of loan and contends that in view of the agreement between the parties the government has to proceed first against the property mortgaged and in case of a shortfall other methods could be resorted to.
It will be pertinent at this stage to refer to cl. 4 of the loan agreement which reads: "4.
For the consideration aforesaid and as security for the repayment to the Government of the said loan and interest, the borrower hereby transfers to the Government the said sites together with houses now erected or hereafter to be erected thereon, to the intent that the same shall remain and be charged by way of mortgage in the manner following, namely, that for the purpose of recovering the said loan and interest, and any other sum as may become due by the borrower to the Government by virtue of these presents, the Government may, at its option, either sell the said sites and the houses erected or hereafter to be erected thereon or any part thereof 709 without the intervention of any Court or enforce against the said property all or any of the remedies of simple mortgage and in case the realisation from the property mentioned above falls short of the amount due to the Government under these presents, the Government shall be entitled to recover the same personally from the borrower as well as from the movable or other immovable property belonging to the borrower.
A bare reading of c. 4 of the agreement makes it evidently clear that the Government has first to proceed against the property mortgaged and sell the property.
Only in case the entire amount could not be realised that the Government could proceed against the borrower personally.
The government is as much bound by the agreement as the borrower and, therefore, the government has first to proceed against the mortgaged property.
During the course of argument reliance was placed upon Ram Narayan Agarwal etc.
vs State of U.P. & ors.
In that case the petitioners had committed default in payment of the tax payable by them under the U.P. Sales Tax Act, 1948.
The amount due was sought to be recovered as arrears of land revenue.
The procedure for such a recovery was provided by sections 279 and 281 of the U.P. Zamindari Abolition and Land Reforms Act, 1950 read with rr.
246, 247A, 247B and 251 of the U.P.Z.A. and L.R. Rules, 1952.
Clause (b) of sub section (1) of section 279 of the U.P.Z.A. and L.R. Act contemlates of recovery, of the amount due by resort to arrest and detention of the person concerned.
The procedure contained in U.P.Z.A. and L.R. Act and the rules made thereunder was challenged on the ground that they are violative of Arts 14, 19(1) (g) and 21 of the Constitution but this contention was overruled and it was definitely held that the impugned procedure contained in the U.P.Z.A. and L.R. Act and the rules made thereunder were not violative of articles 14, 19 (1) (d) and 21 of the Constitution.
The writ petitions were, however, allowed in the case on the ground that there was non compliance with Rule 251 of the Rules which obligates an enquiry to be made by the officer who issued the warrant into the question whether the detention of the defaulter would compel him to pay the arrear or a substantial portion thereof and admittedly no such enquiry was held in any of those cases and in these circumstances it was held that the petitioners could not be detained pursuant to any warrants already issued.
Such is not the position in this case and, therefore.
that case is not of much assistance.
710 For the reasons given above we do not find any fault with the judgment of the learned Single Judge as confirmed by the High Court in letters patent appeal.
The appeal, is, therefore, dismissed.
There is, however, no order as to costs.
S.R. Appeal dismissed.
|
Respondent No.2 a registered House Building Society with 32 members entered into an agreement with the Government of Punjab where under the Government agreed to advance a loan of Rs. 1,02,000 to its members under the lower income group housing scheme for the purpose of constructing residential houses in Dera Baba Nanak.
As per the written agreement the loan advance was payable in three instalments.
The first instalment of Rs. 20400 was to be paid by the Govt.
On the execution of the deed of agreement, the second instalment of Rs. 51000 to be paid on the completion of the houses to the plinth level and the last instalment of Rs. 30,600 on the completion of the house to the roof level.
The society on the other hand had to mortgage the sites together with the houses erected or to be erected thereon to the govt.
as security for the repayment of loan and the amount of loan was to be paid back in several instalments.
Pursuant to the agreement the Government issued a cheque for Rs. 71,400 towards the first and SECOND instalments.
The third instalment was not paid for failure to furnish the required certificate that the houses had reached the roof level.
The members of the society also failed to repay the loan in the situation, a notice was issued by the Collector of the District to the members of the society to deposit the overdue instalments of loan and to appear before the Deputy commissioner, Gurdaspur on August 24, 1964 to show cause why the entire amount should not be recovered from them by means of arrest and DETENTION.
The society challenged the notice by filing a writ petition in the Court.
Its stand was that in the absence of any such stipulation in the loan agreement the amount could not be recovered by arrest of the members of the 706 society in the first instance.
The writ petition remained pending for more than six years but no instalments had been paid by the members of the society to the government during that period.
The Writ Petition was allowed by the learned Single Judge by his judgment dated 17th March, 1971 holding that the government must resort to the contractual remedy which it reserved to itself while entering into the loan agreement.
The State preferred a letters patent appeal which was summarily dismissed.
Hence the appeal by special leave.
Dismissing the appeal, the Court, ^ HELD: A bare reading of clause 4 of the agreement makes it evidently clear that the Government has first to proceed against the property xaf mortgaged and sell the property.
Only in case the entire amount could not be realised that the Government could proceed against the borrower personally.
The government is as much bound by the agreement as the borrower and, therefore, the Government has first to proceed against the mortgaged property.
In other words, the government must resort to the contractual remedy which it reserved to itself when entering into the loan agreement before resorting to clause (b) of section 67 of the Punjab Land Revenue Act.
[709 B C, 706 H, 710] Ram Narayan Agarwal etc.
vs State of U.P. & Ors.
explained and distinguished.
|
Appeal No. 24 of 1960, Appeal from the judgment and decree dated August 1, 1957, of the Allahabad High Court in Special Appeal No. 249 of 1955.
B. Sen, P. W. Sahasrabudhe and 1.
N. Shroff, for the appellant.
G. section Pathak and O. C. Mathur, for the respondents.
April 30.
The Judgment of Kapur, Ayyangar and Mudholkar, JJ., was delivered by Kapur, J. The Judgment of Sarkar and Das Gupta, JJ., was delivered by Das Gupta, J. KAPUR, J. This its an appeal against the Judgment and order of the High Court of Allahabad holding that the execution of the decree passed by the Additional District Judge, Gwalior, dated November 18, 1948, in favour of the appellant against the respondents was not executable at Allahabad.
The appellant in this court is the decree holder and the respondents are the judgment debtors.
For the decision of this appeal it is necessary to deal with the various Statutes, Orders and agreements as a result of which the erstwhile Indian State of Gwalior became a part of the territories of the Union of India governed by one Civil Procedural law.
It will also be necessary to refer to the various changes in the law of civil procedure applicable at the various stages of the litigation leading to this appeal.
We shall first deal with the integration of the Indian State of Gwalior with the Indian Union.
581 Upto August 15, 1947, i.e. before the independence of India under the Indian Independence Act (10 & 11 Geo, Ch. 30) Gwalior was what was termed under the Government of India Act of 1935 an Indian State and its Courts were 'foreign courts ' within section 2 (5) of the Indian Code of Civil Proce dure.
After independence by section 7 (i) (b) of that Act the suzerainty of the British Crown lapsed and so also all treaties, agreements and obligation which had previously been entered into between the Rulers of Indian States and the British Crown.
The second Question can conveniently be dealt with at a later and appropriate stage.
By the Instrument of Accession which by August 15, 1947, (p. 36 of White Paper on Indian States) was entered into between the Ruler of the State of Gwalior and the Dominion of India certain subjects mentioned in the schedule to that Instru ment were transferred to the Dominion of India but Civil Procedure was not one of them.
By a covenant signed in April 1948, the Rulers of Gwalior, Indore and certain other States in Central India formed the United State of Gwalior, Indore and Malwa which was termed United State (Madhya Bharat).
By a fresh , Instrument of Accession executed on July 19, 1948, the United State acceded to the Dominion of India and when the Constitution came into force it became Madhya Bharata Part B State and was governed by the provi sions of the Constitution as applicable to such States.
This then was the process of transformation of the Indian State of Gwalior into a part of the Republic of India.
On May 15, 1947, the appellant instituted a suit in the Court of the District Judge, Gwalior, for recovery of Rs. 6,92,236.15 0 against the respondents, who are the sons and legal representatives of the late Munshi Ishwar Saran.
The writs of summons were served on the respondents on 582 September 12, 1947, but they did not appear in the Court of the Additional District Judge who actually tried the suit.
On, November 18, 1947, the trial Judge ordered suit to proceed ex parte and on November 18, 1948, the claim was decreed with costs and interest.
On August 9, 1949, the appellant made an application to the Court of the Additional District Judge praying for transfer of the decree for execution to the Court of Civil Judge, Allahabad, where the properties of the father of the respondents were situate.
On April 25, 1950, the Court passed the following order "I order transfer of this execution care.
A certificate of transfer relating to non satis faction of decree be issued to the Civil Judge, 1st Class, Allahabad, for execution proceedings.
This execution case be dismissed".
On September 14, 1951, another order was made sending the decree for execution to the Court of the Civil Judge, 1st Grade, Allahabad.
Along with it a copy of the order dated April 23, 1950, was also sent.
The order was as follows "Order dated 14th September, 1951 for transfer of decree to another court for execution".
Whereas in the above mentioned case the applicant submitted that the Judgment Debtor resided or held property within the local limits of the jurisdiction of the court of Civil Judge, ist Grade, Allahabad and prayed for the sending of a certificate to that court for execution of the said decree and it being considered necessary and proper, the said certificate be sent to that court under Order XXI, Rule VI.
A copy of this order along with copies of decree, certificate of non payment of decretal 583 amount and other orders passed in connection with execution be forwarded directly to the court of the Civil Judge, 1st Grade, Allahabad.
Dated 14th September 1951.
Enclosures: 1.
Certificate.
Application of the decree holder 3.
Copy of decree in the case.
Copy of order, dated 25th April, 1950.
B. K. Mehra.
District & Sessions Judge District Gwalior, Madhya Bharat".
The parties were not in accord as to which of these orders was the real order for transfer.
It is unnecessary to resolve this controversy because we shall proceed on the assumption that the order of transfer was the later one which the appellant has relied upon i.e. of September 14, 1951.
On October 16,1951, the appellant filed in the Court of Civil Judge, Allahabad, an Application for execution of the decree for realisation of the amount due under it which by then had amounted to Rs. 8,98, 7 7 0.
This was registered as Execution Case No.47 of 1951 'rho respondents filed their objections under section 47 of the Code of Civil Procedure on February 8, 1952.
They pleaded that the Gwalior Court was a Foreign Court, to the jurisdiction of which, they had not submitted and the decree was, therefore, an absolute nullity; that the decree was not in accordance with law and that the application for execution was not maintainable.
By an order of the High Court under section 34 of the Civil Procedure Code, the execution case was transferred to the High Court and 584 registered as Extraordinary Miscellaneous Case No. 1 of 1954.
The matter was beard by Brij Mohan Lal J., who bold that the decree was passed by a Foreign Court, to The jurisdiction of which, the respondents had not subsisted; that the decree was not binding on the respondents and could not be executed in the territories of Uttar Pradesh.
The execution application was, therefore, dismissed.
On appeal against that judgment the Appeal Court upheld the judgment of the learned Single Judge holding that the rule in Sirdar Gurdial Singh vs Maharaja of Faridkot (1) was applicable to the case; that Gwalior was a foreign State on the date of the decree and its status as a foreign State was ' not affected by the Indian Independence Act, 1947, the Standstill Agreement, 1947 the First Instrument of Accession 1947, the 1948 Covenant by which the United State of Madhya Bharat which included Gwalior was formed or the Second Instrument of Accession, 1948, an that Gwalior State ceased to be a foreign State only on the coming into force of the Constitution of India on January 26, 1950.
It also held that the District Judge 's court passing the decree was a foreign Court at the time of the suit.
As the appellant had not submitted to the jurisdiction of the Gwalior District Judges Court the decree passed by it was an absolute nullity;that even if the Gwalior law authorised the passing of such a decree, the decree was a nullity and it was not correct to Pay that as a result of the various constitutional changes, the impediment in the way of its execution was removed; that there was no provision of law by which a decree passed by the Gwalior Court could be executed in Uttar Pradesh; that article 261(3) of the Constitution was not retroactive and did not operate on the decree in question to make it executable; that section 43 of the Indian Civil procedure Code as it stood after the Amendment Act II of 1951 was inapplicable; that the right to resist the execution (1) (1894) L. R 21 I. A. 171.
585 of the decree on the ground that it was a nullity was not taken away by the political changes and, therefore, the judgment of the learned Single Judge was upheld.
Against this judgment and Order the appellant has come in appeal to this Court on a certificate under article 133(i) (a) and (e) of the Constitution; The vital question for decision is whether the decree passed by the Gwalior Court on November 18, 1948, was executable in the State of Uttar Pradesh which, was at one time, a part of what was British India, Gwalior at the relevant time being a part of the United State aforesaid.
For this purpose, the questions that arise are: 1.
Was the decree a decree of a foreign court? 2.
Could the Court at Gwalior order the transfer of the decree for execution in the Allahabad Civil Court? 3.
If it could not, then was the decree executable at Allahabad under sections 43 & 44 of the Code of Civil Procedure? and 4.
Could the respondents judgment debtors take an objection to the execution of the decree on the ground that it was an absolute nullity, being the decree of a foreign Court? We shall first enquire into the nationality of the decree passed in favour of the appellant which necessitates a determination of the Court passing the decree i.e, whether it was or was not a Court falling within section 2(5) of the Indian Code of Civil Procedure (Act V of 1909) which shall hereinafter be termed the 'Indian Code.
At the.time when the suit was brought i. e. 586 May 15, 1947, the definition of "Foreign Court" in section 2(b) of the Indian Code was: ""Foreign Court" means a court situate beyond the limits of British India which has no authority in British India and is not established or, continued by the Central Government or the Crown representative.
" As a result of the Adaptation Order of March 23, 1948, the definition was: " "Foreign Court" means a court situate beyond the limits of provinces which has no authority in the provinces and is not established or continued by the Central Government.
" By the Adaptation Order of January 26, 1950, there was a further change in the definition of "Foreign Court" and it then stood as follows: ""Foreign Court" means a court situate beyond the limits of the States which has no authority in States and is not established or continued by the Central Government." After Act II of 1951 came into force on April 1, 1951 the section read as follows: "Foreign Court" means a court situate outside India and not established or continued by the authority of the Central Government.
" At the time of the passing of the decree on November 18, 1948 the definition of the Foreign Court was as amended by the Adaptation order of March 23, 1948 i. e. a court situate beyond the limits of the provinces which means the provinces of what was British India and which had no authority in the provinces (of British India) and was not established or continued by the Central Government.
The court at Gwalior fell 587 within this definition and therefore on a plain reading, of the definition it was a foreign court and a judgment passed by it would be a foreign judgment as defined in section 2(6) where the expression "foreign judgment" is defined as the judgment, of a foreign court.
Under the Indian Code the judgment obtained by the appellant in Gwalior court would be governed by section 13 of that Code and its conclusiveness is governed by cl.
(a) to cl.
(f) of that section.
The rules laid down in that section are rules of substantive law and not merely of procedure.
It is to be noted that in the present case the respondents did not submit to the jurisdiction of the Gwalior Court.
In Halsbury.
's Laws of England Vol.
VII p. 144, paragraph 257 (3rd Ed.
) conditions necessary for giving jurisdiction to a foreign court are set out and at least one of them is required to be satisfied before a foreign judgment is regarded as having extra territorial validity.
None of them was satisfied in the present case.
Firstly the respondents were not the subjects of Gwalior; they did not owe any allegiance to the Ruler of Gwalior and therefore they were under no obligation to accept the judgments of the courts of that State.
Secondly the were not residents in that State when the suit was instituted.
Thirdly they were not temporarily present in that State when the process was served on them.
Fourthly they did not in their character as plaintiffs in the foreign action themselves selected the for am where the judgment was given against them.
Fifthly they did not voluntarily appear in that court.
Sixthly they had not contracted to submit to the jurisdiction of the foreign court.
The Gwalior Court therefore was not a court of competent jurisdiction.
The judgment of Gwalior Court was therefore a nullity outside the United State (Madhya Bharat).
See Gurdyal Singh vs Raja 588 of Faridkot (1).
Lord Selborne there observed as follows: "Under these circumstances there was, in their Lordships ' opinion, nothing to take this case out of the general rule, that the plaintiff must one in the court to which the Defendant is subject at the time of suit ("Actor sequitor forum rai"); which is rightly stated by Sir Robert Phillimore (International Law, Vol. 4, section 891 to "lie at the root of all international, and of most domestic, jurispru dence on this matter".
All jurisdiction is properly territorial and "extra territorium jus dicenti, imprime non paretur".
Territorial jurisdiction attaches (with special exceptions) upon all persons either permanently or temporarily resident within th e territory while they are within it; but it does not follow them after they are living in another independent country.
It exists always as to land within the territory and it may be exercised over moveables within the territory; and, in questions of status or succession governed by domicil, it may exist as to persons domiciled, or who when living were domiciled, within the territory.
As between different provinces under one severeignty (e.g., under the Roman Empire) the legislation of the sovereign may distribute and regulate jurisdiction; but no territorial legislation can give jurisdiction which any foreign Court ought to recognise against foreigners, who owe allegiance or obedience to the power which so legislates".
But it was submitted by the appellant that the Court at Gwalior ceased to be a foreign court because firstly as a consequence of the constitutional.documents executed by the Rulers of Indian States the 'United State (Madhya Bharat) (1) (1894) 1.
R. , 423 589 become a part of the Dominion of India and therefore a decree passed by a court of the State could not be the decree of a foreign court; secondly as a result of the coming into force of the Constitution of India what was United State (of Madhya Bharat) became a Part B State of the Union of India and therefore a decree passed by the Gwalior Court even though a nullity in the erstwhile province of U. P. ceased to be so and took Indian nationality and thus became executable in the State of U.
Thirdly it was submitted that the decree passed by the Gwalior Court was a valid decree in the United State (Madhya Bharat) and therefore was not an absolute nullity but there was in impediment to its executability which was removed as soon as the United State (Madhya Bharat) became a part of the Union of India and fourthly it was submitted that subsequent changes in the Indian Code consequent upon the promulgation of the Adaptation Order of January 26, 1950 under article 372 of that Constitution and subsequent amendment of the Order of June 5,1950, which became retrospectively operative from January 26, 1950 and by a subsequent Act [Civil Procedure Amendment Act (Act II of 1951] the Gwalior Court became competent to transfer its decrees for execution to the Court at Allahabad; and under the provisions of the Indian Code relating to execution amended from time to time the decree sought to be executed became executable by the Court at Allahabad.
The first contention is unsustainable because the constitutional changes did not effect any change in the status or nationality of the Gwalior Court till after the passing of the decree of November 18, 1948 and there being no specific provision to the contrary those change left the decree unaffected.
The United State (Madhya Bharat) had not become a part of the Dominion of India despite the various 590 constitutional documents executed by the Rulers of the Indian States.
The effect of these Constitutional documents was examined and decided in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(1); Virendra Singh vs The State of Uttar Pradesh(1) and Prem Nath Kaul vs The State of Jammu & Kashmir(3).
In Rao Shiv Bahadur Singh 's case it was held that in spite of the Instrument of Accession by which all subjects enumerated in Lists I and III of Schedule VII of the Government of India Act 1935 were banded over to the Dominion Government and in spite of the Covenant by which the Rajpramukh had declared that the Constitution of India which was to be adopted by the Constituent Assembly of India shall be the Constitution for Vindhya Pradesh and specifically superseded and abrogated other constitutional provisions inconsistent therewith which were then in force in the State, those arrangements brought about an integrated United State of Vindhya Pradesh within the framework of the Dominion of India "but only by way of accession".
In Virendra Singh 's case Bose J., observed as follows: ((Despite the readjustment, the sum total of the sovereignties; which had resided in each (ruler) before the covenant now resided in the whole and its component parts; none of it was lost to the Dominion of India".
(P. 419) A somewhat similar view was taken by the Court of Appeal in Sayco vs Ameer Ruler Sadiq Mohammad of Bahawalpur where an objection was taken by the Ruler of Babawalpur State that he still retained his independent status and the State of Bahawalpur was not within His Majesty 's Dominion (1) [1953]1 S.C.R. 415,418,419.
(2) [1959] Supp 2 S.C.R. 275.
(3) , 394. 591 in spite of the Ruler of Babawalpur having acceded to the Dominion of Pakistan.
At the relevant date i.e. on November 18, 1948, the various constitutional changes did not affect the position and status of the United States (Madhya Bharat) which comprised Gwalior also; it did not become a part of the Dominion of India but continued to retain its status.
The United State (Madhya Bharat) was not comprised in the ', 'Territory of India" till after the Constitution came into force on January 26, 1950.
This Court has hold that the Constitution is prospective and not retrospective: Janardhan Reddy vs The State of Hyderabad(1); Lachamandas Kewal Ram Ahuja vs The State of Bombay (2); [Keshavan Madhua Menon vs State of Bombay(,).
Before the Constitution, Madhya Bharat was not a Part B State but became one as a consequence of the Constitution.
Therefore the decree which was sought to be executed remained a decree of a foreign court as defined in section 2(5) of the Indian Code then applicable and its judgment had to be enforced in the manner that foreign judgments were enforceable i. e. either a suit had to be brought on the basis of that judgment or if there was a provision in the Indian Code it had to be executed in accordance with that provision; Mull 's C. P. C. p.96; Dicey, Conflict of Laws, Rule 162(7th Ed.).
A Judgement which is governed by the rule in Sirdar Gurdyal Sing 's (4) case not being by a court of competent jurisdiction in the international sense i. e. according to the principles of International Law (Cheshire, Private International Law, p. 641, 6th Ed.) and the respondent not having submitted to its jurisdiction is a nullity outside the territory of the State in which the,court passing the decree is situate.
In that case it was said: (1) ; , 368 (2) ; , 730.
(3) (4) (1894) L.R. 21 I.A. 171.
592 "In a personal action to which none of these causes of jurisdiction apply, a decree pronounced in absentem by a foreign Court, to the jurisdiction of which the Defendant has not in any way submitted himself, is by inter national law an absolute nullity.
He is under no obligation of any kind to obey it; and it must be regarded as a mere nullity by the Courts of every nation except (when authorised by special local legislation) in the country of the forum by which it was pronounced".
On the basis of such a decree therefore no action could be brought in what was British India the decree being of a Court in an Indian State.
By el.
27 of the Adaptation of Laws Order made on January 26, 1950, the previous operation of or anything done or suffered under any existing law or any right, privilege, obligation or liability already acquired, accrued or incurred remains unaffected.
This Order was subsequently amended on June 5, 1950 and el.
27 was numbered as 20 but there was no change in its language.
Therefore by a change made in the definition of "foreign court ' or other changes introduced in the Indian Code the effect of and rights and liabilities under the decree sought to be executed, no fresh rights accrued to the appellant nor were any fresh liabilities incurred by the Respondents and if the decree was a nullity outside the United State (Madhya Bharat) it remained a nullity and Adaptation Order did not change its efficacy.
The effect of Act II of 1951 by which the Indian Code was applied to Madhya Bharat was no different qua the rights and liabilities under previous Orders and decrees; see section 20 of that Act which will be more fully discussed later in this judgment.
In this connection we may refer to the judgement of this Court in Kishori Lal vs Shanti 593 Devi(1).
There, an order under section 488, Criminal Procedure Code, had been passed by a Magistrate at Lahore before the Partition of India and that was sought to be enforced under section 490 of the Criminal Procedure Code in a Magistrate 's Court at Delhi.
An objection was raised that the order was enforceable as it was the order of a foreign court ' i. e. of a court which had subsequently become a Pakistan Court.
This Court held that the order was of an Indian Court when made and was at the time of its enforcement in the Delhi Court still an order of a domestic tribunal.
In the absence of any specific bar there was no reason why it should lose its Indian nationality simply because Lahore was no longer a part of India.
Bose J., at p. 442 observed: "A number of enabling provisions were passed after the partition to meet certain special cases of this kind and of course, where there is specific legislation, effect must be given to it.
But where, as here, there is nothing then in the absence of a specific bar we hold that an order which was good and competent when it was made and which was passed by a tribunal which was domestic at the date of its making and which could at that date, have been enforced in an Indian Court, does not lose its efficacy by reason of the partition".
This no doubt is the reverse case of the present one but the principle laid down there that the effect of the judgment obtained before the constitutional changes does not change unless there is a specific provision to that.
effect is applicable to this case also.
Following the decision in Kishori lal 's(1) case Wanchoo J., (as he then was in Laxmi Chand vs Mst.
Tipuri(2) held that the crucial date for determining the validity or enforceability of an order or a (1) A.I.R. 19S3 section C. 441.
(2) J. L. R. 594 decree is the date when it was made.
Therefore if a decree was unenforceable in a particular court at the time it was passed, it would not become enforceable and valid simply because of the political changes That took place unless there is a specific provision to the contrary.
The Calcutta High Court in Shah Kanti Lal vs Dominion of India (1) held that there, is no retrospective effect of the Constitution including its definition of The words "Territory of India" which has the effect of converting what was a foreign judgment before the Constitution of India to a domestic judgment after the Constitution.
The argument ' raised against the decree of the Gwalior Court being a nullity and not remaining so after the Constitution must therefore fail.
The next argument raised was that the decree passed by the Court at Gwalior on November 18, 1948, was not a nullity as under the Madhya Bharat Code of Civil Procedure it was a valid decree and there was only an impediment to its executability which was removed as a consequence, of the constitutional changes and the subsequent amendments of the Indian Code.
This argument is also not well founded.
The decree was, in the international sense a nullity outside Madhya Bharat even though according to the law in that State it was not so.
We have all ready held that the decree was foreign when it was born in Gwalior and it continued to be so as there was no process or procedure for its becoming, a naturalised Indian decree.
The decree being a nullity outside the courts of the United State (Madhya Bharat), in the absence of any specific provision, it could not be enforced in the United State (.Madhya Bharat).
It will not be correct to say that the decree which was a nullity before the Constitution came into force suffered Only from the defect of enforcibility by execution Section 13 creates substantive rights and is not merely (1) A.I.R. 944 Cal.
595 procedural and therefore defenses which were open to the Respondents were not taken away by any constitutional changes in the absence of a specific provision to the contrary.
It is erroneous to say therefore that the decree of the Gwalior Court was unenforceable when passed because of some impediment which the subsequent constitutional changes had removed; but that decree suffered from a. more fundamental defect of being a nullity and the rights and liabilities created under it remained unaffected by subsequent changes.
That, in our opinion, is the effect of the judgment of this Court in Kishori Lal 's case(1).
See also E. Radhesham Roshan Lal vs Kundanlal Mohanlal") where it was held that the right of the judgment debtor to plead that the decree is a nullity, is not a procedural matter but is a vested right in the judgment debtor and it cannot be taken away by the provision of law which is not retrospective.
The Nagpur High Court in Ram Kishan Jankilal vs Seth Harmukharai Lachmi Narayan(3) also held that a decree by the Indore High Court prior to the constitution was of a court without jurisdiction and merely because Indore became a part of the "Territory of India" after the Constitution did not retrospectively clothe the court at Indore with jurisdiction in order to make the decree which was a nullity, into a valid decree.
It was next argued that as a result of subsequent changes in the provisions of the Indian Code result from constitutional changes in the country, and amendments in the Indian Code the decrees of the Courts in Madhya Bharat became executable under the provisions of the Indian Code and the Gwalior Court could therefore transfer the decree for execution to the Court at Allahabad.
We shall therefore discuss the power of the Court at Gwalior to make the order 'of transfer dated September 14, 1951, assuming without decid (1) A.I.R. (1953) S.C. 441.
(2) I.L.R. 1956 Punj.
(3) A.I.R. 1955 Nag.
103, 596 ing that order which the appellant relies upon Was a judicial orders of transfer.
At the time when 'the suit was filed i. e. May 15, 1947, the law relating to civil procedure applicable to Gwalior State was the Gwalior Civil Procedure Code (Gwalior Act 1 of Samvat 1966 i. e. 1909).
The relevant provisions of that Code dealing with transfer of decrees were se.
227 and 229 the former corresponding to section 38 of the Indian Code of Civil Procedure and the latter to section 39 of that Code.
Sub section (2) of section 229 corresponds to section 41.
of the Indian Code of Civil Procedure.
By the (Madhya Bbarat) Indian Civil Procedure Adaptation Act (Madhya Bharat) Act 70 of Samvat 2006 or 1949 the Indian Code was adapted in Madhya Bharat (and this adapted Code will here inafter be referred to an the Madhya Bharat Code).
It was to come into force on January 23, 1950, i. e.15 days after its publication in the Gazette.
By a. 3 the Indian Code was adapted, and it mutatis mutandis came into force in Madhya Bharat.
It was also provided therein that whatever and whenever amendments would be made in the said Indian Code they would be applicable to Madhya Bharat with necessary alterations.
By section 4 of Madhya Bharat Code above mentioned the previous Codes in force in the various States comprising Madhya Bharat were repealed and it was provided inter alia that all decrees passed and judgments given in accordance with the repealed Code as well as other acts done thereunder would have the same force as if they were issued or made by a competent authority under the Madhya Bharat Code.
Thus on January 23, 1950, the Indian Code with necessary amendments and adaptations was made applicable to the State of Madhya Bharat but this was under the orders of the legislative authority of Madhya Bharat, which could only legislate for and in the territories of that State.
As we have already said on January 26, 1950, the adaptation of Laws 597 Order was promulgated under article 372 of the Constitution of India by the President of India.
Under that Order existing laws Were adapted as mentioned in the Schedule to the Order.
Clause 27 of that Order provided that "Nothing in this Order shall affect the previous operation of, or anything duly done or suffered under any existing law or any right, privilege, obligation or liability already acquired, accrued or incurred under any such law, or any penalty, forfeiture or punishment incurred in respect of any offence already committed against any such law".
As a result of this adaptation, certain changes were made in the Indian Code.
But it did not affect any act already done or any liability already incurred.
Thus it left the operation of decrees previously passed unaffected.
On June 5, 1950, the President promulgated the adaptation of Laws (Amendment) Order, 1950, but gave it a retrospective effect, so that it was deemed to have come into force on January 26, 1950.
Under the amended Adaptation order certain changes Were made in the Indian Code which will be discussed later in this judgment.
But it did not affect the operation of cl. 27 above set out, Under the adaptation of Laws (Third Amendment) Order of April 4, 1951, cl. 27 was renumbered as el. 20.
The Indian Code was amended by the Code of Civil Procedure (Amendment) Act, 195 1, (II of 195 1) which came into force on April 1, 1951.
By that Act, the Indian Code was extended to the whole of India excepting certain territories mentioned in section 2 which are not relevant for the purpose of this appeal.
Thus it became applicable to Madhya Bharat which was then a Part B State and consequently it became operative in what at one time was the Indian State Section 20 of this Act provided for of Gwalior.
repeals and savings.
That section runs as follows: 598 section 20 (1) "Repeals and Savings.
If, immediately before the date on which the said Code comes into force in any Part B State, corresponding to the said Code, that law shallon that date stand repealed: Provided that the repeal shall not affect (a) the previous operation of any law so repealed or anything duty done or suffered thereunder, or (b) any right, privilege, obligation or liability accrued or incurred under any law so repealed, or (e) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty forfeiture or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if this Act had not been passed.
(2) Subject to the provisions contained in subsection (1) notifications publisbed, declaration and rules made, places appointed, agreements filed, scales prescribed, forms framed, appointments made and powers concerned under any enactment hereby repealed shall, so far as they, are consistent with the said Code, have the same force and effect as if they had been respectively published, made, appointed, filed prescribed, framed and conferred under the said Code and by the authority empowered thereby in such behalf.
599 (3) In every law or notification passed or issued before the commencement of this Act in which reference is made to or any Chapter or section of any law hereby repealed, such reference shall so far as may be practicable be taken to be made to the said Code or its corresponding Part, Order, section or rule.
" On the coming into force of Act II of 1951 aforesaid the rights that were acquired or accrued under the decree passed previously remained unimpaired and unaffected by the repeal and all rights and privileges acquired or accrued under the decree continued as before so also all liabilities or obligations incurred thereunder.
And all such rights and privileges were enforceable as if the Act had not been passed.
Therefore the decree of the Gwalior Court dated November 11, 1948 continued to be enforceable as decree under the Madhya Bharat Code.
As we have said before we shall assume for the purposes of this appeal that the order of transfer by the Court at Gwalior was the one passed on September 14, 1951.
By then by the operation of Act II of 1951 there was one Civil Procedure Code for what was Gwalior and U. P. and indeed for the whole of India.
The question then is, was the order dated September 14, 1951, transferring the decree for execution to the Civil Judge, Allahabad an effective order to which sections 38 and 39 of the Indian Code applied and could the decree so transferred be executed by the execution Court at Allahabad ? It was contended on behalf of the appellant that it could be executed as it was a decree which fell within sections 38 and 39 of the Indian Code, which the Gwalior Court had the power to transfer and 600 which the Allahabad Court had under the law the authority to execute.
We think it is not so.
The main provisions for execution of decrees are contained in Part II "Execution" in the Indian Code and minor rules are contained in Order 21.
Of these provisions sections 36 to 42 deal with Courts which can execute decrees, can transfer decrees and the power of executing Courts in regard to transferred decrees.
The present sections 43 to 45 deal with execution ' of decrees passed by Civil Courts in place to which the Indian Code does not extend execution of decrees passed by revenue courts, by the courts in the United Kingdom and other reciprocating territory and execution of decrees in foreign territories.
Section 38 of the Indian Code provides that a decree may be executed by the Court which passed it or by the court to which it is sent for execution.
Court which passed a decree is defined in section 37 and section 39 provides for the transfer of decrees for execution.
It reads 39 (1) 'The court which passed a decree may, on the application of the decree holder send it for execution to another Court".
Section 40 of the Indian Code provides for the transfer of a decree to a court in another State where it has to be executed in such manner as may be prescribed by Rules in force in that state and section 42 lays down the powers of the Court in executing transferred decree.
It provides that the power of the Court in executing decrees shall be the same as if it had been passed by itself.
These are the relevant provisions which deal with the transfer to and execution of decrees in other courts and to courts of another State and powers of such courts in execution and the procedure to by followed by them.
The jurisdiction of the Allahabad Court to execute the decree sent to it by the Gwalior Court can be examined from two angles : (1) Was the court at Gwalior a court which could under section 39 of the Indian Code transfer its decree to the Allahabad Court for execution; and (2) was the decree sent for execution a decree which a court governed by the Indian Code as was the Allahabad Court, such that it could be executed by the transferee court.
We are unable to see how the Gwalior Court could send under section 39 decrees which it had passed when it was not governed by the Indian Code.
It is fallacious to think that the court at Gwalior governed by the Indian Code was identical with the court which was governed by another Code.
In our opinion, the Gwalior Court which made the order of transfer of September 1951 when it was governed by the Indian Code was a different court from what it was at the time it passed a decree when functioning under a different Code of Civil Procedure.
The Court which made the order of transfer in September, 1951 was thus not the court which passed the decree within the meaning of section 39.
The decrees in the sections dealing with execution of decrees i.e. sections 37 to 42 are decrees which were passed by courts governed by the Indian Civil Procedure Code because those sections relate to decrees passed in suit under the provisions of that Code.
The preamble to the Indian Civil Procedure Code is "whereas it is expedient to consolidate and amend the laws relating to the procedure of the Courts of Civil Judicature." Under section 1 (3) as it exists now the Code extends to the whole of India except 'certain Tribal Areas etc.
Previous to the Amendment Act 11 of 1951 above referred to, section 1 (3) of the Indian Civil Procedure Code reads as under: 602 section 1 (3) "This section and sections 155 to 158 extend to the whole of India except Part B States; the rest of the Code extends to the whole of India except Part B States and the Scheduled Districts".
Therefore the Indian Code was not then applicable to those States which became Part B States as a result of the Constitution of India.
" Decree" in the Indian Code is defined to mean the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any matters in controversy in the suit. .
It means, therefore, that a decree which is to be executed under the Indian Code by a transferee Court is a decree passed in a suit i.e., in civil proceeding which is instituted by the presentation of a plaint under section 25 of the Code.
Therefore 'the decree which is referred to in Part II dealing with execution i.e. sections 37 to 42 in a decree which is passed in a suit commenced in the manner provided in the Indian Code, is conducted and decided under the provisions of the Indian Code, and there is nothing in Act 11 of 1951 above referred to which has changed that position.
Reference was made by counsel for the appellant to sub section
(2) of section 30 of Act 11 of 1951 but that section does not apply to judgments and decrees passed but applies to the other matters therein mentioned e.g., notifications, declarations, rules and appointments etc.
It has no reference to decrees passed or Orders made under the local Codes of Civil Procedure.
That section therefore is not of any assistance to the appellant.
Whatever rights or privileges the appellant bad acquired or whatever rights or privileges bad accrued to him were continued and it cannot be said that the decree passed under the Madhya Bharat Code became a decree 603 under the Indian Code by virtue of a 20 of Act 11 of 1951.
On the other hand by cls.
(b) and (c) of sub section
(1) of that section the decree continued to be decree governed by the Madhya Bharat Code and executable under it.
The Gwalior Court therefore had no power under as 38 and 39 to transfer the decree of November 18, 1948, and consequently the Allahabad Court acquired no power to execute it.
It was next contended that if the Court at Gwalior that passed the decree had no power under as. 38 to 42 of the Indian Code to transfer the decree for execution and the Court at Allahabad was not empowered to execute that decree then the decree could be executed under the provisions of as 43 and 44 of the Indian Code.
Of course the decree was not sought to be executed under either of these two provisions.
But we shall examine these sections of the Indian Code as applicable to the Courts at Allahabad at the relevant time.
Prior to the Indian Independence (Adaptation of Central Acts and Ordinance) Order of 1948 promulgated on March 23, 1948, which will hereinafter be termed the Adaptation Order 1948, the relevant portion of section 43 was as follows: Execution of decrees passed by British Courts or in places to which this part does not extend or in foreign territory.
Any decree passed by a Civil Court established in any part of British India to which the provisions relating to execution do not extend or by any Court established or continued by the authority of the Central Government or the Crown Representative in the territories of any foreign Prince or State, may, if it cannot be executed within the jurisdiction of the court by which it passed.
604 executed in manner herein Provided within the jurisdiction of any court in British India" After the Adaptation Order 1948 the provisions essentially remained the same and there was only a change in nomenclature.
Instead of British India the expression ,the provinces of India" and in place of "territories of any Foreign Prince or State" "in any Indian State" were substituted.
After the coming into force of the Constitution Adaptation of Laws Order of January 6. 1950 was promulgated.
There again the change in section 43 was nominal and in place of "Province of India" the word "State" was substituted.
Thus there was no change which is material for the present 'appeal till the Adaptation of Laws (Amendment) Order dated June 5, 1950, which had retrospective effect as from January 25, 1950 and section 43 was amended as follows " 'Execution of decrees passed by Civil Courts in Part B States, in places to which this Part does not extend or in foreign territory.
Any decree passed: (a) by a Civil Court in a Part B State, or (b) by a Civil Court in any area within a Part C State or Part B State to which the provisions relating to execution do not extend, or (c) by a Court established or continued by the authority of the Central Government outside India, may, if it cannot be executed within the jurisdiction of the Court by which it ,was passed, be executed in a manner herein provided within the jurisdiction of any court in the States.
605 By the operation of Act 11 of 1951, section 43 was further amended and it then read as follows Execution of decrees passed by Civil, Courts in places to which this Cock does not extend.
Any decree passed by any Civil Court, established in any part of India to which the provisions of this Code do not extend, or by any Court established or continued by the authority of the Central Government outside India, may, if it cannot be executed within the jurisdiction of the Court by which it was passed, be executed in the manner herein provided within the jurisdiction of any Court in the territories to which this Code, extends".
Thus after the Constitution came into force by virtue of the Adaptation Order, a decree which was passed by a Civil Court in a Part B State could be executed in the manner provided, within the jurisdiction of any Court in what were the States of India i. e.
Part A, B & C States.
It was submitted on behalf of the appellant that the words in section 43 of the Code as adapted by the Adaptation Order of June 5, 1950, "Any decree passed by a Civil Court in a Part B State" must be read as "a Civil Court in what became a Part B State".
We are unable to accept, this contention.
This would mean that the Constitution is retrospective.
But it has been held by this Court that the Constitution is prospective.
Madhya Bharat, before the Constitution of India i. e. before January 26, 1930, was not a Part B State.
It became one as a consequence of the Constitution.
As a matter of fact there were no Part B States, before the Constitution.
Therefore a decree passed 606 before the Constitution by a Civil Court in Madhya Bharat cannot be considered as a decree by a Civil Court in a Part B State.
After the Indian Code came into force in Part B States as a result of Act 11 of 1951 under section 43 only those decrees could be executed which were passed by Civil Courts established in Parts of India to which the provisions of the Civil Procedure Code "do not extend" or by Courts estab lished or continued by the authority of the Central Government outside India, and in none of these categories does the decree passed by the Gwalior Court after the establishment of Madhya Bharat fall.
It was not a decree passed by a Court in a part of India to which the Indian.
, Code "does not extend".
Those areas were set out in section 1 (3) of the Indian Code.
Therefore, under the provisions of section 43 of the Indian Code of Civil Procedure the decree could not be executed.
We shall not take section 44 of the Code: S.44 "Execution of decrees passed by Courts of Indian States.
The Provincial Government may, by notification in the Official Gazette declare that the decrees of any Civil or Revenue Courts in any Indian State not being Courts established or continued by the authority of the Central Government or of the Crown Representative, or any class of such decrees, may be executed in the Province as if they had been passed by Courts of British India.
By the Adaptation Order of 1948 in place of the words "British India" "that Province" were substituted.
By the Adaptation Order of January 26 1950, the section read as follows: 607 Execution of decrees passed by Courts of Part B States.
The State Government may by notification in the Official Gazette declare that the decrees of any Civil or Revenue Courts in any Part B State, or any class of such decrees, may be executed in the State as if they had been passed by Courts of that State".
This section was again amended by the Adaptation Order of June 6, 1950, which gave it retrospective effect as from January 26, 1950.
It then read as follows: Execution of decrees passed by Revenue Court Part B States.
The Government of a Part A State or Part C State may by notification in the Official Gazette, declare that the decree of any Revenue Courts in any Part B State or any class of such decrees may be executed in the Part A State or Part C State, as the case may be, as if they had been passed by Courts of that State".
Finally after Act 11 of 1951 which came into force on April 1, 1951, section 44 is as follows: Execution of decrees passed by Revenue Courts in places to which this Code does not extend.
The State Government may, by notification in the Official Gazette, declare that the decrees of any Revenue Court in any part of India to which the provisions of this Code do not ext end or any class of such decrees may be executed in the State as if they had been passed by courts in that State".
At the time when the decree was sought to be executed in the, Execution Court at Allahabad, section 44 of the Code was what was 608 substituted by Act 11 of 1951 and that certainly could Dot be availed of by the appellant as it bad no application to decrees of Civil Courts and the argument in regard to decrees of Part B States is the same as in the case of a. 43 of the Code which has been discussed above.
It was next argued that in construing the words "the decree of a civil court in a Part B State" we should have regard to the fact that at the time section 43 was amended in this manner section 44 was also amended in such a way that it was no longer possible for a State Government to issue a notification as it could have done but for such amendment declaring that the decrees of civil courts in an Indian State might be executed in the State as if they have been passed in the courts of that State.
It is said that this took away the whatever chance a decree made by an Indian State had of being made executable in other parts of India.
So, it is argued we should interpret the words "the decree of a civil court in a Part B State", to include decrees made by a civil court in what later became Part B State at a time when it was an Indian State.
It could 'not, it is urged, have been the intention of the legislature in making the amendment of June 3, 1950 to totally destroy this chance of executability which was possible under the law as it stood before.
We do not think this is a relevant consideration.
If the legislature bad intended to save this chance of executability under a possible future notification it could have easily made the necessary provision.
It has to be remembered that the right of executability which had attached to a decree on the basis of a notification already made would continue after the date of amendment.
Only, if the law had not been changed as it was by the amendment on June 3, 1950, there would have existed a chance that the decrees of courts of Indian 609 States in respect of which no notification had been made under section 44 could have become executable by a notification made in future thereunder.
The power to make such a notification in respect of decrees of civil courts in Indian States was however deliberately taken away and it is useless and irrelevant to worry about the resultant loss of chance of executability by a possible future notification that might have existed under the old law.
It was finally contended that by virtue of article 261, the decree passed by the Gwalior Court was executable.
The first clause of article 261 provides for full faith and credit to be given throughout the territory of India to judicial proceedings of the Union and of every State.
Clause 3 of article 261 was as follows: "Final judgments or orders delivered or passed by Civil Courts in any part of the territory of India shall be capable of execution anywhere within that territory according to law".
The first matter to be considered in regard to article 261 is that the Constitution is prospective and not retrospective and it applies to decrees which were passed after the coming into force of the Constitution and not before and, therefore, neither clause 1 nor clause 3 can have any application to the decree sought to be executed.
In our opinion, therefore, the decree of the Gwalior Court sought to be executed was A, decree of a foreign court which did not change its nationality in spite of subsequent constitutional changes or amendments in the Code.
The Gwalior Court could not transfer the decree for execution to the Court at Allahabad under sections 38 and 39 nor could 610 the Court of Allahabad execute the decree without Such transfer.
The provisions of sections 43 and 44 of the Code also were not applicable in this case.
For these reasons the appeal fails, and is dismissed with costs.
DAS GUPTA, J.
This appeal is by a decreeholder whose application for execution of the decree has been unsuccessful.
The decree was passed on November 18, 1948, by the Court of the District Judge, Gwalior, in Gwalior State.
It was ex parte, the defendants the respondents in the present appeal who are residents the United Provinces, now Uttar Pradesh, not having appeared in the Gwalior Court.
On August 9, 1949, the decree holder applied to the Gwalior Court for transferring the decree to the Court of the Civil Judge, Allahabad, for execution.
On April 25, 1950, the Gwalior Court passed an order for transfer of the decree for the execution to the Civil Judge, First Grade, Allahabad.
It needs to be mentioned that on the date when the suit was instituted, i.e., May 15, 1947; the date on which the decree was passed, November 18, 1948; the date on which the application was made for transferring the decree, August 9, 1949; as also the date April 25, 1950, when the order for transferring the decree was made by the Gwalior Court, the Code, of Civil Procedure which is in force in India did not apply to the Gwalior Court.
For, even though the Gwalior State had acceded to the Dominion of India by an Instrument of Accession by the under of the State made on August 15, 1947, arid after that the United State (Madhya Bharat) of which Gwalior became a part by a covenant signed in April 1948, acceded to the Dominion of India on July 19, 1948, by a fresh Instrument of Accession and after the Constitution of India came into force this United States (Madhya 611 Bharat) became part of the territory of India as Madhya Bharat being a Part B State, the Indian Code of Civil Procedure did not become applicable to the Courts in Gwalior till after the enactment of Act 11 of 1951 which came into force on April 1, 1951.
From this date the Indian C de of Civil Procedure became applicable to the Courts of Gwalior also.
We have already mentioned that On April 25, 1950, an order for transfer of the decree had been made by the Gwalior Court.
The further action which has to be taken under 0.
21 r. 6 of the Indian Code, of Civil Procedure by the court sending a decree for execution was not however taken till September 14, 1951.
On that date an order was made by the Gwalior Court certifying that the amount of the decree had "not been paid or realised by execution" and ordering that the certificate be sent to the Civil Judge ' First Grade, Allahabad under O. 41 r. 6.
This order closed with the sentence "a copy of this order along with copies of decree passed in connection with the execution be forwarded directly to the court of the Civil Judge, First Grade, Allahabad.
" The application for execution was made in the Court at the Civil Judge at Allahabad on October 16, 1951.
To this application the judgment debtor raised objections under section 47 of the Code of Civil Procedure.
This application was ultimately heard by a single Judge of the High Court of Allahabad who dismissed the application being of opinion that the decree obtained by the appellant was a nullity and on that ground in executable at Allahabad.
This view was upheld by the same High Court on appeal.
Three questions have been raised in this appeal.
The first is: whether vis a vis the Allahabad Court the decreed sought to be executed was a 612 foreign decree which the Allahabad Court rightly considered to be a nullity and on that account inexecutable in Allahabad Courts.
The second question raised before us is whether, even assuming. that this was not a foreign decree the Allahabad Court was a Court to which it could be sent for execution within the meaning of section 37 and 38 of the Indian Code of Civil Procedure.
The third question is whether a. 43 or section 44 of the Code of Civil Procedure made the decree executable in the Allahabad Courts.
It is unnecessary in our judgment to investigate the first question.
The objection raised on the nullity of the decree could be raised only in the Allahabad Court where the decree was sought to be executed.
But before that question would arise the Allahabad Court must have power to execute the decree either oil transfer of the decree to it under section 38 or under the provisions of section 43 or s.44 of the Code.
For reasons to be presently stated, we do not think that there could be valid transfer of the decree to the Allahabad Court or that it had any power to execute the decree under section 43 or s.44.
bat is why we think that, the question bow far the decree was a nullity does not fall for our decision in this case.
With other modes of enforcement of a foreign decree this case has no concern.
In solving the problems raised by the second and the third questions it is necessary first to have an idea of the scheme, of the Indian Code of Civil Procedure as regards what courts in India can execute decrees.
We find in Part II of the Civil Procedure Code which relates to the execution of decrees, only three sections dealing with this matter.
They are sections 38, 43 and 44.
Sections 38 provides that a decree may be executed either by the Court which passed it, or by the Court to which it is sent 613 for execution.
Section 43 as it stands at present provides that: "Any decree passed by any civil court established in any part of India to which the provisions of this Code do not extend, or by any court established or continued by the authority of the Central Government outside India, may, if it cannot be executed within the jurisdiction of the Court by which it was passed be executed in the manner herein provided within the jurisdiction of any court in the territories to which this Code extends.
" We shall have later to refer to the several changes which section 43 has undergone between the time the decree was made and the present day.
Section 44 provides that "the State Government may, by notification in the Official Gazette, declare that the decrees of any revenue court in any part of India to which the provisions of this Code do not extend, or any class of such decrees, may be executed in the State as if they had been passed by courts in that State.
" This section has also undergone some change during the relevant period.
To this change we shall later refer.
Let us first examine whether the Allahabad Court where the decree holder is seeking to execute the decree is a court by which the decree can be executed under section 38.
Obviously, it is not the Court which passed the decree.
The controversy is whether it is a Court to which the decree was sent for execution.
The provisions for sending a decree for execution to another Court by the Court which passed the decree are contained in section 39 of the Code of Civil procedure.
According to the decree holder the decree was sent by the Gwalior Court to the Allahabad Court by its order dated September 14, 1951.
The Judgment debtors ' contention on the other hand is that the only 114 order of transfer was that of April 25, 1950.
If the judgment debtors ' contention is correct it would follow that there was no order for transfer under section 39, as on that date the Gwalior Court was not governed by the Indian Code of Civil Procedure.
Learned Counsel for the decree holder appellant has contended that the directions that were given on September 14, 1951, really amounted to an order for transfer under section 39.
According to the learned Counsel the Indian Courts should ignore the order of April 25 1950, as non existent, so that it was open to the Gwalior Court to make a fresh order in the matter on September 14, 1951, when it was governed by the Indian Code of Civil Procedure.
Therefore, it is argued, though it might be true to say that if the order of April 25, 1950, had been made under the Indian Code of Civil Procedure, what was ordered on September 14 1951; was merely a direction under O 21 r. 6 of the Civil Procedure Code for the ministerial carrying out of the order under section 39 already made, that is, not the position here as the first order of April 25, 1950, was admittedly not under the Indian Code of Civil Procedure.
The matter is by no means free from difficulty; but let us assume that this order of September 14, 1951, was the order by which the Gwalior Court then governed by the Indian Code of Civil Procedure, purported to transfer the decree to the Allahabad Court for execution.
The question still remains.
Was it an order within the meaning of a. 39 of the Code of Civil Procedure? The answer to this question depends on weather the Gwalior Court which was functioning on September 14, 1951, was "the Court which passed the decree." Under the Indian Code of Civil Procedure the right to execute a decree arises as soon as a decree is made.
Immediately on the making of the decree the Court which passed the decree has jurisdiction 615 to execute it and at that very point of time that very Court has the jurisdiction to transfer it to another court governed by the Indian Code of Civil procedure for execution.
It is reasonable to think that in speaking of " 'courts" in the phrase, "courts which passed the decree" section 37, as well as section 39 contemplate only courts governed by the Indian Code of Civil Procedure.
For, it is with the procedure of such courts only that this Code is concerned.
On the date the present decree was made the Indian Code of Civil Procedure did not apply to the Gwalior Court.
In other words, it was not a ""court" for the purposes of the Indian Code of Civil Procedure.
Later on, it is true, from April 1951, the Indian Code of Civil procedure became applicable to the Gwalior Court.
It will be proper, in our opinion, to think that the court when governed by the Gwalior Code of Civil Procedure had a distinct identity from the court at Gwalior after it came to be governed by the Indian Code of Civil Procedure.
The Court which made the order of transfer in September 14, 1961 was therefore not ",the Court which passed the decree" within the meaning of section 39.
It is clear therefore that the Allahabad Court had no power to execute the decree under section 38 of the Civil Pro cedure Code as there was no valid transfer to it from the "court which passed the decree.
" It remains to consider whether section 43 or section 44 are of any assistance to the decree holder.
Coming to section 44 first, it has to be mentioned that upto March 23, 1948 the section ran thus : "The Provincial Government may by notification in the Official Gazette declare that the decree ' of any Civil or Revenue Courts in any Indian State, not being courts established or continued by the authority of the Central Government or of the Crown Representative, or any class of such decrees, may be executed in the Province as if they had been 616 by courts of British India.
" The section was materially amended on June 3, 1960 with retrospective effect from January 26, 1950.
On amendment the section ran thus : "The Government of a Part A State or Part B States may, by notification in the Official Gazette declare that the decrees of any Revenue Court in any Part B State or any class of such decrees may be executed in the Part A State or Part C State, as the case may be, as if they had been passed by courts, of that State.
" It is obvious that the decree holder can get no benefit from section 44 after this amendment.
If however there had been a notification by the U. P. Government under section 44 as it originally stood in respect of decrees of Civil Courts in Gwalior State the present decree would have been executable in Allahabad Courts on January 26, 1950, and that right of executability would have continued upto the present time.
There was however no such notification.
It is clear therefore that section 44 is of no assistance to the decreeholder.
It is equally clear that section 43 is also no assistance to him.
Section 43 as it originally stood was in these words : " 'Any decree passed by any civil court established in any part of British India to which.
the provisions relating to execution do not extend, or by any court established or continued by the authority of the Central Government or the Crown Representative in the territories of any foreign prince or State outside India, may if it cannot be executed within the, jurisdiction of the Court by which it was passed, be executed in the manner herein provided within the jurisdiction of any court in British India.
" The decree of Gwalior Court did not fall within this.
The section was amended after March 23, 617 1948, and for the words "in any part of British India" the words "in any area within the provinces of India" were substituted.
This change could not 'however bring the decree of a Gwalior State within the section.
The next change, which it is necessary to mention was made by the amendment of June 3, 1950, with retrospective effect from January 26, 1950.
On this amendment section 43 ran thus , "Any decree passed, (a) by a Civil Court in a part B State or (b) by a civil court in any area within a part A State or part C State to which the provisions relating to execution do not extend, or (c) by a court established or continued by the authority of the Central Government out side India, may, if it cannot be executed within the jurisdiction of the Court by which it was passed, be executed in a manner provided within the jurisdiction of any court in the States.
" It has been strenuously contended on behalf of the decree holder that the decree passed by the Gwalior Court on November 18, 1948, is a decree passed by a civil court in a Part B State.
It is true that Gwalior became Part of a Part B State from January 26, 1950, and civil courts in Gwalior were from that date civil courts in any Part B State.
Every decree made by a court in Gwalior after January 26, 1958, would get the benefit then of section 43 as amended.
We are unable to see however how the decree passed by a civil court in Gwalior before that date could get any such benefit.
The agreement of the appellant 's council that a decree passed by a civil court in Gwalior before Gwalior become included in a Part B State is a decree passed by a 618 civil court in a Part B State really asks us to construe the words ",by a civil court in a part B State" as by a "civil court in an Indian State which has later become included in a Part B State." For such a construction we cannot see any justification.
It was urged by the learned Counsel that it could not have been the intention of the legislature to make any radical departure in the scheme of making decrees of courts of Indian States executable in as courts in Indian provinces.
It is pointed out that under section 44 as it originally stood such a decree would have become executable in the courts of the provinces if the Provincial Government made the necessary notification under section 44.
The position was safe when there was such a notification.
But, even when there was no such notification there was always the probability of such a notification being made.
That probability disappeared with the amendment of section 44 on June 3, 1950.
It is reasonable to think, argues the learned Counsel, that when at the same time section 44 was thus being amended the legislature used the words: "any decree passed by a civil court in a Part B State ', ' its intention was to include within those words "decrees made by a civil court in an Indian State which later become a Part B State," In our opinion, the words actually used by the legislature do not admit of such an interpretation.
If it was the legislature 's intention to preserve for the decrees of the Indian States this chance of executability it could have easily made the necessary provision by using suitable phraseology either in section 43 or section 44.
On a proper construction of the words that were actually used, viz., "any decree passed by a civil court in a part B State", we see no reason to think that the legislature intended to use to mean ,,decrees made by a civil court in an Indian State, which later became a Part B State" Section 43 619 therefore as it stood after the amendment of June 3, 1951 is of no assistance to the decree holder.
Section 43 was further amended by Act 11 of 1951 and the words as they stand at present have already been set out.
The appellant rightly does not contend that section 43 as it now stands applies to the present decrees.
Our conclusion therefore is that the Allahabad Court had no power to execute the decree either under sections 38 or under sections 43 or 44 of the Code of Civil Procedure.
Therefore, even if the decree was not a foreign decree, the decree holder 's application for execution was rightly dismissed.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
|
The appellant instituted a suit for the recovery of money against the respondents in a Court in Gwalior State in May 1947.
The respondents who were residents in U. P. did not appear before the court and in November 1948 the Gwalior Court passed an ex partc decree.
On September 14, 1951, the Gwalior Court transferred the decree for execution to Allahabad, and on October 16, 1951, the appellant filed an application for execution of the decree before the Allahabad Court.
The respondents contended that the decree being a decree of a Foreign Court to whose jurisdiction they had not submitted was a nullity and the execution application in respect thereof was not maintainable.
Held, that the decree was not executable at Allahabad.
Per Kapur, Ayyangar and Mudholkar, JJ.The decree of the Court in Gwalior State sought to be executed was a foreign decree which not change its nationality inspite of subsequent constitutional changes or amendments in the Code of Civil Procedure.
On the day on which it passed the decree the Gwalior Court was a foreign Court within the meaning of section 2 (5) of the Code.
None of the conditions necessary to give its judgment extra territorial validity existed (i) the respondents were not the subjects of Gwalior; (ii) they were not residents in Gwalior at the time the suit was filed, (iii) they were not temporarily present in gwalior when the process was served upon them, (iv) they did not select the forum which passed the decree against them, (v) they did not voluntarily appear before the court, and (vi) they had not contracted to submit to the jurisdiction of the 579 by the Indian Code, was a different court from that which passed the decree under the Local Code, and was not the court.
which passed the decree within the meaning of section 39.
Sections 37 to 42 of the Code deal with execution of decree., passed by the courts governed by the Indian Code.
The decree could not be executed under the provisions of section 43 of the Code at any time.
After its adaptation in June 1950, section 43 applied to "a decree passed by a Civil Court in a Part B State".
There were no Part B States at the time when the decree was passed and these words could not be read as "a decree passed by a civil court in what became a Part B State".
Nor could the decree be executed under section 44 as that section was also inapplicable to this decree.
Article 261 (3) which provides that the final judgments or orders of Civil Courts in any part of the territory of India shall be capable of execution anywhere within that territory is inapplicable to the decree of the Gwalior court as the, provision is prospective and not retrospective.
Per Sarkar and Das Gupta, JJ.
Even in the decree passed by Gwalior Court was not a foreign decree the Allahabad Court had no power to execute it either under section 38 or under sections 43 or 44 of the Code of Civil Procedure.
Section 38 provides that a decree may be executed either by the court which passed it or by the court to which it is sent for execution.
The Allahabad Court was not the court which passed the decree.
Section 39 empowers the court which passed the decree to transfer it for execution to another court.
The word "court" in the phrase "court which passed the decree" in section 39 contemplates only courts governed by the Indian Code of Civil Procedure.
The Gwalior ,.Court which was governed by the Gwalior Code when it passed the decree had a distinct identity from the court at Gwalior after it came to be governed by the Indian Code.
The Court which transferred the decree was accordingly not the court which passed the decree and the order of transfer was not a valid order.
Section 43 of the Code provided for the execution of decrees passed by the Civil Courts in places where the Indian Code did not extend.
The decree of the Gwalior Court did not fall within this section as it stood before the Constitution.
A, After the adaptation in 1950 the section applied to a decree passed "by a Civil Court in a Part B State".
These words could not be read as "by a civil court in an Indian State which has later been included in a Part B State".
The Gwalior Court which passed the decree was not a Civil Court in a Part B State. 'Section 44 was equally inapplicable to the decree,.
The section after adaptation in 1950 580 applied only to decrees of revenue courts.
Before the adap tation it could apply only if there was a notification issued by the U. P. Government but no such notification was issued.
|
Civil Appeal No. 2649 of 1984.
Appeal U/s 116A of the R.P. Act 1951 from the Judgment and Order dated 30.5.1984 of the Punjab & Haryana High Court at Chandigarh in E.P. No. 8 of 1982.
H.L. Sibal, Kapil Sibal, Mrs. Madhu Tewatia Singh and N.M. Popli for the Appellant.
S.N. Kacker and Ravinder Bana for the Respondents.
by VARADARAJAN, J.
This appeal by the first respondent in Election Petition No. 8 of 1982 on the file of the Punjab and Haryana High Court is filed against the judgment of the learned Single Judge, allowing the election petition and setting aside the appellant 's election to the Haryana Legislative Assembly from the Jind constituency in the election held on 19 5 1982.
Out of 26 nomination papers filed, 24 were found to be valid and ultimately 14 candidates remained in the field.
The real contest was between the appellant Brij Mohan, who was an independent candidate supported by the Lok Dal and the first respondent Manga Ram who contested as the Congress (I) candidate.
In the counting which took place on 20 5 1982 it was found that the appellant had secured 27045 valid votes while the first respondent had secured 26899 valid votes and the appellant was accordingly declared elected.
The first respondent filed the election petition challenging the p appellant 's election on the following grounds, namely: (I) corrupt practice of bribery as defined in section 123(1) of the Representation of People Act, 1951; (2) corrupt practice of publication of various statements relating to the personal character of the first respondent which were false; (3) result of the election in so far as it related to the appellant having been materially affected by en masse violation of the statutory provisions and (4) large scale receiption of void votes in favour of the appellant but for which the first respondent would have been declared elected.
The first respondent prayed in the election petition for (I) the appellant 's election being set aside as void on the above grounds; (2) the appellant being declared to have committed corrupt practice and (3) the first respondent being declared to have been duly elected, 315 The learned Single Judge who tried the election petition allowed it with costs on only one ground and set aside the appellant 's election as void on that ground, namely, that he committed the corrupt practice of bribery by contributing a sum of Rs. 5100/towards the cost of construction of a temple for the backward classes in Kandela village in order to get the votes of the members of those classes cast in his favour in that election.
It is, therefore, necessary to state the case of the parties briefly in regard to only this item of corrupt practice.
The first respondent has alleged in the election petition that the appellant visited Kandela village on or about 16 5 1982 accompanied by his father Sita Ram and two others Ram Kishan and Amrit Lal and they contacted Dalip Singh, Sarpanch of the village and one Dewan Singh, Secretary of the backward classes.
The appellant appealed to the backward class voters assembled at the house of one Dharam Singh for casting their votes in his favour.
The voters present there included Dewan Singh, Hari Ram, Devi Ram, Fateh Singh and Mauji Ram.
The voters told the appellant that they intended to cast their votes in favour of the Congress (I) candidate as they had always been in favour of the Congress (I) party.
The appellant, thereafter, had a talk with the Sarpanch Dalip Singh and one Dharam Singh and subsequently stated, for inducing the voters to cast their vote in his favour, that he was prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir.
Accordingly, he gave a sum of Rs. 5100 to the Sarpanch Dalip Singh who passed it on to Dharam Singh and Dewan Singh.
The voters thereafter assured the appellant that they would vote for him and ensure that every vote belonging to their class will go in his favour.
The appellant denied this allegation saying that he never visited Kandela village in the company of Sita Ram, Ram Kishan and Amrit Lal and never gave Rs. 5100 to the Sarpanch Dalip Singh and that the entire allegation in the election petition regarding this item of corrupt practice is false and mischievous.
In regard to this item of corrupt practice there is evidence of the election petitioner/first respondent Mange Ram, P.W. 1, Dewan Singh, P.W, 16, Manuji Ram, P.W. 90, Fateh Singh, P.W. 91 and Prahlad, P.W. 92 on the side of the first respondent and of the appellant, R.W. 1 on the side of the appellant.
The learned Single 316 Judge found that after a Commissioner appointed by the Court contacted P.W. 16 and obtained a register from him.
P.W. 16 was suspended by the District Education Officer, Jind by an order dated 23 11 1982 and transferred to Narnaul situate 200 miles away from his original place which was his home town and he opined that it was done in order to overawe P.W. 16 so that he may not appear as a witness in this election petition.
He further observed that "It was in his (appellant 's) interest to see that this witness did not come on record.
If illegal pressure was brought to bear on a witness who had come to this Court to depose about this charge, normal inference and presumption would be that the pressure had been brought to bear upon him either by the party who was interested in seeing that damaging evidence was not led against him or by some one else at his instance.
I am clearly of the view that respondent No. I had somehow or other secured that order of suspension and transfer of Dewan Singh, P.W. 16".
We are wholly unable to appreciate this reasoning of the learned Judge.
We do not see how the appellant was obliged to explain the circumstances under which P.W. 16 came to be suspended and transferred to Narnaul by the District Educational Officer 's order dated 23 11 1982 after the Commissioner appointed by the Court approached him and obtained a register from him or how the adverse inference could be drawn against the appellant by the learned Judge merely because the appellant was unable to explain how P.W. 16 came to be suspended and transferred by the District Educational Officer 's order dated 23 11 1982 after a register had been obtained from him by the Commissioner appointed by the Court and it came to be known that p.
W. 16 may be examined as a witness in this election petition, We think that there is no justification whatsoever to draw any such adverse inference against the appellant.
The appellant, R.W. 1 had denied that he had gone to Kandela village on 16 5 1982 either alone or in the company of Sita Ram and others.
He has denied that he contacted the Sarpanch Dalip Singh and others and gave Rs 5100 as alleged in the election petition and that the voters of Kandela village held out any promise for casting their votes in his favour.
In the cross examination on suggestion was made to R.W. 1 that he gave a sum of Rs. 5100 for the construction of a mandir for the backward class voters of Kandela village on 16 5 1982 or on any other date, to induce them to cast their votes in his favour, 317 The first respondent.
P. W. l has stated in his evidence that the appellant visited Kandela village on 16.
1982 accompanied by the Sarpanch Dalip Singh, Hari Ram, Dewan Singh and others, that all of them and the members of the backward classes assembled in the house of the Backward Classes Samiti Chairman Dharam Singh, that the appellant gave Rs. 5100 to the members of the backward classes for the construction of a Viswakaram Mandir in the village and the Society passed a receipt for that amount and also made an entry in its own books of accounts kept in the regular course of business and that the members of the backward classes who received the amount promised to cast their votes in favour of the appellant.
In his cross examination he has stated that the bribe money was paid by the appellant on 15.5.1982.
It would appear from his evidence that he claims to have personal knowledge about the alleged visit of the appellant and others to Kandela village on 16.5.1982 and about the alleged payment of Rs. 5100 by the appellant for the construction of a temple for the backward classes people of the village in order to induce the voters of those classes to cast their votes in his favour.
But in his affidavit verifying the election petition he has stated that the allegations made in para 9(d) of the election petition regarding this item of corrupt practice are based upon information received by him from Dewan Singh.
Therefore, the evidence of P.W. I regarding this item of alleged corrupt practice is wholly unacceptable.
Dewan Singh, P.W. 16 has stated in his evidence that he is the Secretary of the Managing Committee of a temple that was being constructed in Kandela village for the members of the backward, classes, that the appellant attended a meeting of the backward classes in Dewan Chand 's house on 15 5 1982, and volunteered to give a donation of Rs. 5100 for that temple provided the members of the backward classes cast their votes in his favour and that on 16.5.1982 one Madan Lal gave Rs. 5100 to the Temple Committee 's President Dharam Singh in his presence and he himself made the entry exhibit PW 16/2 about that payment in the Temple Committee 's cashbook, exhibit P.W. 16/1.
He has admitted that the entire cash book, exhibit P.W. 16/1 is in his hand writing and does not bear the signature of any office bearer of the Viswakarama Samiti.
But he has denied that he has got up this cash book in connivance with the first respondent for the purpose of this election petition.
His evidence that the appellant offered on 15.5.1982 to give a sum of Rs. 5100 in the house of Dewan Chand and that it was given by one Madan Lal to Dharam Chand is inconsistent with the allegation in the election petition 318 that the appellant offered to give Rs. 5100 on 16.5.1982 as donation and gave it himself to the Sarpanch Dalip Singh and he passed it on to Dharama Singh.
Therefore, the evidence of P.W. 16 regarding this item of alleged corrupt practice cannot be accepted.
Mauji Ram, P,W. 90 has stated in his evidence that the appellant and his father and Sarpanch Dalip Singh collected the people belonging to black smith and carpenter communities in the house of the carpenter Diwana on 14.5.1982 and requested the people to cast their votes in his favour, that the people told the appellant and his two companions that they would inform that after discussing about the matter and asked the appellant and his companions to visit the village again on 16.5.1982, that accordingly the appellant and others came to the village on 16 5.1982 and asked the people to vote for the appellant, that the people told the appellant and his companions that they would vote for him if he gave money and that the appellant thereupon gave a sum of Rs 5100 to Dharma Lohar.
The evidence of this witness is that the people asked for money to vote in favour of the appellant and that thereupon he gave Rs. 5100 to Dharma Lohar whereas the allegation in the election petition is that after the voters told the appellant that they intended to vote for the Congress (I) candidate as they had always been in favour of the Congress (I) Party the appellant had a talk with the Sarpanch Dalip Singh and one Dharam Singh and he subsequently stated, for inducing the voters to cast their votes in his favour, that he was prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir and that he accordingly gave Rs. 5100 to the Sarpanch Dalip Singh and he passed it to Dharam Singh and Dewan Singh There is thus a vital discrepancy between the pleading in the election petition and the evidence of P.W. 90.
P.W. 90 has stated that he does not know whether any receipt was passed for the amount whereas P.W. 16 has stated in his evidence that Madan Lal gave Rs 51()0 to the Temple Committee 's President Dharam Singh in his presence on 16 5 1982 and he made an entry for receipt of that amount in exhibit PW. 16/2 in the cash book, exhibit P.W. 16/1 and P.W. ` I has stated in his evidence that the Society passed a receipt for the amount and also made an entry in the cash book about the money.
It is significant to note that P.W. 90 was not cited as a witness in the list of witnesses filed by the first respondent on 11.11.1982 and 26.11.1982 and that he was examined as a witness only on 25.7.1983.
In these circumstances, we think that no reliance would be placed on the evidence of P.W. 90 regarding this item of alleged corrupt practice.
319 Fateh Singh, P.W. 91 is yet another witness whose name was not mentioned in the list of witnesses filed by the first respondent on 11.11.1982.
He has stated in his evidence that four or five days prior to the date of poll 19.5 1982, the appellant and his father and two others, Sarpanch Dalip Singh and Madan Lal, visited Kandela village and come to the house of Diwana Khati, that many voters belonging to the backward classes were summoned to that house and the appellant and his companions offered to donate some money to the temple provided the people assembled there and other members of the community voted for the appellant and they told them that they would discuss about the matter and let them know, that two or three days thereafter the appellant came by a car they assembled in the house of the black smith Dharama and that in his presence Madan Lal who came with the appellant gave Rs. 5100 to the Sarpanch Dalip Singh who in turn passed it on to Dharma Lohar and he promised that the members of his community would vote for the appellant.
The evidence of this witness is not consistent with the allegation made in the election petition that the appellant gave a sum of Rs 5100 to the Sarpanch Dalip Singh and that he passed it on Dharam Singh and Dewan Singh.
We are, therefore, unable to place any reliance on his evidence regarding this item of alleged corrupt practice.
Then there remains the evidence of Prahalad, P.W. 92.
He has stated that the appellant, came to Kandela village on 16.5.1982 alongwith the Sarpanch Dalip Singh and one Madan Lal of that village, that the appellant who had visited the village five days prior to the date of the poll suggested that the voters belonging to the community and the members of the Managing Committee should vote for him and stated that he would make some contribution for the temple funds and asked Madan Lal to give the money, that thereupon Madan Lal gave Rs. 5100 to the Sarpanch Dalip Singh and he passed it on to Dharma Lohar and undertook the responsibility to have votes cast in favour of the appellant and that the temple treasurer Ram Singh passed a receipt for the amount.
The evidence of this witness that Madan Lal of Kandela village gave Rs. 5100 is inconsistent with the allegation made in the election petition that the appellant himself gave that amount.
His evidence that it was given to Dalip Singh though consistent with the allegation made in the election petition and the evidence of P.W. 91 is inconsistent with the evidence of P.W. 90 that it was given to Dharma Lohar.
We 320 are, therefore, unable to place any reliance on his evidence regarding this item of alleged corrupt practice.
The evidence of P.Ws. 1, 16, 90, 91, and 92 referred to above is wholly unreliable and does not prove the corrupt practice of which the appellant has been found guilty by the learned Single Judge.
We may state here that Mr. S.N. Kacker, Senior Advocate who appeared for the respondent, probably felt that the Judgment of the learned Single judge holding the appellant guilty of this item of corrupt practice is wholly indefensible and he candidly admitted that he will not advance any argument at all in favour of the first respondent.
In these circumstances for the reasons mentioned above, we allow this appeal but without costs and set aside the judgment of this learned Single Judge who found the appellant guilty of this item of corrupt practice.
M.L.A. Appeal allowed.
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In the election held on 19.5.1982 to the Haryana Legislative Assembly from the Jind Constituency, the appellant was declared elected over his nearest rival respondent No. I with a margin of 146 votes.
Respondent No. I challenged the appellant 's election inter alia, on the ground that the appellant and his father Sita Ram and two others Ram Kishan and Amrit Lal visited Kandela village on or about 16.5.1982 and contacted Dalip Singh, Sarpanch of the village and one Dewan Singh, Secretary of the Backward Classes.
Thereafter all of them went to the house of one Dharam Singh where backward class voters including Dewan Singh, Hari Ram, Devi Ram, Fateh Singh and Mauji Ram had assembled.
The voters told the appellant that they intended to cast their votes in favour of Congress (I) candidate as they had always been in favour of the Congress (I) party Then the appellant had a talk with the Sarpanch Dalip Singh and one Dharam Singh and subsequently stated, for inducing the voters to cast their vote in his favour, that he is prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir.
Accordingly he gave a sum of Rs. 5100 to the Sarpanch Dalip Singh who passed it on to Dharam Singh and Dewan Singh.
The voters thereafter assured the appellant that they would vote for him and ensure that every vote belonging to their class will go in his favour.
Thus, the appellant was alleged to have committed the corrupt practice of bribery as defined in Section 123(1) of the Representation of People Act, 1951.
The appellant had denied that he had gone to Kandela village on 16.5.1982 either alone or in the company of Sita Ram and others.
He also denied that he had contacted the Sarpanch Dalip Singh and others and gave Rs. 5100 as alleged in the election petition and that the voters of Kandela village held out any promise for casting their votes in his favour.
The High Court held that the appellant had committed that corrupt practice of bribery and set aside the election as void.
313 Allowing the appeal by the appellant, A ^ HELD: 1.
As regards the corrupt practice of bribery, there is evidence only of P.Ws. 1, 16, 90, 91 and 92 which is wholly unreliable and does not prove the corrupt practice of which the appellant has been found guilty by the Learned Single Judge.
[320B] 2(i) The first respondent P.W. 1 has stated in his cross examination that the bribe money was paid by the appellant on 15.5.1982.
It would appear from his evidence that he claims to have personal knowledge about the alleged visit of the appellant and others to Kandela village on 16.5.1982 and about the alleged payment of Rs. 5100 by the appellant for the construction of a temple for the backward class people of the village in order to induce the voters of those classes to cast their votes in his favour.
But in his affidavit verifying the election petition he has stated that the allegations made in para 9(d) of the election petition regarding this item of corrupt practice are based upon information received by him from Dewan Singh.
Therefore the evidence of P.W. 1 is wholly unacceptable.
[317C D] 2(ii) The evidence of P.W. 16 that on 15.5.82 the appellant offered to give a sum of Rs. 5100 in the house of Dewan Chand and that it was given by one Madan Lal to Dharam Chand is inconsistent with the allegation in the election petition that the appellant offered to give Rs. 5100 on 16.5.1982 as donation and gave it himself to the Sarpanch Dalip Singh and he passed it on to Dharama Singh.
Therefore the evidence of P.W. 16 also cannot be accepted.
[317H; 318A] 2(iii) The evidence of P.W. 90 is that the people asked for money to vote in favour of the appellant and that thereupon he gave Rs. 5100 to Dharma Lohar on 16.5.82 is contrary to the allegation in the election petition, There is thus a vital discrepancy between the pleading in the election petition and the evidence of P.W. 90.
Moreover P.W. 90 has stated that he does not know whether any receipt was passed for the amount whereas P.W. 16 has stated in his evidence that Madan Lal gave Rs. 5100 to the temple Committee 's President Dharam Singh in his presence on 16.5.1982 and he made an entry for receipt of that amount in exhibit P.W. 16/2 in the cash book.
In these circumstances no reliance could be placed on the evidence of P.W. 90.
[319D; F G] 2(iv) The evidence of P.W, 91 is also not consistent with the allegation made in the election petition that the appellant gave a sum of Rs. 5100 to the Sarpanch Dalip Singh and that he passed in on to Dharam Singh and Dewan Singh.
Therefore no reliance can be placed on his evidence also.
[319D] 2(v) The evidence of P.W. 92 that Madan Lal of Kandela village gave Rs. 5100 is inconsistent with the allegation made in the election petition that the appellant himself gave that amount.
His evidence that it was given to Dalip Singh though consistent with the allegation made in the election petition and the evidence of P.W, 91, is inconsistent with the evidence of P.W. 90 that it was given to Dharma Lohar.
[319G H] 314
|
Civil Appeal Nos. 295 & 296 (NT) of 1974.
From the Judgment and Order dated 19.7.1973 of the Kerala High Court in I.T.R. Nos. 32 and 33 of 1971.
section Poti, section Sukumaran and D.N. Mishra, for the Appellant.
G.C. Sharma, K.C. Dua and Miss A. Subhashini, for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two appeals arise by certificate by the High Court in Income Tax Reference Nos. 32 and 33 of 1971.
The High Court of Kerala by its judgment dated 19th July, 1973 answered the following two questions in the negative and in favour of the revenue. "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sums of Rs. 2,90,220 and Rs. 3,63,750 were not assessable as income of the assessee for the assessment years 1960 61 and 1961 62? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law and had material for holding that the sums of Rs. 2,90,220 and Rs. 3,63,750 are exempt from taxation under section 4(3)(vii) of the Indian Income tax Act, 1922 for the assessment years 1960 61 and 1961 62 respectively?" The references relates to assessment years 1960 61 and 1961 62.
The assessee 's accounting year was the calender year.
940 The assessee publishes a Malyalam daily newspaper by name Kerala Dhwani.
Till 1953, he was a lecturer in History and Political Science in the College at Kottayam.
He had his education in the United State of America, during 1953 to 1957.
During this period of stay in the U.S.A. he had the privilege of associating himself with the India Gospel Mission in the United States.
The India Gospel Mission, it was stated, was collecting money for its working abroad through the Indian Christian Crusade.
The assessee was also publishing a religious magazine called "Viswa Deepam".
The magazine was started in January, 1957.
The father of the assessee Shri K.G. Thomas was the Editor of Viswa Deepam.
Shri Thomas was also in America and he was also doing missionary work in America for some time.
In 1958, Shri Thomas, the lather of the assessee was in India the was going to America off and on.
Indian Christian Crusade, U.S.A. is an institution sponsoring religious education in India and it was admitted that the assessee was propagating the ideals of the Indian Christian Crusade on returning to India after finishing his education in the States.
Later on the assessee started publishing a paper called "Kerala Dhwani".
This paper was started in 1959.
While the assessee was in America, he took his Ph.D. degree.
For the assessment year 1960 61, the assessee filed a return disclosing a loss of Rs. 1,59,894 under the head 'business '.
The assessee, as mentioned hereinbefore, was publishing Malayalam daily newspaper called 'Kerala Dhwani '.
While t scrutinising the accounts, the Income tax Officer found in the ledger folio in the name of the assessee amounts totalling Rs. 2,57,138 credited in ' his account.
The assessee was asked to explain these credits and he represented that most of the amounts were received by the assessee as donations from U.S.A. through an organisation known as Indian Christian Crusade, U.S.A. The Income tax Officer found that the names and other details of persons who had donated the amounts were not available.
He also found that such amounts amounted in all Rs. 2,90,220.
The Income tax Officer had stated that in the absence of definite information regarding the individuals who has made the donations, it had to be presumed that the amounts had been given by the Indian Christian Crusade, U.S.A. to the assessee.
The assessee 's case before the Income tax Officer was that the amounts received by the assessee were purely personal gifts and testimonials which were given because of the esteem and regard for the personal qualities of the assessee and that the payments were purely voluntary.
The Income tax Officer rejected the contention.
He held: 941 (i) The payment of donations started simultaneously with the publication of the daily newspaper Kerala Dhwani and the donations were continued during the period the publication continued.
(ii) The donations were regular and continued for the next year also.
(iii) There was nothing to show that the amounts were given on account of the personal qualities of the assessee.
(iv) The donations were being made regularly throughout the year and these were evidently given as aid to the running of the newspaper which was the business carried on by the assessee.
(v) The Indian Christian Crusade, U.S.A. which was paying money to the assessee was an enterprise in India established for the furtherence of ideals and objectives similar to theirs.
For aforesaid reasons the Income tax Officer held that the so called donations were payments by way of remuneration for the work done by the assessee in connection with the spreading, in India, of the ideals of the Indian Christian Crusade, U.S.A. The Income tax Officer came to the conclusion that the amounts paid to the assessee were connected with the business of the assessee and were liable to be taxed as the business income of the assessee.
He, therefore, brought to tax Rs. 2,90,220 which had been received during the assessment year.
For the next assessment year, the assessee had received similar amounts totalling to Rs. 3,63,750 through the Indian Christian Crusade, U.S.A.
For the reasons given in the order of the previous year, the Income tax Officer treated this amount also as the business income for the assessment year 1961 62 and brought the same to tax.
The assessee filed appeals in respect of both the years and the Appellate Assistant Commissioner disposed of the appeals by different orders delivered on the same date.
He discussed all the contentions raised by the assessee in his appellate orders.
The main contention raised by the assessee before the Appellate Assistant Commissioner was that the various amounts credited in his bank account and in his personal account in the business represented gifts made by personal friends in the U.S.A., that the amounts were collected by the Indian Christian Crusade and forwarded to India to the assessee.
The Appellate Assistant Commissioner rejecting these contentions of the assessee found that the assessee was a journalist and it was his avocation or vocation to propagate certain ideas and ideals.
He was closely associated with the missionary work carried on by the Indian Christian Crusade in America and he was propagating the ideals of 942 Indian Christian Crusade, America in India because of his close relationship with that origination as mentioned hereinbefore.
The assessee during his stay in U.S.A. and after his return was engaged in a movement for the spread of religion and fighting the forces of atheism.
According to the assessee, his friends in America and those Who believed in the cause which he sponsored were sending him donations for helping tile movement and the amounts that were handed over to or were collected by the Indian Christian Crusade, U.S.A. were remitted to him.
In further appeal the Tribunal held that the amounts did not represent remuneration or payments for services rendered.
The tribunal further held that the receipts were clearly causal and non recurring and aid not arise in the course of the exercise of any vocation.
Then the aforesaid two questions were referred to the High Court under Section 66 (1) of the Indian Income tax Act, 1922.
The High Court held that the receipts of casual and non recurring nature would not be included in the total income of a person.
But if there were receipts arising from the exercise of a vocation, these would be included in the total income, even if these were of casual or non recurring nature or voluntary and the receipts resulting from such payments would be outside Section 4(3)(vii) of the Income tax Act, 1922 (hereinafter referred to as the ( 'Act ').
Relying on the findings of the Tribunal, the High Court held that the assessee was very actively, fully occupied with the activities connected with achieving the objects of straightening faith in God and fighting against atheism and was occupied with this affair.
The payer which he published for this purpose was a daily coming out with views in support of this mission.
Teaching and propagating religion could be an occupation.
It was not necessary that its object should be to earn a livelihood.
Anything in which a person was engaged systematically could be an occupation or vocation.
The next question would be whether receipts could be said to arise from such occupation or vocation.
There was link between the activity of the assessee and the payments, and that the payments were made by those who held similar views as those of the assessee and who were very much interested in the propagation and the acceptance of those views by the general public.
The payments were made for the purpose of helping the assessee to run the paper which was the mouth piece or medium through which the ideas were to be spread.
The 943 connection between the activity of the assessee and the donations was thus intimate.
lt arose out of the vocation or the occupation carried on by the assessee.
Therefore, the receipts arose from the exercise of an occupation by the assessee.
The high Court also considered whether such payments were excluded by Section 4(3)(vii) of the Act.
Section 4 of the Act made the total income of the previous year of any person assessable to tax and sub section (3) specified certain incomes which should not be included in the total income of the person.
Sub section (vii) of Section 4(3) was in the following terms: "(vii) any receipts not being capital gains chargeable according to the provisions of section 12B and not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non recurring nature or are not by way of addition to the remuneration of an employee.
As the section made it clear, in order to be entitled to exemption, the receipts must be of income character first.
In the instant case, there is no doubt that if a sum of money is received for the purpose in pursuance of an avocation or vocation, it arose out of this vocation or profession.
If this is so, then this was income under the Act.
Such income could only be excluded if it was specifically excluded by any provision of the Act.
The High Court held, and in our opinion rightly, that in view of the facts and circumstances of this case as found by the Tribunal, these amounts were not excluded under Section 4(3)(vii) of the Act.
The position was thus, these amounts were received by the assessee in the course of his avocation or vocation and were given to him for the purpose of the same.
These were therefore incomes which were not also of a casual or non recurring nature nor were these capital gains under Section 12B of the Act.
If that was the position, then, in our opinion, the amounts were clearly taxable as held by the Income tax Officer and by the High Court.
Several aspects of the question were placed before us on a large canvass namely that the High Court had gone into facts of the first time over ruling the findings of the fact of the Tribunal without there being a question to that effect and also there was no finding that the receipts were of income character.
In support of these contentions, several decisions of this Court were referred before us, Inter alia, Parimisetti Seetharamma vs 944 Commissioner of Income Tax, Andhra Pradesh.
, Reliance was placed on the observations appearing at pages 536, 537 and 538 of the said report.
It was urged that the burden of proof was wrongly placed by the High Court and on the facts, that the two circumstances relied on by the High Court did not establish that certain money was given to the assessee as remuneration for services and as such it could not be held that the person concerned was assessable to tax.
It was urged that the High Court wrongly placed the burden of proof upon the assessee.
But on the facts and in the circumstance of this case, the conclusion recorded by the High Court in the instant case was borne out on the facts on record.
The observations of this Court referred to above cannot be of much assistance to the assessee.
The case which is most apposite to the facts of the instant case is a decision of this Court in the case of P. Krishna Menon vs Commissioner of Income Tax, Mysore, Travancore Cochin and Coorg.
Bangalore.
, There after retirement from Government service, the appellant therein was spending his time in studying and teaching Vedanta philosophy.
L, who was one of his disciples, used to come from London at regular intervals to Trivendrum where the appellant resided, and stay there for a few months at a time and attend his discourses, and so received instructions in Vedanta and had the benefits of his teachings.
L transferred his entire balance standing to this credit in his on account at Bombay, amounting to more that Rs. 2 lakhs, to the account of the appellant opened in the letter 's name in the same bank at Bombay.
Thereafter, from time to time, L put in further sums into the appellant 's account in Bombay.
The question was whether the receipts from L. constituted the appellants income taxable under the Travancore Income Tax Act, 1121 (Malayalam Era) which was identical with the Indian Income Tax Act, 1922.
It was held that teaching was a vocation, if not a profession, and teaching Vedanta was just as much teaching as any other teaching and therefore a vocation; that in order that an activity might be called a vocation it was not necessary to show that it was an organised activity and that it was indulged with a motive of making profit; it was well established that it was not the motive of a person doing an act which decided whether the act done by him was the carrying on of a business, profession or vocation; and if any business, profession or vocation in fact produced an income, that was taxable income and none the less so because it was carried on without the motive of producing an income; that teaching of Vendetta by the appellant in that case was the 945 carrying on of a vocation by him and that the imparting of the teaching was the causa causans of the making of the gifts by L, and it was impossible to hold that the payments to the appellant had not been made in consideration of the teaching imparted by him, and that, therefore, the payments were income arising from the vocation of the appellants that the payments made by L were income arising from a vocation.
These were not casual or non recurring receipts and no question of exemption under Section 4(3)(vii) of the Act arose.
It was further observed that in order that a payment might be exempted under Section 4(3)(vii) as a casual and non recurring receipt, it had to be shown that it did not arise from the exercise of a vocation.
In the instant case before us, identical is the position.
The assessee carried on a vocation of preaching against atheism.
In the course of such vocation and for the purpose of the same he received the amounts in question as donation for the furtherance of the objects of his vocation.
The receipts arose to the assessee for the carrying on of the vocation by the assessee, and these were not casual and non recurring.
These were taxable.
These facts were found by the Income tax Officer.
These facts not in so many terms but essentially found by the Appellate Assistant Commissioner and were reiterated by the Tribunal and the High Court accepted these findings of facts and answered the question accordingly.
Reliance was also placed on the decisions of the Gujarat High Court in the case of the Acharya D.V. Pande vs Commissioner of Income tax, Gujarat., , and Commissioner of Income tax, Gujarat vs Shri Girdharram Hariram Bhagat, , decisions of the Bombay High Court in the Case of Maharaj Shri Govindlalji Ranchhodlalji vs Commissioner of Income tax, Ahmedabad, , and H.H. Maharani Shri Vijaykuverba Shed of Morvi and Another vs Commissioner of Income tax, Bombay City II, , decision of the Madras High Court in the case of S.A. Ramakrishnan vs Commissioner of Income tax, Madras, , and decision of the Delhi high Court in the case of Siddhartha Publications (P) Ltd. vs Commissioner of Income tax, Delhi, , dealing with certain facts and circumstances where income could be said be taxable.
From all these decisions, two facts emerge.
The burden is on the revenue to establish that the receipt is of a revenue character.
Once receipt is found to be of a revenue character 946 whether it comes under exemption or not, it is for the assessee to establish.
Facts must be found by the Tribunal and the High Court must proceed on the basis of the facts found by the Tribunal.
The High Court cannot afresh go to the facts over ruling the facts found by the Tribunal unless there is a question to that effect challenging the facts found by the Tribunal.
These propositions are well settled and in this case in the decision of the High Court, these principles, in our opinion, have not been breached.
It has been established that the assessee was carrying on a vocation, the vocation preaching of Christian Gospel and helping anti atheism was the vocation of his life.
He was running a newspaper in aid of that.
The donations received from America were to help him for the said purpose.
They arose out of his carrying on and continued so long as he carried on this avocation or vocation.
These receipts therefore arose out of his vocation.
These were therefore his income.
In the facts these were not exempt under Section 4(3)(vii) of the Act.
In the premises these were taxable.
Numerous decisions were referred to us on the question as to how far the High Court could interfere with the facts found by the Tribunal.
Reliance was placed on the decisions of this Court in the case Karnani Properties Ltd. vs Commissioner of Income tax, West Bengal, , Aluminium Corporation of India Ltd. vs Commissioner of Income tax, West Bengal, , Anil Kumar Roy Chowdhury and Others vs Commissioner of Income tax, West Bengal II, , Commissioner of Income tax, West Bengal III vs Kamal Singh Rampuria, , Commissioner of Income tax, West Bengal III vs Imperial Chemical Industries (India) (P) Ltd., , and the decision of the Bombay High Court in the case of Commissioner of Income tax, Bombay City II vs Deviprasad Khandelwal and Co. Ltd., , and also the decision of the Madras High Court in the case of Commissioner of Income tax vs P.S. Chelladurai.
, 145 I.T.R. 139.
We have set out the findings of the Tribunal and considered the findings of the Tribunal as well as the judgment of the High Court.
There has not been any unwarranted interference by the High Court with the facts found by the Tribunal.
Basic facts have been found by the Tribunal.
On the question where income could be said to arise, it may be relevant to refer to Strong & Co. of Romsey, Limited vs Woodifield (Surveyor of Taxes), ; There a brewery 947 company owned an inn which was carried on by the manager as part of their business.
A customer sleeping in the inn was injured by the fall of a chimney, and recovered damages and costs against the company for the injury, which was owing to the negligence of the company 's servants.
The question was whether the amounts paid as damages could be claimed as a deduction from the business of s carrying on the activities of the inn keeper.
The Lord Chancellor observed at page 452 of the report as follows: "I think only such losses can be deducted as are connected with in the sense that they are really incidental to the trade itself.
They cannot be deducted if they are mainly incidental to some other vocation or fall on the trader in some character other than that of trader.
The nature of the trade is to be considered.
To give an illustration, losses sustained by a railway company in compensating passengers for accidents in travelling might be deducted.
On the other hand, if a man kept a grocer 's shop, for keeping which a house is necessary, and one of the window shutters fell upon and injured a man walking in the street, the loss arising thereby to the grocer ought not be deducted.
Many cases might be put near the line, and no degree of ingenuity can frame a formula so precise and comprehensive as to solve at sight all the cases that may arise.
In the case of The Commissioner of Inland Revenue vs E.C. Warnes & Co. Ltd., , at page 231 of the Report, Rowlatt J. observed: "I may shelter myself behind the authority of Lord Loreburn, who, in his judgment in the House of Lords in Strong & Co. vs Woodifield, said that it is impossible to frame any formula which shall describe what is a loss connected with or arising out of a trade.
That statement I adopt, and 1 am not sure that I gain very much by going through a number of analogies; but it seems to me that a penal liability of this kind cannot be regarded as a loss connected with or arising out a trade.
In the instant case there cannot be any doubt that the receipts by the assessee arose out of the avocation of the assessee of propagating views against atheism and preaching Christian Gospel.
948 In view of the facts and circumstances of the case there was a link between the activities of the assessee and the payments received by him and the link was close enough.
In that view of the matter, in our opinion, the High Court was right in answering both the questions referred to it in the negative and in favour of the revenue.
The appeals accordingly fail and are dismissed with costs.
Civil Miscellaneous Petition No. 10046 of 1976 for condonation of delay in filing the additional papers is allowed.
A.P.J. Appeals dismissed.
|
The assessee appellant had associated himself with the India Gospel Mission while he was getting his education in the United States of America during 1953 to 1957 and was propagating the ideals of Indian Christian Crusade, U.S.A., an Institution sponsoring religious education in India.
The India Gospel Mission was collecting money for its working abroad through the Indian Christian Crusade.
On returning to India in January 1957 he started publishing a religious magazine called "Viswa Deepam" and in 1959 started publishing Malyalam daily newspaper called "Kerala Dhwani".
In the assessment year 1960 61 he filed a return disclosing a 1088 of Rs. 1,59,894 under the head 'business '.
While scrutinising the accounts, the Income Tax Office found amounts totalling Rs. 2,90,220 credited in the assessee 's accounts.
Since the names and other details of persons who had donated the amounts were not available it had to be presumed that the amounts had been given to the assessee by the Indian Christian Crusade, U.S.A. and therefore, the Income Tax Officer rejected the contention of the assessee that the amounts received by him were purely personal gifts and testimonials made voluntarily and held that the so called donations were payments by way of remuneration for the work done by the assessee in connection with the spreading in India, of the ideals of the Indian Christian Crusade, U.S.A. and that these amounts were connected with the business of the assessee and were liable to be taxed as his business Income.
He, therefore, brought to tax Rs. 2,90,220 which had been received during the assessment year 1960 61.
For the assessment year 1961 62 the assessee had received similar amounts totalling to Rs. 3,63,750 through the Indian Christian Crusade, U.S.A. and Income Tax Officer treated this amount also as business income and brought the same to tax.
937 The assessee filed appeals and the Appellate Assistant Commissioner while dismissing the appeals held that the assessee was a journalist and it was his avocation or vocation to propagate Christian ideas and ideals and that the assessee during the stay in U.S.A. and after his return was engaged in a movement for the spread of religion and for fighting the forces of atheism.
In further appeal, the tribunal held that the amounts did not represent remuneration or payments for services rendered, and that the receipts were clearly casual and non recurring and did not arise in the course of the exercise of any vocation.
The Tribunal referred the matter to the High Court, which held that the receipts of casual and non recurring nature would not be included in the total income of a person.
But if there was receipts arising from the exercise of vocation, these would be included in the total income, even if these were of a casual or non recurring nature or voluntary and the receipts resulting from such payments would be outside section 4(3)(vii) of the Income Tax Act, 1922.
Since there was link between the activity of the assessee and the payments and the same were made by those who held similar views and who were interested in the propagation and the acceptance of those views by the general public, the receipts, therefore, arose from the exercise of an occupation by the assessee.
Dismissing the Appeals ^ HELD: 1.
The receipts by the assessee arose out of the avocation of the assessee of propagating views against Atheism ant preaching Christian Gospel.
[947 H] 2.
There was a link between the activities of the assessee and the payments received by him and the link was close enough.
[948 A] Strong & Company, of Romsey Limited vs Woodifield (Surveyor of Taxes), ; and The Commissioner of Inland Revenue vs E.C. Warnes & Co. Ltd., [1919] 12 T.C. 227, referred to.
Section 4(3)(vii) of the Indian Income Tax Act 1922 makes it clear that in order to be entitled to the exemption, the receipts must be of income character first.
if a sum of money is received for the purpose in pursuance of an avocation or vocation, it arose out of this vocation or profession.
If that is 938 so, then this was income under the Act.
Such income could only be excluded if it was specifically excluded by any provision of the Act.
[943 D E] 4.
The High Court rightly held that in view of the facts and circumstances of this case as found by the Tribunal, these amounts were received by the assessee in the course of his avocation or vocation and were given to him for the purpose of the same.
These were, therefore, incomes which were neither of a casual or non recurring nature nor were these capital gains under section 12B of the Act.
The amounts were, therefore, clearly taxable as held by the Income Tax Officer and by the High Court.
[943 E G] P. Krishna Menon vs Commissioner of Income Tax, Mysore, Travancore Cochin and Coorg.
Bangalore. , relied upon.
The burden 18 on the revenue to establish that the receipt is of a revenue character.
Once receipt is found to be of a revenue character whether it comes under exemption or not, it is for the assessee to establish.
Facts must be found by the Tribunal and the High Court must proceed on the basis of those facts.
The High Court cannot afresh go to the facts over ruling the facts found by the Tribunal unless there is a question to that effect challenging the facts as found by the Tribunal.
In this case the High Court has not interfered with the basic facts found by the Tribunal.
It has been established that the assessee was carrying on a vocation of preaching of Christian Gospel and helping anti athesim.
He was running a newspaper in aid of that.
The donations received from America were to help him for the said purpose.
They arose out of his carrying on and contained so long purpose.
The carried on this avocation or vocation.
These receipts, therefore, arose out of his vocation.
These were, therefore, his Income, not exempt under s.4(3)(vii) of the Act and were taxable.
[945 H, 946 A C] Parimisetti Seetharamma vs Commissioner of Income Tax, Andhra Pradesh, inapplicable.
Acharya D.V. Pande vs Commissioner of Income tax, Gujarat, , Commissioner of Income Tax, Gujarat vs Shri Giurdharram Hariram Bhagat, , Maharaj Shri Govindlalji Ranchhodlaji vs Commissioner of Income tax, Ahmedabad, , H.H. Maharani Shri Vijay Kuverba Saheb of Morvi and Another vs Commissioner of Income Tax Bombay City II, S.A. Ramkrishnan vs Commissioner of Income tax, Madras, , Siddhartha Publications (P) Ltd. vs Commissioner of 939 Income tax, Delhi. , Karnani Properties Ltd. vs Commissioner of Income tax, West Bengal, , Aluminium Corporation of India Ltd. vs Commissioner of Income tax, West Bengal, , Anil Kumar Roy Chowdhury and Others vs Commissioner of Income tax, West Bengal II, , Commissioner of Income tax, West Bengal III vs Kamal Singh Rampuria, , Commissioner of Income tax, West Bengal III vs Imperial Chemical Industries (India) (P) Ltd. , Commissioner of Income tax, Bombay City II vs Devi Prasad Khandelwal and Co. Ltd. , and Commissioner of Income tax vs P.S. Chelladurai, , referred to.
|
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.
|
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.
|
ivil Appeal No. 1349(NT) of 1974.
From the Judgment and Order dated 20th June, 1973 of the Gujarat High Court in Estate Duty Ref.
No. 3 of 1970.
S.C. Manchanda, K.P. Bhatnagar and Miss A. Subhashini for the Appellant.
48 S.T. Desai and S.C. Patel for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal by certificate granted by the High Court of Gujarat by its order dated 2nd May, 1974 from the judgment and order dated 28th June, 1973 in Estate Duty Reference No. 3 of 1970 under section 65(1) of the (hereinafter called the 'Act ').
One Nareshchandra Kantilal died on 13th September, 1962.
He was a partner in the firm of Messrs G. Bhagwatiprasad & Co. having 28% share in the partnership.
The partnership was by the document of partnership which is dated 6th June, 1957.
On the death of the deceased, the accountable person filed necessary return under the Act.
The Assistant Controller of Estate Duty while valuing the estate of the deceased, came to the conclusion that the share of the deceased in the goodwill of the firm in which he was a partner was liable to be included in the principal value of his property.
This inclusion was resisted by the accountable person on the ground that the question of adding the value of the share of the deceased in the goodwill of the firm did not arise in view of clause (10) of the partnership deed.
Clause (10) was as follows: "The firm shall not stand dissolved on death of any of the partners and the partner dying shall have no right whatever in the goodwill of the firm".
The accountable person contended on the basis of this clause that on the death of the deceased, his heirs had no right in the goodwill of the firm, and as such the value of the said goodwill did not pass under the provisions of the Act and was, therefore, not liable to any estate duty.
The Assistant Controller, however, negatived the said contention.
He valued the goodwill at Rs.2,16,900.
The share of the deceased in the goodwill was worked out from this value at Rs.60,732.
The Assistant Controller also worked out the value of the interest which the deceased had in the partnership assets and added to the above referred amount of Rs.60,732 as the value of his share in the goodwill.
The accountable person, being aggrieved, preferred an appeal before the Appellate Controller of Estate Duty, Bombay.
He by and 49 large confirmed the order of the Assistant Controller and made only a slight reduction in the value of the goodwill.
The accountable person thereafter went up in appeal before the Appellate Tribunal.
She raised before the Tribunal two principal contentions, namely, (1) that the deceased had no interest in the assets of the firm and hence his share in the goodwill did not pass at all, and (2) as, according to the partnership agreement, the partnership was to continue on the death of any of the partners and as it was further stipulated that the deceased would have no interest in the goodwill of the firm on his death, his share in the goodwill did not pass and as such was not liable to the charge of estate duty.
The Tribunal rejected both these contentions.
It was contended on behalf of the accountable person before the Tribunal that when a partnership was a going concern there could not be any separate valuation of the goodwill which went with the running business.
The Tribunal noted that there was no question of valuing the goodwill separately because what was to be valued was the totality of interest of a partner in partnership assets including the value of the goodwill.
The Tribunal eventually decided the matter relying upon the decision of the Privy Council in Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes, = 25 I.T.R. (ED) 47.
The Tribunal held that in spite of clause (10) of the partnership agreement, the value of the goodwill to the extent of the share of the deceased passed on the death of Nareshchandra Kantilal and it was liable to be charged estate duty.
Three questions of law were referred to the High Court.
These were: "1.
Whether, on the facts and in the circumstances of the case, the interest of the deceased in the firm of Messrs. G. Bhagwatiprasad & Co. of Ahmedabad was property within the meaning of the provisions of the ? 2.
If the answer to the above question is in the affirmative, whether, on the facts and in the circumstances of the case, having regard to the terms of the partnership deed dated June 6, 1957, the value of the interest of the deceased in the said partnership would include the goodwill of the partnership firm? 3.
Whether, on the facts and in the circumstances of the case, the value of the goodwill, if any, would be exempt under the provisions of section 26(1) of the Act?" 50 The last question was not pressed before the High Court.
The High Court, therefore, did not give any answer.
The first question, the High Court, answered in favour of the revenue and in the affirmative and the second question was answered in the negative.
As the first question was in favour of the revenue and there was no appeal by the accountable person this appeal is concerned only with the second question namely 'whether the value of the interest of the deceased in the said partnership would include the goodwill of the partnership firm '.
The High Court answered the question in the negative and in favour of the accountable person as mentioned hereinbefore.
The High Court noted that the primary object of every taxing statute was to recover a tax or duty in cash on the happening of a particular taxable event.
This event under the Act, is the actual or deemed passing of property on the death of a person.
Every taxing statute, according to the High Court, contemplated the levy of a tax or duty on the valuation date which has to be arrived at on the principles stated in the statute itself.
If the valuation principles stipulated in the Act could not be worked out with any precision in respect of any property it would follow as a necessary corollary that that property was not one which was intended to be subject to tax or duty contemplated by the statute.
This basic principle, according to the High Court, should be applied while construing sections 7 and 40 of the Act.
Section 7 of the Act, according to the High Court would apply only if two conditions were satisfied, namely (1) that there was a cesser of interest in the property on the death of a person, and (2) an accrual or arising of benefit to another as a result of the said cesser.
In order to assess the tax liability the value of the benefit had to be worked out and section 40 of the Act provides the basis for the valuation.
Section 40 clearly postulates that the property in which interest had ceased must be capable of yielding income.
If the 'benefit ' arising under section 7 on the cesser of an 'interest ' could not be measured under section 40, the cesser of such interest, according to the High Court did not attract payment of estate duty under section 7 of the Act.
A partner in a firm has a marketable interest in all the capital assets of the firm including the goodwill even during the subsistence of the partnership.
Interest in goodwill was property within the meaning of section 2(15) of the Act, according to the High Court.
But the goodwill of a firm, in the opinion of the High Court, standing by itself could not earn any income.
In a case where it was specially stipulated 51 that on the death of any of the partners, the partnership shall not stand dissolved and that the heirs of the deceased partner shall have no right whatsoever to claim any share in the goodwill of the firm, the benefit arising to the other partners on the cesser of interest in the goodwill, on the death of the partner could not be measured in terms of section 40.
The High Court, therefore, was of the view that such a benefit was not liable to estate duty under section 7 of the Act.
The High Court was, therefore, of the view that the facts of this case were not covered by either section 5 or section 7 and answered the question No. 2 in the negative.
In order to appreciate this controversy, it is necessary to refer first to section 2(15) of the .
Section 2(15) deals with 'property '.
It provides as follows: " 'property ' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method.
" There are two explanations with which we are not presently concerned.
Section 2(16) deals with 'property passing on the death ' and is as follows: " 'Property passing on the death ' includes property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation, and "on the death" includes "at a period ascertainable only by reference to the death" .
The imposition of estate duty is by sub section (1) of section 5.
It stipulates that in case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as provided in the Act, all property, settled or not settled including agricultural land. ., which passes on the death of such person, a duty called 'estate duty ' at the rates fixed in accordance with section 35.
Section 6 of the Act deals with property which is deemed to pass 52 and provides that property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death.
Section 7(1) deals with interest ceasing on death and is as folllows: "(1) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased 's death to the extent to which a benefit accrues or arises by the cesser of such interest, including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakattayam or Allyasantana law.
The other sub sections of the section deal with special cases of different communities, the details of which need not be considered.
The other relevant provisions which need be considered deal with the value which is chargeable.
Sub section (1) of section 36 of the Act stipulates that the principal value of any property shall be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in open market at the time of the deceased 's death.
Sub section (2) of the section stipulates that in estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased 's death and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time, provided that where it is proved to the satisfaction of the Controller that the value of the property has depreciated by reason of the death of the deceased, the depreciation shall be taken into account in fixing the price.
Sections 37, 38 and 39 are provisions with which the present controversy is not directly concerned.
Section 40 deals with the valuation of benefits from interests ceasing on death.
This is relevant and is as follows: "The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall (a) if the interest extended to the whole income of the property, be the principal value of that property; and 53 (b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended.
" The other provisions of the Act need not be considered for the present controversy.
Section 14 of The recognises that subject to contract between the partners, the property of the firm would include all the property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise, by the firm or for the purpose or in the course of business of the firm and includes the goodwill of the business.
It further provides that unless contrary intention appears property and rights in the property acquired with money belonging to the firm are deemed to have been acquired for the firm.
Section 15 of the said Act provides that the property of the firm shall be held and used exclusively for the purpose of the firm.
In a partnership there is a community of interest in which all the partners take in the property of the firm.
But that does not mean that during the subsistence of the partnership a particular partner has any proprietary interest in the assets of the firm.
Every partner of the firm has right to get his share of profits till the firm subsists and he has also a right to see that all the assets of the partnership are applied to and used for the purpose of partnership business.
Section 29 of the said Act also shows that he can transfer his interest in the firm either absolutely or partially.
He has also the right to get the value of his share in the net asset of the firm after the accounts are settled on dissolution.
All these rights of a partner show that he has got a marketable interest in all the capital assets of the firm including the goodwill asset even during the subsistence of the partnership.
This interest is property within the meaning of section 2(15) of the Act as mentioned hereinbefore.
Our attention was drawn to the decision of the King 's Bench Division in the case of Attorney General vs Boden and Another, , in support of the contention on behalf of the revenue.
There the Court was concerned with section 1 of the Finance Act, 1894 of United Kingdom.
By the said provision, estate duty was, except as in the Act provided, payable upon the principal value of all property which passes on the death of every person dying after the 54 date therein mentioned.
By seation 2, sub section (1), property passing on the death of the deceased was deemed to include. .(b) property in which the deceased had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest;. (c) property which would be required on the death of the deceased to be included in an account under section 38 of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889.
There, a father and his two sons carried on the business of lace or plain net manufacturers under a deed of partnership which included covenants (among others) to the following effect: Neither of the sons was, without the consent of the father, to be directly or indirectly engaged in any trade or business except on account and for the benefit of the partnership; both the sons were bound to give so much time and attention to the business as the proper conduct of its affairs required; the father was not bound to give more time or attention to the business then he should think fit; if the father should die his share was to accrue to the sons in equal shares subject only to their paying out to his representatives the value of his share and interest at his death as ascertained by an account to be made as on the day of his death with all proper valuations, but without any valuation of or allowance for goodwill, which goodwill was to accrue to the sons in equal shares.
The father died, the value of his share and interest at his death was ascertained by an account taken as directed by the deed of partnership without any valuation of or allowance for goodwill.
The share and interest so ascertained amounted to a large sum, and estate duty was paid on that sum.
The Crown claimed estate duty on the value of the father 's share in the goodwill on the ground that it was (1) property which passed on the death of the father within section 1 of the Finance Act, 1894, or (2) property in which the deceased had an interest ceasing on his death in which a benefit accrued or arose to the sons by the cesser of that interest within section 2, sub section 1(b) of the Act, or (3) property passing under a settlement by deed whereby an interest for life was reserved to the father, and therefore property which would be required on the death of the father to be included in an account under section 38 of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889, as further amended by and within the provision of section 2, sub section 1(c), of the Finance Act, 1894, or (4) an interest provided by the father in which a beneficial interest accrued or arose by survivorship on his death within section 2, sub section 1(d) of the Act.
55 The Court deciding on the evidence that the goodwill of the business was of small value held that, having regard to the obligation of the sons under the partnership deed, the share and interest of the father in the goodwill of the busines passed on the death of the father to the sons by reason only of a bona fide purchase for full consideration in money 's worth paid to the father for his own use and benefit, within the meaning of section 3, sub section(1) of the Act.
It was further held that the share and interest of the father in the goodwill of the business was not (1) property which passed on the death of the father within the meaning of section 1 of the Act, nor (2) an interest for life reserved to the father within the meaning of section 38, subsection 2(c) of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889.
It was further held that it was a benefit accruing or arising to the sons by the cesser of an interest which the father had in property and which ceased on his death within section 2 sub section 1(b) of the Act.
The High Court, on the analysis of this case which was placed before it, came to the conclusion that clause 10 of the present partnership deed with which we are concerned is entirely different.
In the partnership agreement in Boden 's case, the interest of the deceased passed to his legal representatives immediately after his death because his share was to accrue to his partnership who were his sons subject only to their paying to his legal representatives the value of their share as on the date of death ascertained by proper valuation.
This decision, in our opinion, must be understood in the light of the facts of that case and though there is a ring of similarity with the facts of the present case.
Though clause 10 of the present agreement is different on the aspect of section 7 of the Act, this decision certainly supports the revenue 's contentions.
In Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes of the Commonwealth of Australia (supra) (E.D) the Privy Council had to deal with a case where the principal asset of a testator was his interest in a partnership pursuant to a deed of partnership which, inter alia, conferred option on the surviving partners to purchase the testator 's share in the capital on his death and further provide that "in computing the amount of purchase money payable on account of the exercise of any option, no sum shall be added or taken into account for the goodwill.
" It was held by the Privy Council that the whole of the testator 's interest including goodwill was assessable to duty.
In so far as the Boden 's case decided that the 56 goodwill did not pass was dissented from.
But the moot question is, what happens to the share of the partner in the goodwill of the firm.
Clause 10 of the partnership deed in the instant case states as indicated before that the firm shall not stand dissolved on the death of any of the partners.
Therefore death of any of the partners will not dissolve the partnership firm and so long as partnership firm exists, goodwill as an intangible asset will belong to all the partners.
What the clause says that on the death of the partner, the partner dying shall have no right whatsoever in the goodwill of the firm.
It is clear, there fore, that goodwill exists up to the death among the partners.
If it does, then the property in the goodwill will also exist in the partners.
After his death, the partner shall have no right.
It means to convey that as a result of inheritance, the heirs of the partners will not get any share but it cannot evaporate nor can the parties by agreement defeat the rights of the revenue.
The very moment life ceases, the right of the deceased in the asset ceases and at that moment the property shall pass and/or shall be deemed to pass on.
Jawaharlal Nehru in 'The Discovery of India ' quotes Aurobindo Ghose thus: "Aurobindo Ghosh writes comewhere of the present as 'the pure and virgin moment ' that razor 's edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not.
The phrase is attractive and yet what does it mean? The virgin moment emerging from the veil of the future in all its naked purity, coming into contact with us, and immediately becoming the soiled and stale past.
Is it we that soil it and violate it? Or is the moment not so virgin after all, for it is bound up with all the harlotry of the past?" (1983 Impression p. 21) So therefore in that razor 's edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not, the property indubitably passes on, to whom depends upon the facts and circumstances of a particular case.
If property exists, as it must as the clause does not and indeed cannot say that goodwill vanishes, then share of the partner exists.
If that is so then the title to that property cannot be in the vacuum.
The High Court at page 309 of the report has observed that interest of a dying partner automatically comes to an end on his death.
The High Court further stated that if an interest in any property came 57 to an end at a particular point of time, nothing survived which could be inherited by the heirs.
We are unable to accept this position.
The moment the life comes to an end, 'the razor ' edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not, ' at that time property passes or is deemed to pass.
The goodwill of the firm after the death of the dying partner does not get diminished or extinguished.
Whoever has the benefit of that firm has the benefit of the value of that goodwill.
Therefore if by any arrangement, for instance, clause (10) of the partnership agreement in the instant case, the heirs do not get any share in the goodwill, the surviving partners who will have the benefit of the partnership will certainly have that benefit.
The High Court was right in observing at page 312 of the report that section 7 of the Act might apply to the facts of a given case if it could be shown that there was a cesser of any interest resulting in some form of benefit.
Indeed in this case whoever gets the partnership firm is the gainer.
Therefore, as a result of the death of the dying partner, there is cesser of interest as well as accrual or arising of benefit of the said cesser.
It is well settled that during the subsistence of the partnership, no partner can claim any specific share in any particular items of the partnership assets.
A partner 's interest in running partnership is not specific and is not confined to any specific item of partnership property but that does not mean that the partner has no interest in any individual asset of the firm.
His interest obviously extends to each and every item of firm 's asset.
See the observations in the case of Addanki Narayanappa & Anr.
vs Bhaskara Krishnappa and 13 Ors.; , 3 S.C.R. 400.
So the goodwill of the firm was an asset in which dying partner had a share.
It passed from the death of the dying partner and the beneficiary of such passing would be one who by virtue of the partnership agreement would be entitled to the value of that asset.
The question is how should such asset be valued? Under the Act, the levy of the estate duty is on every asset that will pass on the death of the deceased.
Part V of the Act deals with the valuation of assets that is chargeable to tax under the Act.
Sub section (1) of section 36 provides that the principal value of any property shall be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in the open market at the time of the deceased 's death.
Subsection (2) of section 36 further stipulates that in estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased 's 58 death and shall not make any reduction in the estimate on account of the estimate being made on certain assumptions.
Section 40 deals with the valuation of benefits from interests ceasing on death.
It has been canvassed before the High Court on behalf of the accountable person and it found favour with the High Court that clause (b) of section 40 of the Act which deals with the valuation of benefit of interest arising on death would be wholly inapplicable with the facts and circumstances of this case.
We are unable to accept this position.
Difficulties in making apportionment does not make a taxable item non taxable.
See in this connection the observations of this Court in Commissioner of Income tax, Madras.
vs Best and Co. (Private) Ltd., Reliance was placed on behalf of the accountable person on a decision of the Judicial Committee in Attorney General of Ceylon vs AR.
Arunachalam Chettiar and Others, 34 I.T.R. 20 E.D.
The facts of that case and the clauses with which the Judicial Committee was concerned there were entirely different.
There the son had merely a right to be maintained by the Karta out of the common fund to an extent in the Karta 's absolute discretion and there was no basis of valuation which in relation to such an 'interest ' would conform to the scheme prescribed under section 17(6) of the Ordinance with which the Judicial Committee was concerned.
A full bench of the Madras High Court in the case of Alladi Kuppuswami vs Controller of Estate Duty, Madras, , had to construe the effect of a Hindu Women 's Rights to Property Act, 1937 and to consider the nature of the right of the widow in the property.
It was found that at the death of the widow, there was no cesser of any interest she had in the joint family property and, in any case, her interest being entirely undefined, it lapsed on her death resulting in no change in the coparcenership as such and her interest could not properly be regarded as an interest in property within the meaning of section 7(1) of the Act.
Our attention was drawn to certain observations of Veeraswami, C.J. at page 507 of the report wherein it was observed that it was only property that passed in the sense of passing hands by way of inheritance, or other form of devolution which seemed to attract section 5.
Likewise, for purposes of section 6, it must be property which the deceased at the time of his death was competent 59 to dispose of.
So also, for the application of the first part of section 7(1), it should be such interest in property, as on its cesser the benefit that accrues or arises should be referable to the whole or less than the whole income of the property.
The Chief Justice had observed that the implication was that if that measure in terms of income of the property was not apposite to the cesser of an interest, it would not be an interest such as was contemplated by section 7(1) of the Act.
It is not necessary to examine this proposition in any greater detail because in our opinion under section 5 of the Act read with section 36, valuation can be made in the instant case.
The Madras High Court in Controller of Estate Duty, Madras vs Ibrahim Gulam Hussain Currimbhoy, , observed that the goodwill being an asset of the firm belonged to the firm, i.e., to all the partners, and the death of the deceased partner did not extinguish his share in the goodwill but resulted in the augmentation of the interest of the surviving partners in the goodwill in view of clause 14 of the partnership deed in that case.
Clause 14 was as follows: "The retiring partner or the legal representatives of the deceased partner shall not be entitled to the goodwill of the business as the surviving or continuing partners alone shall be entitled to the goodwill and to continue to carry on the business under the same name and style.
" And hence there was a passing of the deceased 's share in the goodwill even if there was no devolution of the deceased 's interest in the goodwill on the legal representatives.
The interest in the goodwill which the deceased possessed and could dispose of along with his entire interest in the firm at the time of his death came to devolve on the surviving partners and their share in the goodwill was augmented to the extent of the share of the deceased as per clause 14 of the partnership deed in that case and the Madras High Court held that section 5, of the Act applied.
Section 5, we have noted, is applicable in the instant case in the sense that property passed on the death of the deceased partner and if that is so, section 40 would not have any application in the valuation.
On this aspect, the Madras High Court was unable to agree with the Gujarat High Court 's decision under appeal.
The Madras High Court relied on the decision of this Court in Khushal Khemgar Saha vs Mrs. Khorsed Banu, [1970]3 S.C.R. 689.
Our attention was also drawn to a decision of the Madras High 60 Court in the case of Smt.
Surumbayi Ammal vs Controller of Estate Duty, Madras, But the question under controversy was different in that case and no useful purpose would be served by examining that case in detail.
The full bench of Punjab and Haryana High Court in the case of State vs Prem Nath, , held that the goodwill of a firm was an asset of the firm, the share of the deceased partner in which, along with his share in the other assets of the firm, devolved for the purposes of estate duty, on his death, upon his legal representatives notwithstanding any clause in the deed of partnership to the effect that the death of a partner should not disolve the firm and that the surviving partners were entitled to carry on the business on the death of the partner.
The Punjab & Haryana High Court noted that the decision under appeal of the Gujarat High Court did not consider the question whether the devolution of the goodwill on the surviving partners on the death of the deceased partner was itself not sufficient to constitute passing of the property within the meaning of section 5 of the Act.
It noted that this view of the Gujarat High Court was contrary to the Privy Council 's decision referred to hereinbefore and that of the Madras High Court 's view noted earlier.
The Bombay High Court in the case of Controller of Estate Duty, Bombay City I vs Fakirchand Fatehchand Sachdev, , came to the conclusion that the charging provisions and the computation provisions in the constituted an integrated scheme, and if in a given case it was not possible to compute the value of a particular property passing on death, then that property did not become exigible to the charge of estate duty.
Where certain property was deemed to pass under section 7(1) of the Act, estate duty thereon would be chargeable under section 5, but the value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased would have to be computed under section 40 and if it could not be computed, then such a benefit was not liable to the charge of estate duty.
The goodwill of a firm was one of the properties or assets of a firm.
Merely because it was an intangible asset, it did not stand on a diferent footing from the tangible assets of the firm, but in making up the final accounts it had to be taken together with the other assets of the firm in arriving at the value of the total assets and for deducting therefrom the liabilities as provided by law and in paying to the partners their share in the balance so arrived at.
Where a partnership was dissolved by the death of a partner, his share in the firm 61 passed on his death to his legal representatives.
Where a partnership A was not dissolved on the death of a partner but the surviving partners became entitled to continue the partnership business, the deceased partner 's share passed to his surviving partners subject to their making payment to the legal representatives of the deceased partner of the amount of the value of his share in accordance with the provisions of the deed of partnership.
A partner did not have a defined share in the goodwill of the firm and the estate duty authorities could not regard it as a separate property by itself apart from the other assets and liabilities of the firm and include its value in the estate of a deceased partner under section section The Bombay High Court could not agree with the view of the Gujarat High Court under appeal.
In the case of Controller of Estate Duty vs Kanta Devi Taneja, , the Gauhati High Court held that passing of property was not a mere change of source or title but change of beneficial possession or enjoyment.
The interest of a partner in a partnership firm was property within the meaning of section 2(15) of the , and such interest extended to the share of the partnership including goodwill.
Therefore, on the death of a partner, his interest in the entire unit of the firm including goodwill passes, irrespective of the provisions of the partnership deed as to its final devolution.
The Calcutta High Court in the case of Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta, had occasion to consider this question and held that what passed on the death of a partner was his share in the firm, that is, his interest in the entire unit of the firm.
This had to include goodwill.
The fact that such interest might devolve not on the legal representatives but on a different group or category of persons or that from the goodwill of the legal representatives might be excluded would not make any difference for the purpose of assessment to estate duty.
The entirety of the the interest of the deceased partner that would pass, which necessarily included goodwill, would be includible in the estate.
The valuation of such entire interest had to be determined as provided under section 36 of the read with rule 7(c) of the Estate Duty Rules, 1953.
Goodwill as such could not be valued, according to the Calcutta High Court, for inclusion in the estate of the deceased for purposes of estate duty.
The High Court observed at page 552 of the report as follows: "We hold that the Tribunal 's finding that the goodwill in 62 the firm, Messrs. Ashok Foundary and Metal Works, did not pass on the death of the deceased is incorrect but the finding that the valuation of the goodwill as such could not be included in the estate of the deceased for the purpose of the estate duty is correct.
Goodwill being part of the entire assets of the firm, the entire share of the deceased therein has to be valued in accordance with law and this value has to be included in the estate for levy of estate duty." The Allahabad High Court in the case of Controller of Estate Duty vs Smt.
Ram Sumarni Devi, , followed the decision under appeal and was of the view that the goodwill could not be included in the value of the property passing on the death of a partner.
In P.T. Abdul Sattar vs Controller of Estate Duty, , the Kerala High Court came to the conclusion that under clause 15 of the deed it had to construe, provided that in the event of death or retirement of a partner, such deceased or retiring partner would not be entitled to any goodwill of the firm.
A had died in 1969 and the Asst.
Controller held that the interest of A in the goodwill of the firm passed on his death and this was upheld by the Tribunal.
It was held by the High Court that under clause 15, the interest of A in the goodwill of the firm automatically came to an end on his death.
Property in the goodwill did not, therefore, pass on his death.
We are, however, for the reasons we have indicated before, unable to accept this conclusion.
In the aforesaid view of the matter, we are of the opinion that the share of the deceased in the partnership did not evaporate or disappear.
It went together with the other assets and should be valued in the manner contemplated under rule 7(c) of the Estate Duty Rules as indicated in the judgment of the High Court of Calcutta in Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta (supra) .
The second question must, therefore, be answered in the affirmative and in favour of the revenue.
The appeal is, therefore, allowed.
In the facts and circumstances of the case, parties will pay and bear their own costs.
Consequential orders in accordance with law and in consonance of this decision should be passed by the Tribunal upon notice, to all necessary parties.
A.P.J .
Appeal allowed.
|
One N. Kanti Lal had 28% share in a partnership firm.
The Partnership Deed, by cl.
(10) provided that the firm shall not stand dissolved on death of any of the partners and the partner dying shall have no right whatever in the goodwill of the firm.
On his death, the respondent accountable person filed necessary return under the without including the value of the share of the deceased in the goodwill of the firm.
The Assistant Controller of Estate Duty, however, held that the share of the deceased in the goodwill of the firm was liable to be included in the principal value of his property and added the same to the value of the interest which the deceased had in the partnership assets.
The Appellate Controller of Estate Duty confirmed the aforesaid order in appeal.
The accountable person preferred appeal before the Appellate Tribunal contending: (1) that the deceased had no interest in the assets of the firm and hence his share in the goodwill did not pass at all; (2) that in view of cl.
(10) of the Partnership Deed the share of the deceased partner in the goodwill did not pass and as such was not liable to the charge of estate duty; and (3) that when a partnership was a going concern, there could not be any separate valuation of the goodwill which went with the running business.
The Tribunal rejected all the contentions and held that in spite of cl.
(10) of the partnership agreement, the value of the goodwill to the extent of the share of the deceased passed on his death and it was liable to be charged to estate duty.
46 On reference by the Tribunal, the High Court held: (i) that the interest of the deceased in the firm was property within the meaning of the provisions of the ; and (ii) that the value of the interest of the deceased in the partnership firm would not include the goodwill of the partnership firm.
This Court, on the question: 'Whether the value of the interest of the deceased in a partnership firm would include the goodwill of the partnership firm and liable to estate duty ', allowing the Appeal of the Revenue, ^ HELD: 1.
In a partnership there is a community of interest in which all the partners take in the property of the firm.
But that does not mean that during the subsistence of the partnership a particular partner has any proprietary interest in the assets of the firm.
Every partner of the firm has a right to get his share of profits till the firm subsists, and he has also a right to see that all the assets of the partnership are applied to and used for the purpose of the partnership business.
All these rights of a partner show that he has got a marketable interest in all the capital assets of the firm including the goodwill asset even during the subsistence of the partnership.
This interest is 'property ' within the meaning of section 2(15) of the .
[53 D F] 2.
The goodwill of the firm is an asset in which the dying partner has a share.
It passes on the death of the dying partner and the beneficiary of such passing would be one who by virtue of the partnership agreement would be entitled to the value of that asset.
The fact that such interest might devolve not on the legal representatives but on a different group or category of persons or that from the goodwill the legal representatives might be excluded, would not make any difference for the purpose of assessment of estate duty.
The entirety of the interest of the deceased partner that would pass, which necessarily included goodwill, would be includible in the estate.
The valuation of such entire interest has to be determined as provided under section 36 of the read with Rule 7(2) of the Estate Duty Rules, 1953.
[61 E G] 3.
The share of the deceased in the partnership did not evaporate or disappear.
It went together with the other assets and should be valued in the manner contemplated under Rule 7(c) of the Estate Duty Rules.
The goodwill of the firm after the death of the dying partner does not get diminished or extinguished.
Whoever has the benefit of that firm has the benefit of the value of that goodwill.
Therefore, if by any 47 arrangement, for instance, clause (10) of the partnership agreement in the instant case, heirs do not get any share in the good will, the surviving partners who will have the benefit of the partnership will certainly have that benefit.
Therefore, as a result of the death of the dying partner, there is cesser of interest as well as accrual or arising of benefit of the said cesser.
B D] 4.
Difficulties in making apportionment do not make a taxable item non taxable.[58 C] Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes, = 25 I.T.R. (ED) 47, Attorney General vs Boden and Another, 1912 (I) K.B. 539, Addanki Narayanappa & Anr.
vs Bhashara Krishnappa and 13 ors.
, A.I.R. 1966 S.C. 1330=[1966] 3 SCR 400, Commission of Income tax, Madras vs Best and Co. (Private) Ltd., 60 I.T.R.11 and Khushal Khemgar Shah vs Mrs. Khorshed Banu; , relied upon.
Controller of Estate Duty, Madras vs Ibrahim Gulam Hussain Currimbhoy, , State vs Prem Nath, , Controller of Estate Duty, Bombay City I vs Fakirchand Fatchchand Sachdev, , Controller of Estate Duty vs Kanta Devi Taneja, and Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta, , approved.
Attorney General of Ceylon vs AR.
Arunachalam Chettiar and Others, E.D., Alladi Kuppuswami vs Controller of Estate Duty, Madras, and Smt.
Surumbayi Ammal vs
Controller of Estate Duty, Madras, , distinguished.
Controller of Estate Duty vs Smt.
Ram Sumarni Devi, and P. Abdul Sattar vs Controller of Estate Duty, , overruled.
|
ION: Civil Appeal No. 824 of 1986 From the Judgement and order dated 10.
1.1986 of the Bombay High Court in W.P. No. 5327 of 1985.
S.N. Kacker.
Rani Chhabra and Swatanter Kumar for the Appellant.
V.S. Desai, C.V. Subba Rao, A.S. Bhasme and A.M. Khanwilkar for the Respondents.
The Judgment of the Court was delivered by R.B. MISRA, J.
The present appeal by special leave is directed against the judgment and order dated January 10, 1986 of the High Court of Judicature at Bombay dismissing the petition under Article 226 of the Constitution filed by the appellant.
The appellant is carrying on the business of bulk supply of milk, 66 products and milk cream etc.
The appellant is well known in the said field and has a plant of pasteurization in Pune and has been carrying on the said business for more than twenty years.
The appellant installed a plant for pasteurization at a heavy cost to the tune of rupees three lakhs.
The appellant has been supplying large quantities of milk and milk products pasteurized or otherwise to various companies, Government Departments including respondents Nos. 2 and 3.
The appellant as a registered contractor has been supplying fresh buffaloes and cows milk to respondent Nos. 2 and 3 as per the requirements for the last twenty years.
The appellant is on their approved list for the same period and his supplies and work were always appreciated and accepted by the respondents for all these periods.
The appellant is also capable of supplying any quantity of pasteurized milk and, indeed, he had been supplying to various organisations the milk and milk products and also pasteurized milk.
Later on Respondent No. 2, the officer incharge of the Military Farms, Pimpri, directed that the local purchase of milk be stopped and regular supply under a contract by inviting tenders be effected.
Accordingly, the appellant 's contract for supply of fresh buffalo and cow milk ended in 1984 The Military Farm had its own plant for pasteurization and for all these years respondents Nos. 2 and 3 had been making purchases of only fresh buffalo milk and used to pasteurize the milk for their own purposes in their own plant.
The plant of respondents 2 and 3 is very much in operation till to day and also on the date of inviting tenders in question .
Respondent No. 2 issued on or about July 16, 1985 tender notices for the supply of fresh buffalo or cow milk.
The said tender notice was published in the Indian Express on July 29, 1985.
The tender notice was also sent to the appellant by Respondent No. 2 by registered post acknowledgement due which was received by the appellant in July 1985.
By the said tender notice, the respondent had invited tenders for supply of fresh buffalo or cow milk at Military Farms of Pimpri, Pune.
The appellant being eligible and already on the approved list of the respondents submitted a tender for supply of fresh buffalo milk to respondents 2 and 3 as per the requirements stated in the tender notice.
The appellant had offered the milk at the rate of Rs.4.21 per litre having 6 per cent fat and specific gravity of 1.030 as required in the tender notice, thus, giving a rate of Rs.421 for each 100 litres.
67 Respondent No. 4, General Manager, Government Milk Scheme, A Pune, also submitted a tender but the tender of respondent No. 4 related not to the item asked for in the tender notice viz. fresh buffalo or cow milk but related to the supply of pasteurized milk.
While the cow milk asked for in the tender provided for 4 per cent fat with a specific gravity of 1.029, respondent No. 4 agreed to supply pasteurized milk for Rs.4 per litre, that is Rs.400 per 100 litres.
It appears that after the submission of the tender, the appellant received a notice dated October 30, 1985 from respondent Nos. 2 and 3 requesting the appellant to extend the validity period of tender up to November 30, 1985 on the same terms and conditions as mentioned in the tender submitted by the appellant.
The appellant acceded to the request and extended the validity period till November 30, 1985 in view of the long standing business and his good relations with respondents 2 and 3.
During this period respondents 2 and 3 kept on receiving sup plies of fresh buffalo milk to the satisfaction till the appellant was asked to stop the supply from November 20, 1985 vide letter dated October 30, 1985, although the appellant had been requested earlier to continue the supply at least up to December 1, 1985 vide letter dated October 30, 1985.
The appellant thus had to suffer a huge loss on account of the abrupt stoppage of the supply.
Tenders were opened on August 23, 1985.
The appellant was the lowest bidder.
The rates given by the appellant in the tender for supply of fresh buffalo milk was lower and tender of respondent No. 4 could be of no consequence as it was for a different item not contemplated by the tender notice.
The tender given by Respondent No. 4 was however accepted on November 19 20, 1985 and the tender of the appellant was rejected although it was lower than that of respondent No. 4.
The concerned officer had made a report to the higher authorities about the two tenders, one from the appellant and the other from respondent No. 4, vide letter dated August 23, 1985.
It will be appreciated at this stage to refer to the advice given by the officer concerned which is as follow: "CONCLUSION OF CONTRACT FOR SUPPLY OF MILK AT PR MF KIRKEE / PIMPRI.
Reference discussion DDME and ADMP of date.
The information required is given below: (a) The cost of blended milk and standard milk taking the buff milk rate of Rs.421 for 100 litres works out to: i) Blended Milk (Taking Rs.3.59per lit of BMP Rs.28 per kg.) 10% price preference Rs.0.36 ii) Standard Milk (Taking cost of Rs.3.48 per litre separated milk Rs.2.30 per litre) 10% price preference Rs.0.35 Rs.3.83 (b) If contract for purchase of cow milk is concluded, farm will lose 41 paise per litre on blended milk and 52 paise on standard milk per litre.
Taking a daily purchase of 3000 litres of cows milk for which tender has been called for it will amount to a loss of Rs.4.48 lakhs in terms of blended milk and Rs.5.69 lakhs in terms of standard milk during the period of contract of one year.
In so far as pasteurization is concerned, milk has to be repasteurized as delivery timings of units in the station are different.
Moreover, even if Milk Scheme delivers the milk just before one hour of sending out the delivery rounds, it will only save on electricity charges which will be negligible.
The 7,500 litres of cows milk being produced daily at Pimpri has to be pasteurized for which the daily section will continue to work as it is at present.
The collection charges under farm arrangement works out to Rs.0.10 per litres.
The details are enclosed at Appendix 'A '.
Though collection charges will be less by 10 paise but it will cause lot of inconvenience to the dairy staff because milk is already being collected three times a day from Pimpri and lot of difficulties are being experienced in route.
If Milk Scheme delivers the Milk at MP Dairy that arrangement will be the best.
" From the above report it is obvious that the respondents will be put to substantial loss to the tune of about Rupees ten lakhs by accept 69 ing the tender of respondent No. 4 but all the same the tender of respondent No. 4 was accepted in preference to the tender made by the appellant.
Respondents 2 and 3 would have gained by accepting the tender of the appellant which is strictly in terms of the tender notice because the respondent could further increase the quantity of milk by diluting the same to bring to fat and gravity standard.
From the terms and conditions inviting the tender, the Government suppliers were given exemption from depositing the earnest money and tender form fee but no other concession to the Government supplies was indicated in the tender notice yet 10 per cent price preference was given to respondent No. 4 without any basis and in violation of the terms of notice inviting the tender.
All the same the price of the appellant quoted in the tender was lower than that of respondent No. 4 and there was absolutely no justification whatsoever for not accepting the tender of the appellant.
To start with the appellant had made an offer of Rupees four hundred fifty per hundred litres but para 16 of the tender notice provided for negotiations by respondents 2 and 3 with the contractors on rates or otherwise.
As a result of subsequent negotiations between the appellant and the respondents, the offer of Rs.450 was reduced to Rs.421 per hundred litres.
If the tender notice had indicated for the supply of pasteurized milk there was no difficulty for the appellant to have done so.
But in the absence of any such indication in the tender notice and in the absence of any subsequent negotiations between the appellant and the respondents under para 16 of the tender notice, the appellant offered to supply the buffaloes or cows fresh milk.
Feeling aggrieved by the rejection of his tender, the appellant challenged the order of the authority concerned by a Writ Petition in the High Court.
The Writ Petition was, however, dismissed in limine by a cryptic order as under: "Heard both sides.
The Writ Petition involves Questions relating to contractual obligations.
Even otherwise, we do not find that there is anything wrong or unfair in accepting the milk from the Government Milk Scheme.
The policy decision cannot be termed as unfair or arbitrary.
Hence W.P. rejected.
" The appellant has now come to challenge the judgment and order of the High Court dated 10.1.1986 by special leave.
Shri S.N. Kacker, learned counsel appearing for the appellant has reiterated the same contentions as had been raised before the High Court.
70 The main contention is that the authorities concerned had acted contrary to the principles of law, unfairly, arbitrarily and discriminately.
The appellant being the lowest bidder his tender ought to have been accepted by the Panel officers and there was absolutely no reason or justification for the respondents to reject the same.
It was further contended that the tender submitted by respondent No. 4 was not in consonance with the requirements of the tender form and, therefore, that should have been ignored.
The tender notice demanded supply of fresh buffaloes or cows milk hut respondent No. 4 had submitted for pasteurized milk.
In any case, if the respondents wished to alter the invitation of the tender it was obligatory and mandatory for the respondents to call the appellant for negotiations before rejecting his tender and accepting the tender of respondent No. 4.
There was a clear provision for negotiation in the tender notice and it was open to respondent No. 4 to have negotiated with appellant and asked him to tender for the supplying pasteurized milk.
In any case, on the own admission of the respondents, that the pasteurized milk supplied by respondent No. 4 would have to be re pasteurized and secondly the cost of 5() paise had to be added even to the price of respondent No. 4 as the same was being added to the price given by the appellant.
The action of the respondent is completely arbitrary and discriminatory inasmuch as respondent No. 4 merely being the Government organisation had been given preference over the appellant while respondent No. 4 had no better quality or standard for effecting the supplies asked for under the contract and even tor the pasteurized milk.
Even in the matter of contract, the Government has to act fairly and justly and the failure of the Government to do so given a right to the citizen to approach the court for justice.
The respondents have made a wrongful exercise of their power in rejecting the tender of the appellant.
It was contended for the appellant that he being the lowest bid der, the authorities concerned acted arbitrarily in accepting the bid of respondent No. 4 which was higher than that of the appellant.
We find considerable force in this contention.
In Ramana Dayaram Shetty vs The International Airport Authority of India and Ors., ; , this Court laid down the law in this respect in the following words: "Where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet 71 will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant.
The power or discretion of the Government in the matter of grant of largess must be confined and structured by rational, relevant and non discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
" On August 23, 1985, the officer of the Military Department submitted a report to the Higher Authority stating therein that the appellant was not only the lowest bidder but also the purchase of milk from the appellant could be profitable while the purchase of milk from respondent No. 4 would result in serious losses to the extent of Rupees ten lakhs or so.
The report further indicates that respondents would have to re pasteurize the milk for its supply to its various units without any profit because the minimum fat standard of 4 per cent with the gravity of 1.029 has to be maintained.
As such the entire labour would be deployed without any fruitful result or benefit to the respondent while on the other hand, if the respondent wished, by pasteurizing the fresh milk supply of the appellant they could otherwise earn profits extracting fat while maintaining the fat and the gravity standard.
In spite of the report of the Military Officer, the higher bid of respondent No. 4 in preference to the lower bid of the appellant was accepted.
It clearly indicates that the action of the respondent authority was arbitrary and fanciful.
The terms contained in the tender notice have been detailed in the notice itself and it is not necessary to refer to all the terms but we would refer to paras 2, 16 and 19.
Para 2 of the tender notice provides that tenders will be invited for the supply of pure fresh buffaloes milk testing not less than 6.0% butter fat and 1.030 specific gravity or pure fresh cows milk testing not less than 4% butter fat and 1.029 specific gravity daily at Military farms/depots as mentioned in Appendix `A '.
Para 16 provides that as per orders of Army Headquarters, Military Farms contracts are to be concluded through a panel of officers which may hold negotiations with the contractor where necessary and recommend the reasonable rates to the higher authorities.
72 Para 19 provides that the Central Government/State Governments are purely governments concerns need not pay tender form fees and earnest money.
They are, however, requested to inimate the period of supply for which they desire to tender their rates to enable the undersigned to send them the required tender form.
It is contended for the appellant that the tender submitted by respondent No. 4 did not satisfy the requirement of para 2 of the tender notice.
The tenders had been invited for the supply of pure fresh buffaloes milk or fresh cows milk but the respondent had submitted tender for supplying pasteurized milk, and therefore, the tender submitted by respondent No. 4 being not in conformity with the tender notice should not have been accepted by the authorities.
In any case, if the tender of respondent No. 4 regarding supply of pasteurized milk was accepted and the original terms of the tender notice were changed, the appellant should have been given an opportunity to submit his tender in conformity with the changed terms but this was not done which has caused serious prejudice to the appellant.
If the tender forms submitted by any party is not in conformity with the conditions of the tender notice the same should not have been accepted but the authorities concerned arbitrarily and in a fanciful manner accepted the tender of respondent No. 4.
The State of its instrumentality has to act in accordance with the conditions laid down in the tender notice.
In any case if the authorities chose to accept the tender of respondent No. 4 for supplying pasteurized milk, the appellant should also have been given an opportunity to change its tender.
The authorities have, however, given preference to the tender of respondent No. 4 for offering to supply pasteurized milk contrary to the terms contained in para 2 of the tender notice.
We find considerable force in this contention of the appellant.
It was next contended that the conditions contained in the tender notice did not contemplate of giving 10 per cent price preference to Government undertakings yet 10 per cent price preference was given to the Government illegally and the policy of the Government to give 10 per cent price preference to Government undertaking was discriminatory and violative of Articles 14 and 16 of the constitution.
The State policy places respondent No. 4 above the appellant without any basis or reasonable classification.
In the absence of any such stipulation in the contract such price preference was unjustified.
If the terms and conditions of the tender have been incorporated 73 in the tender notice itself and that did not indicate any preference to the Government undertakings of giving 10 per cent price preference to Government undertaking, the authority concerned acted arbitrarily in allowing 10% price preference to respondent No. 4.
The only facility provided to the Government undertakings was provided in paragraph 19 which contemplates that the Central or State Government Departments are purely Government concerns need not pay tender forms fees and earnest money.
This was the only concession available to the Central/State Government or to the purely Government concerns, and no other concession or benefit was contemplated under the terms of the tender notice.
If the appellant had known that 10 per cent price preferene to Government undertaking was to be given to respondent No. 4 the appellant would have taken every precaution while submitting the tender.
In support of his contentions, Shri S.N. Kacker, appearing for the appellant strongly relied upon Ramana Dayaram Shetty vs The International Airport Authority of India and Ors.
(supra).
In that case, the first respondent by a public notice invited tenders for putting up and running a Second Class Restaurant and Two Snack Bars at the International Airport at Bombay.
The notice, inter alia, stated in paragraph 1 that sealed tenders in the prescribed form were invited from Registered Second Class Hoteliers having at least five years experience for putting up and running a Second Class Restaurant and two Snack Bars at the Bombay Airport for a period of three years.
Paragraph 8 stated that the acceptance of the tender would rest with the Airport Director who does not bind himself to accept any tender and reserve to himself the right to accept or reject any tender received without assigning any reason therefor.
Out of the six tenders received only the tender of the 4th Respondent was complete and offered the highest amount as licence fee.
All the other tenders were rejected because they were incomplete.
As the 4th respondent did not satisfy the description of a Registered Second Class Hotelier having at least five years experience prescirbed in paragraph (1) of the tender notice, the first respondent called upon the 4th respondent to produce documentary evidence whether they were registered second class hoteliers having at least five years experience.
The Fourth Respondent stated once again that they had considerable experience of catering for various reputed commercial houses, clubs, messes and banks and that they held on Eating House Catering Establishment (Centeen) Licence.
On being satisfied by the information given by the 4th respondent, the first respondent accepted the tender on the terms and conditions set out in its letter.
74 The appellant challenged the decision of the first respondent in accepting the tender of the 4th respondent.
This Court held that the action of the first Respondent in accepting the tender of the 4th respondent who did not satisfy the standard or norms was clearly discriminatory since it exlcuded other persons similarly situated from tendering for the contract and it was arbitrary and without reason.
The acceptance of tender was invalid as being violative of the equality clause of the Constitution as also the administrative law for its arbitrary actions.
This Court also did not justify the action of the first respondent on the ground that it could have achieved the same result by rejecting all the tenders and entering into direct negotiations with the 4th respondent.
This Court observed: "It is true that there was no statutory or administrative rule requiring the 1st respondent to give a contract only by inviting tenders and hence the 1st respondent was entitled to reject all the tenders and, subject to the constitutional norm laid down in Article 14, negotiate directly for entering into a contract.
Paragraph (8) of the notice also made it clear that the 1st respondent was not bound to accept any tender and could reject all the tenders received by it.
But here the 1st respondent did not reject the tenders outright and enter into direct negotiations with the 4th respondents for awarding the contract.
The process of awarding a contract by inviting tenders was not terminated or abandoned by the 1st respondent by rejecting all the tenders but in furtherance of the process, the tender of the 4th respondents was accepted by the 1st respondent.
The contract was not given to the 4th respondents as a result of direct negotiations.
Tenders were invited and out of the tenders received, the one submitted by the 4th respondents was accepted and the contract was given to them." This Court quoted with approval the following observations of Mathew J., in V. Punnan Thomas vs State of Kerala, AIR 1969 Kerala 81: "The Government is not and should not be as free as an individual in selecting the recipients for its largess.
Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society.
A democratic Government cannot lay 75 down arbitrary and capricious standards for the choice of persons with whom alone it will deal." Shri Anil Dev Singh, appearing for the respondents, has contended that respondent No. 4 being the State Government agency was rightly awarded the contract as per the policy of the Government of India as laid down in Letter No. 12(1)/1/85/D/(QS) dated August 13, 1985.
The policy adopted by said letter dated August 13, 1985 came in after the 16th July, 1985 when respondent No. 2 issued tender notice for the supply of fresh buffalo or cow milk.
As such the notification dated August 13, 1985 is of no avail to the respondent in so far as the acceptance of the tender of respondent No. 4 is concerned.
Acceptance or rejection of tender made by the appellant or the respondent No. 4 will depend upon the compliance of the terms of tender notice.
It is true that the Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily.
In the instant case, tenders were invited and the appellant and respondent No. 4 submitted their tenders.
The tenders were to be adjudged on their own intrinsic merits in accordnace with the terms and conditions of the tender notice.
The learned counsel, however, placed reliance on C.K. Achuthan vs State of Kerala, [1959] Suppl.
1 SCR 787 where Hidayathullah, J., as he then was, held that a contract which is held from Government stands on no different footing from the contract held by a private party and when one person is chosen rather than another, the aggrieved party cannot claim protection of Article 14.
The wide observation made by Hidayatullah, J., was explained in Ramana Dayaram Shetty (Supra).
Bhagwati J. as he then was, speaking for the Court observed: "Though the language in which this observation is couched is rather wide, we do not think that in making this observation, the Court intended to lay down any absolute proposition permitting the State to act arbitrarily in the matter of entering into contract with third parties.
We have no doubt that the Court could not have intended to lay down such a proposition because Hidayatullah J. who delivered the judgment of the Court in this case was also a party to the judgment in Rashbihari Panda v State of Orissa (Supra) which was also a decision of the Constitution Bench, where it was held in so many terms that the State cannot act arbitrarily in selecting persons with whom to enter into 76 contracts.
Obviously what the Court meant to say was that merely because one person is chosen in preference to another, it does not follow that there is a violation of Article 14, because the Government must necessarily be entitled to make a choice.
But that does not mean that the choice be arbitrary or fanciful.
The choice must be dictated by public interest and must not be unreasoned or unprincipled.
" Next reliance was placed on Viklad Coal Merchants, Patiala, etc. etc.
vs Union of India & others, AIR 1984 SC 95.
In that case this Court had to construe section 27A and 28 of the Railways Act and the Court observed: "Section 28 forbids discrimination by giving undue or unreasonable preference or advantage in respect of any particular traffic to any particular person or any railway administration but this general prohibition against discrmination is subject to the overriding power conferred on Central Government under section 27A.
If while giving effect to the orders of the Central Government issued under Section 27A, priority is accorded in the matter of transport of goods consigned to Central or State Government or class of goods specified in the general or special order issued in this behalf, the action of the railway administration in complying with such special or general order could not be said as tentamounting to giving undue or unreasonable preference or advantage to or in favour of any particular person or railway administration.
What section 28 forbids is discrimination in the matter of transport of goods against a class but this is subject to the permissible classification that would be introduced by a special or general order issued by the Central Government in exercise of the power conferred by Section 27A. It may be recalled that the Preferential Traffic Schedule according to Priority `C ' to transport of coal by those mentioned therein has been issued in exercise of the power conferred by Section 27A.
Therefore, the submission that petitioners in the matter of transport of coal are similarly situated with the Central or State Government or transporters given priority by general or special order issued under Section 27A cannot be entertained.
" 77 This case is not of much help in the present case.
The facts were materially different in that case.
In that case, the railway authority had to comply with the directions given by the Central Government which was in the public interest.
Lastly, the counsel relied upon Madhya Pradesh Ration Vikareta Sangh Society & Ors.
etc etc.
vs State of Madhya Pradesh & Anr. ; In that case the question for consideration was whether the Fair Price Shops in the State under the Government Scheme should be directly run by the Government through the instrumentalities of the Consumers Co operative Societies as its agents or by retail dealers to be appointed by the Collector.
This Court took the view that essentially this was a matter of policy to which the Court is not concerned.
This case also is not of much help in the present case.
In the instant case, the instrumentalities of the State invited tenders for the supply of fresh buffaloes and cows milk and, therefore, this case has to be decided on the basis of bid by the tenderers.
There was no question of any policy in this case.
It is open to the State to adpot a policy different from the one in question.
But if the authority or the State Government chooses to invite tenders then it must abide by the result of the tender and cannot arbitrarily and capriciously accept the bid of respondent No. 4 although it was much higher and to the detriment of the State.
The High Court, in our opinion, was not justified in dismissing the writ petition in limine by saying that the question relates to the contractual obligation and the policy decision cannot be termed as unfair or arbitrary.
There was no question of any policy decision in the instant case.
The contract of supply of milk was to be given to the lowest bidder under the terms of the tender notice and the appellant being the lowest bidder he should have been granted the contract to supply, especially, when he has been doing so for the last so many years.
In the result, the appeal must succeed.
It is accordingly allowed and the judgment and order of the High Court dated January 10, 1986 is set aside and the Writ Petition is allowed and the order of the authorities rejecting the tender of the appellant and accepting the tender of respondent No. 4 is quashed.
The respondents authorities are directed to accept the tender of the appellant.
There is, however, no order as to costs.
P.S.S. Appeal allowed.
|
The appellant is carrying on the business of bulk supply of milk and milk products for the last twenty years.
He has a plant for pasteurization at Pune.
On July 16, 1985 the officer in charge of the Military Farms respondent No. 2, issued tender notice for the supply of pure fresh buffalo and cow milk.
The appellant being eligible and already on the approved list of the respondent authority, submitted a tender offering fresh buffalo milk of the specified fat content and gravity giving a rate of R.S. 421 per 100 litres.
The General Manager, Government Milk Scheme, Pune respondent No. 4, also submitted a tender for the supply of pasteurized milk, an item not contemplated by the tender notice, at Rs.400 per 100 litres.
Tenders were opened on August 23, 1985 and the appellant was found the lowest bidder.
The Military officer concerned submitted a report to the higher authority stating that the appellant was not only the lowest 'bidder but also that the purchase of milk from him would be profitable, while the purchase of milk from respondent No. 4 would result in serious loss to the extent of rupees ten lakhs or so.
But all the same, the respondent authority accepted the higher bid of respondent No. 4, in preference to the lower bid of the appellant contrary to the terms of the notice inviting tender.
Feeling aggrieved by the rejection of his tender, the appellant challenged the order by filing a writ petition in the High Court which was dismissed in limine.
In this appeal by special leave on behalf of the appellant it was 64 contended that even in the matter of contracts, the Government has to act fairly and justly and the failure of the Government to do so gives a right to the citizen to approach the court for justice, that the authority concerned in rejecting his tender had acted contrary to the principles of law, unfairly, arbitrarily and discriminately, that the tender submitted by respondent No. 4 was not in consonance with the tender notice and it should have been ignored, and that if the authority wished to alter the conditions of the tender notice it was obligatory and mandatory for it to call him for negotiation.
It was further contended that the 10 per cent price preference given to respondent No. 4 contrary to the terms of the tender notice was illegal and discriminatory.
On behalf of the respondents it was contended that respondent No. 4 being the Government agency was rightly awarded the contract as per the policy of the Government of India laid down in notification dated August 13, 1385.
Allowing the appeal, the Court, ^ HELD: 1.
The Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily.
It is open to the State to adopt a policy different from the one in question, but once the authority or the State Government chooses to invite tenders then it must abide by the result of the tender.
[75 C D; 77 D E] 2.
The High Court was not justified in dismissing the writ petition in limine by saying that the question relates to the contractual obligation and the policy decision cannot be termed as unfair or arbitrary.
[77 E] There was no question of any policy decision in the instant case.
The notification dated August 13, 1985 laying down the policy came in after July 16, 1985 when respondent No. 2 issued tender notice.
The instrumentalities of the State having invited tenders for the supply of fresh buffalo and cow milk, these were to be adjudged on their intrinsic merits in accordance with the terms and conditions of the tender notice.
The contract for the supply of milk was to be given to the lowest bidder under the terms of the tender notice and the appellant being the lowest bidder, it should have been granted to him.
The authority acted capriciously in accepting a bid which was much higher and to the detriment of the State.
[75 B D; 77 D F] 3.
Where the tender form submitted by any party is not in con 65 formity with the conditions of the tender notice the same should not be A accepted.
So also, where the original terms of the tender notice are changed the parties should be given an opportunity to submit their tenders in conformity with the changed terms.
[72 C E] 4.
The authority acted arbitrarily in allowing 10 per cent price preference to respondent No. 4.
The terms and conditions of the tender had been incorporated in the tender notice itself and that did not indicate any such price preference to government undertakings.
The only concession available to Central/State Government or to the purely government concerns was under para 13 of the notice, that is, that they need not pay tender form fee and earnest money.
No other concession or benefit was contemplated under the terms of the tender notice.
[73 A C ] Ramana Dayaram Shetty vs The International Airport Authority of India & Ors., ; ; V. Punnan Thomas vs State of Kerala, AIR 1969 Kerala 81; C.K. Achuthan vs State of Kerala [1359] Suppl.
1 SCR 787; Viklad Coal Merchants, Patiala etc.
vs Union of India & Ors.
AIR 1984 SC 95; and Madhya Pradesh Ration Vikreta Sangh Society SCR 750, referred to.
|
Civil Appeal No. 3435 of 1984 etc.
From the Order dated 24.7.1984 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED/SB/A.664/84 D. K.K. Venugopal, Soli J. Sorabji, Bishambar Lal, H.K. Kochar I.L. Beri, P.K. Chatterjee, Rajesh Agarwal and Arun Kr Sinha for the Appellants.
G. Das, A. Subhashini, P.P. Singh, C.V. Subba Rao and Sushma Ratha for the Respondents.
130 The Judgment of the Court was delivered by PATHAK, J.
The question raised in the appeal filed by Atul Glass Industries (Pvt.
) Ltd. (C.A. No. 3435 of 1984) under section 35L(b) of the is whether glass mirrors fall under Tariff Item No. 23A(4) or Tariff Item No. 68 of the First Schedule to the .
That is also the question raised in the Transferred Cases Nos. 349, 350 and 355 of 1983 filed by the Hindustan Safety Glass Works Ltd., with an additional question whether the glass screens fitted in motor vehicles as wind screens, rear screens and window screens fall under Tariff Item No. 23A(4) or Tariff Item No. 34A or Tariff Item No. 68.
The Appellant, Atul Glass Industries (Pvt.) Ltd., carries on the business of manufacturing and selling glass mirrors.
It purchases duty paid glass sheets from the manufacturers of glass, and either in their original size or after reducing them to smaller sizes puts the glass sheets through a process of treatment.
The glass pieces are buffed with the aid of buffing machines in order to improve the surface of the glass and prepare it for mirror processing.
The glass is fed into an automatic silvering conveyor line where it passes through a stage of mechanical cleaning and polishing with the aid of nylon bristle brushes so that the glass surface is rendered free of scratches, dust particles and carbohydrates.
The glass is then washed mechanically with the aid of cylindrical brushes using distilled water as a washing medium.
Thereafter the glass surface is sensitised by chemical compounds such as stannous chloride, and rinsed with distilled or demineralised water to remove excess of chemicals.
The sensitised glass is passed through a chamber where silver in liquid form with the aid of reducing solutions is applied as a very thin and uniform adherent reflective film on the surface of the glass.
The silver coating, being of malleable metal, is protected by a coating of copper in the form of a thin metal deposit with the aid of an electromagnetic spray system.
The excess of copper and acidic solutions are rinsed away with the distilled or demineralised water.
Subsequently hot air is employed for the purpose of drying, and the humidity is removed completely with the aid of an infra red heating system.
After thorough drying, the silver and copper coatings are protected with four coats of special mirror backing paint applied with the aid of a roller coating machine in four stages.
The paint is baked in the baking conveyor after thorough drying.
The other side of the mirror is 131 mechanically cleaned.
The mirror thus produced is finally sent for quality control inspection.
Cut glass is employed in the case of decorative mirrors.
The cut glass is shaped with the aid of cutting lathemachines before subjecting it to the silver process.
Edge grinding or bevelling and hole drilling is done, if required, after the mirror has been manufactured.
Before the budget of 1979, Tariff Item No. 23 relating to 'glass and glass ware ' prescribed the different rates of duty in respect of (1) sheet glass and plate glass, (2) laboratory glass ware, (3) glass shells, glass globes and chimney for lamps and lantern, and (4) 'other glassware including table ware '.
During the period following the budget of 1979 which is the period which concerns us, Tariff Item No. 23A relating to glass and glass ware specified the rates of duty in respect of (1) flat glass, which included sheet glass, wired glass and rolled glass whether in the form of plate glass, figured glass or in any other form, (2) laboratorty glass ware, (3) glass shells, glass globes and chimney for lamps and lantern and (4) 'other glass and glass ware including table ware '.
Tariff Item No. 68 is of residuary character and relates to "all other goods not elsewhere specified," but excluding alcohol, opium and certain other goods specified therein.
The rate of duty is higher if the product falls under Tariff Item No. 23A(4) than if it fell under Tariff Item No. 68.
The appellant submitted a classification list showing glass mirror as covered by duty under Item No. 68.
Before March 1, 1979 glass mirrors were treated as exempt from duty as they were manufactured from duty paid glass.
The exemption was cancelled from March 1, 1979.
Simultaneously Tariff Item No. 23A(4) underwent an amendment, as mentioned earlier, by the substitution of words 'other glass and glass ware ' for the words 'other glass ware '.
On January 28, 1980 the Excise Authorities issued a notice calling upon the appellant to take out an L 4 Licence on the ground that glass mirrors were classifiable as 'other glass ' within the meaning of Tariff Entry No. 23A(4) as a product now dutiable from March 1, 1979.
The appellant filed a writ petition in the Delhi High Court and simultaneously preferred an appeal before the Collector (Appeals).
The High Court disposed of the writ petition without deciding the question of liability to duty on its merits, observing that the appellant should pursue its appeal before the Collector (Appeals).
On January 24, 1984 the appeal was allowed by the Collector (Appeals).
He held that Tariff Item No. 68 applied to glass mirrors.
The Revenue appealed to the Customs, Excise and Gold (Control) Appellate Tribunal.
132 The Appellate Tribunal allowed the appeal and reversed the decision of the Collector (Appeals) holding that Tariff Item No. 23A(4) was attracted.
The Appellate Tribunal held that glass mirrors should be classified as 'glass ware '.
And now this appeal.
It appears from the record before us that the true classification of glass mirrors has been the subject of fluctuating opinion among the higher echelons of the Revenue.
Opinion has varied from time to time.
Tariff Advice No. 60 of 1979 dated December 18, 1979 issued by the Central Board of Excise and Customs took the stand that glass mirrors could be described as glass ware and therefore, merited classification under Tariff Item No. 23A(4).
Subsequently on doubts being raised regarding such classification, the Central Board of Excise and Customs considered the matter further, and by Tariff Advice No. 61 of 1980 dated September 27, 1980 opined that glass mirrors would fall under Tariff Item No. 68 in as much as while glass sheets were used as raw material the subsequent processing applied thereto gave rise to a different commercial product altogether, the utility of the glass being reduced to a mere medium.
This was, of course, subject to the condition that the glass sheets, out of which the glass mirrors were prepared, had paid appropriate duty under Tariff Item No. 23A before being employed in the manufacture of mirrors.
The controversy was re opened later, and the Central Board of Excise and Customs reverted to its original understanding of the classification for the product.
By Tariff Item No. 41 of 1981 dated May 7, 1981 it pointed out that glass mirrors had been classified under the Brussels Tariff Nomenclature as "glass and glass ware" and taking the view that after undergoing silvering a glass mirror still remained glass it advised that glass mirrors should be treated as liable to excise duty under Tariff Item No. 23A(4) as 'other glass and glass ware '.
It has been noticed that the Superintendent of Central Excise called upon the appellant to take out an L 4 Licence on the footing that glass mirrors fell under Tariff Item No. 23A(4), that on appeal, the Collector (Appeals) reached the conclusion that it was not open to such classification but fell under the residuary Tariff Item No. 68, and that the Appellate Tribunal thereafter reversed the Collector (Appeals) and upheld the Superintendent of Central Excise.
It is in this uncertain climate of opinion that the question calls for decision by this Court.
A broad description of the process through which a glass sheet passes has been detailed earlier.
It indicates clearly to our mind that the original glass sheet undergoes a complete transformation when it 133 emerges as a glass mirror.
What was a piece of glass simpliciter has now become a commercial product with a reflecting surface.
Into the process of transformation have gone successive stages of processing with the aid of chemicals such as stannous chloride, silver nitrate and copper coating besides an entire range of physical proscesses involving polishing, washing, coating, drying, varnishing, evaporation and cooling.
The evolved product is completely different from the original glass sheet.
What was once a glass piece in its basic character has no longer remained so.
It has been reduced to a mere medium.
That is clear if regard is had to the fundamental function and qualities of a glass mirror.
The power to reflect an image is a power derived not from the glass piece but principally from the silvering and other processes applied to the glass medium.
If any part of the coating is scratched and removed, that particular area of the glass mirror will cease to be glass mirror.
That simple test demonstrates the major importance attributable to the chemical deposit and coating which constitute a material component of a glass mirror.
It is not mandatory that a mirror employed for the purpose of reflecting an image should have a glass base.
Copper mirrors have been known from the dawn of history.
In the modern age, acrylic sheets are sometimes used instead of glass for manufacturing mirrors.
It is apparent, therefore, that a glass mirror cannot be regarded as a glass.
For the same reason, it cannot be classified as 'glass ware ', for 'glass ware ' means merchandise made of glass and understood in its primary sense as a glass article.
A glass bowl, a glass vase, a glass tumbler, a glass table top and so on are all articles in which the primary component is glass.
They are nothing more and nothing less.
Any treatment of an ornamental nature applied to such articles does not derogate from their fundamental character as glass articles.
It is quite the contrary in the case of a glass mirror.
The case is more akin to that of carbon paper.
A sheet of paper with a carbon coating thereon is employed for the purpose of producing copies of the original.
The paper is a mere base while the function is performed by the carbon coating.
This Court held in State of Uttar Pradesh vs M/s Kores (India) Ltd. ; , that carbon paper could not be described as paper.
It referred to the functional difference between the two, and pointed out that while paper would be understood as meaning a substance which was used for writing or printing or drawing on or for packing or decorating or covering the walls, carbon paper, which is manufactured by coating the tissue paper with a thermosetting ink based mainly on wax, non drying oils, pigments and dyes could not be so described.
134 The test commonly applied to such cases is: How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition.
Porritts and Spencer (Asia) Ltd. vs State of Haryana [1978] (42) S.T.C. 433.
It is generally by its functional character that a product is so identified.
In Commissioner of Sales Tax, U.P. vs Macneill & Barry Ltd., Kanpur ; This Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance.
On the same basis the Orissa High Court held in State of Orissa vs Gestetner Dluplicators (P) Ltd. [1974] (33) S.T.C. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act.
It is a matter of common experience that the identity of an article is associated with its primary function.
It is only logical that it should be so.
When a consumer buys an article, he buys it because it performs a specific function for him.
There is a mental association in the mind of the consumer between the article and the need it supplies in his life.
It is the functional character of the article which identified it in his mind.
In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else.
It is a mirror, an article which reflects images.
It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror.
The basic or fundamental character of the article lies in its being a mirror.
It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. vs State of Rajasthan & Ors.
; Which was a case under the Sales Tax law: "In determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expression must be construed in the sense in which they are understood in the trade, by the dealer and the consumer.
It is they who are concerned with it, and it is the sense in which they understand it that consitutes the definitive index of the legislative intention when the statute was enacted.
" That was also the view expressed in Geep Flashlight Industries Ltd. vs Union of India and Others.
[1985]) (22) E.L.T. 3.
Where the goods are not marketable that principle of construction is not attract 135 ed.
Indian Aluminium Cables Ltd.v.
Union of India and Others.
[1985]) (3) S.C.C. 284.
The question whether thermometers, lactometers, syringes, eye wash glasses and measuring glasses could be described as 'glass ware ' for the purpose of the Orissa Sales Tax Act, 1947 was answered by the Orissa High Court in State of Orissa vs Janta Medical Stores [1976]) (37) S.T.C. 33.
In the negative.
To the same effect is the decision of this Court in Indo International Industries vs Commissioner of Sales Tax, Uttar Pradesh, ; Where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to "hospital equipment and apparatus" rather than under the entry which related to "glass wares" in the U.P. Sales Tax Act.
Reliance was placed by the Revenue on Commissioner of Sales Tax, U.P. vs Banaras Bead Manufacturing Co. [1970])(25) S.T.C. 100.
Where the Allahabad High Court held that glass beads could be described as 'glass ware for the purpose of a Notification issued under the U.P. Sales Tax Act.
The decision of the High Court rested on the manner in which the contextual setting was altered in successive and different Notifications promulgated under the U.P. Sales Tax Act, indicating the content of the expression as developed through successive Notifications.
Our attention has been drawn on behalf of the Revenue to the circumstance that glass mirrors have been classified as 'glass and glass ware ' in Chapter 70 of the Brussels Tariff Nomenclature.
It seems to us that this circumstance can hardly advance the case of the Revenue, because the First Schedule to the Central Execises and Salt Act does not appear to have been modelled on the Brussels Tariff Nomenclature.
There is nothing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature.
It was when the was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature, evidently because the progress made in industrial growth and economic development, and the substantial changes in the composition and pattern of India 's external trade called for the need to modernise and rationalise the nomenclature of India 's Tariff in line with contemporary conditions.
The glass mirrors were still not specifically mentioned under the .
They are now being brought in as such by the Customs Tariff Bill, 1985.
136 It is pointed out that glass mirrors have been classified by the Indian Standards Institution as "glass and glass ware" in the glossary of terms prepared by it in respect of that classification.
That, to our mind, furnishes a piece of evidence only as to the manner in which the product has been treated for the purpose of the specifications laid down by the Indian Standards Institution.
It was a test employed by this Court in Union of India vs Delhi Cloth & General Mills, [1963] Supp.
(1) S.C.R. 586, but was regarded as supportive material only of the expert opinion furnished by way of evidence in that case.
The considerations to which we have adverted should, in our opinion, have greatly weighed in deciding the question raised in this appeal.
So also in Union Carbide Co. Ltd. vs Assistant Collector of Central Excise and Others, , the description set forth in the publications of the Indian Standards Institution was regarded as a piece of evidence only.
There were other more tangible considerations which weighed with the Court in reaching its conclusions.
We are firmly of the view that glass mirrors cannot be classified as 'other glass and glass ware ' set forth in Tariff Item No. 23A(4), and must therefore fall under the residuary Tariff Item No. 69.
An additional point arises in M/s Hindustan Safety Glass Works Ltd. (Transfer Cases Nos. 349, 350 and 355 of 1983).
The manufacturers of motor vehicles place orders with the appellant for the manufacture of screens for fitting in motor vehicles.
They are commonly known as wind screens, rear screens and door screens.
The screens are manufactured according to the specific shape and measurements indicated in the orders, for different vehicles require screens of different shapes and measurements.
The screen is manufactured from sheet glass.
It is first given shape and size according to the specifications contained in the order and thereafter subjected to the process of toughening.
It is a fabricated article.
The Superintendent of Central Excise called upon the petitioner to pay excise duty on the basis that the screens fell under Tariff Item No. 23A(4) relating to 'glass and glass ware '.
The petitioner filed writ petitions in the Allahabad High Court challenging the view taken by the Excise authorities.
The question in these cases is whether the screens manufactured by the petitioners can be classified under Tariff Item No. 23A(4) or Tariff Item No. 34A or Tariff Item No. 68.
Prior to February 28, 1979 Tariff Item No. 34A, which was 137 headed Item No. 34A Motor Vehicle Parts, related to "Parts and accessories not elsewhere specified, of Motor vehicles and Tractors, including Trailers", and the rate of duty prescribed was 20% ad valorem.
Under Rule 8 of the Central Excises and Salt Rules, the Central Government issued Notification No. M.F. (D.R.I) 99/71 dated May 29, 1971, as amended by a subsequent Notification, exempting parts and accessories of motor vehicles and tractors falling under Tariff Item No. 34A other than those specified in the Schedule annexed to the Notification, from the whole of the duty of excise leviable thereon.
The Schedule annexed to the Notification did not mention the screens manufactured for motor vehicles.
The parts and accessories specifically mentioned in the Notification to the Schedule were covered by a Notification No. 101/71 C.E. dated May 29, 1971 as amended subsequently, by which the Central Government exempted under Rule 8 parts and accessories of motor vehicles, provided it was establishd to the satisfaction of the Collector of Central Excise that the parts were intended to be used as original equipment parts by the manufacturers of motor vehicles and tractors falling under Tariff Item No. 34A. The Finance Bill of 1979 introduced changes in Tariff Item No. 34A. Tariff Item No. 34A now spoke of 'parts and accessories of motor vehciles and tractors, including trailers, the folowing namely '. and here followed 15 parts and accessories.
The screens manufactured by the petitioner did not figure in that list.
Until the enactment of the Finance Bill of 1979, the commodities manufactured by the petitioner would have fallen within the ambit of Tariff Item No. 34A.
But after the introduction of the Finance Bill 1979 the Central Government issued Notification No. 76 of 1979 C.E. dated March 1, 1979 under Rule 9, whereby parts and accessories of motor vehicles and tractors which had not been specified in Tariff Item No. 34A but which fell under that Tariff Item were exempted from so much duty of excise leviable thereon as was in excess of 8% ad valorem.
Two more Notifications were issued, No. 74/79 C.E. dated March, 1 1979 and No. 75/79 C.E. dated March 1, 1979.
By these Notifications parts and accessories of motor vehicles and tractors falling under Tariff Item No. 34A were exempted from the whole of the duty of excise leviable thereon provided the said parts or accessories were intended to be used in the manufacture of assembled components of motor vehicles and tractors and such assembled components were used as original equipment parts by the manufacturers of those vehicles and such parts and accessories which were intended to be used as original equipment parts by such manufacturers.
On the enforcement of the Finance Act 1979 the ambit of Tariff Item No. 34A became restricted to the 15 specified commodities.
The 138 commodities manufactured by the petitioner did not fall within the ambit of Tariff Item No. 34A.
It is case of the petitioner that the commodities manufactured by it fall within the ambit of the residuary Item No. 68 of the First Schedule to the .
Prior to the enforcement of the Finance Act, 1979 the Central Government had, under Rule 8, issued Notification No. 166 C.E. dated April 19, 1979 whereby all excisable goods on which the duty of excise was payable and in the manufacture of which parts and accessories of motor vehicles falling under Item No. 34A had been used were exempted from so much of the duty of the excise leviable thereon as was equivalent to the duty of excise paid by the said parts and accessories.
Another Notification No. 167/79 dated April 19, 1979 was issued under Rule 3 whereby parts and accessories of motor vehicles falling under Item No. 34A and intended for use in further manufacture of excisable goods were exempted from the whole of duty leviable thereon provided that the intended use was in a factory of a manufacturer different from the factory in which the said parts and accessories had been manufactured.
The Notifications did not apply to the 15 specified items.
Subsequently the two Notifications were amended by Notification No. 187/79 C.E. dated May 10, 1979 by deleting the reference to Tariff Item No. 34A and substituting for it Tariff Item No. 68.
According to the petitioner the result of these successive Notifications is that the parts and accessories of motor vehicles fall under Tariff Item No. 34A prior to the enforcement of Finance Act 1979 and after the enforcement of that Act they fall under Tariff Item No. 68 provided that the parts and accessories of motor vehicles do not find mention in Tariff Item No. 34A as amended by the Finance Act, 1979.
Upon the tests and having regard to the foregoing considerations which have appealed to us when considering the proper classification of glass mirrors, we have no hesitation in holding that the screens cannot be described as "glass or glass wares" under Tariff Item No. 23A(4).
No one dealing in or using the screens would consider them as "glass or glass ware".
They can only be considered as motor vehicle parts.
Even if we assume that they could fall under Tariff Item No. 23A(4) relating to 'glass and glass ware ' also, inasmuch as Tariff Item No. 34A is a special entry and Tariff Item No. 23A(4) is a general entry, the special must exclude the general and therefore also it is Tariff Item No. 34A which prevails and is attracted.
It is clear, however, that after the amendment of Tariff Item No. 139 34A by the Finance Act 1979 the scope of that Tariff Item is restricted to the 15 commodities specified therein.
That being so the screens manufactured by the petitioner merit classification in the residuary Tariff Item No. 68.
In the result, Civil Appeal No. 3435 of 1984 is allowed, the order dated July 24, 1984 of the Customs, Excise and Gold (Control) Appellate Tribunal is set aside and the Order dated January 24, 1984 of the Collector (Appeals) is restored.
In the Transfer Cases, we allow the writ petitions and direct that the glass mirrors and screens manufactured by the petitioner be treated to excise duty in the light of the observations made by us.
The parties shall bear their own costs.
A.P.J. Appeal and Petitions allowed.
|
The appellant carries on the business of manufacturing and selling glass mirrors.
Before March 1, 1979 glass mirrors were treated as exempt from duty as they were manufactured from duty paid glass.
This exemption was cancelled from March 1, 1979 and in Tariff Item 23A(4) the words 'other glass and glass ware ' were substituted for the words 'other glass ware '.
On January 28,1980, the Excise Authorities issued a notice calling upon the appellant to take out an L 4 Licence on the ground that glass mirrors were classifiable as 'other glass ' within the meaning of Tariff Entry No. 23A(4) of the First Schedule to the , as a product dutiable from March 1, 1979.
The appellant filed a writ petition in the High Court and simultaneously preferred an appeal before the Collector (Appeals).
The High Court disposed of the writ petition with the observation that the appellant should pursue its appeal before the Collector (Appeals).
The appeal was allowed by the Collector (Appeals) holding that Tariff Item No. 68 applied to glass mirrors.
On appeal by the Revenue, the Customs, Excise and Gold (Control) Appellate Tribunal reversed the decision of the Collector (Appeals)and held that Tariff Item No. 23A(4) was attracted, and that the glass mirrors should be classified as 'glass ware '.
In the transferred cases, the manufacturers of motor vehicles place orders with the petitioner for the manufacture of screens for fitting in motor vehicles, commonly known as wind screens, rear 127 screens, door screens, and these were to be manufactured according to the specific shapes and measurements indicated in the orders for the different vehicles.
The Superintendent of Central Excise called upon the petitioner to pay excise duty on the basis that these screens fell under Tariff Item No. 23A(4) relating to 'glass and glass ware '.
The petitioner filed writ petitions in the High Court challenging the view taken by the Excise Authorities.
On the questions: "Whether glass mirrors fall under Tariff Item No. 23A(4) or Tariff Item No. 68 and whether glass screens fitted in motor vehicles as wind screen, rear screens and window screens fall under Tariff Item No. 23A(4) or Tariff Item No. 34A or Tariff Item No. 68 of the First Schedule to the ", allowing the Appeal and the Writ Petitions in the transferred cases, the Court, ^ HELD: (1) Glass mirrors cannot be classified as 'other glass and glass ware ' set forth in Tariff Item No. 23A(4), and must therefore fall under the residuary Tariff Item No. 68.
[132F G] (2) The original glass sheet undergoes a complete transformation when it emerges as a glass mirror.
What was a piece of glass simpliciter has now become a commercial product with a reflecting surface.
Into the process of transformation have gone successive stages of processing.
The evolved product is completely different from the original glass sheet.
What was once a glass piece in its basic character has no longer remained so.
It has been reduced to a mere medium.
That is clear if regard is had to the fundamental function and qualities of a glass mirror.
The power to reflect an image is a power derived not from the glass piece but principally from the silvering and other processes applied to the glass medium.
If any part of the coating is scratched and removed, that particular area of the glass mirror will cease to be glass mirror.
That simple test demonstrates the major importance attributable to the chemical deposit and coating which constitute a material component of a glass mirror.
It is not mandatory that a mirror employed for the purpose of reflecting an image should have a glass base.
Copper mirrors have been known from the dawn of history.
Now acrylic sheets are sometimes used instead of glass for manufacturing mirrors.
Therefore, a glass mirror cannot be regarded as a glass.
For the same reason, it cannot be classified as a 'glass ware ', for 'glass ware ' 128 means merchandise made of glass and understood in its primary sense as a glass article.
A glass bowl, a glass vase, a glass tumbler, a glass table top and so on are all articles in which the primary component is glass.
They are nothing more and nothing less.
Any treatment of an ornamental nature applied to such articles does not derogate from their fundamental character as glass articles.
It is quite the contrary in the case of a glass mirror.
[132H; 133A F] (3) It is a matter of common experience that the identity of an article is associated with its primary function.
It is only logical that it should be so.
When a consumer buys it, it is because it performs a specific function for him.
There is a mental association in the mind of the consumer between the article and the need it supplies in his life.
It is the functional character of the article which identifies it in his mind.
In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else.
It is a mirror, an article which reflects images.
It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror.
The basic or fundamental character of the article lies in its being a mirror.
[134C E] State of Uttar Pradesh vs M/s. Kores (India) Ltd. ; , Porritts and Spencers (Asia) Ltd. vs State of Haryana [1978] (42) S.T.C. 433, Commissioner of Sales Tax U.P. vs Macneill & Barry Ltd. Kanpur, ; , Delhi Cloth and General Mills Co. Ltd. vs State of Rajasthan & Ors.
[1980] (3) S.C.R.1109, Geep Flashlight Industries Ltd. vs Union of India and Others [1985] (22) E.L.T.3, Indian Aluminium Cables Ltd. vs Union of India and Others.
; and Indo International Industries vs Commissioner of Sales Tax.
Uttar Pradesh, ; relied upon.
State of Orissa vs Gestetner Duplicators (P) Ltd. [1974] (33) S.T.C. 333 and State of Orissa vs Janta Medical Stores [1976] (37) S.T.C. 33 approved.
Commissioner of Sales Tax, U.P. vs Banaras Bead Manufacturing Co. [1970] (25) S.T.C. 100 distinguished.
(4) Classification of glass mirrors as 'glass and glass ware ' in Chapter 70 of the Brussels Tariff Nomenclature, does not advance the case of the Revenue, because the First Schedule to the Central Excises 129 and Salt Act was not modelled on the Brussels Tariff Nomenclature.
There is nothing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature.
It was when the was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature.
The glass mirrors were still not specifically mentioned under the .
They are now being brought in as such by the Customs Tariff Bill 1985.
[135E H] (5) Classification of glass mirrors by the Indian Standards Institution as "glass and glass ware" in its glossary of terms furnishes a piece of evidence only as to the manner in which the product has been treated for the purpose of the specifications laid down by the Indian Standard Institution.
[136A B] (6) The screens used in motor vehicles cannot be described as "glass or glass wares" under Tariff Item No. 23A(4).
No one dealing in or using the screens would consider them as "glass or glass ware".
They can only be considered as motor vehicle parts.
Even if it is assumed that they could fall under Tariff Item No. 23A(4) relating to "glass and glass ware" also, in as much as Tariff Item No. 34A is a special entry and Tariff Item No. 23A(4) is a general entry, the special must exclude the general and therefore also it is Tariff Item No. 34A which prevails and is attracted.
[138F H] (7) After the amendment of Tariff Item No. 34A by the Finance Act 1979 the scope of that Tariff Item is restricted to the 15 commodities specified therein.
That being so the screens manufactured by the petitioner merit classification in the residuary Tariff Item No. 68.
[138H; 139A B]
|
ivil Appeal No. 1643 of 1984.
From the Judgment and Order dated 6.7.
1982 of the Allahabad High Court in Writ Petition No. 1499 of 1974 G.L. Sanghi, Mrs. section Dixit and Pradeep Misra for the Appel lants.
Kuldip Singh, Additional Solicitor General, Ashok K. Srivastava, C.V. Subba Rao, Mrs. Sushma Suri and A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal by special leave is directed against the judgment of the Allahabad High Court dismissing the writ petition of the appellants whereby they challenged inter alia the validity of rule 328(2) of the Railway Estab lishment Code as amended by the Railway 82 Board by Advance Correction Slip No. 70.
The appellants were appointed Trade Apprentices in Locomotive Component Works (for short 'LCW ') in or about January, 1959.
There was a merger of LCW with Diesel Locomo tive Works, Varanasi, (for short 'DLW ') on August 1, 196 1, as a result of which, all the members of the staff of LCW were taken over by DLW.
On July 19, 1962, the appellants were appointed Skilled Artisans after successfully complet ing a training for three years and a half.
The regular channel of promotion to higher posts from the post of Skilled Artisan is in the following order: 1.
Skilled Artisan.
Highly Skilled Grade II.
Highly Skilled Grade I. 4.
Chargeman C. 5.
Chargeman B. 6.
Chargeman A. 7.
Assistant Foreman.
Foreman.
It is apparent from the above channel of promotion that the next higher post to which the appellants could be pro moted was the post of Highly Skilled Grade II.
In September, 1963, the appellants were, however, promoted to the post of Instructor C which is equivalent to the post of Chargeman C.
There is a controversy between the parties as to whether the post of Instructor C was an ex cadre post or not.
According to the appellants, it was an interchangeable post with Chargeman C.
We shall have occasion to consider the question later in this judgment.
It may be stated, however, that there is no dispute that the post of Instructor C is a selection post and the appellants were selected and promoted to existing vacancies in that post.
The next post to which the appellants were promoted on September 22, 1964 is the post of Chargeman B upon their selection by a constituted Selection Board on a regular basis.
Some of the respondents, who are direct recruits, also competed with the appellants for the post of Chargeman 83 B, but they could not qualify themselves in the written test.
To complete the narrative, it may be stated that the appellants have now been promoted to the post of Chargeman A.
On August 11, 1966, the General Manager of DLW prepared certain seniority lists including a seniority list of Chargeman B on the basis of the rules or guidelines framed by him.
The said seniority list was challenged by certain direct recruits by filing writ petitions before a learned Single Judge of the Allahabad High Court.
The learned Single Judge quashed the seniority list and also the guidelines or rules framed by the General Manager, DLW, on the basis of which the seniority list was prepared.
The principal ground on which the seniority list and the rules or guidelines framed by the General Meeting, DLW, were quashed by the learned Single Judge was that the General Manager, DLW, was not the General Manager of the Railway and, as such, he had no authority to frame rules or guidelines for the purpose of preparation of the seniority list.
Further, the learned Judge held that the said rules or guidelines dated August 11, 1966 were violative of Articles 14 and 16 of the Consti tution of India.
Several appeals were preferred against the judgment of the learned Single Judge including one preferred by the Railway Administration before the Division Bench of the High Court.
While upholding the finding of the learned Single Judge that the General Manager, DLW, was not competent to frame rules or guidelines, the Division Bench could not agree with the finding of the learned Single Judge that the said rules or guidelines were violative of Articles 14 and 16 of the Constitution.
It was observed that there would have been no objection if the General Manager, DLW, had utilised the relevant statutory rules in drawing up the seniority list but, admittedly, the rules in question were ignored.
Further, the Division Bench pointed out that all the concerned employees in the writ petition agreed before the learned Single Judge that the seniority list might be prepared on the basis of the relevant rules contained in the Railway Establishment Code and the Railway Establishment Manual.
The Division Bench also found that the DLW project was not a temporary project, but appeared to be a permanent project.
Upon the above findings, the Division Bench upheld the quashing of the seniority list and directed the General Manager, DLW, to prepare a fresh seniority list in the tight of the statutory provisions contained in the Railway Estab lishment Code and the Railway Establishment Manual.
After the aforesaid judgment of the Division Bench of the High 84 Court, what the Railway Board did before preparation of any seniority list by the General Manager, DLW, was to issue Advance Correction Slip No. 70 inserting rules 324 to 328 in the Railway Establishment Manual after rule 323 in Chapter III.
Of the rules, so inserted, that which vitally affected the appellants is rule 328(2) which provides as follows: "328(2).
Selection and promotions made in the Diesel Locomotive works from 1.8.1961 up to the date of notification of these rules shall not be valid.
" The Rules were amended by the Board by virtue of its power under rule 157 which provides that the Railway Board have full powers to make rules of general application to non gazetted railway servants under their control.
The date of notification of the amended Rules is March 11, 1973.
In view of rule 328(2), the promotions which were granted to the appellants from August 1, 1961 up to March 11, 1973 shall not be valid.
Needless to say, rule 328(2) has vitally affected the appellants by making invalid all the promotions given to them between the said period.
As a result, the appellants were reverted back to the position of Skilled Artisans.
The General Manager, DLW, by his circular dated December 7/8, 1973 directed the appellants to appear at the trade test.
it was further directed that if the staff concerned would fail to appear in the trade test, they would be passed over for fixation of seniority in the Highly Skilled Grade Il, although the appellants had in 1962 crossed the position of Highly Skilled Grade Il.
The appellants made a represen tation against the said circular to the General Manager, DLW, on December 12, 1973.
That representation was turned down by the General Manager on the ground that in view of the said rule 328(2), the claim for either higher positions or exemption from passing any trade test was not tenable.
It was also stated that if the appellants would fail to appear in the trade test, they would be passed over for fixation of seniority in the Highly Skilled Grade Il.
Being aggrieved by the introduction of the said rule 328(2) directly affecting the appellants and also the said circular of the General Manager, DLW, requiting the appel lants to appear at the trade test for the purpose of prepa ration of the seniority list in Highly Skilled Grade II, the appellants filed a writ petition before the High Court.
The High Court overruled the contention of the appellants that the new rules, which have been inserted in the Railway Establish 85 ment Manual including rule 328(2) by the Advance Correction Slip No. 70 by the Railway Board by virtue of its power under rule 157 of the Railway Establishment Code, were invalid.
The High Court held that the said rules were quite valid and were not arbitrary or discriminatory as contended on behalf of the appellants.
In regard to the promotions of the appellants.
The High Court took the view that they were only interim and provisional and not regular promotions under the normal rules, and that such provisional selection and promotions conferred no rights on the appellants to hold the posts to which they were promoted.
Upon the above find ings, the High Court dismissed the writ petition.
Hence this appeal by special leave.
Mr. Sanghi, learned Counsel appearing on behalf of the appellants, has challenged before us the validity of rule 328(2) as inserted in the Railway Establishment Manual by the Advance Correction Slip No. 70.
It has been already noticed that in view of the said rules, the promotions of the appellants up to the position of Chargeman A stand set aside and the appellants are reverted back to their original position of Skilled Artisan.
In other words, the length of service of the appellants for a period of about nine years has been completely wiped out by rule 328(2).
The High Court took the view that the promotions which were granted to the appellants were by way of interim meas ure and did not confer on them any title to the posts to which they were promoted.
In support of that view, the High Court has referred to the order of the General Manager, DLW, dated May 14/16, 1962 which reads as follows: "As an interim measure, all supervisory tech nical posts in the Mechanical Department will be treated as ex cadre posts and promotions will be regulated by selection.
" Before considering the question of the validity of rule 328(2), we may first of all examine whether the promotions of the appellants up to the post of Chargeman B were by way of interim measures, as found by the High Court, and/or whether such promotions are permissible by the Rules or not.
In this connection, we may refer to the circular of the Railway Board dated May 27, 1963 regarding the procedure to be followed for filling up selection posts (non gazetted).
The Board directed that if the requisite number of staff was not available in the grade next to the grade for which the selection was being held, the administration could go to the .lower grade in order to make up four 86 times the number required to be called up for selection but, in no case, can the eligibility be extended to staff in the grade lower than three times.
This circular of the Board is quite consistent with rule 2 16 of the Railway Establishment Manual.
Rule 216 also provides for a similar procedure.
The direction of the Board read with the provision of rule 2 16 clearly empowers the administration to select persons from two grades lower than the post to which promotion was to be made.
The next circular dated November 2, 1963 of the General Manager, DLW, regarding the formation of panel for promotion of mechanical supervisors and instructors is significant.
The said circular clearly provided that all staff in Mechan ical Department including instructoral staff under the Principal Technical Training School in two grades below the grade for which selection was going to be held, were eligi ble.
The Skilled Artisans having not less than one year 's service were permitted to apply for the post of Instructor in the grade of Rs.205 280 (AS) which is equivalent to that of Chargeman C.
In the channel of promotion, which has already been noticed above, the feeder post for promotion to the post of Chargeman C is Highly Skilled Grade I but, in view of the said circular dated May 27, 1963 of the Board read with rule 2 16 of the Railway Establishment Manual, persons holding posts two grades below the post to which the promotion was to be made, that is, the post of Instructor which is equivalent to the post of Chargeman C, were allowed to apply for the same.
The reason for the said circular or the said rule is that at all times suitable candidates might not be available and just to avoid administrative inconven ience, the promotions are given from posts below the feeder post.
The said circular of the General Manager, DLW, dated November 2, 1963 does not show that the promotion to the posts of selection and/or promotion to the posts of Instruc tors would be by way of interim measure or ad hoc arrange ment.
In the absence of any such indication, it will not be unreasonable to presume that such promotions were anything other than by way of interim measure or ad hoc arrangement, as contended on behalf of the respondents.
In view of the said circular dated November 2, 1963, the appellants applied for the posts of Instructors and they were selected after the requisite tests.
In the office order No. 3421 dated December 30, 1963, appointing the appellants to the post of Instructor (Machinist Gr.
C), it is clearly stated that they are appointed to the post of Instructor (Machinist Gr.
C) against existing vacancies.
Again, a similar circular dated July 18, 1964 was issued from the office of the General Manager, DLW, with regard to the filling up of 87 the posts of Chargeman B in the scale of Rs.250 380 (AS).
It was clearly stated in the circular that the staff in the Mechanical Department in two grades below the grades for which the selections would be held, were eligible to apply.
The appellants applied for the post and had to appear at the written and viva voce examinations.
Some of the private respondents also appeared in the said examinations along with the appellants but they failed, while the appellants succeeded and were empanelled for appointment to the post of Chargeman (Machinist) B.
In view of such an empanelment, the appellants were appointed Chargemen B in the grade of Rs. 250 380 against existing vacancies sometime in February, 1965.
We may now refer to a very significant document which is office order No. 25 dated January 22, 1966.
In that order, it is stated that the staff mentioned therein will have their paper lien maintained in the Shops/Division as men tioned against each and will seek their promotions in their respective Division/Shops.
In the list annexed to the said order, the present designation of the first appellant has been mentioned as "Instructor B ' ' and his revised position or designation as "Chargeman B".
In the last column under the heading "placed where lien is kept", it is stated that his lien is kept under the production Engineer (PE).
The present and revised designation of the appellant Nos. 2 and 3 have been shown as Chargeman B. The place of lien of the appellant No. 2 has been stated to be under the Production Engineer, while that of the third appellant has been stated to be under the Works Manager (B).
It is urged on behalf of the respondents that the said officer order No. 25 does not show that the appellants have any lien on the posts of Chargeman B. It only mentions that they have a lien on certain places.
We are unable to accept this contention.
A person may have lien on a post and not a lien on a place.
And all that the said order means that they have lien on the post of Chargman B, but in certain places under either the Production Engineer or the Works Manager.
There can be no doubt that a person appointed to a post on an ad hoc basis cannot have any lien on the post.
It is only when a person appointed on a permanent basis, he can claim lien on the post to which he is so appointed.
It is, therefore, not correct to say that the appellants were appointed or promot ed to the post of Instructor C or Chargeman C on an ad hoc basis or by way of an interim measure, as held by the High Court in the impugned judgment.
If they were appointed on ad hoc or purely temporary basis, they could not have been promoted to the post of Chargeman B and the said order No. 25 dated January 22, 1966 would have been quite inconsistent with such ad hoc or temporary appointments.
88 At this stage, it will be pertinent to refer to the counter affidavit of the Railway Administration in the previous writ proceedings.
In paragraph 15 of the counter affidavit, it has been stated inter alia that the post of Junior Instructor carries the same scale of pay as Charge man 'C ' and that the two posts being of the same rank and scale, staff of the one post could be transferred to the other post and vice versa.
This statement in the counter affidavit of the Railway Administration clearly indicates that the post of Instructor C and Chargeman C are inter changeable posts.
Further, it is stated as follows: "Respondent Nos. 8 to 11 (which include the three appellants herein) in the first instance offered for the post of Instructors in grade Rs.205 280 (equivalent to Chargeman 'C ' grade) and they were selected by duly constituted Selection Board.
Subsequently they offered for the post of Chargeman B grade Rs.250 280 (AS) and were promoted as such after having been selected by a Selection Committee.
Respondents Nos.
8 to 11 were appointed to grade Rs.205 280 and subsequently to grade Rs.250 280 after having been selected by a duly constituted Selection Board ' . . . ." In the circumstances, we are of the view that the appel lants were not appointed on an ad hoc or a purely temporary basis by way of interim measure as held by the High Court, but they were appointed on a permanent basis in the post of Instructor or Chargeman Grade C, which are interchangeable posts and, thereafter, promoted to the post of Chargeman Grade B.
The appointment or promotion of the appellants to the post of Chargeman C from the post of Skilled Artisan or to Chargeman B were made in accordance with the circular of the Railway Board and/or in accordance with rules 216 of the Railway Establishment Manual.
It cannot, therefore, be said that the appellants were promoted to the post of Chargeman C illegally or in violation of any rule.
There is a controver sy between the parties as to whether the post of Instructor C is an ex cadre post or not.
It is submitted on behalf of the respondents that the post of Instructor C being an ex cadre post, the appellants could not be appoint ed or promoted to the post of Chargeman C.
This contention is unsound and is fit to be rejected.
It is the clear case of the Railway Administration, as pointed out above, that the posts of Instructor C and Chargeman C are interchange able posts.
Even assuming that the post of Instructor C is an ex cadre post, nothing turns out on that inasmuch as according to 89 the Railway Administration itself, the two posts being of the same rank and scale, the staff of one post could be transferred to the other post and vice versa.
The appellants might have been appointed to the post of Instructor C, but they were transferred to the post of Chargeman C and, there fore, there was no difficulty in promoting them to the post of Chargeman B.
Now, we may consider the question as to the propriety otherwise of rule 328(2) as inserted in the Railway Estab lishment Manual by the Railway Board in exercise of its power under rule 157 of the Railway Establishment Code.
It has already been noticed that in the previous writ proceed ings the Division Bench of the High Court quashed the sen iority list and directed the General Manager, DLW, to pre pare a fresh seniority list in the light of statutory provi sions contained in the Railway Establishment Code and the Railway Establishment Manual.
The Principal ground for quashing the seniority list was that the General Manager, DLW, had no authority to frame guidelines or rules for the purpose of preparing the seniority list.
It has also been noticed that while the learned Single Judge took the view that the guidelines or rules framed by the General Manager were violative of Articles 14 and 16 of the Constitution, the Division Bench took a contrary view and after consider ing the rules or guidelines in detail came to the finding that none of the guidelines or rules framed by the General Manager was contrary to the provisions of Articles 14 and 16 of the Constitution.
Indeed, the Division Bench was of the view that no objection could be taken to the said rules or guidelines, but it had to quash the seniority list framed on the basis of such guidelines or rules inasmuch as the Gener al Manager had no authority to frame such rules or guide lines.
Accordingly, the Division Bench directed the General Manager to prepare the seniority list in accordance with the existing statutory rules.
It is curious that instead of preparing the seniority list in accordance with the existing statutory rules, as directed by the High Court, the Railway Board amended the rules and inserted by the Advance Correction Slip No. 70, among others, rule 328(2) which has been extracted above.
That rule wipes out not only the promotion granted to the appellants up to the post of Chargeman Grade B, but also the length of service of the appellants for about nine years.
The appellants have been directed by the order dated decem ber 7/8, 1973 of the General Manager to appear in a trade test in respect of the post of Highly Skilled Artisan Grade Il, otherwise their seniority in the said post will be passed over.
In other words, the appellants are in a way 90 reverted to the post of Skilled Artisan which they were holding before their promotion to the post of Instructor/Chargeman C.
No reason appears to have been given for the introduction of rule 328(2) by the Advance Correc tion Slip No. 70.
It was not the case of the Railway Admin istration in the previous writ proceedings that the promo tions that were given to the appellants were purely on an ad hoc basis.
The High Court in the previous writ proceedings did not also find that the appellants ' promotion to the post of Instructor/Chargeman C or to the post of Chargeman B were on ad hoc basic.
We have, after considering the relevant facts, come to the finding that the appellants were regular ly promoted to the post of Chargeman C and, thereafter, to Chargeman B.
In the circumstances, we do not find any justi fication for the Railway Board to incorporate a new rule, that is, rule 328(2) to the serious prejudice of the appel lants.
The Railway Administration was to comply with the order of the High Court and in compliance with the order, it should have prepared the seniority lists in accordance with the existing rules.
It is not the case of the Railway Admin istration that under the existing rules the seniority list could not be prepared.
There is, therefore, no reasonable justification for the Railway Board to insert in the Railway Establishment Manual rule 328(2).
There can be no doubt that by virtue of rule 157 of the Railway Establishment Code, the Railway Board has the power to frame rules, but such rules must be framed with certain objects in view and must not be arbitrary.
The Court is always entitled to examine whether a particular rule which takes away the vested fight of a railway employee or seriously affects him with retrospective effect, has been made to meet the exigencies of circum stances or has been made arbitrarily without any real objec tive behind it.
In the instant case, we do not find any objective or purpose behind the framing of rule 328(2) to the serious prejudice of the appellants.
In other words, rule 328(2) is arbitrary and, therefore, cannot be allowed to be operative to the detriment of the appellants.
The only justification for rule 328(2) as advanced by the learned Counsel for the respondents is that as the appellants we.re promoted on ad hoc basis to the posts of Chargeman C and Chargeman B, they had no fight to hold these posts and, accordingly, they were to be reverted to the post of Skilled Artisan.
This contention of the respondents does not find support from the counter affidavit filed by the Railway Administration in the previous writ petition nor does it appear from any order or circular of the Railway Board or the Railway Administration in support of the same.
Moreover, we have on a conspectus of the facts and circumstances and the circulars of the Railway Administration come to the finding that the appellants were not promoted on an ad hoc basis.
For the reasons aforesaid, the appeal is allowed and the judgment of the High Court is set aside.
It is directed that the respondents Nos. 1 and 2 shall not give effect to rule 328(2) as inserted in the Railway Establishment Manual by the Advance Correction Slip No. 70 in the cases of the appellants and the respondents Nos.
3 to 6.
The impugned orders dated December 7/8, 1973 and January 7, 1974 are quashed.
The respondents Nos. 1 and 2 are further directed to fix the seniority of the appellants and the said respond ents Nos.
3 to 6 on the basis of their promotions to the posts of Instructor/Chargeman C and Chargeman B.
There will be no order as to costs.
N.V.K. Appeal allowed.
|
The appellants in the appeal were appointed in or about January, 1959 as Trade Apprentices in Locomotive Component Works.
In August, 1961 there was a merger of Locomotive Component Works with Diesel Locomotive Works, as a result of which all the members of the staff of LCW were taken over by DLW.
The appellants were appointed skilled artisans on July 19, 1962 after successfully completing the training period of 3 1/2 years.
The channel for promotion to higher posts was: (1) Skilled Artisan, (2) Highly Skilled Grade II, (3) Highly Skilled Grade I, (4) Chargeman C, (5) Chargeman B, (6) Chargeman A, (7) Assistant Foreman and (8) Foreman.
In September, 1963, the appellants were promoted to the post of Instructor C which was equivalent to the post of Charegman C.
The posts were inter changeable.
The appellants were further promoted on September 22, 1964 to the post of Chargeman B. Some of the respondents in the appeal who were direct Recruits also competed with the appellants for the post of Chargeman B, but could not qualify in the written test.
On August 11, 1966, the Genera1 Manager, DLW pre pared and issued a seniority list of Chargeman B.
This list was challenged by I certain direct recruits in a writ petition to the High Court.
A Single 79 Judge quashed the seniority list and also the guidelines/rules framed by the General Manager, DLW on the basis of which the seniority list was prepared, on the ground that the General Manager, DLW was not the General manager of the Railway, and as such he had no authority to frame the rules or the guidelines for the purpose of prepa ration of the seniority list.
It was further held that the guidelines/rules were violative of Articles 14 and 16 of the Constitution.
Several appeals were preferred, one of them being by the Railway Administration.
The Division Bench while upholding the finding of the Single Judge that the General Manager DLW was not competent to frame the rules/guidelines, disagreed with the finding that the rules/ guidelines were violative of Articles 14 and 16 of the Constitution.
Pursuant to the aforesaid judgment, the Railway Board issued an Advance Correction Slip No. 70 inserting Rules 324 to 328 in the Railway Establishment Manual after rule 323 in Chapter III.
Rule 328(2) provided that: 'selections and promotions made in the Diesel Locomotive Works from August 1, 1961 upto the date of the notification of the rules shall not be invalid '.
The amended rules came into effect from March 11, 1973.
The resultant situation was that Rule 328(2) vitally affected the appellants by making invalid all the promotions given to them during the period August 1, 1961 to March 11, 1973 and the appellants were reverted back as Skilled Arti sans.
The General Manager, DLW a Circular dated 7/8th Decem ber, 1973 directed appellants to appear at the Trade test and further informed that failure to do so would result in being passed over for fixation of seniority in the Highly Skilled Grade II.
The representation against this Circular was turned down.
Aggrieved by the introduction of Rule 328(2) and also the issuance of Circular by the General Manager DLW the appellants filed a writ petition in the High Court The High Court overruled the contention that the new rules inserted in the Railway Establishment Manual by the Advance Correc tion Slip No. 70, were invalid, and held that the rules were quite valied and were not arbitriary or discriminatory.
As regards promotion of the appellants,the High court took the view that they were only interim and professional and not regular and as such no right was confirmed on appellants to hold the posts to which they were promoted.
The high court accordingly dismissed the writ petition.
80 On behalf of the appellants in the appeal by special leave it was contended that Rule 328(2) as inserted in the Railway Establishment Manual by the Advance Correction Slip No. 70 was invalid, that the promotions of appellants up to the position of Chargeman A could not be set aside and appellants reverted back to their original position of Skilled Artisans, and that the length of service of the appellants for a period of about 9 years has been completely wiped out by the said Rule 328(2).
Allowing the appeal and setting aside the judgment of the High Court, HELD:1.
By virtue of Rule 157 of the Railway Establish ment Code, the Railway Board has the power to frame rules, but such rules must be framed with certain objects in view and must not be arbitrary.
[90E] 2.
The Court is always entitled to examine whether a particular rule which takes away the vested right of a railway employee or seriously affects him with retrospective effect, has been made to meet the exigencies of circum stances or has been made arbitrarily without any real objec tive behind it.
[90E F] 3.
The Railway Administration was to comply with the order of the High Court and in compliance with the order, it should have prepared the seniority lists in accordance with the existing rules.
[90C D] 4.
It is curious, that instead of preparing the seniori ty list in accordance with the existing statutory rules, as directed by the High Court, the Railway Board amended the rules and inserted by the Advance Correction Slip No. 70, among others, Rule 328(2).
That rule wipes out not only the promotions granted to the appellants up to the post of Chargeman Grade B, but also the length of service of the appellants for about nine years.
[89F G] 5.
This Court does not find any objective or purpose behind the framing of Rule 328(2) to the serious prejudice of the appellants.
The said Rule is arbitrary and therefore, cannot be allowed to be operative to the detriment of the appellants.
[90F] 6.
The appellants were regularly promoted to the post of Chargeman C and thereafter to Chargeman B.
In these circum stances, no justification is found for the Railway Board to incor 81 porate a new rule viz., Rule 328(2) to the serious prejudice of the appellants.
[90C] 7.
A person can have lien on a post and not a lien on a place.
There can be no doubt that a person appointed to a post on ad hoc basis cannot have any lien on the post.
It is only when a person is appointed on a permanent basis, he can claim lien on the post to which he is so appointed.
[87F G] 8.
It is not correct to say that the appellants were appointed or promoted to the post of Instructor C or Charge man C on an ad hoc basis or by way of an interim measure, as held by the High Court.
If they were appointed on ad hoc or purely temporary basis they could not have been promoted to the post of Chargeman B and Office Order No. 25 dated Janu ary 22, 1966 would have been quite inconsistent with such ad hoc or temporary appointments.
[87G H] 9.
Directed that Respondent Nos. 1 and 2 shall not give effect to Rule 328(2) as inserted in the Railway Establish ment Manual by the Advance Correction Slip No. 70 in the case of appellants and Respondent Nos.
3 to 6.
Orders dated December 7/8th, 1973 and January 7, 1974 are quashed.
Fur ther directed that Respondent Nos. 1 and 2 fix the seniority of appellants and respondents 3 to 6 on the basis of their promotions to posts of Instructor/Chargeman C and Chargeman B. [91B C]
|
ivil Appeal Nos.1685 and 1686(NT) of 1974 From the Judgment and Order dated 21st February, 1974 of the Karnataka High Court in Tax Reference Nos. 67 and 68 of 1972.
M.K. Banerjee, Additional Solicitor General, Ms A. Subhashini and B.B.Ahuja for the Appellant G. Sarangan and Mukul Mudgal for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
These appeals are directed against the judgment of the Karnataka High Court disposing of two Income tax References.
The question in each Reference, which was answered by the High Court in favour of the assessee and against the Revenue, is whether in computing the profits for the purpose of deduction under section 80E of the Income Tax Act, 1961, the loss incurred by the assessee in the manufacture of alloy steels could not be set off against the profits of the manufacture of automobile ancillaries.
The assessee is a public limited company engaged in the 169 manufacture of automobile spares.
The products manufactured by it are covered by the list in the Fifth Schedule to the Income Tax Act.
During the previous year relevant to the assessment year 1966 67, the assessee commenced another activity, the manufacture of alloy steels, which was also an industry included in the Fifth Schedule.
The assessee sustained a loss in the alloy steel industry during the previous years relevant to the assessment years 1966 67 and 1967 68.
It claimed a loss in the sum of Rs. 15,30,688 for the assessment year 1966 67.
For the assessment year 1966 67, the assessee disclosed profits from the industry of automobile ancillaries in the following detail: 1.
Manufacture of Springs at Mangalore Rs. 7,54,107 2.
Manufacture of Springs at Nagpur Rs. 9,61,808 3.
Manufacture of Hubs and Brake Drums Rs. 41,214 Rs 17,57,129 The assessee claimed relief under section 80E at 8 per cent of this amount in the sum of Rs.1,40,574.
In the same manner, the assessee claimed relief under section 80E in the sum of Rs.1,52,483 for the assessment year 1967 68.
The Income Tax Officer declined to grant the relief claimed by the assessee in the two assessment years.
He noticed that the assessee had not taken into account the losses incurred in the alloy steel industry, and he held that the assessee would be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture.
After making certain adjustments in the computation of the total income, the Income Tax Officer gave relief under section 80E in the sum of Rs.24,896 for the assessment year 1966 67 and Rs.1,20,986 for the assessment year 1967 68, computing the deduction at 8 per cent on the amount of profits from the manufacture of automobile parts as reduced by the losses from the alloy steel manufacture.
An appeal by the assessee was dismissed by the Appellate Assistant Commissioner of Income tax.
But on second appeal, the Income Tax Appellate Tribunal accepted the contention of the assessee that a deduction was permissible at 8 per cent on the entire profits of the automobile parts industry included in the total income without deducting therefrom the losses in the alloy steel manufacture.
It directed the Income Tax Officer to recompute the relief under section 80E.
At the instance of the Revenue, the Appellate Tribunal referred 170 the case for each of the two assessment years 1966 67 and 1967 68 to the Karnataka High Court for its opinion on the following question of law: "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that in computing the profits for the purpose of deduction under section 80E of the Income Tax Act, 1961 the loss incurred in the manufacture of alloy steels should not be set off against the profits of the manufacture of automobile ancillaries?" The High Court answered the question in the affirmative.
To appreciate the merits of the controversy in these appeals it would be as well to set forth at this point the relevant provisions of section 80E of the Income Tax Act as they stood at the time: 80E. "Deduction in respect of profits and gains from specified industries in the case of certain companies (1) In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of this Act) includes any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles and things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent thereof, in computing the total income of the company.
" It is not disputed that the assessee is a company to which section 80E applies.
The question is whether for the purpose of granting relief under s.80E the loss suffered by the assessee in the manufacture of alloy steels can be set off against the profits arising from the manufacture of automobile ancillaries.
It is apparent that section 80E provides for the grant of a rebate when computing the total income of a company carrying on the business of generating or distributing elect 171 ricity or other form of power or of constructing, manufacturing or producing any one or more of the articles and things specified in the list in the Fifth Schedule.
Popularly, the list is known as the list of Priority Industries.
A perusal of the entries in the list makes it clear that they are concerned with articles and things which are regarded of primary importance in the industrial and economic development of the country.
Some of them form part of the industrial and economic base of the country while others enter into the industrial and economic infrastructure considered necessary or desirable for its development.
A certain priority has been assigned to the construction, manufacture or production of those articles and things.
They find place in section 80E along with the business of generation or distribution of electricity or other form of power.
Nobody can dispute that electrical energy or other form of energy is crucial to industrial and economic development.
The nature of articles and things included in the list in the Fifth Schedule possesses the same character.
Alloy steels are undoubtedly covered by Entry (1) "Iron and steel (metal), ferro alloys and special steels", while automobile ancillaries appear clearly by that description in Entry 20 of the list.
Both represent separate priority industries.
It is obvious from the object underlying the enactment of section 80E and the terms in which it provides relief that the intention of Parliament in enacting the provision was to encourage the setting up of industries concerned with the generation or distribution of electrical and other energy and the construction, manufacture or production of articles or things specified in the list in the Fifth Schedule.
The intention goes further.
By making a provision for a rebate year after year on the industry making profits and gains during the year, the intention also was to provide an incentive for promoting efficiency in the industry.
It is clear that the benefit was directed to the setting up and also the efficient working of the priority industries.
How is the benefit to be worked out? First, it must be a company to which section 80E applies, that is to say a company which satisfies the requirements of sub section
(2) of section 80E.
Second, the total income, as computed in accordance with the Income tax Act 1961 without taking into regard the provisions of section 80E, should include profits and gains attributable to the business or the industry mentioned in the section.
Third, from the profits and gains attributable to such business or industry a deduction has to be allowed of an amount equal to eight per cent of such profits and gains and effect must be given to this deduction when computing the total income of the company.
172 The assessee in this case carries on two industries, both of which find place in the list in the Fifth Schedule and can, therefore, be described as priority industries.
It is urged by the learned Additional Soliciter General, appearing for the Revenue, that on a true application of section 80E the profit in the industry of automobile ancillaries must be reduced by the loss suffered in the manufacture of alloy steel, and reference has been made to a number of cases to which we shall presently refer.
After giving the matter careful consideration we do not find it possible to accept the contention.
It seems to us that the object in enacting section 80E is properly served only by confining the application of the provisions of that section to the profits and gains of a single industry.
The deduction of eight per cent is intended to be an index of recognition, that a priority industry has been set up and is functioning efficiently.
It was never intended that the merit earned by such industry should be lost or ' diminished because of a loss suffered by some other industry.
It makes no difference that the other industry is also a priority industry.
The coexistence of two industries in common ownership was not intended by Parliament to result in the misfortune of one being visited on the other.
The legislative intention was to give to the meritorious its full reward.
To construe section 80E to mean that you must determine the net result of all the priority industries and then apply the benefit of the deduction to the figure so obtained will be, in our opinion, to undermine the object of the section.
An example will illustrate this.
An industry entitled to the benefit of section 80E could have its profits wholly wiped out on adjustment against a heavy loss suffered by another industry, and thus be totally denied the relief which should have been its due by virtue of its profits.
In our opinion, each industry must be considered on its own working only when adjudging its title to the deduction under section 80E. It cannot be allowed to suffer because it keeps company with some other industry in the hands of the assessee.
To determine the benefit under section 80E on the basis of the net result of all the industries owned by the assessee would be, moreover, to shift the focus from the industry to the assessee.
We hold that in the application of section 80E the profits and gains earned by an industry mentioned in that section cannot be reduced by the loss suffered by any other industry or industries owned by the assessee.
We shall now turn to the cases cited before us.
In the view which has found favour with us it is apparent that the Madras High Court erred in holding in Commissioner of Income tax, Tamil Nadu III vs English Electric Company Ltd., , that in granting relief under section 80E the adjustment of certain losses in other trading 173 transactions was permissible in determining the quantum of profits and gains attributable to the priority industry claiming relief under that provision.
The High Court did not correctly appreciate the law laid down by this Court in Cambay Electric Supply Industrial Co. Ltd., vs Commissioner of Income tax, Gujarat II.
, That was a case where this Court held that, for the purpose of granting relief under section 80E to an industry, account must be taken when computing the profits and gains attributable to that industry of the balancing charge worked out under sub section
(2) of section 41 as well as items of unabsorbed depreciation and any depreciation development rebate carried forward from earlier years.
It appears from the facts of that case that the balancing charge as well as the unabsorbed depreciation and unabsorbed development rebate related to the particular industry itself.
The only business carried on by the assessee there was generation and distribution of electricity at Cambay.
The balancing charge arose because during the relevant accounting period the assessee had sold some of its machinery and buildings.
The unabsorbed depreciation and development rebate also appear to relate to the same business.
There is no indication that any of them related to a business or industry distinct from that whose profits and gains formed the subject of computation under section 80E. Our attention has been invited by the Revenue to Distributors (Baroda) P. Ltd.v.
Union of India and Others, ; That is a case in which the Constitution Bench of this Court was called upon to consider the scope of section 80M of the Income tax Act.
We do not see how that case is in any way relevant to the case before us.
The point before the Court appears to have been whether the income by way of dividends from a domestic company, which fell to be included in the gross total income of the assessee, should be the amount computed in accordance with the provisions of the Act or the full amount received from the paying company.
We may refer at this point to Commissioner of Income tax, West Bengal II vs Belliss and Morcon (I.) Ltd., a decision of the Calcutta High Court to which one of us (Sabyasachi Mukharji J.) was a party.
That decision supports the view taken by us in so far as it lays down that in applying section 80 I of the Income tax Act (which replaced section 80E) it is not permissible to compute the profits of the priority industry, respecting which the relief is claimed, by taking into account the depreciation loss from other industries.
No doubt the depreciation loss arose in that case from non priority industries, but in view of what we have said earlier that should make no difference whatever.
We think it unnecessary to refer to other cases on the point.
We think it sufficient to indicate that a distinction must be drawn between a case where the loss or un 174 absorbed depreciation pertain to the same industry whose profits and gains are the subject of relief under section 80E and a case where the loss or unabsorbed depreciation relate to industries other than the one whose profits and gains constitute the subject of relief.
While concluding we may point out that the Mysore High Court seems, in our opinion, to be perfectly right in holding in Commissioner of Income tax, Mysore vs Balanoor Tea and Rubber Co. Ltd., that the loss from the plastic business carried on by the assessee could not be deducted from the profits and gains attributable to the tea industry for the purpose of computing the quantum of the profits and gains attributable to the tea industry under section 80E.
In the result, we affirm the answer returned by the High Court to the question raised in the Income tax References.
The appeals are dismissed with costs.
A.P.J. Appeals dismissed.
|
The assessee company is engaged in the manufacture of autombile spares.
During the previous year relevant to the assessment year 1966 67, the assessee also commenced the manufacturing of alloy steels.
Both the industries are included in the Fifth Schedule to the Income Tax Act, 1961.
The assessee sustained a loss in the alloys steel industry during the previous years relevant to the assessment years 1966 67 and 1967 68.
It claimed a loss in the sum of Rs.15,30,688 for the assessment year 1966 67.
For the assessment year 1966 67, the assessee disclosed profits to the tune of Rs.17,57,129 from the industry of automobile ancillaries.
The assessee claimed relief under section 80E at 8% of this amount in the sum of Rs.1,40,574.
Similarly the assessee claimed relief in the sum of Rs.1,52,483 for the assessment year 1967 68.
The Income Tax Officer declined to grant the relief claimed and held that the assessee would be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture.
The Appellate Assistant Commissioner dismissed the appeal of the assessee.
But on second appeal, the Tribunal accepted the contention of the assessee that a deduction was permissible at 8% on the entire profits of the automobile parts industry included in the total income without deducting therefrom the losses in the alloy steel manufacture and directed the Income tax Officer to recompute the relief under s.80E.
In the Reference, on the question whether in computing the profits for the purpose of deduction under section 80E of the Income tax Act, 1961, the loss incurred in the manufacture of alloy steels should not be set off against the profits of the manufacture of automobile ancillaries, the High Court answered in favour of the assessee and against the revenue.
167 In the Appeal to this Court, on behalf of the Revenue it was contended that on a true application of section 80E the profit in the industry of automobile ancillaries must be reduced by the loss suffered in the manufacture of alloy steels.
Dismissing the appeal, ^ HELD: 1.
In the application of section 80E of the Income tax Act, 1961 the profits and gains earned by an industry mentioned in that section cannot be reduced by the loss suffered by any other industry or industries owned by the assessee.
[172G] 2.
Each industry must be considered on its own working only when adjudging its title to the deduction under section 80E. It cannot be allowed to suffer because it keeps company with some other industry in the hands of the assessee.
To determine the benefit under section 80E on the basis of the net result of all the industries owned by the assessee would be, to shift the focus from the industry to the assessee.
[172E F] Commissioner of Income tax, Tamil Nadu III vs English Electric Company Ltd., [1981]131 ITR 277 overruled.
Cambay Electric Supply Industrial Co.Ltd.
vs Commisioner of Income tax, Gujrat II, followed.
Distributors (Baroda) P. Ltd. vs Union of India & Ors., ; inapplicable.
Commissioner of Income tax, West Bengal II vs Belliss and Morcon (1) Ltd., ; and Commissioner of Income tax, Mysore vs Balanoor Tea and Rubber Co. Ltd., approved.
The object underlying the enactment of section 80E was to encourage the setting up of industries concerned with the generation or distribution of electrical and other energy and the construction, manufacture or production of articles or things specified in the list in the Fifth Schedule.
By making a provision for a rebate year after year on the industry making profits and gains during the year, the intention also was to provide an incentive for promoting efficiency in the industry.
The benefit was directed to the setting up and also the efficient working of the priority industries.
[171E F] 168 4.
The object in enacting section 80E is properly served only by confining the application of the provisions of that section to the profits and gains of a single industry.
The deduction of 8% is intended to be an index of recognition that a priority industry has been set up and is functioning efficiently.
It was never intended that the merit earned by such industry should be lost or diminished because of a loss suffered by some other industry.
It makes no difference that the other industry is also a priority industry.
The co existence of two industries in common ownership was not intended by Parliament to result in the misfortune of one being visited on the other.
The legislative intention was to give to the meritorious its full reward.
To construe section 80E to mean that one must determine the net result of all the priority industries and then apply the benefit of the deduction to the figure so obtained will be, to undermine the object of the section.
[172B E] In the instant case, both the industries carried on by the assessee find place in the list in the Fifth Schedule and represent separate priority industries.
[172A]
|
ivil Appeal No. 642 (NT) of 1974.
From the Judgment and Order dated 25.4.1973 of the Madras High Court in T.C. No. 243 of 1969.
240 S.T. Desai, Inbarajan and A.T.M. Sampath for the Appellant.
M.M. Abdul Khader, V.C. Nagarajan and A.V. Rangam for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
We are concerned with Civil Appeal No.642(NT) of 1974, Civil Appeal Nos.
1798 1800 of 1981 and the Writ Petition No. 196 of 1974 along with Special Leave Petitions Nos.
12943 44 of 1985.
All these will have to be disposed of on the main question stated hereinafter and these raise a common question, facts in all these matters are more or less identical except that certain assumptions of facts have been made in Special Leave Petitions Nos.
12943 44 of 1985 because in these there were no investigation of facts by the revenue authorities.
The question involved in all these, is, whether the sales in question were within the State of Tamil Nadu and as such subject to tax under the Tamil Nadu General Sales Tax Act, 1959, hereinafter called the 'Act '.
The dealers who are the petitioners in the writ petitions and are the appellants in the appeals and the petitioners in Special Leave Petitions are dealers in stores and were doing business as ship chandlers in the relevant years.
The appellants/petitioners used to supply the goods imported as stores to foreign going vessels and other diplomatic personnel.
The appellants/petitioners imported these goods from foreign countries.
At the time of import they complied with the statutory provisions of the and other enactments relating to import of goods.
They had given an undertaking to the concerned authorities to supply the imported goods to foreign going vessels and/or to diplomatic personnel and to receive the goods in custom bonded ware house.
Under section 59 of the the importer of any dutiable goods which had been entered for warehousing and assessed to duty under section 17 or section 18 should execute a bond binding himself for a sum equal to twice the amount of the duty assessed on such goods (a) to observe all the provisions of the Act and the rules (b) to pay on or before a date specified in a notice of demand all duties, rent and charges claimable on account of such goods under the Act, and (c) to discharge all penalties incurred for violation of the provisions of the and relevant statutes.
For the above 241 purpose, the Assistant Collector of Customs might permit an importer to enter into a general bond for such amount as the Assistant Collector of Customs might approve in respect of the warehousing of goods to be imported by him within a specified period.
Sections 60, 61 and 62 of the provide for ancillary purposes.
In substance these provide for control by the proper officer of the goods warehoused.
It is not necessary for the determination of the issue involved to deal with other relevant provision of the .
The appellants/petitioners after receipt of the goods kept these in a bonded ware house under the relevant provisions.
The ware house was under dual control of the Customs Department and the importers like the appellants/petitioners so that it could not be opened by one without the presence of the other.
On receipt of order from the captain of the ship requiring ship stores the petitioners supplied the goods on board after observing certain formalities imposed by the , the rules and regulations thereunder.
These were the broad features of the way the appellants/petitioners operated.
We will, however, deal with the facts as found in Civil Appeal No. 642 of 1974.
The case of the appellants/petitioners was that all these goods were intended for re export only and were at all relevant time in a bonded warehouse.
The delivery was on board the ship to foreign going ship.
The goods were consumed only on the high seas.
The property in the goods had passed only after the goods had crossed the custom frontiers.
The contention was that the property in the goods did not pass in the territory of Tamil Nadu.
The sales were therefore (i) in the course of export because goods were to be on board the ship and were exported outside the country and could not be consumed before they reached the high seas; (ii) the sale of the goods took place in the territorial waters of India and not within the State of Tamil Nadu, "Indian Customs Water" is defined in the under section 2(28) as follows: "Indian customs waters" means the waters extending into the sea up to the limit of continguous zone of India under section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zones Act, 1976 and includes any bay, gulf, harbour, creek or tidal river." 242 Under article 297 of the Constitution, all lands, minerals and other things of value underlying the ocean within the territorial waters or the continental shelf of India shall vest in the Union and are held for the purposes of the Union.
It is the contention of the appellants/petitioners that sales there fore took place outside the State as territorial waters vested in the Union Government and not in the State of Tamil Nadu.
The turnover in question was not exigible according to the appellant/petitioners, to sales tax under the provisions of the Act.
It is this plea which the petitioners/appellants sought to raise as an additional ground before the High Court in the appeal out of which Civil Appeal No. 642 of 1974 arose.
But it was not permitted by the High Court.
The Taxing Authorities ' plea on the other hand was that the various goods sold to foreign bound vessels were within the State of Tamil Nadu when the concerned officer of the foreign bond vessels placed indents for the supply of goods.
Further, the appellants ' godowns and bonded warehouses were within the State of Tamil Nadu.
When orders were received the appellants/petitioners supplied the required quantity from the stock either in the godown or in the bonded warehouses and delivered these or set these apart in fulfilment of the orders placed by the concerned officer of the foreign bond ship.
It is the case of the respondents that at that time only appropriation was made towards the contract of sale and such appropriation took place within the State of Tamil Nadu.
It is the further case of the respondents that it was on such appropriation that the sale took place.
In the premises it was submitted on behalf of the respondents that the contention of the appellants/petitioners, that the transactions of sale were completed only when the masters of the vessels acknowledged delivery of the goods on board the vessels was not correct.
It was further urged that it was not correct to contend that the appellants/petitioners should be treated as actual exporters.
The place of delivery would not alter appropriation which had already taken place.
In support of this contention, reliance was placed on the decision of this Court in the case of Burmah Shell Oil Storage and Distributing Co. of India Ltd., and Another vs Commerical Tax Officer and Others.
, 11 S.T.C. 764.
It is necessary in this background, to examine the facts involved in Civil Appeal No. 642 of 1974.
There, the main question involved 243 was whether Rs.3,51,438.08 which was the taxable turnover determined by the assessing authority was subject to the tax under the said Act.
The appellant objected to the assessment on such turnover on the ground that the goods relating to such turnover were imported from abroad, stored in the customs warehouse and were not brought to the country across the customs frontiers.
The lower appellate authority allowed some deduction in the determination of the taxable turnover in respect of sales to local diplomatic corps and determined the figure at Rs.3,51,045.68.
The Appellate Assistant Commissioner confirmed the assessment on the basis that sales were effected within the State of Tamil Nadu and as such dismissed the appeal.
There was an appeal before the Tribunal.
The Appellate Assistant Commissioner relied on the decision of the Madras High Court in the case of Deputy Commissioner of Commerical Taxes vs Caltex India Ltd Madras, 13 S.T.C. 163.
The Tribunal accepted the contentions of the dealer and held that the sales did not take place within the State of Tamil Nadu.
It was pointed out that there was significant change in the from Sea Customs Act, 1978, and the Tribunal held that import of goods in question had not become complete and as the goods were sold to the ocean going vessels, the sales in question could not be deemed to be within the State of Madras.
On revision the High Court relying on the decision of this Court in The State of Madras vs Davar and Co., 24 S.T.C. 481 held that the sales took place in the State of Madras and assessment to tax was valid.
Civil Appeal No. 642 of 1974 arises from the said decision.
Civil Appeals Nos.
1798 1800 of 1981 followed the said decision and are based on the said reasons.
These appeals are for the assessment years 1968 69 and 1970 71.
It may be mentioned that Civil Appeal No. 642 of 1974 was concerned with the assessment to tax for the year 1964 65.
The writ petition challenges the assessment made for the assessment year 1972 73 where the taxing authorities and the appellate authorities under the Act followed the said decision which is under appeal in Civil Appeal No. 642 of 1974.
Special Leave Petition Nos.
12943 44 of 1985 challenge the assessments for 1978 79 and 1979 80 where the High Court took the view upholding the revenue 's contention that sales were taxable relying on the decision in the case of Madras High Court of Fairmacs Trading Company vs The State of Tamil Nadu, 141 S.T.C. 157.
244 As mentioned hereinbefore, before the High Court in Civil Appeal No. 642 of 1974, the grounds urged in the writ petition were sought to be urged as additional grounds but were not permitted as these had not been taken before the taxing authorities.
On behalf of the appellants/petitioners, Mr. S.T. Desai, learned counsel, submitted that the legislative competence of the State of Tamil Nadu as regards levying of the sales tax was confined to the territories of the State as specified in item No. 7 of the First Schedule to the Constitution.
That legislative competence did not extend to any territorial waters simply because these were abutting the land mass of the State of Tamil Nadu.
It was further urged that the Sovereignty over the limits of territorial waters extended and always extended to the entire territorial waters of India.
The limits and extent of the said territorial waters had not been altered by any notification of the Central Government.
The territorial waters extended to a distance of 12 nautical miles from the sea shore adjacent to the land mass of the State.
See in this connection The Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976.
It was further urged that there was no definition at all of 'Customs Frontiers ' in the .
The definition inserted in the Act in section 2(ab) by the Amending Act 103 of 1976 must be read as declaratory or explanatory and no questions of prospective operations would arise according to counsel for the appellants/petitioners.
He submitted that that definition would also be applicable to sales prior to 1976.
This Court dealt with the history of the definition now appearing in the relevant sections of the in the case of Tata Iron and Steel Co. Limited, Bombay vs S.R. Sarkar and Others, 11 S.T.C. 655.
In that case this Court was dealing with the relevant provisions in a petition under Artical 32 of the Constitution challenging the demand of the Sales Tax Officer of State of West Bengal under the in respect of certain sales of steel goods.
The petitioner company in that case had its registered office in Bombay and its head sales office in Calcutta in the State of West Bengal and factories in Jamshedpur in the State of Bihar.
The company was registered as a 'dealer ' under the Bihar Sales Tax Act and was also registered as 'dealer ' in the State of West Bengal under the .
For the period of asessment 1st July, 1957 to 31st March, 1958, the company submitted its return of taxable sales 245 to the Commercial Tax Officer, Lyons Range, Calcutta.
The assessment order was passed.
It is not necessary to deal exhaustively with the history of the present sections 4 and 5 of the which has been dealt with by this Court.
Interpreting the relevant provisions of the , it was observed that the Act by section 3 indicates as to when a sale or purchase of goods is said to take place in the course of inter State sale or trade or commerce.
Section 4 also indicates as to when a sale or purchase takes place outside the State.
The majority of the judges of this Court held on the facts found as follows: "In our view, therefore, within clause (b) of section 3 are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto: clause (a) of section 3 covers sales, other than those included in clause (b), in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State.
" Sarkar and Das Gupta JJ.
in a separate judgment held that the documents of title of goods sold could pass the property in them only if the parties had agreed that that would be the result.
In interpreting whether in the course of import or export, sales took place, the same principle would be applicable.
The correct position, so far as the facts of the present case are concerned, in our opinion, has been laid in the decision of Burmah Shell Oil Storage and Distributing Co.
Of India Ltd. and Another vs Commercial Tax Officer and Others (supra).
This Court observed at page 765 as follows: "While all exports involved a taking out of the country, all goods taken out of the country cannot be said to be exported.
The test is that the goods must have a foreign destination where they can be said to be imported.
It matters not that there is no valuable consideration from the receiver at the destination end.
If the goods are exported and there is sale or purchase in the course of that export and the sale or purchase occasions the export to a 246 foreign destination, the exemption is earned.
Purchases made by philanthropists of goods in the course of export to foreign countries to alleviate distress there, may still be exempted, even though the sending of the goods was not a commerical venture but a charitable one.
The crucial fact is the sending of the goods to a foreign destination where they would be received as imports.
" The appellant in that case dealt in petroleum and petroleum products and carried on business at Calcutta.
They had maintained supply depots at Dum Dum Airport from which aviation spirit was sold and delivered to aircraft proceeding abroad for their consumption.
The question was whether these supplies to the aircraft which proceeded to foreign countries were liable to sales tax under the Bengal Motor Spirit Sales Taxation Act, 1941.
The contention of the appellants in that case was that such sales were made in the course of export of such aviation spirit out of the territory of India that they took place outside the State of West Bengal, that inasmuch as aviation spirit was delivered for consumption outside West Bengal, the sales could not fall within the Explanation to clause (1) (a) of article 286 as it then stood.
It was held by this Court that in order to exclude the taxation by the State of West Bengal, the appellants had to prove that there was some other State where the goods could be said to have been delivered as a direct result of the sale for the purpose of consumption in that other State and that as they failed to do so, the aviation spirit loaded on board an aircraft for consumption though taken out of India, was not exported since it had no destination, where it could be said to be imported and so long as it did not satisfy that test, it could not be said that the sale was in the course of export.
It was further held that aviation spirit was sold for the use of aircraft and the sale was not even for the purpose of export and all the elements of sale including delivery and payment of price took place within the State of West Bengal and the sales were complete within the territory of that State.
The customs barrier did not set a terminal limit to the territory of West Bengal for sales tax purpose.
The sale beyond the customs barrier was still a sale in fact in the State of West Bengal.
The ratio of this decision would be applicable to the facts and circumstances of this case.
It was rightly urged that the appropriation of goods took place in the State of Tamil Nadu when the goods were segregated in the bonded warehouse to be delivered to the foreign going vessels.
It was not a case of export as there was no destination 247 for the goods to a foreign country.
The sale was for the purpose of consumption on board the ship.
It was not as if only on delivery on board the vessel that the sale took place.
The mere fact that shipping bill was prepared for sending it for custom formalities which were designed to effectively control smuggling activities could not determine the nature of the transaction for the purpose of sales tax nor does the circumstances that delivery was to the captain on board the ship within the territorial waters make it a sale outside the State of Tamil Nadu.
In the case of The State of Kerala and Others vs The Cochin Coal Company Ltd., 12 S.T.C. 1, it was held that concept of export in article 286(1)(b) of the Constitution postulated the existence of two termini as those between which the goods were intended to move or between which they were intended to be transported and not a mere movement of goods out of the country without any intention of their being landed in specie in some foreign port.
Goods might be consumed within the meaning of the Explanation to article 286(1)(a) either by destruction or by way of use depending on the nature of the goods.
In that case the respondent company dealers in coal had their office at Fort Cochin which was formerly within the State of Madras.
The company had imported and kept stocks of 'bunker coal ' at certain places which at the relevant period was also within the State of Madras.
Part of the activities of the said company consisted in the supply of 'bunker coal ' from their depots in Candle Island for steamers arriving at the port of Cochin in the State of Travancore Cochin for the outward voyage of the steamers from the Cochin port.
In respect of these sales of coal, tax was claimed by the Travancore Cochin State for the years 1951 52 and 1952 53 but the respondent claimed exemption under article 286(1)(b) or (2) of the Constitution and also under a Notification dated 5th February, 1954 and published in the official Gazette of 16th February, 1954.
It was held that the sales of coal by the respondent were sales in the course of inter State trade and fell within the ban of article 286(2), but the levy of tax on such sales had been validated by the Sales Tax Laws Validation Act, 1956.
It was further held that the sales were not sales 'in the course of export ' within the meaning of article 286(1)(b) and were therefore not exempt under that article but they fell within the Explanation to article 286(1)(a) inasmuch as the coal was delivered in the State of Travancore Cochin and the steamers were the actual consumers who were at liberty to consume the coal whenever they desired; that the Notification dated 5th February, 1954 was and must be deemed to be one issued in exercise of the power 248 conferred on the State Government by section 6(1) of the Travancore Cochin General Sales Tax Act, 1125 and as the transactions clearly fell within the Notification, the respondent would be entitled to the benefit of the tax exemption conferred by the Notification.
The High Court in Civil Appeal No. 642 of 1971 has based its decision on the decision of this Court in State of Madras v Davar and Co. (supra).
In that case the assessee, a dealer in timber, had imported two consignments of timber from Burma and sold it to buyers in India.
The ship carrying the first consignment arrived at the Madras Harbour on 17th October, 1957.
The assessee obtained moneys from the buyers on 24th October, 1957, retired the documents of title from the bank and handed over the documents on the same day to the buyers to enable them to clear the goods.
All charges and expenses by way of import duty, clearance charges etc., were paid to the buyers on behalf of the assessee.
The second consignment reached Madras by ship on 17th December, 1957 and the assessee obtained on 23rd December, 1957, from the buyers the value of the consignment after handing over to the buyers the necessary shipping documents.
The assessee claimed that these sales were in the course of import and these were not liable to tax under the Madras General Sales Tax Act, 1959, as these were covered by article 286(1)(b) of the Constitution.
It was held that the expression 'customs frontiers ' in section 5(2) of the , did not mean 'customs barrier '.
It had to be construed in accordance with Notification No. S.R.O. 1683 dated 6th August, 1955, issued by the Central Government under section 3 A of the read with the Proclamation of the President of India dated 22nd March, 1956. 'Customs frontiers ' meant the boundaries of the territory, including territorial waters, of India.
The sales in this case were effected by transfer of documents of title long after the goods had crossed the customs frontiers of India; the ships carrying the goods in question were all in the respective harbours within the State of Madras when the sales were effected by the assessee by transfer of documents of title to the buyers.
The sales were therefore not effected in the course of import.
This Court, in construing the customs frontiers, referred to the extent of territorial waters, declaration of the President dated 22nd March, 1956, the contents of which were set out in that decision which need not be repeated here.
We have noted the further contentions which were only raised in the writ applications and not raised in Davar 's case.
In our opinion these further contentions have been elaborately discussed in the two 249 decisions, one of the Andhra Pradesh High Court and another of the Madras High Court, which we shall presently notice but it may be pointed out that there is a difference between the two High Courts on the interpretation whether section 4(2)(a) or 4(2)(b) of the would apply or not.
It may be noted that it was observed by Sarkar and Das Gupta JJ.
in Tata Iron and Steel Co. Limited, Bombay vs S.R. Sarkar and others, (supra) that clauses (a) & (b) of section 3 were mutually exclusive and sale could not fall under both the clauses.
We are not here directly concerned with the question whether clauses 4(2)(a) and 4(2)(b) of the are mutually exclusive or not.
We are concerned with the question whether either of these was applicable.
In the case before the Andhra Pradesh High Court in Fairmacs Trading Company vs The State of Andhra Pradesh, 36 S.T.C. 260, the petitioner imported ship stores from foreign countries, kept these in bonded warehouses of the customs department without the levy of customs duty and later on sold and delivered to ships ' masters for consumption abroad the ship after crossing the port boundaries.
On the question whether the sales were outside the State or in the course of export and therefore not liable to tax under the Andhra Pradesh General Sales Tax Act, 1957, it was observed by the Andhra Pradesh High Court that the goods were specific and ascertained and were within the State when the contract of sale took place and therefore the requirements of section 4(2)(a) of the were fully satisfied and the sales must be said to have taken place inside the State; but as the goods sold were meant for consumption during voyage and they had no destination in any foreign country where they could be received as imports, the sales were not sales in the course of exports.
It was further held that mere movement of goods out of the country following a sale would not render the sale, one in the course of export within article 286(1)(b) of the Constitution of India.
Before a sale can be said to be a sale in the course of export, the existence of two termini between which the goods are intended to move or to be transported is necessary.
The Madras High Court in the case of Fairmacs Trading Company vs The State of Tamil Nadu (supra) was dealing with an assessee, who was a dealer in ship 's stores and was also doing business as ship chandlers and who imported goods from abroad for the purpose of supplying them either to foreign going vessels or to diplomatic personnel.
These goods were received and kept in the customs bonded 250 ware house and were cleared under the supervision of the customs authorities whenever these were sold by the assessee.
In respect of supplies of specific goods made to certain ships located in the Madras Harbour, pursuant to orders placed by the Master of the ship or other officers working in the ship, the transportation of the goods to the ship was effected in such a manner as to ensure that the bonded goods, which had not paid any duty, did not enter the local market.
The delivery receipt sent along with the goods by the assessee was signed by an officer of the ship in token of having received the goods in good condition.
The question that arose for consideration was whether the sale took place within the State of Tamil Nadu and liable to be taxed under the Tamil Nadu General Sales Tax Act, 1959.
It was held (i) that there was nothing to show in the communications from the ship that the goods had necessarily to be supplied only in the ship.
It was open to the officers working in the ship to come and take delivery of the goods in which event the sale would be a local sale.
Therefore, assuming that the territorial waters did not form part of the State of Tamil Nadu, as there was nothing in the contemplation of the contracting parties that the goods were to be moved from one State to another, it was held that it was not possible to take the view that the sales were inter State sales; and (ii) that the assessee was not selling specific or ascertained goods, because the goods formed part of a larger stock within the bonded warehouse and had, therefore to be separated and appropriated to the contract as and when orders were placed by the officers of the ship by description.
Therefore, the sales were local sales in view of the specific provision of section 4(2)(b) of the , read with section 2(n), explanation (3) of the Act (Tamil Nadu General Sales Tax Act, 1959), and were accordingly taxable under the Act.
The Court did not find it necessary to consider the question whether the territory covered by the territorial waters formed part of the State of Tamil Nadu or not.
Attention of the Madras High Court was drawn to the decision of Andhra Pradesh High Court in Fairmacs Trading Company vs The State of Andhra Pradesh (supra).
The Madras High Court did not examine the question in detail in the view it took.
In so far as the High Courts of Andhra Pradesh and Madras in the said two decisions held that sales took place within the State, we are in agreement.
On the aspect of territorial waters, we have set out hereinbefore 251 the contention of the respondents.
But inasmuch as we hold that sales took place within State of Tamil Nadu where appropriation took place it is not necessary to rest our decision in these matters on this question.
Mr. Desai drew our attention to the observations of Chief Justice Lord Parker in the case of R. vs Kent Justices Ex Parte LYE and others, [1967] 1 All England Report 560 at 564 65.
But in this case it is not necessary to consider that aspect in the view we have taken.
In any event, the sale took place when appropriation was made and appropriation was made within the State of Tamil Nadu even if the goods were not delivered.
See in this connection the observations of Lord, Goddard, G.J. in Furby vs Hoey.
[1947] 1 All England Report 236.
There the respondent, an excise officer, filled in and sent to the appellant at his licensed premises a form of order purporting to order a variety of liquor, stating that delivery instructions would follow.
Subsequently, after licensing hours and at an unlicensed club, the respondent filled up a form of delivery for one bottle of gin, which was taken by a messenger to the appellant 's premises, and the gin was brought back to and paid for by the respondent at the club.
The appellant was convicted at quarter sessions of selling by retail a bottle of gin at the club without having taken out a licence, contrary to section 50(c) of the Finance of U.K.
It was held that appropriation, which completed the contract, took place at the licensed premises of the appellant and not at the club, and, accordingly, though guilty of the offence of selling liquor out of permitted hours, the appellant was not guilty of selling liquor on unlicensed premises as charged.
In our opinion that is the correct position and appropriation was made within the State of Tamil Nadu.
In our opinion as the goods were within the State of Tamil Nadu in case of ascertained goods at the time when the contract of sale was made and in case of unascertained goods at the time of their appropriation to the contract by the seller, sale must be deemed to be within the State of Tamil Nadu.
In our opinion, therefore, Shri M.M. Abdul Khader, learned counsel for the respondents was right that under section 2(n) of the Act read with explanation 3, these sales were within the State.
It may be mentioned that there was an amendment in 1976 of the by Act 3 of 1976.
By that provision, the 252 following was inserted in section 2 of the : "(ab) "crossing the customs frontiers of India" meant crossing the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities.
Explanation For the purposes of this clause, "customs station" and "customs authorities", shall have the same meanings as in the ." Mr. Desai sought to urge that this was declaratory and was valid for all the relevant years.
Whether a law is a declaratory or not, depends upon the Act and the language used.
There was nothing in the Act or object of the Act which stated that it was further to amend the that it was declaratory and not prospective in nature.
Our attention was drawn to certain decisions, whether an Act is retrospective and declaratory in operation or prospective would depend upon the purpose of the Act, the object of the Act and the language used.
See in this connection the observation in The Central Bank of India vs Their Workmen; , ; Keshavlal Jethalal Shah vs Mohanlal Bhagwandas & Anr., ; and Chanan Singh & Another vs Jai Kaur., [19701 1 SCR 803 at 804 807.
But that amendent is not relevant in the view we have taken.
The short question, therefore, that arises in all these matters is whether sale of the goods in question took place within the territory of Tamil Nadu.
In these cases sale took place by appropriation of goods.
Such appropriation took place in bonded warehouse.
Such bonded warehouses were within the territory of State of Tamil Nadu.
Therefore, under sub section (2), sub clauses (a) and (b) of section 4 of the Central Sales Tax Act, 1956, the sale of goods in question shall be deemed to have taken place inside the State because the contract of sale of ascertained goods was made within the territory of Tamil Nadu and furthermore in case of unascertained goods appropriation had taken place in that State in terms of clause (b) of sub section (2) of section 4 of the .
There is no question of sale taking place in course of export or import under section 5 in this case.
From that point of view the amendment introduced by Act 103 of 1976 by incorporating in clause (ab) of section 2 of the does not affect the position.
In this connection reference may be made from the observations of this Court in Burmah 253 Shell oil Storage Ltd., (supra) where it has been held that customs A barrier does not set a terminal limit to the territory of the State for sales tax purposes.
Sale, therefore, beyond the customs barrier is still a sale within the State.
The amendment introduced in section 2 by the Act 103 of 1976 does not affect the position because the custom station is within the State of Tamil Nadu.
That question might have been relevant if we were considering the case of sale by the transfer of documents of title to the goods as contemplated by section 5 of the Central Sales Tax Act.
In the premises we are unable to accept the contentions urged on behalf of the appellants in the Civil Appeals and also the contentions urged in the Writ Petition.
In the view we have taken, it is not necessary to express our opinion on the arguments whether introduction of clause (ab) of section Z of by Act 103 of 1976 is prospective or not.
We have, however, noted the submissions.
That question, in the light of our aforesaid views, is not material for the present controversy.
In the premises Civil Appeal No. 642 of 1974, Civil Appeal Nos.
1798 1800 of 1981 and Writ Petition No. 196 of 1974 are all dismissed with costs.
So far as Special Leave Petitions Nos.
19243 44 of 1985 are concerned, the same are also dismissed.
In these cases, however, the parties will pay and bear their own costs.
M.L.A. Appeals and Petitions dismissed.
|
The appellant company in Civil Appeal No.642 of 1974 was doing the business as ship chandler.
It imported the goods from foreign countries and after receipt of the goods, kept them in a bonded warehouse under the relevant provisions of the .
The ware house was under dual control of the Customs Department and the importers like the appellant so that it could not be opened by one without the presence of the other.
On receipt of order from the Captain of the Ship requiring ship stores, the appellant supplied the goods on board after observing certain formalities imposed by the , the rules and regulations made thereunder.
For the Assessment year 1964 65 a question arose whether Rs.3,51,438.08 which was the taxable turnover, determined by the assessing authority, was subject to the tax under the Tamil Nadu General Sales Tax Act, 1959.
The appellant objected to the assessment on such turnover on the ground that the goods relating to such turnover were imported from abroad, stored in the customs ware house and were not brought to the country across the customs frontiers.
The Sales Tax Officer assessed the turnover and the Appellate Assistant Commissioner confirmed the assessment on the basis that sales were effected 237 within the State of Tamil Nadu.
However, the Tribunal, in appeal by the appellant, held that the sales did not take place within the State of Tamil Nadu since the import of goods in question had not become complete and as the goods were sold to the foreign going vessels, the sales in question could not be deemed to be within the State of Madras.
On revision, the High Court relying on the decision of the Supreme Court in the State of Madras vs Davar and Co., 24 STC 481, held that the sales took place in the State of Madras and assessment to tax was valid.
The facts in all the other connected appeals, writ petitions and the special leave petitions being identical, a similar question of law also arose in them.
In appeal to the Supreme Court by the appellant/petitioners, it was contended on their behalf: (i) that the property in the goods, did not pass in the territory of Tamil Nadu and the sales were therefore, in the course of export because goods were to be on board the ship and were exported outside the country and could not be consumed before they reached the high seas; (ii) that the sale of goods took place in the territorial water of India and not within the State of Tamil Nadu; (iii) that the legislative competence of the State of Tamil Nadu as regards levying of the sales tax was confined to the territories of the State as specified in item No. 7 of the First Schedule to the Constitution.
That legislative competence did not extend to any territorial waters simply because these were abutting the land mass of the State of Tamil Nadu; (iv) that the Sovereignty over the limits of territorial waters extended and always extended to the entire territorial waters of India.
The limits and extent of the said territorial waters had not been altered by any notification of the Central Government.
The territorial waters extended to a distance of 12 nautical miles from the sea shore adjacent to the land mass of the State; and (v) that there was no definition at all of "Customs Frontiers" in the .
The definition inserted in the Act in section 2(ab) by the Amending Act 103 of 1976 must be read as declaratory or explanatory and no questions of prospective operations would arise.
On the other hand, it was argued on behalf of the respondent State that the appellant 's godowns and bonded ware houses were within the State of Tamil Nadu.
When orders were received, the appellants/petitioners supplied the required quantity from the stock either in the godown or in the bonded ware houses and delivered these or set these apart in fulfilment of the orders placed by the concerned officer of the foreign bond ship and that at that time only appropriation was made towards the contract of sale and such appropriation took place within the State of Tamil Nadu.
It was, therefore, on such ap 238 propriation that the sale took place; and (ii) that it was not correct to say that the transactions of sale were completed only when the masters of the vessels acknowledged delivery of the goods on board the vessels.
Dismissing the Appeals and the Petitions, ^ Held: 1.1 The concept of export in Article 286(1)(b) of the Constitution postulates the existence of two termini as those between which the goods were intended to move or between which they were intended to be transported and not a mere movement of goods out of the country without any intention of their being landed in specie in some foreign port.
Goods might be consumed within the meaning of the Explanation to Article 286(1) (a) either by destruction or by way of use depending on the nature of the goods.
Therefore, the sales were not sales "in the course of export" within the meaning of Article 286(1) (b) and were not exempt under that Article but they fell within the Explanation to Article 286(1) (a).
[247C D; G] 1.2 Mere movement of goods out of the country following a sale would not render the sale, one in the course of export within Article 286(1) (b) of the Constitution of India.
Before a sale can be said to be a sale in the course of export, the existence of two termini between which the goods are intended to move or to be transported is necessary.
[249F G] In the instant case the appropriation of goods took place in the State of Tamil Nadu when the goods were segregated in the bonded ware house to be delivered to the foreign going vessels.
Therefore, under sub section
(2), sub cl.
(a) and (b) of section 4 of the , the sale of goods in question shall be deemed to have taken place inside the State because the contract of sale of ascertained goods was made within the territory of Tamil Nadu and furthermore in case of unascertained goods approrpriation had taken palce in that State in terms of cl.
(b) of sub section
(2) of section 4 of the .
There is no question of sale taking place in course of export or import under section 5.
From that point of view, the amendment introduced by Act 103 of 1976 by incorporating in cl.
(ab) of section 2 of the does not affect the position.
It was not a case of export as there was no destination for the goods to a foreign country.
The sale was for the purpose of consumption on board the ship.
It was not as if only on delivery on board, the vessel that the sale took place.
The mere fact that shipping bill was prepared for sending it for custom formalities which were designed to effectively control smuggling activities could not 239 determine the nature of the transaction for the purpose of sales tax nor does the circumstances that delivery was to the captain on board the ship within the territorial waters make it a sale outside the State of Tamil Nadu.[252E H; 247A B] Burmah Shell Oil Storage and Distributing Co. of India Ltd., and Anr.
vs Commercial Tax Officer & Ors., 11 STC 764; Deputy Commissioner of Commercial Taxes vs Caltex India Ltd., Madras, 13 STC 163; The State of Madras vs Davar & Co., 24 STC 481; Fairmacs Trading Co. vs The State of Tamil Nadu, 41 STC 157; Tata Iron and Steel Co. Ltd. Bombay vs S.R. Sarkar & Ors., 11 STC 655; and The State of Kerala & Ors.
vs The Cochin Coal Co., Ltd., 12 STC 1 relied upon.
Fairmacs Trading Co. vs The State of Tamil Nadu, 41 STC 157 and Fairmacs Trading Co. vs The State of Andhra Pradesh, 36 STC 260 approved.
Customs barrier does not set a terminal limit to the territory of the State for sales tax purposes.
Sale, therefore, beyond the customs barrier is still a sale within the State.
The amendment introduced in s.2 by the Act 103 of 1976 does not affect the position because the custom station is within the State of Tamil Nadu.
[253A B] 4.
In the facts and circumstances of the case, it is not necessary to express any opinion on the arguments whether introduction of cl.(ab) of s.2 of the by Act 103 of 1976 is prospective or not.
[253C D] Deputy Commissioner of Commercial Taxes vs Caltx India Ltd., Madras, 13 STC 163; Tata Iron and Steel Co. Ltd. Bombay vs S.R. Sarkar & Ors., 11 STC 655; Furby vs Hoey [1947] 1 All England Report 236; The Central Bank of India vs Their Workmen ; ; and Chanan Singh & Anr.
vs Jai Kaur; , at 804 807 referred to.
Kent Justices Ex Parte LYE & Ors., [1967] 1 All England Report 560 at 564 65 held inapplicable.
|
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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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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Civil Appeal No. 1348 (NT) of 1974 From the Judgment and order dated 7.1.1974 of the Allanabad High Court in I.T.R. No. 364 of 1971.
S.C. Manchanda, V.J. Francis, N.M. Popli and Ujjal Singh for the Appellant.
V. Gouri Shankar and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
This appeal is directed against the judgment of the Allahabad High Court answering the following question in the negative: "1.
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of sections 10(2) (vii) of the Income tax Act, 1922 were not attracted? 2.
Whether on the facts and in the circumstances of the 201 case, the Tribunal was justified in holding that the sale had taken place before 1.4.1956 and, therefore, the provisions of section 12B of the Income tax Act 1922 were not attracted?" The assessee, a public limited company, was put into liquidation under the orders of the Allahabad High Court.
An amount of Rs. 8,58,893/5/6 was payable by the assessee to the State of Uttar Pradesh on account of arrears of cane cess.
In proceedings for recovery of that amount as arrears of land revenue, the Collector of Deoria attached the assessees mills and put them to auction sale on November 10, 1955.
The land, building, machinery and parking grounds were sold for Rs. 24,00,000 while the moveable properties including mill stores, spare parts, tools and equipment were sold for Rs. 1,80,000.
All the properties were purchased by the Kanpur Sugar Works (P) Ltd., Although the sale was held on November 10, 1955, the sale certificate under rule 285 M of the U.P. Zamindari Abolition and Land Reforms Rules, 1952 could not be issued till July 4, 1956 on account of objections raised by the assessee, in spite of the fact that the entire amount of purchase money of Rs.25,80,000 had been paid by the purchasers on December 8, 1955.
During the period in which the objections were pending, i.e., November 10, 1955 to July 2, 1956, the Government of India appointed an Authorised Controller to run the sugar mills by a notification dated November 25, 1955.
After possession of the mills was given to the purchasers, a suit was filed by them against the assessee claiming damages for loss of profits on account of the possession of the mills not having been delivered to them immediately after the auction sale.
In the suit the purchasers claimed, in the alternative, compensation for loss of interest on Rs.25,80,000 from the date of deposit of the sale price to the date of delivery of the mills.
The claim of the purchasers was ultimately settled by compromise for a sum of Rs.1,25,000.
In assessment proceedings for the assessment year 1957 58, the relevant accounting period being the year ended October 31, 1956, the Income tax Officer called upon the assessee to explain why the excess amount which the assessee had received on sale of the building, machinery and plant over the difference between the original and the written down value should not be subjected to tax under cl.
(vii) of sub section
(2) of section 10 and under section 12B of the Indian Income Tax Act, 1922.
The assessee replied stating that (1) simultaneous computation 202 of income under cl.
(vii) of sub section
(2) of section 10 and of capital gains under section 12B amounted to double taxation and was against the principles of natural justice and the legislative intention; (2) the sale being a compulsory sale was not a sale within the meaning of cl.
(vii) of sub section
(2) of section 10; (3) moveable property was exempt from capital gains tax; and (4) as the sale was complete before April 1, 1956 it did not attract the provisions relating to capital gains which became effective from April 1, 1956 only.
Alternatively, it was claimed that the value of the mills as on January 1, 1954 was much higher than that determined and the assessee was not liable to tax on capital gains.
The Income tax Officer rejected the contentions raised by the assessee, and completed the assessment under sub section
(3) of section 23 read with sub section
(1A) of section 34 of the Indian Income tax Act, 1922 on March 29, 1965, computing the profits under cl.
(vii) of sub section
(2) of section 10 at Rs. 10,07,000 and the capital gains at Rs. 10,23,210.
The Income tax Officer did not find any substance in the assessee 's contention that the value of the fixed assets of the mills was Rs. 18,50,000 as on January 1, 1954 and that there was no justification for initiating the assessment proceedings under sub section
(1A) of section 34 of the Indian Income tax Act, 1922.
On appeal by the assessee the Appellate Assistant Commissioner, by his order dated May 1, 1968, agreed with the Income tax Officer that the sale attracted cl.
(vii) of sub section
(2) of section 10, that it took place on July 4, 1956 and that the assessee was, therefore, liable to capital gains under section 12B.
But contrary to the view taken by the Income tax Officer, the Appellate Assistant Commissioner held that the assessee was entitled to substitute the market value of the machinery as on January 1, 1954 in place of its cost price under cl.
(iii) of section 12B, and accordingly reduced the capital gains from Rs. 10,23,210 to Rs.4,89,343.
Both the Revenue and the assessee filed appeals before the Income tax Appellate Tribunal.
Before the Appellate Tribunal it was the case of the assessee that while an auction sale may be a sale within the meaning of section 12B it was not a sale as contemplated under cl.
(vii) of sub section
(2) of section 10.
It was urged that a compulsory sale was not a sale for the purposes of cl.
(vii) of sub section
(2) of section 10.
It was also urged that as the auction sale had taken place prior to March 31, 1956 the assessee was not liable to tax on capital gains at all.
The Appellate Tribunal by its order dated January 31, 1970 allowed the assessee 's appeal and dismissed the Revenue appeal.
It accepted both the contentions of the assessee and did not find it necessary to go into the question whether 203 the Appellate Assistant Commissioner was right in substituting the market value of the machinery as on January 1, 1954 in place of its cost price under cl.
(iii) of section 12B.
At the instance of the Commissioner of Income tax, Lucknow the Appellate Tribunal referred the two questions of law set out earlier to the High Court for its opinion.
On January 7, 1974, the High Court pronounced judgment in the reference in favour of the Revenue.
And now this appeal.
Shri S.C. Manchanda, appearing for the assessee, has raised two points before us.
The first contention is that cl.
(vii) of sub section
(2) of section 10 of the Indian Income tax Act 1922 has no application because a sale effected for recovering arrears of cane cess as an arrear of land revenue is not a voluntary sale and does not fall within the terms of the relevant statutory provisions.
The second contention is that the sale must be regarded as having taken place on November 10, 1955 when the auction was held and not on July 4, 1956 when the sale certificate was issued, and that being so section 12B which took effect from April 1, 1956 does not extend to the sale.
These are the only two contentions before us, and in our opinion, they can be disposed of shortly.
Clause (vii) of sub section
(2) of section 10 of the Indian Income tax Act, 1922 provides for the computation of profits and gains chargeable to tax under the head 'business ' after making the following allowances: "(vii) in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value: Provided that such amount is actually written off in the books of the assessee: Provided further that where the amount for which any such building, machinery or plant is sold, whether during the continuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be 204 profits of the previous year in which the sale took place: xxx xxxx xxxxx" The argument for the assessee is that the word "sold" in the clause refers to a sale transaction affected on the free volition of the seller and not where it is in the nature of a compulsory transfer for recovering an arrear of land revenue.
Reliance is placed on Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income tax, West Bengal, , where the Calcutta High Court laid down that the word "sale" in its ordinary meaning, was a transaction entered into voluntarily between two persons, the buyer and the seller, and that, therefore, the requisition of an electricity generating plant by the Government under sub rule (1) of rule 83 of the Defence of India Rules, not being a voluntary sale, did not fall within the mischief of cl.
(vii) of sub section
(2) of section 10.
Our attention has also been drawn to Indian Steel & Wire Products Ltd vs State of Madras, ; In that case this Court was called upon to consider whether the supplies by the appellant of certain steel products to various persons in the State of Madras under the Iron and Steel (Control of Production and Distribution) Order, 1941 could be regarded as sales for the purposes of the Madras General Sales Tax Act.
The Court observed that the transactions must be treated as sales because the element of mutual assent was not excluded altogether from the transactions.
Learned counsel seeks support from that case in support of his submission that the element of consent is essential to the character of a sale.
A third case, R.B. Lachman Das Mohanlal & Sons vs Commissioner of Income tax, U.P., has been placed before us but nothing said therein is truly apposite to the limited question before us.
We have given the matter careful consideration and we think, for the reasons which follow, that there is no escape from the conclusion that the transaction in this case constitutes a sale for the purposes of cl.
(vii) of sub section
(2) of section 10.
The levy of cane cess was imposed under a statute in respect of an activity carried on voluntarily by the assessee.
When entering upon and carrying out that activity the assessee was fully conscious that he did so subject to the provisions of the statute.
The statute provided for the levy of cane cess and its recovery, in the event of default of payment, as arrears of land revenue.
What was done in the present case 205 was to recover the arrears of cane cess as arrears of land revenue.
All along, therefore, the assessee was aware that when it entered upon and carried out an activity attracting cane cess it was exposing itself to recovery proceedings as arrears of land revenue.
The assessee was aware that recovery could be affected by an auction sale of its properties.
It can be inferred from the circumstance that by embarking upon the activity which attracted cane cess the assessee agreed to be bound by the structural framework imposed by the statute around that activity, and, therefore, agreed to an auction sale of its properties as arrears of land revenue in the event of its failure to pay the cane cess.
We are not satisfied that the element of consent is absent altogether from the transactions considered in this case.
We are clearly of opinion that the sale of the properties of the assessee fall within the scope of cl.
(vii) of sub section
(2) of section 10 of the Indian Income tax Act, 1922 and therefore, the first contention must be rejected.
Turning to the second contention, the question is whether the sale can be said to have taken place when the properties were auctioned or on the date when the sale certificate was issued.
The recovery of an arrear of land revenue in Uttar Pradesh is governed by the provisions of the U.P. Zamindari Abolition and Land Reforms Act and the Rules made thereunder.
We have been taken through the pertinent provisions, of that Act and its Rules.
The High Court, in the judgment under appeal, has made detailed reference to them and, in an admirable exposition of the law, has demonstrated that the date on which the sale certificate was issued is the date on which the sale must be regarded as having taken place.
We have no hesitation in endorsing that view.
Section 279 of the U.P. Zamindari Abolition and Land Reforms Act specifies the modes for the recovery of an arrear of Land revenue, and section 282 prescribes the procedure for the attachment and sale of moveable property.
Section 286 empowers the Collector to proceed against other immoveable property belonging to the defaulter.
Rule 281 authorises the Collecter to sell immovable property and upon the property being auctioned under the Rules, and the objections, if any, thereto having been considered and disposed of, provides for confirmation of the sale by an order of the Commissioner.
Rule 285 M provides that the Collector shall thereupon put the person declared to be the purchaser into possession of the property, and shall grant him a certificate to the effect that he has purchased the property to which the certificate refers, and that such certificate shall be deemed to be a valid transfer of such property.
It is apparent that it is only after the sale is confirmed and a certificate is granted that the 206 property stands transferred and the purchaser becomes the owner of the property.
Rule 285 M is explicit.
The certificate operates as a transfer of the property.
As before the High Court, learned counsel for the assessee relies on section 65 of the Code of Civil Procedure in support of his submission that the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.
The application of section 65 turns upon the scope of section 341 of the U.P. Zamindari Abolition and Land Reforms Act, which applies the provisions of the Code of Civil Procedure to the proceedings taken under that Act.
section 341, however, applies the Code only so far as it can be applied consistently with the Act and not in derogation of it.
As is clear, the procedure incorporated in the U.P. Zamindari Abolition and Land Reforms Act and the Rules made under it specifically exclude the operation of section 65.
When the sale certificate itself operates as effecting the transfer of the property, no question arises of relating the transfer back to the date of auction.
It is true that the order of the Commissioner confirming the sale refers back to the auction which has already taken place, but that is hardly of any moment in view of the terms of Rule 285M.
We see no force in the second contention.
In the result the appeal fails and is dismissed with costs.
P.S.S. Appeal dismissed.
|
Section 279 of the U.P. Zamindari Abolition and Land Reforms Act specifies the modes for the recovery of an arrear of land revenue.
Rule 281 of the Rules framed under the Act, authorises the Collector to sell the attached immovable property of a defaulter by auction, and provides for confirmation of the sale by an order of the Commissioner.
Rule 285 M requires the Collector to grant the purchaser a certificate that he has purchased the property and provides that such certificate shall be deemed to be a valid transfer of such property.
A certain amount was payable by the assessee to the State on account of arrears of cane cess which was recoverable as arrears of land revenue.
In proceedings for its recovery the Collector attached the assesse 's mills and put them to auction sale on November 10, 1955.
The entire amount of purchase money had been paid on December 8, 1955.
However, the requisite sale certificate under r. 285 M could not be issued till July 4, 1956 on account of the objections raised by the assessee.
In assessment proceedings for the assessment year 1957 58, the 199 Income tax officer called upon the assessee to explain why the excess amount which he had received on sale of the buildings, machinery and plant over the difference between the original and the written down value should not be subjected to tax under cl.
(vii) of sub section
(2) of section 10 and under section 12B of the Indian Income tax Act, 1922.
The assessee contended (i) that an auction sale being a compulsory sale was not a sale within the meaning of cl.
(vii) of sub section
(2) of section 10; and (ii) that the sale having been completed prior to March 31, 1956, it did not attract the provisions of section 12B relating to capital gains, which became effective from April 1, 1956 only.
The Income tax officer rejected the aforesaid contentions and computed the profits under section 10 (2) (vii) at Rs.10,07,000 and the capital gains under section 12B at R.S. 10, 23, 210.
The matter ultimately went before the High Court which decided in favour of the Revenue.
In the assessee 's appeal to this Court it was contended (i) that cl.
(vii) of sub section
(2) of section 10 of the Income tax Act, 1922 had no application because an auction sale was not a voluntary sale; and (ii) that the sale must be regarded as having taken place on November 10, 1985 when the auction was held and not on July 4, 1956 when the sale certificate was issued, for the property should be deemed to have vested in the purchaser from the time when it was sold and not from the time when the sale became absolute and that being so, section 12B did not extend to the sale.
Dismissing the appeal, the Court ^ HELD: 1.
The sale of the properties of the assessee falls within the scope of cl.
(vii) of sub section
(2) of section 10 of the Indian Income tax Act, 1322.
it cannot be said that the element of consent essential to the character of a sale was absent altogether from the transaction.
The levy of cane cess was imposed under a statute in respect of an activity carried on voluntarily by the assessee.
When entering upon and carrying out that activity the assessee was fully conscious that he did so subject to the provisions of the statute, and that in the event of default of payment of cane cess it was exposing itself to recovery proceedings as arrears of land revenue.
The assessee was also aware that recovery could be affected by an auction sale of its property.
The assessee thereby agreed to be bound by the structural framework imposed by the statute around the activity.
and, therefore, agreed to an auction sale of its properties in the event of its failure to pay the cane cess.
[205C ; 204G H; 205A C] Calcutta Electric Supply Corporation Ltd. vs Commissioner of 200 Income tax, West Bengal, ; Indian Steel & Wire Products Ltd. vs State of Madras, ; ; and R.B. Lachman Das Mohanlal & Sons vs Commissioner of Income tax, U.P., , referred to 2.
The date on which the sale certificate was issued should be the date on which the sale must be regarded as having taken place.
It is only when the property is transferred that it can be deemed to nave vested in the purchaser.
Rule 285 M of the U.P. Zanmindari Abolition and Land Reforms Act, is explicit in its terms.
When the sale certificate itself operates as effecting the transfer of the property, no question arises of relating the transfer back to the date of auction.
[205E; 260A B] The procedure incorporated in the U.P. Zamindari Abolition and Land Reforms Act, and the Rules made under it, specifically exclude the operation of section 65 of the Code of Civil Procedure.
Section 341 of that Act applies the Code only so far it is consistent with the provisions of the Act and not in derogation of it.
[206B C]
|
ing been subsequently filled in by introducing section 132A of the Act with effect from October, 1975, it will be open to the income tax authorities to approach the appropriate authorities to realise any amount of money or to recover any books of account or documents in accordance with the law.
[307D E] & CIVIL APPELLATE JURISDICTION: Civil Appeal No.1666 (NT) of 1974.
297 From the judgment and order dated 26th November, 1973 of the A Punjab & Haryana High Court in Civil Writ No. 3355 of 1972.
S.C. Manchanda, M.B. Rai and Ms. A. Subhashini for the Appellants.
Harbans Singh for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MIJKHARJI, J.
This appeal is by special leave from a judgment and order of Punjab and Haryana High Court in an application under article 226 of the Constitution.
The judgment in question is reported in By a petition under articles 226 and 227 of the Constitution the order of the Income Tax Department dated 10th May, 1972, passed under section 132 of the Income tax Act, 1961 (hereinafter called the 'Act ') and Rule 112(II) of the Income tax Rules, 1962 (hereinafter called the 'Rules ') was challenged.
The division bench by the impugned judgment allowed the petition, quashed the search and seizure warrants and directed the Income Tax Department to return the moneys to the Customs authorities and gave certain consequential directions.
In order to appreciate the points involved, it is necessary to refer to certain facts as found by the High Court.
On 23rd August, 1970 the petitioner before the High Court, who is the respondent here, was travelling by car, alleged to be belonging to his brother from Ambala to Batala.
He was intercepted near the Beas river by the Customs officer and was forcibly taken along with the driver, Gurnam Singh, to the Customs House at Amritsar.
The said petitioner in that application was searched along with his driver and the Customs authorities took into possesion Rs.93,500 in Indian currency, 10 gold sovereigns and the car.
On the 24th August, 1970, the petitioner was produced before a Duty Magistrate at Amritsar and was granted bail.
In the meantime, the Customs department took proceedings under section 110(2) of the and extended the period of issuing of the show cause notice under section 124 of the .
These proceedings were challenged in the High Court by Writ Petition and the order of the Customs authority under section 110(2) was quashed by an order of the learned single judge of the High Court on 24th April, 1972.
The appeal against that decision was dismissed by the division bench along with this petition by the High Court.
After the said judgment of the learned single judge, the respondent had approached the Customs authorities for the return of H 298 the money and the car.
The gold sovereigns were not demanded be cause according to the said petitioner, these did not belong to him.
He had been directed to come on the following day to get back the currency notes and the car.
In the meantime on 12th May, 1972 the Income tax officer, had served the warrant of authorisation dated 10th May, 1972 issued under section 132 of the Act and rule 112(II) of the Rules on the respondent as well as on the Customs department, with the result that only the cash was taken possession of by the income tax authorities.
Thereafter, the respondent filed the petition under articles 226 and 227 of the Constitution before the High Court in respect of which the judgment impugned here was rendered.
It was submitted that the authorisation warrant was illegal, be cause the money was not in his possession but was in the possession of the Customs authorities.
It was secondly urged that the action taken by the Income tax authorities under section 132 of the Act militated the provisions of section 110(2) of the .
The High Court felt that so far as the first contention was concerned, it was concluded by the decision of the said High Court in The Commissioner of Income tax vs Ramesh Chander & Ors., The High Court relied on the following observations at pages 478 479 of the report: "I have come to the conclusion that the search and seizure warrants issued under sub section (1) of section 132 of the Income tax Act were illegal, firstly, because the search and seizure warrants were issued in the name of Ramesh Chander and he was in fact not in possession of either the currency notes or account books, and secondly, the income tax authorities could not seize the currency notes and account books from the police officer who is duty bound to proceed with the case property in accordance with the pro visions of the Code of Criminal Procedure.
" The High Court held that where the amount was seized by the Customs authorities and the seizure was held illegal by the Court, Customs authorities were bound to return the money to the person entitled to it under the relevant provisions of section 110 of the .
The Income tax authorities could not seize such an amount from the Customs authorities under section 132 of the Act.
Moreover, the authorisation was illegal if issued in the name of the person who did not have possession of the article, in respect of which it was issued.
The High Court further held that in the facts and circum 299 stances of the case the order under section 132 of the Act was not Justified.
Therefore, the High Court held that the search and seizure warrants were liable to be quashed and the money returned to the customs department.
The judgment of the High Court is reported in The validity of the judgment is impugned in this appeal.
It is necessary in order to appreciate the contentions urged in this case to refer to the relevant provisions of section 132 of the Act.
Sub section ( I) of section 132 provides as follows: "Search and Seizure (1) Where the Director of Inspection or the Commissioner [or any such Deputy Director of Inspection or Inspecting Assistant Commissioner as may be empowered in this behalf by the Board,] in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub section (1) of section 37 of the Indian Income tax Act, 1922 (XI of 1922), or under sub section (1) of section 131 of this Act, or a notice under sub section (4) of section 22 of the Indian Income Tax Act, 1922, or under sub section (1) of section 112 of this Act was issued to produce or cause to be produced any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to any proceeding under the Indian Income tax Act, 1922 (XI of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property [which has not been, or would not be, disclosed] for the purposes of the Indian Income tax Act, 1922 (XI of 1922), or this Act H 300 (hereinafter in this section referred to as the undisclosed income or property), [then, (A) the Director of Inspection or the Commissioner, as the case may be, may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income tax officer, or (B) such Deputy Director of Inspection or Inspecting Assistant Commissioner, as the case may be, may authorise any Assistant Director of Inspection or Income tax officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer to ) (i) enter and search any [building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia)search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;] (iii)seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; (iv) place mark of identification on any books of ac count or other documents or make or cause to be made extracts or copies therefrom; 301 (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing; " The only other sub section to which reference need be made is sub section (3) which is as follows: B "The authorised officer may, where it is not practicable to seize any such books of account, other document, money bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub section.
" It is not necessary to refer to the other provisions for the present purpose.
But the procedure indicated that if necessary, force may be used for search seizure.
Rule 112 of the said Rules provides the manner in which such search and seizure should be conducted.
On a construction of the section; and the context, in which the words "search", "possession" and "seizure" have been used in the said section and the rules indicate that there cannot be any order in respect of goods or moneys or papers which are in the custody of another department under legal authority.
It is important to note that the expression "possession" has not been defined in the Act.
It may be noted that sub section (3) of section 132 of the Act uses the expression "who is in immediate possession or control thereof".
"Possession" is a word of ambiguous meaning and its legal senses do not always coincide with the popular sense.
Reference may be made to Halsbury 's Laws of England, Vol. 35, 4th Edn.
articles 1111 11267 pages 617 627.
Possession again may not always be synonymous with manual detention or physical retention of the goods or moneys.
It appears to us that when the physical custody of the moneys and goods were with the customs authorities, and that too by a legal sanction and authority to have that custody, it would be improper to contend that possession as used in section 132 of the Act was still with the respondent.
The use of the expression "immediate possession" in sub section 302 (3) of section 132 does not detract from the meaning of possession in the popular sense.
This construction is not unmindful of the fact that in some of the sub sections of section 132 the expressions "retention" and "custody" have been used, but reading these expressions in the context these have been used, it cannot be said that where an authority or a person has retention and custody with the legal sanction behind it, it was not the intention of the legislature to say that he was not in possession as contemplated in section 132 of the Income tax Act, 1961.
In this connection, reference may be made to Burrows Words & Phrases Judicial Dictionary, 4th Edn.
page 306.
All these aspects were discussed by the Calcutta High Court (by one of us, Sabyasachi Mukharji, J singly) in Laxmipat Chororia vs K.K. Ganguli & ors., 82 l.
T.R. 306 (Cal).
This decision was affirmed on appeal and the bench decision of the said Court is reported in 93 I.T 'R. at p. 489.
This aspect of the matter has been clearly dealt with by a judgment of the division bench of the Allahabad High Court in Motilal and ors.
vs Preventive Intelligence officer, Central Excise and Customs, Agra and others, where the judgment was delivered by one of us (R.S. Pathak, J.).
There the Court held that the power conferred under section 132(1) of the Act was contemplated in relation to those cases where the precise location of the article or thing was not known to the Income tax department and therefore, a search was necessary for it, and where it would not be ordinarily yielded over by the person having possession of it.
The view that section 132(3) of the Act would include a case where the location of the article or thing was known and where ordinarily the person holding custody of it would readily deliver it up to the Income tax department was not correct, it was so held by the division bench of the Allahabad High Court.
It was further held that consequently goods in the custody of the Assistant Collector of Customs and Central Excise were not things which could be the subject of an order under section 132(3) of the Act.
Pathak, J. spoke for the division bench there at p. 422 of the report thus: "In my opinion, the power conferred under section 132(1) is contemplated in relation to those cases where the precise location of the article or thing is not known to the income tax department and, therefore, a search must be made for it, and where it will not be ordinarily yielded over by the person having possession of it and, therefore it is necessary to seize it.
If it is only such article or thing which 303 is contemplated by section 132(1) then it is such article or A thing alone which can be the subject of an order under section 132(3).
I am unable to accept the contention on behalf of the Income tax department that section 132(3) will include a case where the location of the article or thing is known and where ordinarily the person holding custody of it will readily deliver it up to the Income tax department.
Such article or thing, I think, requires neither search nor seizure. " Mr. S.C. Manchanda, learned advocate for the revenue, drew our attention to several decisions including the decision in Noor Mohd. Rahimatulla Gillani, vs The Commissioner of Income tax Vidrabha and Marathwada, Nagpur and another, 1976 Taxation Law Reports 688 (Bombay).
In that case, after referring to the views expressed by the division bench of Allahabad High Court and division bench of Punjab and Haryana High Court in the judgment under appeal and the Calcutta High Court, as indicated before, Chandurkar J. Of the Bombay High Court observed as follows: "We are not inclined to accept the submission that no valid authorisation to seize the amount Lying with the Collector of Central Excise and Customs, Nagpur could have been issued under Section 132(1).
The relevant provision in the instant case is to be found in Section 132(1) (c) of the Act and all that is required in order to issue an authorisation under Section 132(1) is that either the Director of Inspection or the Commissioner must have reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Act or the Income tax Act of 1922.
It is the character of money or assets as undisclosed income or property and their possession that gives jurisdiction to issue the authori risation.
Merely because some authority has seized that money or property, its character which is believed to be that of undisclosed income or property does not change.
The seizure of the cash amount of Rs.3.05.530 by the 304 Central Excise Authorities in the instant case no doubt transferred physical possession of that amount from the petitioner to the Central Excise Department, but the legal ownership of that money still continued to be with the petitioner.
As long as that amount was not confiscated or did not become the property of the Central Excise Depart ment by virtue of an order passed under the relevant provision of law if at all any order could be so passed the property or the money did not cease to be that of the petitioner.
Though the Collector of Central Excise and Customs was in possession of the money, since its alleged character of being undisclosed income or property remained unattended the Collector satisfied the description of "any person" being in possession of undisclosed income or property though the property represented the undisclosed income or property of the petitioner himself.
The words used in section 132(1) (c) are "any person".
Such a person may be a person who is in possession of his own undisclosed income or property or a person who is in possession of somebody else 's undisclosed income or property.
The fact that the Collector of Central Excise and Customs happened to be an officer of the Government of India was not relevant because the Income tax Authorities and the Central Excise Authorities were functioning under two separate enactments which created two different liabilities the enforcement of which was entrusted to independent authorities under the law.
Disagreeing, therefore, with the authorities relied upon by the 3 petitioner, we must hold that the authorisation issued even against the Collector of Central Excise and Customs enabling the Income tax officer to seize that amount was a valid authorisation.
In any case, in the instant case, a subsequent order under section 132(3) was already made and even by the order under section 132(5) that amount was directed to be released.
" It is true that the title was not transferred to the Customs authorities by seizure under the .
But in the context.
in which the expressions "possession" and "seizure" have been used, it p cannot be considered to mean that the possession was where the legal title was, physical possession was with the Customs authorities, title Was with the respondent herein.
In this context, the physical posses 305 sion having regard to the language used is relevent and material.
Physical possession was with the Customs authorities when the seizure authorisation was passed.
Therefore, where the exact location of the property was known and there was no need to seize the money, the Income tax department could direct handing over the money to the Income tax authorities or take steps for such direction through appropriate authorities.
In that view of the matter we are unable to sustain the view of Chandurkar, J. as the learned Chief Justice then was of the Bombay High Court.
Mr. Manchanda also drew our attention to the case of Pannalal vs Income Tax officer, B Ward, Chhindwara and ors.
, 93 I.T.R. p.480 (M.P.) where the division bench of the Madhya Pradesh High Court was of the view that an order under section 132(3) could only be passed after an authorisation for search and seizure had been made under section 132(1) of the Act.
The thing in respect of which the order is made must be one regarding which the conditions mentioned in clauses (a), (b) and (c) of section 132 are satisfied.
But there was nothing in the requirements of section 132 to support the view that if the Commissioner has definite knowledge that the books of account, documents, money, bullion, etc., sought to be searched and seized are in the possession of a particular person he cannot issue an authorisation for search and seizure of the same.
In our opinion.
it may be mentioned that if the location was certain, then there was nothing to search or look for.
Madhya Pradesh High Court, however, observed that the expression "has reason to believe" signified that the Commissioner has reason to be satisfied that the things to be searched are in the possession of a particular person.
The object of section 132 was according to the High Court, not merely to get information of the undisclosed income but also to seize the money, bullion, etc.
representing the undisclosed income and to retain.
them for purposes mentioned in section 132(5).
Section 132(1)(C) of the Act did not contain a condition either expressly or impliedly that the thing to be seized should not be in the possession of a person who may willingly part with his possession.
There is no obligation on any one, not even on Government officers of other department, to deliver anything to G the income tax authorities except when the law requires them to do so.
The person authorised by the Commissioner could enter and search any building, break open the lock of any door etc.
But that did not mean that in every case the person authorised by the warrant would have to exercise all those powers in making the search and seizing the thing, according to the High Court.
It was not necessary that an actual 306 search must precede an order under section 132(3) directing a person not to part with articles in his possession.
Section 132(1)(c) did not contemplate that the person who has not disclosed his income or property for the purposes of the Income tax Act should himself be in possession of money, bullion, etc.
representing such income.
Clause (c) spoke of "any person who is in possession" and it did not specifically refer to possession by the person who had not disclosed his income.
All that the clause required was that the money, bullion etc. should be such which represents either wholly or partly income or property which had not been disclosed for purposes of the Income tax Act and such money, bullion, etc.
should be in the possession of a person.
This construction was supported by the use of words "immediate possession" in section 132(3) of the Act.
This was the view of the High Court.
There an order under section 132(3) was passed by the Commissioner of Income tax on the Collector of Customs and Central Excise in respect of currency notes of the value of Rs.2,02.500 belonging to a firm, which the Collector was holding under the Gold Control Act and which, as no offence was committed under that Act, the Collector had ordered to be released.
It was also held by the High Court that the Collector was under a legal obligation to return the currency notes to the firm after the proceedings under the Gold Control Act had been finalised.
The power of the Collector was only to retain the currency notes for a limited period.
It could be held that the currency notes were held by the Collector for and on behalf of the firm and the order passed under section 132 was valid.
For the reasons mentioned hereinbefore, we are unable to sustain that view of the High Court.
As mentioned before though legal title might have been with the person whose income was sought to be taxed the physical possession was with the Customs authorities.
Our attention was drawn to a bench decision of the Madras High Court where similar view was taken in Gulab and Company and Anr.
vs Superintendent of Central Excise (Preventive) Trichy, and ors.
For the reasons we have indicated hereinbefore, we are also unable to sustain this view.
The Kerala High Court in the case of Assainar and Anr.
vs Income tax Officer, Calicut and on,., also accepted this view.
We are, for the aforesaid reasons, unable to sustain this view with respect.
The High Court observed that the word "search" has varied meanings and it should be given the general meanings "to look for" or "seek" which are also well known.
But in the context the expression "seizure" and in the context 307 the expression "search" where the location of the property was known A to the Government, we are of the opinion that it could not be said that one government department could search any other government department, and seize those documents.
Relying on the decision of the Allahabad High Court in Motilal 's case (supra) as well as the decision of the Calcutta High Court in Laxmipat 's case (supra), the learned single judge of the Punjab and Haryana High Court in Ramesh Chander vs Commissioner of Income Tax (supra) held that the word "seizure" implied forcibly taking from the owner or who has the possession and who was unwilling to part with the possession.
In that case custody was with the police and it would be inappropriate to accept the position that the income tax department which was another department of the Union of India had to be armed with authority to seize from the unwilling persons.
We are in agreement with these views of the learned single judge.
This view of the learned single judge has been confirmed in the judgment of the division bench, already referred to hereinbefore (reported in 93 I.T.R. p. 450).
The lacuna in law has subsequently been filled in by 132A of the Act with effect from October, 1975.
In the view of the law as it stood at the relevant time, we are unable to sustain the challenge to the order, impugned in this appeal.
The appeal, therefore, fails and is accordingly dismissed with the . observations that it will be open to the Income tax authorities to approach the appropriate authorities to realise any amount of money or to recover any books of account or documents in accordance with law.
In the facts and the circumstances of the case, parties will pay and bear their respective costs.
S.R. Appeal dismissed.
|
On 23rd August, 1970, when the respondent was travelling by car, alleged to be belonging to his brother, from Ambala to Batala, the Customs officer intercepted him near the Beas river and forcibly taken along with the driver, Gurunam Singh to the Customs House at Amritsar.
The respondent along with the driver was searched and the customs authorities took into possession Rs.33,500 in Indian currency, 10 gold sovereigns and the car in which he travelled.
The Customs authorities, thereupon initiated departmental proceedings under section 110(II) of the and extended the period of issuing of the show cause notice under section 124 of the .
These proceedings were quashed by an order of the Learned Single Judge of the High Court of Punjab on 24th April, 1372 following an earlier decision of that Court.
After the said judgment, the respondent approached the customs authorities for the return of the money and the car on 11.5.1972.
The gold sovereigns were not demanded because ac cording to the respondent these did not belong to him.
He had been directed to come on the following day to get back the currency notes and the car.
On the next day, however the Income Tax officer served the warrant of authorisation dated 10th May, 1972 issued under section 132 of the Income Tax Act, read with Rule 112(II) of the Rules on the respondent as well as on the customs department with the result the cash was taken possession of by the Income Tax authorities.
Thereafter 295 the respondent filed another writ petition under Article 226 and 227 of A the Constitution.
The customs authorities also filed an appeal against the decision of the Single Judge dated 24th April, 1972.
The writ petition and the appeal were heard together by a Division Bench of the Punjab High Court.
Dismissing the appeal and allowing the writ petition the High Court held that where the amount was seized by the customs authorities and the seizure was held illegal by the Court customs authorities were bound to return the money to the person entitled to it under the relevant provisions of section 110 of the ; that the Income Tax authorities could not seize such an amount from the customs authorities under section 132 of the Income Tax Act and authorisation of search and seizure was illegal if issued in the name of the person who did not have possession of the Article in respect of which it was issued.
Hence this appeal by the revenue by special leave.
Dismissing the appeal, the Court, ^ HELD: 1.1 on a construction of section 132 of Income Tax Act, 1961 and the context, in which the words "search", "possession", and "seizure" have been used in the said section and the rules indicate that there cannot be any order in respect of goods or moneys or papers which are in the custody of another department under legal authority where the location of the property was known to the Government one government department could not search another department and seize them.
[301E F] 1.2 Sub Section (3) of section 132 of the Act uses the expression "who is in immediate possession or control thereof".
"Possession" is a word of ambiguous meaning and its legal senses do not always coincide with the popular sense.
Possession again may not always be synonymous with manual detention or physical retention of the goods or moneys.
When the physical custody of the moneys and goods were with the customs authorities, and that too by a legal sanction and authority to have that custody, it cannot be said that possession as used in section 132 of the Act was still with the respondent Tarsem Kumar.
[30 1F H] 1.3 Reading the expressions "retention" and "custody" in some of the sub sections of section 132 in the context these have been used, it cannot be said, that where an authority or a person has retention and custody with the legal sanction behind it, it was not the intention of the legislature to say that he was not in possession as contemplated in section 132 of the Income Tax Act, 1961.
[302A B] 296 The Commissioner of Income Tax vs Ramesh Chander & Ors.
, PunJab; Tarsem Kumar & Anr.
vs The Commissioner of Income Tax, Haryana, Himachal Pradesh & Delhi & ors.
, ; Laxmipat Chororia vs K.K. Ganguli Motilal and ors.
vs Preventive Intelligence officer, Central Excise and Customs, Agra & Ors., Allahabad, distinguished and partly overruled.
Noor Mohd. Rahimatulla Gillani vs The Commissioner of Income tax Vidrabha and Marathwada, Nagpurand Anr., [1976] Taxation Law Reports, 688, Bombay; Pannalal vs Income Tax officer, Ward.
Chhindwara and ors.
, 93 ITR p. 480 Madhya Pradesh; Gulab and Company and Anr.
vs Superintendent of Central Excise (Preventive) Trichy, and ors.
, Madras; Assainar and Anr.
vs Income tax officer, Calicut and ors.
, Kerala, overruled.
1.4 It is true that in the instant case, the title was not transferred to the Customs authorities by seizure under the .
But in the context, in which the expressions "possession" and "seizure" have been used, it cannot be considered to mean that the possession was where the legal title was, physical possession was with the Customs authorities, title was with the respondent herein.
In this context, the physical possession having regard to the language used is relevant and material.
Physical possession was with the Customs authorities when the seizure authorisation was passed.
Therefore, where the exact location of the property was known and there was no need to seize the money, the Income tax department could direct handing over the money to the Income tax authorities or take steps for such direction through appropriate authorities and not by resort to section 132 of the Income Tax Act.
This is so because if the location was certain then there was nothing to search or look for.
[304G H; 305A B]
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Civil Appeal No. 1665 of 1974 From the Judgment and order dated 28.9.1973 of the Allahabad High Court in I.T. Reference No. 195 of 1971.
With Civil Appeal No. 145 of 1976.
Dalip Singh, K.C. Dua and Miss A. Subhashini for the Appellant.
Harish Salve, K.J. John, Ranjit Kumar and B.P. Singh for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two appeals were heard together.
Civil Appeal No. 1665 of 1974 arises from the decision of the High Court of Allahabad in Income Tax Reference No. 195 of 1971.
The assessee, Elgin Mills Ltd., at the relevant time, was a public limited company engaged in the business of manufacture of textile goods.
The assessment year involved is the year 1964 65 of which the relevant previous year ended on 30th September, 1963.
For the purposes of assessment under the provisions of Companies Profits (Surtax) Act, 1964, a dispute arose between the assessee and the revenue with regard to the computation of "Standard deductions".
The company claimed that the following amounts should be treated as 411 reserves for the purposes of computation of its capital: (a) Investment Reserve Rs.85,00,000 (b) Rehabilitation reserve Rs.40,00,000 (c) Forfeited Dividend reserve Rs.96,374 The Income tax Officer did not include any of the said 'reserves ' in the capital of the assessee company on the basis that these did not represent reserve in the real sense.
On appeal, the Appellate Assistant Commissioner held that the Rehabilitation reserve and Forfeited Dividends reserve represented reserves but the investment reserve account did not constitute real reserve.
Both the assessee as well as the revenue went up in appeal before the Tribunal.
The Tribunal disposed of these appeals by a similar order along with two similar appeals relating to the assessment year 1963 64 which arose out of proceedings under the .
The Tribunal held that all the three accounts represented reserves for the purposes of assessment under the .
The Tribunal was further of the view that all the three represented reserves for the purposes of assessment under the and as the principle involved was the same as under the Companies Profits (Surtax) Act, 1964, the Tribunal held that the accounts in question represented reserves under the latter Act also.
At the instance of the Commissioner, reference was made to the High Court for the assessment year 1964 65 on the following questions: "1.
Whether, on the facts and in the circumstances of the case, the tribunal was right in arriving at its decision by applying the principles laid down in the second schedule to the , instead of the provisions of the second Schedule to the Companies Profits (Surtax) Act, 1964, for computation of capital of the assessee company for the assessment year 1964 65. 2.
Whether, on the facts and in the circumstance of the case, the tribunal was right in holding that (a) Investment Reserve (b) Rehabilitation reserve (c) Forfeited Dividend Reserve were includible in the capital computation of the company in accordance with the second schedule to the Companies Profits (surtax) Act, 1964.
" 412 The High Court noted that in the connected reference No. 196 of 1971 Commissioner of Income tax vs Elgin Mills Company Ltd. (decision dated 19th July, 1973)) arising out of proceedings under the , it had already held that these accounts in question constituted reserve in the real sense and as such should be taken into consideration in determining the standard deductions under section 9(2) of the Act, 1963.
It was not disputed before the High Court that if the present reference had been under the , the accounts in question would have to be held as reserves by the High Court in view of its previous judgment.
But it was contended that the provisions of the Companies Profits (Surtax) Act, 1964 were different from the provisions of the Super Profit Tax Act, 1963.
The High Court did not accept this contention.
The High Court was of the view that under both the Acts, charging sections (section 4) were identically worded except that the expression "standard deduction" in had been replaced by the expression "statutory deductions" in the Companies Profits (Surtax) Act, 1964.
Under both Acts these deductions had to be computed with reference to the capital employed in the assessee company.
Under both the Acts reserves of the company were to be treated as its capital and the only difference was in the second schedule to the , an explanation had been added.
The said explanation was to the following effect: "For the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company as on the first day of the previous year relevant to the assessment year which is of the nature of item (5) or item (6) or item (7) under the heading "RESERVES AND SURPLUS" or of any item under the heading "CURRENT LIABILITIES AND PROVISIONS" in the column relating to "Liabilities" in the Form "Balance Sheet" given in of Schedule VI to the (I of 1956), shall not be regarded as a reserve for the purposes of computation of the capital of a company under the provision of this schedule.
" This explanation, the High Court noted, merely clarified what was implicit in the Super Profit Tax Act, 1963.
Item No. S in the prescribed Balance Sheet under the is "Surplus ' i.e. Balance in profit and loss account after providing for proposed alloca 413 tions, namely, Dividend, Bonus, or Reserves.
Item No. (6) was "Proposed additions to reserves" and item No. (7) was "Sinking Funds".
The Accounts mentioned in the explanation would not form a reserve for the purposes of the computation of capital of a company.
In any case the High Court was of the view that none of the accounts in dispute fell under the heading "current liabilities".
It was contended before the High Court on behalf of the revenue that any amount credited to those accounts during the relevant previous year would fall in item No. 6 viz. proposed additions to reserves.
The High Court found that there were no additions to those funds during the relevant previous year inasmuch as the amount standing in those accounts were being brought forward from year to year.
In those circumstances the Tribunal was right in deciding the question with regard to the admissibility of the three accounts in question on the principle application to .
This Court in Vazir Sultan Tobacco Co. Ltd. vs Commissioner of Income Tax, held that the expression "reserve '.
in and the Companies Profits (Surtax) Act, 1964 are in pari materia.
On merits, it was agreed that the points were covered by the previous decision of the High Court in the case of Commissioner of Income tax, Kanpur vs British India Corporation (P) Ltd., Accordingly, the High Court answered both the questions in the affirmative and in favour of the assessee.
This appeal arises out of the said decision of the High Court.
In Commissioner of Income tax, Kanpur vs British India Corporation (P) Ltd. (supra), the High Court noted the distinction between 'provision ' and 'reserves ' and observed that when an amount was set apart for a future liability, it was called a reserve and when it was set apart to meet an existing liability, it was called a provision.
The High Court was of the view that the Tribunal in that case was right in holding that capital reserve, stocks and stores reserves, bad and doubtful debts reserves, obsolescence reserve, loans and insurance reserves and investment reserves were to be included in the computation of capital.
The Tribunal was not right in including, according to the High Court, forfeited money reserve as the assessee had been transferring to this account dividends which had not been collected by the share holders after they had been declared, and as and when the shareholders made a claim, made payments and debited the same to the account.
The High Court, therefore, was of the view that this account represented a provision in respect of an existing liability.
The High Court in Income Tax Reference No. 196 of 1971 had to 414 deal with investment reserve account, rehabilitation reserve account, capital reserve account and depreciation reserve account and held that these were reserves but the account maintained as dividend account did not represent reserve.
The High Court in its judgment noted that on the 19th July 1973 relying on other judgment in Income Tax Reference No. 200 of 1917 Commissioner of Income Tax vs The Saran Engineering Co. Ltd. had answered the question by saying that the aforesaid items were re serves.
This is the subject matter of civil appeal No. 1599 of 1974 which will also be disposed of by another judgment of this Court.
Civil Appeal No. 1665 of 1974 and Civil Appeal No. 145 of 1976 which arose out of the Income Tax Reference No. 196 of 1971 have been heard together and are being disposed of by this judgment.
In this connection it would be desirable to dispose of Civil Appeal No. 145 of 1976 separately first.
It was submitted that the assessee had shown capital of Rs.2,63,79,218 which included the aforesaid reserves including investment reserves, rehabilitation reserve, capital reserve, depreciation reserve and forfeited dividends.
The submission on behalf of the revenue by Sree Dalip Singh was that the amount of Rs.85 lakhs in the relevant year as investment reserve was set apart by the assessee company to meet the liabilities of its Bombay Sub sidiaries, M/s Madhav Mills Ltd. and Calico Processors Ltd. which were known to the assessee on the date of the balance sheet.
The Directors ' report, according to the revenue, left no room for doubt that these were anticipated losses of the assessee company in the form of the investments made in its Bombay subsidiaries known at the date of the balance sheet.
These were liabilities, according to Sree Singh actually staring in the face of the assessee company when it prepared the balance sheet.
The Tribunal had held that it was a reserve because it was formed by transfer of the amount from capital/General reserve.
This according to the revenue, could not be accepted.
Revenue submitted that it was a common ground that originally the amount was set apart out of the undistributed mass of profits and therefore the moment it was taken out of the capital or general reserve, it ceased to be a capital or general reserve, and but for its being set apart to meet the liabilities of its subsidiaries, it had again gone back and formed part of the undistributed mass of profits and thereby assumed its original character.
It was submitted that the reserve in order that it might be so called in the real sense of the term must come out of the profits of the 415 company.
But if reserves were constituted out of assets which were sold A or by any other means it would be difficult to term the amounts shown as reserve.
It was submitted that the investments by the assessee company in the Bombay subsidiaries were in the nature of bad and doubtful debts.
Therefore, these were dead losses of the assessee company as the holding company, and these amounts were ultimately bound to be writ ten off and according to the revenue 's submission, the substance of the matter clearly was that the amount of RS.85 lakhs though shown as a reserve, was, in fact, a provision to meet the anticipated losses or bad and doubtful debts in the shape of investments in the two subsidiaries aforesaid which were shown at the date of the balance sheet.
For the assessee Sree Salve drew our attention to the distinction between reserve and provision which has been discussed in the decision of this Court in Metal Box Co. Ltd. vs Their Workmen, at 67 68.
According to the revenue, the nature and object of the subsidiary companies have to be kept in view and the practical result, revenue contended before us, was that the shareholders of the holding company whose share capital had been employed for the floatation of the subsidiary companies had not only no power to control the dealings of the subsidiary companies but in fact had no knowledge of, nor any right to the knowledge of or dealings of the subsidiary companies.
The expressions 'Provision ' and 'Reserve ' are defined in Schedule VI Part III to the .
In the decision of this Court in Vazir Sultan 's case (supra) it has been held that a provision was meant to provide for any known liability and the substance of the matter had to be kept in view.
It was further submitted by Sree Singh that the depreciation reserve could not be considered to be reserve in the real sense at all.
Forfeited dividends reserve of R.S. 1,08,771 had to be a provision.
On the other hand, on behalf of the revenue, it was submitted that in order to constitute reserve, there must be an appropriation of profits current or accumulated and not a charge against the profits for the year.
The conduct must bear out the intention to create a reserve.
It must not be to set apart to meet any known liability, a liability known but existing on the date of the balance sheet.
The explanation 'reserve ' has been defined in the text books of Accountancy which has been noted by this Court.
It was urged that it could not be disputed 416 that reserve might be general or specific reserve, what was required was that amount should be kept aprat for one or the other purpose either general or specific.
The distinction between provision and reserve must be found out bearing in mind main features of the reserve.
These are (1) It must be an appropriation of profits, current or accumulated and not a charge against the profits for the year.
(2) The conduct of the parties must bear out that intention.
(3) It must not be to set apart to meet any known liability a liability known to exist on the date of the balance sheet.
Reference in this connection may be made to the observations of this Court in Vazir Sultan 's case (supra) at pages 569 70.
The Calcutta High Court in Commissioner of Income Tax vs Eyre Smelting Private Ltd., , noted the characteristics of 'provisions ' as well as 'reserves '.
It held, inter alia, that provisions were made against anticipated losses and contingencies, it held further that an amount set aside of the profits designed to meet a contingency or liability or commitment or diminution in the value of the assets known to exist would be a reserve, and an amount set aside to provide for a known liability to which the amount cannot be determined with substantial accuracy would be a provision.
The said High Court differed from the decision of the Allahabad High Court in British India Corporation (P) Ltd. (supra) in respect of 'bad and doubtful debts. ' Whether in respect of bad and doubtful debts the account could be treated as reserve or provision would depend upon the facts and circumstances of the case.
The distinction between 'provision ' and 'reserve ' has been clarified by this Court in Metal Box Company of India Ltd. vs Their Workmen (supra) at pages 67 68 which states as follows: "The next question is whether the amount so provided is a provision or a reserve.
The 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 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 417 (see Spicer and Pegler 's Book keeping and Accounts, 15th A Edition, 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 pro vide for any known liability of which the amount cannot be determined with substantial accuracy is a provision: (see William Pickles Accountancy, second edition, p. 192; , clause 7, Schedule VI to the : which defines provision and reserve).
" This Court in Commissioner of Income Tax (Central) Calcutta vs Standard Vaccum oil Co., at 698, observed that the ordinary meaning of the expression reserve was something specifically kept apart for further use or for specific occasion.
The observations made therein will have to be understood in the light of the subsequent decisions of this Court in Metal Box (supra) and Vazir Sultan (supra).
This Court in Vazir Sultan Tobacco Co. Ltd. etc.
vs Commissioner of Income tax etc.
(supra) considered the expression 'reserve ' in the and Companies (Profit) Surtax Act, 1964.
It is not necessary to set out all the conclusions of this Court.
Our attention was drawn to Datta 's on the Company Law (Third Edition) at page 42 1.
"Reserves" consist of appropriations from profits and other surplus and retained for future use.
This, however, does not include any amount which had been kept to meet any liability or diminution in value of assets known to exist as on the date of the balance sheet.
The essence and substance of the matter has to be kept in view.
As reiterated before, the distinction between 'provision ' and 'reserve ' is while the 'provision ' is a charge of profits which are taken into account in the gross receipt of Profits & Loss Account, 'reserve ' is an appropriation of profit to provide for the asset which is represented.
Keeping these tests and the facts of these appeals in mind, we must hold that the conclusion of the High Court in Civil Appeal No. 1665 of 1974 holding that the investment reserve and rehabilitation reserve were reserves and were entitled to be treated so under the relevant Act is right.
But in the facts of the case, the High Court was 418 not right in holding that the forfeited dividend reserve was reserve and question No. 2 also in the affirmative.
It should have followed in this respect its previous decision in respect of forfeited dividend reserve in Commissioner of Income Tax vs British India Corporation (supra).
The appeal, therefore fails, except on the point of "Forfeited Dividend Reserve." In Civil Appeal No. 145 of 1976, we are concerned with five items as mentioned i.e. investment reserve, rehabilitation reserve, capital reserve, depreciation reserve and forfeited dividends and in view of the facts found, we are of the opinion that first four items constituted reserves and were entitled to be treated as such under the Act and the forfeited dividends did not represent reserve.
This appeal accordingly fails in view of the facts found by Tribunal and reiterated by the High Court and the principles applicable as mentioned hereinbefore.
The High Court in its order had excluded "Forfeited dividend account" from the reserve.
The High Court was right in so doing.
In the facts and circumstances of the case, the parties will pay and bear their own costs in both the appeals.
CA 1665/74 allowed in part.
M.L.A. CA 145/76 dismissed.
|
In Civil Appeal No. 1665 of 1974, a dispute arose between the respondent assessee and the Revenue with regard to the computation of "standard deductions" under the provision of Companies Profits (Surtax) Act, 1964.
The respondent assessee claimed that the three amounts in respect of three accounts, namely, (a) investment reserve (b) rehabilitation reserve and (c) forfeited dividend reserve should be treated as reserves for the purposes of computation of its capital for the assessment year 1964 65 of which the relevant previous year ended on 30th Sept., 1963.
The Income tax officer did not include any of the said "reserves" in the capital of the respondent company on the basis that these did not represent "reserve" in the real sense.
The matter, ultimately went before the Tribunal.
It held: (i) that all the three accounts represented "reserves" for the purposes of assessment under the and as the principle involved was the same as under the Companies Profits (Surtax) Act, 1964, the accounts in question represented "reserves" under the latter Act also.
The High Court also, relying on its earlier decision in Commissioner of Income tax, Kanpur vs British India Corporation (P) Ltd. 92 TIRE 38, affirmed the view taken by the Tribunal and held (i) that under both the Acts charging sections (section 4) were identically worded except that expression(Standard Deduction) in had been replaced by the expression "statutory deductions" in Companies Profits (Surtax) Act, 1964; (ii) that under both Acts these deductions had to be computed with reference to the capital employed in the assessee 's Companies; and (iii) that under both the Acts reserves of the company were to be treated as its capital and the only difference was in the 409 Second Schedule to the Companies Profits (Surtax) Act, 1964 where an A explanation had been added, and this explanation merely clarified what was implicit in the Super Profit Tax Act, 1963.
In C.A. No. 145 of 1976 the assessee respondent had shown capital of Rs.2,63,79,218 which included inter alia investment reserve, rehabilitation reserve, capital reserve, depreciation reserve and forfeited dividends.
The High Court held that the first four items constituted reserves and the forfeited dividends account did not represent reserve.
Dismissing the C.A. No. 145 of 1976 and allowing CA No. 1665 of 1974 in part, ^ HELD: 1.1 The conclusion of the High Court in CA 1665 of 1974 holding that the investment reserve and rehabilitation reserve were reserves and were entitled to be treated so under the relevant Act is right.
But, in the facts of the case, the High Court was not right in holding that the "forfeited dividend reserve" was reserve.
However, in CA No. 145 of 1976, the Tribunal and the High Court had rightly excluded "forfeited dividend account" from the reserve.
[417G H; 418D] 2.1 The Supreme Court in Vazir Sultan Tobacco Co. Ltd. vs Commissioner of Income Tax [1981] 132 TIRE, 559 held that the expression "reserve" in and the Companies Profits (Surtax) Act, 1964 are in pari materia.
[413C D] 2.2 The distinction between "provision" and "reserve" is while the "provision" is a charge of profits which are taken into account in the gross receipt of Profits and Loss Account, "reserve" is an appropriation of profit to provide for the asset which it represented.
Reserve might be general or specific reserve, what is required is that the amount should be kept apart for one or the other purpose either general or specific.
The distinction between provision and reserve must be found out bearing in mind the main features of the reserve.
These are: (i) it must be an appropriation of profits, current or accumulated and not a charge against the profits for the year; (ii) the conduct of the parties must bear out that intention; (iii) it must not be to set apart to meet any known liability a liability known to exist on the date of the balancesheet.
[416A C] In the instant cases, keeping in view the aforesaid tests, invest 410 ment reserve, rehabilitation reserve, capital reserve and depreciation reserve constituted "reserves" and are entitled to be treated as such under Companies Profits (Surtax) Act, 1964.
The "forefeited dividends" do not represent "reserve".
[417G H; 418A B] Vazir Sultan Tobacco Co. Ltd. vs Commissioner of Income Tax, [ ]981] ; Metal Box Co. Ltd vs Their Workmen, at 67 68; and Commissioner of Income Tax (Central) Calcutta vs Standard Vaccum oil Co., at 698 relied upon.
Commissioner of Income tax, Kanpur vs British India Corporation (P) Ltd., approved.
Commissioner of Income Tax vs Eyre Smelting Private Ltd., referred to.
|
Civil Appeal No. 91 of 1971 From the Judgement and order dated 21.8.1978 of the Punjab & Haryana High Court in R.S.A. No. 378 of 1963.
Civil Appeal No. 639 of 1985 From the Judgment and Order dated 3.12.1984 of the Punjab & Haryana High Court in R.S.A. No. 1721 of 1976.
S.K. Bagga for the Appellants.
H.K. Puri for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
These two appeals by special leave are directed against two different judgments of the Punjab & Haryana High Court in suits for pre emption.
The facts of the two cases are different In this Appeal the alienation was on November 22, 1972, by one Nathu and his wife Smt.
Singari in favour of outsiders, Plaintiffs claimed possession of the property by way of pre emption on the ground that they have superior rights being father 's brother 's sons of Nathu covered under Section 15(1)(a) THIRDLY of the Punjab Pre emption Act, 1913.
That claim was decreed so far as Nathu 's half share in the property was concerned and the claim as against the alienation of half share by his wife was rejected.
The alienees ' appeal to the District Judge as also the High Court did not succeed.
A constitution Bench of this Court in the case of Atam Parkash vs State of Haryana, ; , has recently held: "There is, therefore, no reasonable classification and clauses 'First ', 'Secondly ' and 'Thirdly ' in section 15(1)(a). are, therefore, declared ultra vires the Constitution.
" The result of this decision in Atam Parkash 's case is that section 15(1)(a) THIRDLY is, and was not, available to the plaintiffs to base their claim of pre emption upon.
639/85 has, therefore, to be allowed and the decree passed by the trial Court as upheld in the first and second appeals must be reversed.
Plaintiffs ' suit for pre emption has to be dismissed.
Since the reversal is the outcome of a judgment delivered by this Court during the pendency of the civil appeal, we direct parties to bear their respective costs throughout.
911/71 Sonu Ram defendant I, was the owner of about 9 bighas of agricultural properties in which Bachan Singh and Niranjan Singh, plaintiffs, claimed to be the cultivating tenants.
Sonu Ram sold the property under a registered sale deed dated July 22, 1959.
The tenant filed a suit on July 21, 1960, for a decree for possession by preemption.
With effect from February 4, 1960, Section 15 of the Punjab Pre emption Act, 1913 ( 'the Act ' for short), was amended by Act 10 of 1960.
Under the amendment, inter alia, a new clause was inserted in s.15(1)(a), namely, "FOURTHLY" which reads as under: "FOURTHLY, in the tenant who holds, under tenancy of the vendor the land or property sold or a part thereof." The Amending Act brought in a new provision by way of Section 31 to the following effect: 381 "Punjab Pre emption (Amendment) Act, 1960, to apply to all suits No Court shall pass a decree in a suit for preemption whether instituted before or after the commencement of the Punjab Pre emption (Amendment) Act, 1960, which is inconsistent with the provisions of the said Act.
" The trial Court as also the first appellate Court took the view that on the date when the sale took place the plaintiffs had no right of pre emption and as such the claim was not maintainable.
Before the High Court in Second Appeal the appellants placed reliance on the Constitution Bench decision of this Court in Amir Singh & Anr.
vs Ram Singh & Ors., The High Court took the view that on the date of sale the plaintiffs had no right infringed though they had such right on the date of the suit.
As one of the requirements of the law was that the plaintiffs to succeed in a suit for pre emption should have a superior right of pre emption on the date of sale also the plaintiffs ' claim could not be decreed.
The High Court, therefore, upheld the decree of the courts below.
We have heard learned counsel for both the sides at some length and are inclined to agree with the submissions advanced on behalf of the appellants that all the three courts have gone wrong in dismissing the claim.
Gajendragadkar, J. (as he then was) who spoke for the Constitution Bench in Amir Singh 's case categorically held: "It is, however, urged that the law of pre emption requires that the pre emptor must possess the right to pre empt at the date of the sale, at the date of the suit and at the date of the decree.
This position cannot be disputed.
But when it is suggested that the respondents cannot claim that they had the right when they brought the present suit or when the sales were effected, the argument ignores the true effect of the retrospective operation of section 31 and section 15.
If the inevitable consequence of the retrospective operation of section 31 is to make the substantive provisions of section 15 also retrospective, it follows that by fiction introduced by the retrospective operation, the rights which the respondents claim under the amended provisions of section 15 must be deemed to have vested in them at the relevant time.
If the relevant provisions are made retrospective by the legislature, the retrospective operation must be given full effect to, and that 382 meets the argument that the right to pre empt did not exist in the respondents at the time when the sale transactions in question took place.
Therefore, we are satisfied that the respondents are entitled to claim that they should be given an opportunity to prove their case that as tenants of the lands in suit they have a right to claim pre emption.
" In view of the categorical indication that section 15 was retrospective, it must follow that the newly inserted clause FOURTHLY in section 15(1)(a) of the Act was in existence at all relevant times.
So far as facts of this case are concerned, the plaintiffs must be presumed to have had a right to pre empt on the date of sale.
Admittedly, the suit was filed subsequent to the amendment.
It is a well settled principle of law that when the legislature makes provision for a deeming situation to give effect to the mandate of the legislature, all things necessary to effectuate the retrospective intention must be deemed to have existed.
All the courts in our view clearly went wrong in dealing with the legal situation.
The High Court erroneously distinguished the rule in Amir Singh 's case even though the ratio applied in all fours.
The judgments and decrees of all the three courts are set aside.
The plaintiffs are found entitled to pre empt the alienee under section 15(1)(a) FOURTHLY of the Act as amended by the Act of 1960.
We allow the appeal, reverse the decrees of all the courts below and direct that the plaintiffs ' suit shall be decreed.
Plaintiffs shall be entitled to their costs throughout.
The trial Court is directed to give effect to the decree passed by this Court.
M.L.A. Appeal allowed.
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The respondents in Civil Appeal No. 639 of 1985 claimed possession of the property sold by one Nathu on November 22, 1972 by way of pre emption on the ground that they had superior rights being father 's brother 's sons of Nathu covered under Section 15(1)(a) THIRDLY of the Punjab Pre emption Act, 1913.
The claim was decreed and the alienees ' appellants appeal to the District Judge as also the High Court did not succeed.
Hence this appeal by Special Leave.
In Civil Appeal No. 911 of 1971 respondent No. 1 was the owner of some agricultural property in which appellants plaintiffs claimed to be the cultivating tenants.
Respondent No. 1 sold the aforesaid property on July 22, 1959.
The appellants tenants filed a suit on July 21, 1960 for a decree for possession by pre emption.
The Trial Court, the first appellate court as also the High Court took the view that on the date when the sale took place, the appellants had no right of pre emption and, as such, the claims was not maintainable.
Allowing the appeals, ^ HELD: (In C.A. No. 639 of 1983) 1.
The decree passed by the trial court as upheld in the first and second appeals must be reversed in view of the decision of the Supreme Court in Atam Prakash vs State of Haryana, ; holding clauses First, Secondly and Thirdly in section 15(1)(a) as ultra vires the Constitution.
Therefore, section 15(1)(a) THIRDLY is and was not available to the respondents plaintiffs to base their claim of pre emption upon.
[380D] 379 (In C.A. No. 911 of 1971) 2.
All the three Courts have gone wrong in dismissing the claim of the appellants plaintiffs.
They are found entitled to pre empt the alienees under section (15)(1)(a) FOURTHLY of the Act as amended by Act of 1960.
[381E; 382D E] 3.1 It is a well settled principle of law that when the legislature makes provision for a deeming situation to give effect to the mandate of the legislature, all things necessary to effect retrospective intention must be deemed to have existed.
[382C D] 3.2 With effect from February 4, 1960 section 15 of the Punjab Pre emption Act 1913 was amended by Act 10 of 1960.
The inevitable consequence of the retrospective operation of section 31 is to make the substantive provisions of section 15 also retrospective.
It follows that by the fiction introduced by retrospective operation, the rigths which the appellants claimed under the amended provisions of section 15 must be deemed to have vested in them at the relevant time.
Therefore, the appellants must be presumed to have had a right to pre empt on the date of sale.
[380F G; 381G; 382B C] Amir Singh & Anr.
vs Ram Singh & Ors., , referred to.
|
Civil Appeal No. 2637 of 1977 From the Judgment and order dated 9.11.1976 of the Madhya Pradesh High Court in Second Appeal No. 223 of 1976.
Rameshwar Nath for the Appellants.
Y.K. Jain for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal by special leave arising from the Judgment and order of the High Court of Madhya Pradesh at Jabalpur dated 26th October, 1977.
The landlord appellant filed the eviction suit against the tenant, the predecessor in interest of the respondents.
The appellant runs a girls ' school, being covered by one of its objects.
It needed additional accommodation for the said purpose.
The building was also in dilapidated condition.
The learned trial Judge as well as Appellate Court ordered eviction under section 12 (f) of the Madhya Pradesh Accommodation Control Act, 1961.
The respondents were in occupation of an old shed as a tenant in the said house.
Section 12 (f).
Of the aforesaid Act gives the landlord the right to evict on the grounds, inter alia, as follows: 516 "that the accommodation let for non residential purposes is required bonafide by the landlord for the purpose of continuing or starting his business or that any of his major sons or unmarried daughters if he is the owner thereof or of any person for whose benefit the accommodation is held and 13 that the landlord or such person has no other reasonably suitable non residential accommodation of his own in his occupation in the city or town concerned." Section 12 (g) deals with the situation where the building has become unsafe or unfit and the landlord wants the premises for carrying out repairs.
Section 12 (h) on the other hand deals with the case where the accommodation is required bonafide by the landlord for the purpose of building or re building or making thereto any substantial additions or alterations and such additions or alterations cannot be carried out without the accommodation in the occupation of tenant being vacated.
Similar provision in section 31 (1)(g) under the Bombay Rents, Hotels and Lodging House Rates Control Act, 1947 came up for consideration before this Court in Ramniklal Pitambardas Mehta vs Inderadaman Amratlal Sheth, [1964] 8 SCR p.1.
This Court held that the case in question fell under clause (g) which is similar to clause (f) of the instant case before us of Madhya Pradesh Accommodation Control Act, section 12 (f).
This Court further held that the mere fact that the landlord intended to make alterations in the house either on account of his sweet will or on account of absolute necessity in view of the condition of the house, would not affect the question of his requiring the house bonafide and reasonably for his occupation, when he had proved his need for occupying the house.
Nothing further need be proved.
In this case, the case of the landlord appellant is clearly covered by section 12(1)(f).
The fact that the building had to be reconstructed for the said purpose is irrelevant.
The learned trial judge as well as the learned appellate court read the sanctioned plan and came to the conclusion that the appellant had proved in this case all the need for expansion of the building for girls ' education which was one of the objects of the appellant society.
The High Court, in our opinion, misread the sanctioned plan which is Ext.
4, which according to the High Court showed in front side of the building abutting the road, a series of shops are to be constructed.
The High Court was of the view that these shops were meant to be let out to tenants.
We are of the opinion that this was a misreading of the plan.
These shops were not indicated as shops to be reconstructed, but as existing building was to be reconstructed for the purpose of school there was no intention of construc 517 tion of shops and let these out.
There was no intention of the landlord appellant to build for the purpose of letting it out.
The learned trial judge as well as appellate judge held that the object was to get the building back for expansion of the activities of the appellant society.
The High Court, therefore, in our opinion fell into error in misconstruing the plan and in holding that the landlord 's claim for eviction was on the ground of reconstruction.
In that view of the matter the High Court went on the examine whether section 12 (h) of the said Act had been complied with.
There was no such necessity, in view of the facts as found by the two courts below.
In any case, in second appeal the High Court should not have interfered with such a question of fact.
This was unwarranted under the facts and circumstances of the case and on the evidence on record and in view of the decision in Ramniklal 's case (supra).
Mr. Jain appearing for the tenant sought to urge before us that the plan indicated that the shops were intended to be reconstructed in the new plan Shri Rameshwar Nath, Counsel for the appellant assured us that it was the intention of the society to reconstruct the building for the purpose of running the school.
In order to avoid any apprehension, though we allow the appeal and restore the order of the learned appellate court as well as learned trial court, we make it clear that in case if any part of the building is used for shops or let out as shops, the first option should be given to the respondents.
We further direct that the building must be constructed on the basis of the plan sanctioned and as appended in the records of this case.
In view of the fact that the respondents were carrying on business for quite long time, they should have some time to vacate.
We direct that the respondents should vacate the premises in their occupation by 31st December, 1986 and handover the same to the appellant to enable the appellant to proceed with construction.
The respondent will file an undertaking on usual terms within a month from today.
The order of the High Court is set aside.
The orders of the learned Addl.
District Judge and the trial court are restored subject to the modifications indicated above.
We further direct that after obtaining the possession of the premises from the respondents, the appellant should proceed to construct as quickly as possible.
In the facts and circumstances of the case the parties will pay and bear their own costs.
A.P.J. Appeal allowed.
|
The landlord appellant running a girls ' school.
filed an eviction suit against the tenant, the predecessor in interest of the respondent, on the ground that it needed additional accommodation for the school.
The trial Judge as well as the Appellate Court ordered eviction under section 12(i)(f) of the Madhya Pradesh Accommodation Control Act, 1961 holding that the object of the appellant society was to get the building back for expansion of its activities and had proved the same.
The High Court, however, in second appeal examined the sanctioned plan, held that the landlord 's claim for eviction was on the ground of reconstruction, and the series of shops shown in the plan were meant to be let out to tenants and set aside the order of eviction passed by the two courts below.
Allowing the appeal to this Court, ^ HELD: l(i).
The order of the High Court is set aside.
The orders of the Additional District Judge and the Trial Court are restored with the modification that in case any part of the building is used for shop or let out as shop, the first option should be given to the respondents and of that the building must be constructed on the basis of the appended sanctioned plan.
[517G; E] 1(ii).
The High Court fell into error in misconstruing the plan Ext.
4 and in holding that the landlord 's claim for eviction was on the ground of reconstruction.
The High Court went on to examine whether section 12(h) of the Act had been complied with.
There was no such necessity 515 in view of the facts as found by the two courts below.
In any case, in second appeal the High Court should not have interfered with such a question of fact.
[517B C] 2.
The case of the landlord appellant is clearly covered by s.12(1)(f) of the Madhya Pradesh Accommodation Control Act, 1961.
The mere fact that the landlord intended to make alterations in the house either on account of his sweet will or on account of absolute necessity in view of the condition of the house, would not affect the question of his requiring the house bona fide and reasonably for his occupation, when he had proved his need for occupying the house.
[516E F] Ramniklal Pitambardas Mehta vs Inderadaman Amratlal Sheth [1964] 8 SCR p.1, followed.
|
ition No. 106 of 1980 Under Article 32 of the Constitution of India.
with 509 Civil Appeal No. 2735 of 1986 Arising out of Special Leave Petition (Civil) No. 2775 of 1980.
P.S. Potti, K.R. Chaudhary, Miss Malini Poduval and Miss R. George for the Petitioners.
M.K. Ramamurthy, T.V.S.N. Chari and Miss. V. Grover for the Respondents in W .
No . 106 of 1980.
K. Ram Kumar for the Appellant in C.A. No. 2735 of 1986.
A. Subba Rao for the Respondents in C.A. No. 2735 of 1986.
The Judgment of the Court was delivered by DUTT, J.
The Writ Petition No. 106 of 1980 under Article 32 of the Constitution of India preferred by the petitioners, Smt.
M. Nirmala & 309 others, and the appeal by special leave filed by the State of Andhra Pradesh have been heard together as they involve the common question as to the seniority of certain employees of the Government of Andhra Pradesh in Group II and Group IV services.
Group II services relate to the posts of Junior Assistants in the Secretariat and Group IV services relate to the posts of Lower Division Clerks, Lower Division Assistants, Lower Division Typists and Steno Typists.
The petitioners are working in Group IV services in various Departments of the Government of Andhra Pradesh.
On August 18, 1970 by G.O. Ms. No. 682, the Government of Andhra Pradesh put a ban on direct recruitment of all categories of State and subordinate services, pending the recommendations of the Backward Classes Commission.
In spite of the said order baning direct recruitments, the Government had to appoint employees in all Departments in view of exigencies of circumstances and in the public interest.
Such appointments were made under the General Rule 10(a)(i)(1) on a purely temporary basis.
Most of the petitioners were appointed after April, 1974 as temporary employees under General Rule 10(a)(i)(1).
Indeed, General Rule 10(a)(iii) provides that a person appointed under clause (i) shall, whether or not he possesses the qualifications prescribed for the service, class or category to which he is appointed, be replaced as soon as possible by a member of the service or an approved candidate qualified to hold the post under the rules.
In view of clause (iii) of 510 General Rule 10(a), the appointments of the petitioners were to be replaced as soon as possible by qualified and approved candidates.
In 1973, the ban on recruitment through Public Service Commission was partially lifted.
By G.O. Ms. No. 725 dated December 28, 1973, the Government of Andhra Pradesh directed the Public Service Commission to conduct a special qualifying test for recruitment in Group IV services with a view to regularising the temporary appointments made during the ban period.
One of the conditions of eligibility for appearing at the said qualifying test was, as fixed by the Public Service Commission, two years of service as on 1.1.1973.
As the petitioners were appointed after April, 1974, the question of their appearing at the said qualifying test did not arise.
It appears that those who appeared at the said test were all absorbed in the regular service.
On the representation of the temporary employees who were not absorbed, the Public Service Commission conducted another special qualifying test as directed by the Government by G.O. Ms. No. 787 dated November 9, 1976.
The petitioners could not avail themselves of the said test as they had not put in two years of service as on 1.1.1976 as fixed by the Public Service Commission.
The temporary employees including the petitioners who were appointed on or after January 2, 1974, became eligible only in 1976 in which year a test for recruitment through Public Service Commission was conducted to facilitate all temporary employees including the petitioners to compete for regular appointments.
About 82,000 candidates appeared in the test for Group IV services.
The petitioners, however, did not appear at the said qualifying test even though they were eligible for the same.
At the same time, the petitioners and others, who did not appear at the qualifying test in 1976, began to put pressure on the Government for their absorption.
The Government was also prevented from replacing the temporary employees including the petitioners by the candidates who were successful in the said qualifying test.
The successful candidates were appointed to additional posts in Group II and Group IV services sometime in 1977 or 1978.
The temporary employees made a representation to the Government that their appointments should be regularised without requiring them to appear at the special qualifying test.
The Government seems to have yielded to the pressure brought to bear upon it by these temporary employees, as a result of which the appointments of successful candidates in the said test could not be regularised.
By Memo No. 1806/ Ser B/78 2 dated 25.1.1979 the Government proposed to fix the inter se 511 seniority between the Public Service Commission candidates, that is, those who passed in the qualifying test held in 1976 and the temporary employees who did not appear at the qualifying test.
Being aggrieved by the said Memo, certain Public Service Commission candidates belonging to Group II services filed a representation petition being R.P.No. 145/79 before the Andhra Pradesh Administrative Tribunal.
i; Subsequently, another representation petition being R.P. No. 447 of 1979 was filed by certain other Public Service Commission candidates belonging to Group IV services including the respondents Nos. 18 to 108 in the Writ Petition.
While the said representation petitions were pending before the Andhra Pradesh Administrative Tribunal, the Government of Andhra Pradesh issued G.O.Ms.
No. 646 dated September 14, 1979 whereby the temporary employees including the petitioners were exempted from appearing at any examination and the posts held by them were withdrawn from the purview of the Public Service Commission.
By another order, being G.O.Ms.
No. 647 dated September 14, 1979, the Government directed regularisation of the temporary employees including the petitioners without subjecting them to any test, written or oral.
One of the conditions of such regularisation, as contained in clause (b) of the G.O.Ms.
No. 647, is that "in the case of temporary Junior Assistants, Typists and Steno Typists in the Secretariat and L.D.Cs, Typists and Steno Typists in the offices of the Heads of Departments, their services should be regularised from the date subsequent to the date of last regular appointment in that category or from the date of temporary appointment whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal before which representation petitions in this regard are pending.
" At this stage, it may be stated that R.P. No. 145 of 1979 and R.P. No. 447 of 1979 were both decided by the Tribunal in favour of the Public Service Commission candidates, holding that their appointments were regular and their seniority should be computed from the respective dates of regular appointments under the General Rule 33(a) which, inter alia, provides that the seniority of a person in a service, class, category or grade shall be determined by the date of his first appointment to such service, class, category or grade.
The State of Andhra Pradesh being aggrieved by the said order of the Tribunal passed in R.P. No. 145 of 1979, has preferred the instant appeal by special leave.
It is not in dispute that the Public Service Commission candidates including the respondents Nos. 18 to 108, who belong to Group IV services, were appointed sometime in 1977 or 1978 pursuant to their 512 being successful in the special qualifying test held by the Public Service Commission in 1976.
In view of General Rule 33(a), the seniority of the respondents should be computed from the respective dates of their appointments as held by the Administrative Tribunal.
The petitioners, however, claim that their seniority should be computed from the respective dates of their appointments after April, 1974 so that they maybe placed before the respondents Nos. 18 to 108 in the seniority list.
In our view, the claim of the petitioners is untenable.
The petitioners were not appointed on a regular basis, but by way of stop gap arrangements to be replaced by the appointment of qualified candidates.
The petitioners failed to avail themselves of the opportunity of qualifying themselves for regular appointments by appearing at the special qualifying test held in 1976, although they were eligible for the test.
The Government order being G.O.Ms.
No. 647 dated September 14, 1979 on which much reliance has been placed by Mr. Patti, learned counsel appearing on behalf of the petitioners, does not support their claim of seniority from the respective dates of their appointments after April, 1974.
Under the said G.O.Ms. No.647, the services of the employees belonging to Group IV services would be regularised from the date of last regular appointment in that category or from the date of temporary appointments whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal.
The Andhra Pradesh Administrative Tribunal, as stated already, held that the appointments of the Public Service Commission candidates were regular appointments.
The appointments of the Public Service Commission candidates are, therefore, the last regular appointments as contemplated by G.O.Ms. No. 647.
In view of the said decision of the Andhra Pradesh Administrative Tribunal and the directions contained in G.O.Ms. No.647, the services of the petitioners will be regularised subsequent to the respective dates of appointments of the respondents Nos.
18 to 108 or the other employees in Group IV services, who were appointed pursuant to their being successful in the special qualifying test held by the Public Service Compression in 1976.
The petitioners have not challenged the said G.O.Ms.
No. 647; on the contrary, as stated already, they have placed reliance upon the same and have also prayed for the implementation of the same.
The petitioners, therefore, cannot assail the. findings of the Andhra Pradesh Administrative Tribunal and claim that their seniority should be computed from the respective dates of their appointments after April, 1974.
WE have also considered the findings of the Administrative Tri 513 bunal and we are of the view that the findings arrived at by it are quite legal and justified, and no exception can be taken to the same.
For the reasons aforesaid, both the Writ Petition and the appeal are dismissed.
However, in view of the peculiar facts and circumstances of the case, there will be no order as to costs.
S.R. Petition and appeal dismissed.
|
The petitioners in Writ Petition 106 of 1980 are working in Group IV Services in various departments of the Government of Andhra Pradesh.
Most of them were appointed after 1974, under the General Rule 10(a)(i)(l) on a purely temporary basis due to the existence of a ban on direct recruitment.
After the lifting of the ban partially special qualifying tests were held for regularising their services in 1974 and 1976.
As they did not put in two years of qualifying service as on 1.1.73 and 1.1.76 respectively, they could not take the said examinations.
In 1976 there was another test conducted by the Public Service Commission wherein about 82000 candidates appeared.
The petitioners did not appear in the said test.
Among the several candidates who were appointed sometimes hl 1977 and 1978 were Respondents 18 to 108.
The petitioners were, however, granted complete exemption from appearing at any examination by GOMS 646 dated 14.7.1979 and the posts held by them were withdrawn from the purview of the Public Service Commission.
Earlier to the said Notification Government issued a memo No. 1806/ Ser B/78 2 Gad dated 25.1.79 proposing to fix inter se seniority between the Public Service Commission candidates who qualified in 1976 and the temporary employees including the petitioners who did not appear at the qualifying test.
Being aggrieved, the Service Commission candidates including respondents 18 to 108 in the Writ Petition, filed R.P. No. 447/79 before the State Administrative Tribunal whose decision went in favour of the Service Commission candidates.
Hence the Civil Appeal No. 2735/86 by the State of Andhra Pradesh.
In both the 508 Writ Petitions and the appeal the question related to the computation of seniority of the Service Commission candidates and the temporary employees whose services were regularised by GOMS 647 dated 14.9.79 after exempting them from passing the qualifying examination etc.
by GOMS 646 dated 14.9.1979.
Dismissing the petition and the appeal, the Court, ^ HELD: l.
The petitioners cannot claim that their seniority should be computed from the respective dates of their appointments after April 1974.
The petitioners were not appointed on a regular basis, but by way of stop gap arrangements to be replaced by the appointment of qualified candidates.
The petitioners failed to avail themselves of the opportunity of qualifying themselves for regular appointments by appearing at the special qualifying test held in 1976, although they.
were eligible for the test.
The Government order being GOMS No. 647 dated September 14, 1979 does not support their claim of seniority from the respective dates of their appointments after April 1974.
Under the said GOMS No. 647, the services of the employees belonging to Group IV services would be regularised from the date of last regular appointment in that category or from the date of temporary appointment, whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal.
The Andhra Pradesh Administrative Tribunal held that the appointments of the Public Service Commission candidates were regular appointments.
The appointments of the Public Service Commission candidates are, therefore, the last regular appointments as contemplated by GOMS No. 647.
In view of the said decision of the Andhra Pradesh administrative Tribunal and the directions contained in GOMS No. 647, the services of the petitioners will be regularised subsequent to the respective dates of appointments of the respondents Nos.
18 to 108 or the other employees in Group IV services, who were appointed pursuant to their being successful in the special qualifying test held by the Public Service Commission in 1976.
The petitioners have not challenged the said GOMS No. 647; on the contrary, they have placed reliance upon the same and have also prayed for the implementation of the same.
[512B G]
|
ivil Appeal No. 859(NM) of 1988.
From the Judgment and Order dated 12.1.1987 in the High Court of Delhi at New Delhi in C.W. No. 355 of 1985.
A. Subba Rao, P. Parmeshwaran and Mrs. Sushma Suri for the Petitioners.
M. Chandrasekharan, N.M. Popli and V.J. Francis for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal by special leave from the judgment and order of ,the High Court.
of Delhi dated 12th January, 1988.
The respondent company manufactured wireless receiving sets, tape recorders, tape players which were assessable under Tariff Items ' 1026 33A and 37AA of the Central Excise Tariff and it had filed classification list and price lists in respect of the said goods.
On verification of the said lists, it was found that goods were unbranded and on investigation it was alleged to have come to the notice of the Department that the respond ent company was engaged in the manufacture Of wireless receiving sets and tape recorders in the brand name of "Bush".
From the documents filed by the respondent, accord ing to the appellants, it was revealed that the respondent manufactured their entire products in the brand name of "Bush" from the very beginning and were selling the same exclusively to M/s Bush India Limited or its authorised wholesale dealers only.
This fact was nowhere mentioned by the respondent in its price list or its classification lists and this, according to the appellants, amounted to wilful suppression of facts with the intention to evade payment of central excise duty.
Certain enquiries were made and to safeguard the interest of revenue the respondent was re quested time and again to observe the provisions of rule 9B of the Central Excise Rules, 1944 and execute B 13 surety bond.
However, it is stated that respondent evaded the execution of the said bond which was, according to the appellants, done deliberately.
Thereafter, on 4th January, 1985, a Show Cause Notice was issued for the period 1st April, 1983 to 30th November, 1984 requiring the respondent to show cause as to why M/s Bush India Limited should not be treated as a related person and a favoured buyer of the respondent company for the purpose of determination of wholesale cash price and as to why the concessional rate of duty under notification No. 358/77 CE should not be denied to the respondent and as to why the differential duty in respect of the goods cleared during the period should not be recovered.
While the adjudication on the basis of the Show Cause Notice was pending, the respondent company was again requested to execute the surety bond in July, 1984.
Respond ent company thereafter filed a writ petition in the High Court of Delhi under Article 226 of the Constitution praying for quashing of the Show Cause Notice and the communication dated 11th July, 1984 and for mandamus to allow it to clear the goods on the basis of the price at which the goods were sold by it allowing the benefit of the relevant notifica tion.
The High Court by the order dated 12th January, 1987 held that the value of the goods manufactured by the re spondent company was the price charged by it from M/s Bush India Ltd. and not the market value at which M/s Bush India Ltd. sold the goods to its wholesalers.
In the premises, it was held that there was no misdeclaration of the value and the Show Cause Notices were quashed.
In passing the impugned order, the High Court followed its decision in C.W. 197/85.
It is, therefore, necessary to refer to the said decision of the High Court.
The said decision challenged 1027 the notice dated 31st December, 1984 and a demand notice of the same date.
It was contended on behalf of the petitioner in that case, who is the respondent in the instant appeal that the said respondent merely manufacture the aforesaid items for Bush India and after manufacturing those, it sells those to M/s Bush India Ltd. It was contended that for the purpose of finding out the price for payment of excise duty, only the price which was charged by the respondent from Bush India Limited could be taken into account and the price at which M/s Bush India Ltd. further sold those goods in the market was not the price which was to be taken for the excise duty.
It was contended that Bush India Ltd. was not a related person of the respondent within the meaning of Section 4(4)(c) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') and reliance was placed on the decision of this Court in Union of India vs Bombay Tyre International, ; On the merits of the case, reliance was also placed on certain decisions of this Court as well as the decision of the Delhi High Court.
The High Court found that the case of the respondent was directly covered by all these decisions.
In the prem ises, the High Court quashed the said Show Cause Notices and the demand notice.
The question, therefore, is whether the High Court was right in the view it took.
Unfortunately, in the instant case, apart from the facts recorded hereinbefore, there is no other fact.
Learned Counsel appearing for the revenue, Shri A. Subba Rao con tended before us that the High Court was in error in not realising that in the facts and the circumstances of this case, it was an arranged affair and really M/s Bush India Ltd. was a related person and as such the price charged from it could not represent the correct assessable value for the purpose of excise duty.
As noted hereinbefore, the events in this case happened from 1985 onwards.
In the premises, the amended provisions of Section 4 of the Act, as amended by the Amendment Act of 1973, would be applicable.
Section 3 of the said Act enjoins that there shall be levied and collected in such manner as might be prescribed duties of excise on all excisable goods other than salt which are produced and manufactured in India.
Section 4(1)(a) of the Act provides: "4.
(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this sec tion, be deemed to be (a) the normal price thereof, that is to 1028 say, the price at which such goods are ordi narily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that (i) where, in accordance with the normal practice of the wholesale 'trade in such goods, such goods are sold by the asses see at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each class of buyers ;" Proviso (iii) to section 4(1)(a) of the Act enjoins that: "where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related per sons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail.
" According to clause (c) of sub section (4) of section 4 of the Act, "related person" means a person who is so asso ciated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub distributor of such distributor.
The Explanation to Section 4(4)(c) further provides that in this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the ( 1 of 1956).
It is in this context that the validity or otherwise of the High Court 's view has to be judged.
In Union of India vs Bombay Tyre International, (supra), this Court had to examine this question.
This Court examined the scheme of Section 4(1)(a) before the Amendment Act, 1973 and also the position after the amendment.
It was contended in that case before this Court that the definition of the expression "related person" was 1029 arbitrary and it included within its ambit a distributor of the assessee.
This Court however held that in the definition of "related person" being a relative and a distributor could be legitimately read down and its validity upheld.
The definition of related person should be so read, this court emphasised, that the words "a relative and a distributor of the assessee" should be understood to mean a distributor who was a relative of the assessee.
The Explanation to section 4(4)(c) provides that the expression "relative" has the same meaning as in the .
The definition of "related person", as being "a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company . . ", shows a sufficiently restricted basis for employing the legal fic tion.
This Court reiterated that it is well settled that in a suitable case the court could lift the corporate veil where the companies share the relationship of a holding company and a subsidiary company and also to pay regard to the economic realities behind the legal facade.
The true position, it was explained by the aforesaid decision, under the said Act is the price at which the excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of remov al as defined in sub section (4)(b) of section 4 of the Act is the basis for determination of excisable value provided, of course, the buyer is not a related person within the meaning of sub section (4)(c) of section 4 and the price is the sole consideration for the sale.
This aspect was further examined by this Court in Union of India & Ors.
vs Atic Industries Ltd., ; This Court referred to the decision of Bombay Tyre International (supra) and also referred to the first part of the definition of "related person" in clause (c) of section 4(4) which defines "related person" to mean "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other".
It was not enough, it was held, that the person alleged to be a related person had an inter est, direct or indirect in the business of the assessee.
To attract the applicability of the first part of the defini tion, the assessee and, the person alleged to be a related person must have interest direct or indirect in the business of each other.
Each of them must have a direct or indirect interest in the business of the other.
The quality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct while the interest of the latter in the business of the former may be indirect.
That would not make any difference so long as each has got some inter est, direct or indirect in the business of the other.
In that case, this Court found that Atul Products Ltd. has interest in the business of M/s Atic Industries Ltd. since it held 50% of 1030 the share capital of that assessee and had interest as shareholder in the business carried on by the assessee.
But this Court was of the view that it could not be said that the assessee, a limited company, had any interest, direct or indirect in the business carried on by one of its sharehold ers, namely, Atul Products Ltd., even though the sharehold ing of such shareholder might be 50%.
Secondly, it was noted that Atul Products Ltd. was a wholesale buyer of the dyes manufactured by the assessee but even then, since the trans actions between them were as principal to principal, it was difficult to appreciate how the assessee could be said by virtue of that circumstances to have any interest, direct or indirect, in the business of Atul Products Ltd. The asses see, it was observed, was not concerned whether Atul Products sold or did not sell the dyes purchased by it from the assessee nor was it concerned whether Atul Products Ltd. sold such dyes at a profit or at a loss.
In those circum stances, the first part of the definition of related persons in clause (c) of sub section (4) of section 4 of the amended Act was, therefore, clearly not satisfied both in relation to Atul Products Ltd. as also in relation to Crescent Dves and Chemicals Ltd., a subsidiary company of Atic Industries Ltd., and neither of them could be said to be a "related person" vis a vis the assessee within the meaning of the definition of that term in clause (c) of sub section (4) of section 4 of the amended Act.
In those circumstances, the assessable value, it was held, of the dyes manufactured by the assessee could not be determined with reference to the selling price charged by Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. to their purchasers but must be determined on the basis of the wholesale case price charged by the assessee to Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. In that case, the assessee at all material times sold the large bulk of dyes manufactured by it in wholesale to Atul Products and Imperial Chemical Industries (India) Pvt. Ltd. which subsequently came to be known as Crescent Dyes & Chemicals Ltd. at a uniform price applicable alike to both these wholesale buyers and these wholesale buyers sold these dyes to dealers and consumers at a higher price which inter alia included the expenses incurred by them as also their profit.
It was noted that the transac tions between the assessee .on the one hand and Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. on the other were as principal to principal and the wholesale price charged by the assessee to Atul Products Ltd. and Crescent Dyes and Chemicals was the sole consideration for the sale and no extra commercial consideration entered in the deter mination of such price.
For appreciating how the wholesale price could be the basis of the determination of the assess able value, a reference may be made to the decision of this Court in Union of India & Ors.
vs Cibatul Limited, [1985] Supp.
3 SCR 95.
In 1031 that case, the respondent Cibatul Ltd. entered into two agreements with Ciba Geigy of India Ltd. for manufacturing resins by the seller.
The joint manufacturing programme indicated that the resins were to be manufactured in accord ance with the restrictions and specifications constituting the buyer 's standard and supplied at prices to be agreed upon from time to time.
The buyer was entitled to test a sample of each batch of the goods and after its approval the goods were to be released for sale to the buyer.
The products were to bear certain trademarks being the property of the foreign company Ciba Geigy of Basle.
Tripartite agreements were also executed between the buyer, the seller and the foreign company, recognising the buyer as the regis tered or licensed user of the trade marks, authorising the seller to affix the trade marks on the products manufactured "as an agent for and on behalf of the buyer and not of his own account" and the right of the buyer being reserved to revoke the authority given to the seller to affix the trade marks.
The respondent in that case filed declaration for the purposes of levy of excise under the said Act show ing the wholesale prices of different classes .of goods sold by it during the period May, 1972 to May, 1975.
The declara tion included the wholesale prices of the different resins manufactured under the two aforesaid agreements.
The Assist ant Collector of Custom revised those prices upwards on the basis that the wholesale price should be the price for which the buyer sold the product in the market.
According to the Assistant Collector the buyer was the manufacturer of goods and not the seller.
The Collector of Central Excise allowed the appeals of the respondent and accepted the plea that the wholesale price disclosed by the seller was the proper basis for determining the excise duty.
The Appellate orders were, however, revised by the Central Govt.
under sub section (2) of section 36 of the Act and the orders made by the Assistant Collector were restored.
According to the Central Govt.
the buyer was the person engaged in the production of the goods and the seller merely manufactured them on behalf of.the buyer and that under the agreements the seller was required to affix the trade marks of the buyer on the manufactured goods and that indicated that the goods belonged to the buyer.
There is a ring of similarity between the facts of that case and the facts of the instant appeal before us.
The orders of the Central Govt.
were challenged under Article 226 of the Constitution.
The High Court held that the goods were manufactured by the seller as its own goods, and there fore, the wholesale price charged by the seller must form the true basis for the levy of excise duty.
On appeal.
this Court held that the High Court was right in concluding that the wholesale price of the goods manufactured by the seller was the wholesale price at which it sold those goods to the buyer, and it was 1032 not the wholesale price at which the buyer sold those goods to others.
The relevant provisions of the agreements and the other material on the record showed that the manufacturing programme was drawn up jointly by the buyer and the seller and not merely by the buyer, and that the buyer was obliged to purchase the manufactured product from the seller only if it conformed to the buyer 's standard.
For this purpose, the buyer was entitled to test a sample of each batch of the manufactured product and it was only on approval by him that the product was released for sale by the seller to the buyer.
It was apparent that the seller could not be said to manufacture the goods in those facts, it was held, on behalf of the buyer.
It was further found that it was clear from the record that the trade marks of the buyer were to be affixed on those goods only which were found to conform to the specifications or standard stipulated by the buyer.
All goods not approved by the buyer could not bear those trade marks and were disposed of by the sellers without the advan tage of those trade marks.
This question was again examined by this Court in Joint Secretary to.the Govt.
of India & Ors.
vs Food Specialities Ltd., [1985] Supp.
3 SCR 165.
There the respondent used to manufacture certain goods for sale in India by M/s Nestle 's Products India Ltd. (for short Nestle 's) under certain trade marks in respect of which the latter was registered as the sole registered user in India.
The goods were supplied to Nestle 's at wholesale price on rail at Moga or free on lorry at factory.
The respondent disputed the value of the goods determined by the excise authorities for the purpose of the levy under the said Act and ultimately the respondent filed writ petitions in the High Court.
The High Court allowed the writ petitions holding that the value of the trade marks could not form a component of the value of the goods for the purpose of assessment of excise duty.
In appeal to this Court, the appellant contended that the value of the goods sold by the respondent to Nestle 's should, for the purpose of levy of excise duty, include the value of the trade marks under which the goods were sold in the market and that the value of such trade marks should be added to the wholesale price for which the goods were sold by the respondent to Nestle 'section Dismissing the appeal, it was held that the value of Nestle 's trade marks could not be added to the wholesale price charged by the respondent to Nestle 's for the purpose of computing the value of the goods manufactured by the respondent in the assessment to excise duty.
In that case, it was held that what were sold and supplied by the respond ent were goods manufactured by it with the trade marks affixed to them and it was the wholesale cash price of goods that must determine the value for the purpose of assessment of excise duty.
It 1033 was immaterial that the trade marks belonged to Nestle 'section What was material was that Nestle 's had authorised the respondent to affix the trade marks on the goods manufac tured by it and it was the goods with the trade marks af fixed to them that were sold by the respondent to Nestle 'section There could, therefore, be no doubt, it was held, that the wholesale price at which the goods with the trade marks affixed to them were sold by the respondent to Nestle 's as stipulated under the agreements would be the value of the goods for the purpose of excise duty.
That was the price at which the respondent sold the goods to Nestle 's in the course of wholesale trade.
Similarly in the instant case, it appears that the brand name "Bush" was affixed to the goods produced by the re spondent.
In M/s Sidhosons and Others vs Union of India and others, [1987] 1 SCC 25, it was held that the excise duty was payable on the market value fetched by the goods, in the wholesale market at the factory gate manufactured by the manufacturers, i.e., the price charged by the manufacturers to the buyer under the agreement.
It could not be assessed on the basis of the market value obtained by the buyers who also add to the value of the manufactured goods the value of their own property in the goodwill of the 'brand name '.
In view of the facts that have emerged in this case, the High Court came to the conclusion that the market value of the goods of the respondent herein was the price charged from M/s Bush India Ltd. and not the market value at which price M/s Bush India Ltd. sold to its whole sellers for the purpose of payment of excise duty.
The High Court, there fore, quashed the Show Cause Notice and the Demand Notice.
Shri A. Subba Rao on behalf of the Revenue tried to contend before us that the facts of this case revealed that it was a device to under charge.
The respondent herein was brought in to divide the sale price of M/s Bush India Ltd. to be the basis of the assessable value.
It is true that the facts of this case do warrant a great deal of suspicion.
But it is not possible to hold otherwise than what has been held by the High Court in this case.
It is true, as Shri Rao drew our attention, that even though the Corporation might be a legal personality distinct from its members, the Court is entitled to lift the mask of corporate entity if the concep tion is used for tax evasion, or to circumvent tax obliga tion or to perpetrate a fraud.
In this connection, reference may be made to the observations of this Court in Juggi Lal Kamlapat vs Commissioner of Income tax, U.P., In the background of the facts 1034 found we, however, need not get ourselves bogged with the controversy as to judicial approach to tax avoidance devices as tax pointed out in McDowell and Co. Ltd. vs Commercial Tax Officer, , where this Court tried to discourage colourable devices.
It is true that tax planning may be legitimate provided it is within the framework of the law.
Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods.
It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges.
It is also true that in order to create,the atmosphere of tax compliance, taxes must be reasonably collected and when collected, should be utilised in proper expenditure and not wasted.
(See the observations in Commissioner of Wealth Tax vs Arvind Narottam; , , It is not necessary, in the facts of this case to notice the change in the trend of judicial approach in England: (Sherdeley vs Sherdeley, While it is true, as observed by Chinnappa Reddy, J. in McDowell and Co. Ltd. vs Commercial Tax Offi cer, (supra) too much to expect the legislature to intervene and take care of every device and scheme to avoid taxation and it is up to the court sometimes to take stock to deter mine the nature of the new and sophisticated legal devices to avoid tax and to expose the devices for what they really are and to refuse to give judicial ' benediction, it is necessary to remember as observed by Lord Reid in Greenberg vs IRC, that one must find out the true nature of the transaction.
It is unsafe to make bad laws out of hard facts and one should avoid subverting the rule of law.
Unfortunately, in the instant case, facts have not been found with such an approach by the lower authori ties and the High Court had no alternative on the facts as found but to quash the Show Cause and the Demand Notices.
In that view of the matter, the appeal fails and is accordingly dismissed.
But there will be no order as to costs.
We dismiss this appeal with reluctance.
Our reluc tance is not to be ascribed to any hesitation to accept the inference flowing from the facts found but reluctance is due to the fact that the facts were not properly found.
T.N.A. Appeal dismissed.
|
The respondent company was engaged in the manufacture of wireless receiving sets, tape recorders, tape players.
These products were assessable under Tariff Items 33A and 37AA of the Central Excise Tariff.
In the classification list and price lists filed by the respondentassessee company these goods were shown as unbranded goods.
Subsequentiy it was found that the respondent assessee company was manufacturing their products in the brand name of "Bush" and were selling the same exclusively to M/s Bush India Ltd. or its autho rised wholesale dealers only.
The appellants Revenue alleged that there was wilful suppression of facts by the respondent company with intention to evade excise duty because this fact was not mentioned by the company in the price list or classification list, filed.
A show Cause Notice was issued requiring the respondent company to show cause as to why, (i) M/s Bush India Limited should not be treated as .a 'related person ' and a favoured buyer of the respondent company for the purpose of determi nation of wholesale cash price, (ii) the concessional rate of duty under notification No. 358/77 CE should 1024 not be denied to the respondent and, (iii) the differential duty in respect of the goods cleared should not be recov ered.
Instead of executing the surety bond the respondent assessee company filed a writ petition in the High Court praying for quashing of the Show Cause Notice and for a mandamus to allow it to clear the goods on the basis of the price at which the goods were sold by it to Bush India Limited allowing the benefit of the relevant notification.
The High Court following its earlier decision held that for the purpose of payment of excise duty the market value of the goods of the respondent assessee company was the price charged by it from M/s Bush India Ltd., and not the market value at which price M/s Bush India Ltd. sold the goods.
It further held that there was no misdeclaration of the value by the assessee company, and it accordingly quashed the Show Cause Notice and the Demand Notice for recovery.
In this appeal by the Revenue it was contended that in the facts and circumstances of the case the High Court committed an error in not realising that M/s Bush India Ltd. was a related person and as such the price charged by the respondent company from M/s Bush India could not represent the correct assessable value for the purpose of excise duty.
Dismissing the appeal, HELD: 1.
Tax planning may be legitimate provided it is within the ' framework of the law.
But colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods.
It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges.
In order to create the atmosphere of tax com pliance, taxes must be reasonably collected and when col lected, should be utilised in proper expenditure and not wasted.
It is too much to expect the legislature to inter vene and take care of every device and scheme to avoid taxation and it is up to the court sometimes to take stock to determine the nature of the new sophisticated legal devices to avoid tax and to expose the devices for what they really are and to refuse to give judicial benediction.
[1034A B, D] 2.
One must find out the true nature of the transaction.
Even though the corporation might be a legal personality distinct from its members, the court is entitled to lift the mask of corporate entity if the conception is used for tax evasion, or to circumvent tax obligation perpetrate a fraud.
[1034E, 1033G] 1025 3.
It is unsafe to make bad laws out of hard facts and one should avoid subverting the rule of law.
In the instant case, facts have not been found with such an approach by the lower authorities, and the High Court had no alternative on the facts as found but to quash the Show Cause and Demand Notices.
It appears that the brand name "Bush" was affixed to the goods produced by the respondent.
For the purpose of excise duty, the market value of such goods was the price charged from M/s Bush India Ltd. and not the market value at which price M/s Bush India sold the same.
[1034E, 1033C, E] Juggi Lal Kamlapat vs Commissioner of Income tax, U.P., ; Mc Dowell and Co. Ltd. vs Commercial Tax Officer, ; Commissioner of Wealth Tax vs Arvind Narottam, ; Sherdeley vs Sherdeley, and Greenberg vs IRC.
referred to.
Union of India vs Bombay Tyre International, ; ; Union of India & Ors., vs Atic Industries Ltd., ; ; Union of India & Ors.
vs Cibatul Limited, [1985] Supp.
3 SCR 95; Joint Secretary to the Government of India & Ors.
vs Food Specialities Ltd., [1985] Supp.
3 SCR 165 and M/s Sidhosons & Ors.
vs Union of India & Ors, [1987] 1 SCC 25 relied on.
|
Appeal No. 177 of 1960.
554 Appeal from the Judgment and order dated March 27, 1958, of the Orissa, High Court in O. J.C. No. 191 of 1956.
Hemendra Chandra Sen and section Ghose, for the appellants.
N. section Bindra, V. N. Sethi and P. D. Xenon, for the respondents.
April 30.
The Judgment of the Court was delivered by SINHA, C. J.
This appeal on a certificate granted by the High Court of Orissa raises the question of the interpretation of certain provisions of The Orissa Estates Abolition Act, 1951 (Orissa Act 1 of 1952) which hereinafter will be referred to as the Act.
The appellants who were petitioners in the High Court were the proprietors of an Estate, known as Paikpara Estate, in the district of Puri, bearing Touzi Nos.
268, 269 and 270.
The respondents are the State of Orissa and its officials.
The facts on which the High Court based its judgment under appeal areas follows.
Within the said Paikpara Estate, there were several tenures and sub proprietory interests.
The Paikpara Estate vested in the State of Orissa by virtue of a notification issued under section 3 of the Act, on August 23, 1953.
It is common ground that the interests of tenure holders and sub proprietors within the said estate have not yet been taken over under the provisions of the Act.
Under the tenure holders aforesaid, there were some occupancy holdings which Lad been purchased by the proprietors, the appellants in this Court, long ago.
Thus the proprietors by virtue of their purchase became occupancy raiyats, under the tenure holders or sub proprietors, in respect of the holdings purchased by them.
It is also common ground that in the last Settlement Khatians their interests as occupancy 555 raiyat8 in respect of the holdings purchased by them have been recorded.
On the lands of the occupancy holdings, there were several buildings which were used as Katcheri houses by the proprietors, for the administration of their estate.
In January 1954, according to the petitioners in the High Court, the State Officials took illegal possession of those buildings situate on the raiyati land, as aforesaid.
The appellants thereupon made an application to the Collector of Puri for vacant possession of the lands and the buildings, described in the petition, on the allegation that those lands together with the buildings, purchased from tenants with rights of occupancy, were, after purchase by the proprietors, used as Katcheri house by them.
They also alleged that those properties had not vested in the State of Orissa as a result of the said notification, under the Act.
Part of the said house had been let out to the Postal Department.
The Anchal Adhikari of that area wrote to the Postmaster, and Superintendent of Post Offices, not to pay rent to the proprietors.
The Postal Department, therefore, vacated that portion of the building in their occupation, which has gone into the occupation of the State Government.
Another portion of the property, which was used as dhangola was let out for storing paddy, to a third party.
That dhangola was also taken illegal possession of by the Naib Tehsildar of the place.
Other portions of the property also are in illegal possession of the State Government, through its Anchal Adhikari.
It was thus claimed on behalf of the proprietors that the State Government had no right to take possession of the property, as it did not form part of the estate which had been acquired under the Act, and had, on notification, vested in the State Government.
The learned Collector of Puri did not concede the demand of the proprietors, and held that the occupancy holding is situated within the tenure held 556 under the proprietors and lay within the geographical limits of the (state which had vested in the Government.
Being aggrieved by the aforesaid order of the Collector, dated November 20, 1956, the proprietors moved the High Court under article 226 of the Constitution for relief against what was alleged to be illegal interference with their interest not as proprietors but as occupancy tenants.
The High Court dismissed the proprietors ' claim chiefly on the ground that the question raised by the petition before the High Court was "practically concluded by the observations of the Supreme Court in the case of K. C. Gajapati Narayan Deo vs The State of Orissa (1).
It is manifest that the controversy raised in this case has to be answered with reference to the provisions of the Act. 'Estate ' has been defined in cl.
(g) of section 2 of the Act as follows : " 'estate ' includes a part of an estate and means any land held by or vested in an Inter mediary and included under one entry in any revenue roll or any of the general registers of revenue paying lands and revenue free lands, prepared and maintained under the law relating to land revenue for the time being in force or under any rule, order, custom or usage having the force of law, and includes revenue free lands not entered in any register or revenue roll and all classes of tenures or under tenures and any jagir, inam or muafi or other similar grant"; Explanation I. Land Revenue means all sums and payments in money or in kind, by whatever name designated or locally known, received or claimable by or on behalf of the State from an Intermediary on account of or (1) ; 557 in relation to any land hold by or vested in such intermediary; Explanation II.
Revenue free land includes land which is, or but for any special covenant, agreement, engagement or contract would have been, liable to settlement and assessment of land revenue or with respect to which the State has power to make laws for settlement and assessment of land revenue; Explanation III.
In relation to merged territories estate ' as defined in this clause shall also include any mahal or village or collection of more than one such mahal or village held by or vested in an Intermediary which has been or is liable to be assessed as one unit to land revenue whether such land revenue be payable or has been released or compounded for or redeemed in whole or in part".
The definition makes reference to an 'Intermediary ', which has been defined in cl.(h) as follows: 'Intermediary ' with reference to any estate means a proprietor, sub proprietor, landlord, landholder, malguzar, thikadar, gaontia, tenure holder, undertenure holder, and includes an inamdar a jagirdar, Zamindar, Ilaquadar, Khorgoshdar, Parganadar, Sarbaraka r and Maufidar including the Ruler of an Indian State merged with the State of Orissa and all other holders or owners of interest in land between the raiyat and the State; Explanation I. Any two or more Intermediaries holding a joint interest in an estate which is borne either on the revenue roll or on the rent roll of another Intermediary shall be deemed to be one Intermediary for the purposes of this Act; 558 Explanation II.
The heirs and successors in interest of an Intermediary and where an Intermediary is a minor or of unsound mind or and idiot, his guardian, committee or other legal curator shall be deemed to be an Intermediary for the purposes of this Act.
All acts done by an Intermediary under this Act shall be deemed to have been done by his heirs and successors in interest and shall be binding on them.
Reading the two definitions together, the position in law is that 'estate ' includes the interest, by whatever name called, of all persons, who hold some right in land between the State at the apex and the raiyat at the base.
That is to say, the Act is intended to abolish all Intermediaries and rentreceivers and to establish direct relationship bet ween the State, in which all such interests vest, after abolition under the Act, and the tillers of the soil.
The interest of a raiyat is designated by the word 'holding and is defined by the Orissa Tenancy Act (Bihar and Orissa Act II of 1913), as follows: .
" holding" means a parcel or parcels of land held by a raiyat and forming the subject of a separate tenancy".
Under the, Orissa Tenancy Act, the unit of interest of a proprietor is an 'estate '.
Under a proprietor may be a number of sub proprietors. 'Sub proprietor ' is also defined in the Tenancy Act, but we are not concerned in this case with that class of holders of land.
The interest of a tenure holder or an under tenureholder is characterised as a "tenure '.
Thus, the process of in feudalist and sub infeudation, which has been similar in all places where the Permanent Settlement took place, that is to say, in Bengal, Bihar and Orissa and Madras and Andhra Pradesh, 559 has led to the coming into existence of proprietors, with their estates, sub proprietors under them, tenure holders and under tenure holders and ultimately the tiller of the soil, the raiyat, whose unit of interest is a 'holding '.
The Act was intended to abolish all proprietors, sub proprietors, tenureholders and under tennure holders, with a variety of names; but did not touch the interest of the raiyat.
The same person, by transfer or by operation of law, might at the same time occupy different status in relation to land.
He maybe in respect of a particular area, which is geographically included in the estate, the proprietor.
That land may be held by a raiyat not directly under a proprietor but under a tenure holder, who holds directly under proprietor.
The proprietor may have acquired the interest of a raiyat.
Thus the proprietor, in his capacity as the owner of the estate holds the entire estate, and he may have by purchase acquired the interest of a raiyat, paying rent for the raiyati interest to his immediate landlord, the tenure bolder.
The tenure holder, in his turn, may have been liable to pay rent to the proprietor.
That is what appears to have happened in this case.
The appellants held the Paikpara estate as proprietors.
They also appear to have purchased the properties in question comprising raiyati lands with certain buildings thereon from the raiyat.
Hence, the position in law is that though these lands with the buildings are situate geographically within the ambit of the appellants ' estate, they are not part of the estate.
In other words, the appellants hold those properties with the buildings not as proprietors as such, but as rayats.
It appears that the Courts below have not kept clearly in view this distinction.
The Collector, in the first instance, and the High Court in the proceedings under article 226 of the Constitution, appear to have fallen into the error of confusing the petitioners ' position as ex proprietors, with their present position as raiyat in 560 respect of the land on which the buildings stand.
The High Court has drawn the conclusion from the decision of this Court in K. C. Gajapati Narayan Deo vs The State of Orissa, (1) and has observed that whether the buildings in question vested in the Government, on the vesting of the estate under section 3 of the Act, world depend not upon whether it formed part of the estate acquired by the Government but on the, purpose for which the buildings wore used by the proprietors.
As the buildings in question had been primarily used as office or Katcheri for the collection of rent or for the use of servants or for storing grains by way of rent in kind, the buildings will vest in the Government on the vesting of the estate itself.
In our opinion, this conclusion drawn by the High Court from the decision of this Court is not well founded in law.
The High Court draw its conclusions from the following observations of this Court in the aforesaid case at Pages 25 26. "Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State legislature from providing as a part of the estates abolition scheme that buildings, lying within the ambit of an estate and used primarily for management or administration of the estate, would vest in the Government as appurtenances to the estate itself.
This is merely ancillary to the acquisition of an estate and forms an integral part of the abolition scheme.
Such acquisition would come within article 31 (2) of the Constitution and if the conditions laid down in clause (4) of the article are complied with, it would certainly attract the protection afforded by that clause.
Compensation has (1) , 561 been provided for these buildings in section 26(2)(iii) of the Act and the annual rent of these buildings determined in the prescribed manner constitutes one of the elements for computation of the gross asset of an estate.
" The observations quoted above of this Court have reference to the following definition of ,homestead ' in el.
(i) of section 2 of the Act: "homestead ' means a dwelling house used by the Intermediary for the purpose of his own residence or for the purpose of letting out on rent together with any courtyard, compound, garden, orchard and outbuildings attached thereto and included any tank, library and place of worship appertaining to such dwelling house but does not include any building comprised in such estate and used primarily as office or kutchery for the administration of the estate on and from the is day of January, 1946".
it will appear from this definition that the Legislature placed a proprietor 's homestead ' in two categories, namely (1) a dwelling house used by the Intermediary for his own purposes and (2) any building comprised in such estate and used primarily as office or.
Katcheri for the administration of the estate on and from the list day of January, 1946.
In respect of first category the Act provides in a. 6 that portion of the homestead shall be deemed to be settled by the State with the Intermediary, who will continue to hold it as a tenant under the State Government, subject to the payment of fair and equitable groundrent, except where under the existing law no rent is payable in respect of homestead lands.
It will be noticed further that the second category in the definition of homestead, which has not been permitted to the outgoing 562 Intermediary has reference to "any building comprised in such estate".
It has no reference to any building standing on rayati holding or a portion thereof.
This becomes further clear with reference to the provisions of a. 5, which lays down the consequences of vesting of an estate in the State.
Under cl (a) of section 5, the entire estate, including all kinds of lands described in meticulous details, and other non raiyati lands vest absolutely in the State Government.
This Court, while dealing with the constitutionality of the Act, was not concerned with raiyati lands.
Its observations had reference only to such buildings as stood upon the proprietor 's private lands like peel, seer, Zirat, etc., whicl, were in his possession as proprietor or as tenure bolder.
It is thus clear that the very basis of the judgment of the High Court is entirely lacking.
That the High Court was not unaware of this distinction becomes clear from the following passage in its judgment: "Doubtless, Ryoti lands are excluded from the scope of this clause.
But buildings and structures standing on Ryoti lands and in the possession of the proprietor are not expressly saved.
" The first sentence quoted above is correct, but not the second. 'I here is no question of expressly saving structures on ratyati lands, when it is absolutely clear that raiyati lands are not the subject matter of legislation by the Act.
The same remarks apply to the reference in section.
26 (b) (iii).
Section 26 begins with the words ,for the purpose of this chapter", namely, Chapter V, headed "Assessment of Compensation".
Reading section 26 as a whole it is absolutely clear that for the purpose of assessment of the compensation payable to the outgoing proprietor or tenure holder, of the estate to be acquired, gross assets have to be determined, by aggregating the rents payable by 563 tenure holders or under tenure holders and raiyats.
It is, thus, clear that the rent payable by the appellants as raiyats in respect of the disputed lands would form part of the assets which have to be included in the gross assets in determining compensation.
But that does not mean that the interests of raiyats also have become vested in the State as a result of the notification under. 3, read with section 5.
For the reasons aforesaid, it must be held that the appellant 's raiyati interests in the lands and in the buildings standing on those lands have not been affected by the abolition of his interest as proprietors, and that the State authorities had illegally taken possession of those.
The appeal is accordingly allowed with costs here and below.
Appeal allowed.
|
The appellants held the Paikpara estate as proprietors.
They had purchased the properties in question comprising raiyati lands with certain buildings thereon from the raiyat.
Thus the proprietors became occupancy raiyat8 under the tenure holders or sub proprietors.
By virtue of a notification issued under section 3 of the Orissa Estates Abolition Act, 1951, the Paikpara estate vested in the State of Orissa.
But the interest of tenure holders and sub proprietors within the estate had not been taken over under the provisions of the Act: 553 The said buildings on the lands of the occupancy holdings were used as Katcheri houses by the proprietors for the administration of their estates.
The state officials took possession of these buildings situated on the raiyati land.
The appellants made an application to the collector, Puri, for vacant possession of the lands and the buildings.
The Collector did not concede the demand and held that the occupancy holding was situated within the tenure held under the proprietors and lay within the geographical limits of the estate which had vested in the Government.
The High Court dismissed the writ petition of the appellant under article 226 on the ground that the question raised was practically concluded by the Supreme Court in K. C. Gajapati Narayan vs Deo State of Orissa.
The appellants came up in appeal on a certificate granted by the High Court.
Held, that the appellants ' raiyati interests in the lands and in the buildings standing on those lands had not been affected by the abolition of their interests as proprietors, and the State Authorities had illegally taken possession of them.
Held, further, that the Orissa Estates abolition Act,1951, was intended to abolish all proprietors,sub proprietors, tenureholders, with a variety of names, but did not touch the interest of the raiyat.
Hence though these lands with buildings was situate geographicaiy within the ambit of the appellant 's estate, they were not part of the estate.
The appellant held those properties with the buildings not as proprietors as such, but as raiyats.
Held, also, that the conclusion drawn by the High Court from the decision in K. C. Gajapati Narayan Deo vs The State of Orissa is not well founded.
The observation of this Court on which it drew its conclusion had reference to the definition of 'home stead ' in cl.
(1) of section 2 of the Act.
This court while dealing with the constitutionality of the Act, in the above case, was not concerned with raiyati lands.
Its observations had reference only to such buildings as stood upon the proprietor 's private land, which were in his possession as proprietor or as tenure holder.
K. C. Gajapati Narayan Deo vs The State of Orissa; , , not applicable.
|
Civil Appeal No. 2327 of 1986.
From the Judgment and order dated 10.10.1984 of the Punjab and Haryana High Court in R.S.A. No. 2198 of 1984.
K. N. Rai for the Appellant.
R. S .
Sodhi for the Respondents.
The Judgment of the Court was delivered by E RAY, J.
After hearing the learned counsel for both the parties and on consideration of the question of law involved in this petition.
Special Leave is granted.
Arguments heard.
The appellant petitioner was appointed as a lady constable in Hoshiarpur District on 7.5.1979.
After completion of training she was posted in March, 1980 in the police lines, Hoshiarpur.
The Superintendent of Police, Hoshiarpur discharged the appellant from service by an order dated 9.9.
1980 under Rule 12.21 volume 7 of the Punjab Police Rules, 1934.
The said order is in the following terms: "Lady Constable Rajinder Kaur No. 732 is unlikely to prove an efficient police officer.
She is, therefore, hereby discharged from the Police Force Under P.P. 12.21 with effect from today (9.9.1980).
502 Issue orders in O.R. and all concerned to notice and necessary action.
" This order was made, it has been stated in the petition, without serving any charge sheet on her and without asking her to explain any charge.
The order also has not recorded any reason for her discharge from service.
Against this order the appellant made a representation to the Deputy Inspector General of Police, Jullunder Range.
The said representation was rejected on 17.10.1980.
The appellant filed a revision against the order of the Deputy Inspector General of Police and the same was also dismissed on 15.4.1981.
The appellant thereafter filed a civil suit No. 327/ASSJ/82 in the Court of Additional Senior Sub Judge, Hoshiarpur on 16.11.1981 challenging the order of discharge as bad, arbitrary and against the principles of law.
The said suit was dismissed by the Additional Senior Sub Judge, Hoshiarpur on 28.2.1983.
Thereafter, the appellant Sled an appeal before the District Judge, Hoshiarpur on 31.3.1983 and it was numbered as Civil Appeal No. 45 of 1983.
The said appeal was dismissed on 7.5.
1984 and the judgment of the Trial Court was confirmed.
A Regular Second Appeal No. 2198 of 1984 was filed before the High Court of Punjab and Haryana at Chandigarh.
The said Second Appeal was dismissed on 10.10.1984.
Hence the instant application for grant of special leave to appeal under Article 136 of the Constitution has been filed in this Honourable Court by the appellant.
The main argument advanced on behalf of the appellant is that the impugned order of discharge from service was made not in accordance with Rule 12.21 of the Punjab Police Rules, 1934 in accordance with the terms and conditions of the service but it was made by way of punishment.
An enquiry was made by Deputy Police Superintendent, Garhshankar as to the character of the appellant into the allegation that she stayed at Mahalpur for 1 or 2 nights with one constable, Jaswant Singh and evidences were recorded therein without giving the appellant any opportunity of hearing in the enquiry and without giving her any opportunity to cross examine the witnesses and the impugned order was made after the completion of the investigation on the ground of her misconduct which casted a stigma on her service career.
The order in question is, therefore, not an innocuous one though expressed in innocuous terms.
It is made by way of punishment, the ground being her misconduct as found on the basis of the investigation of certain allegations behind her back.
It was urged on behalf of the respondents that the order dis 503 charging the appellant from service was not made by way of punishment.
The order was made in accordance with the terms of Rule 12.21 of the said Rules which empowers the authorities to do away with the service of the constable at any time within three years of her enrolment, if she is found unlikely to prove an efficient police officer, by the Superintendent of Police and no appeal has been provided for under the Rules against the said order of discharge.
It was, therefore, urged that the order being made in accordance with the conditions of service of the appellant and so it is unchallengeable before this Court by filing a special leave petition to appeal.
Admittedly, the appellant was appointed as a lady constable on 7.5.1979 and she was posted in March, 1980 in the police lines, Hoshiarpur after completion of her training.
It has been stated in para 15 of the petition that on an allegation made by the department against the appellant that she spent two nights with a constable an investigation was caused to be made into the said allegation against her conduct and on the basis of that investigation the impugned order of discharge was made by the Superintendent of Police, Hoshiarpur.
In para 15 of the counter affidavit sworn on behalf of respondents it has been stated that the Superintendent of Police, Hoshiarpur, got conducted a confidential enquiry through a Deputy Superintendent of Police regarding the conduct of the appellant.
On an overall assessment of the work and conduct of the appellant, the Superintendent of Police, Hoshiarpur came to the conclusion that she was not likely to become an efficient Police officer and thus passed an order discharging her from service in accordance with the conditions of the service.
These averments made in para 15 of the counter affidavit have been verified to be true and correct to the knowledge of the deponent based upon the information derived from the record of the case.
Thus, it is clear from these averments that the impugned order of discharge though stated to be made in accordance with the provisions of Rule 12.21 of the Punjab Police Rules, 1934, is really made on the basis of the misconduct as found on enquiry into the allegation behind her back by the Deputy Superintendent of Police, Garhshankar.
It is not disputed that the enquiry was made without serving her the charge sheet and without giving her any opportunity to explain the charges and the allegations levelled against her.
The enquiry was conducted behind her back and on the basis of the result of the investigation she was discharged from service.
Therefore in these circumstances, it does not lie in the mouth of the respondents to submit before this Court that the order is an innocuous one and it is an order made simply in accordance with the conditions of her 504 service under Rule 12.21 of the said Rules.
On the other hand, in the background of these facts and circumstances it is crystal clear that the impugned order of discharge from service of the appellant was made on the ground of her misconduct and it is penal in nature as it casts a stigma on the service career of the appellant.
The next question arises is whether the appellant who is yet to be confirmed in the service and has no right to the post in question, the impugned order can be assailed as violative of the protection given by Article 311(2) of the Constitution.
This point has been well settled by several decisions of this Court.
This Court has stated in no uncertain terms in the case of P. L. Dhingra vs Union of India, [1958] SCR p. 828 at 862 as follows: "But even if the Government has, by contract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal or removal or reduction in rank, the Government may, nevertheless, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punishment and the requirements of Article 311 must be complied with." This decision has been relied upon by this Court in the case of K.H. Phadnis vs State of Maharashtra, [1971] SCR (Supp.) p. 118 where it has been held that even in the case of reversion of an employee who has been repatriated from the temporary post of Controller of Food Grains Department to his parent department of Excise and Prohibition, to which he had a lien might be sent back to the substantive post in ordinary routine administration or because of exigencies of service.
Such a person may have been drawing a salary more than that of his substantive post but when he is reverted to the parent department the loss of salary cannot be said to have any penal consequences.
The matter has to be viewed as one of substance and all relevant factors have to be considered in ascertaining whether the order is a genuine one of accidence of service in which a person sent from the substantive post to a temporary post has to go back to the parent post without any aspersion against his character or integrity, or whether the order amounts to a reduction in rank by way of punishment.
505 lt has been further observed by this Court in the case of State of Bihar & Ors.
vs Shiva Bhikshuk Mishra, at 196.
"The form of the order is not conclusive of its true nature and it might merely be a cloak and camouflage for an order founded on misconduct.
It may be that an order which is innocuous on the face and does not contain any imputation of misconduct is a circumstance or a piece of evidence for finding whether it was made by way of punishment or administrative routine.
But the entirety of circumstances preceding or attendant on the impugned order must be examined and the overriding test will always be whether the misconduct is a mere motive or is the very foundation of the order.
" In the case of Shamsher Singh & Anr.
vs State of Punjab, [1975] 1 S.C.R. p.814 at 837 it has been observed as under: "No abstract proposition can be laid down that where the services of a probationer are terminated without saying anything more in the order of termination than that the services are terminated it can never amount to a punishment in the facts and circumstances of the case.
If a probationer is discharged on the ground of misconduct, or inef ficiency or for similar reason without a proper enquiry and without his getting a reasonable opportunity of showing cause against his discharge it may in a given case amount to removal from service within the meaning of Article 31 l (2) f the Constitution.
" lt has been observed by this Court in the case of Anoop Jaiswal vs Government of India & Anr., [1984] 2 S.C.R. p.453 as under: "Where the form of the order is merely a camouflage for an order of dismissal for misconduct it is always open to the Court before which the order is challenged to go behind the form and ascertain the true character of the order.
If the Court holds that the order though in the form is merely a determination of employment is in reality a cloak for an order of punishment, the Court would not be debarred, merely because of the form of the order, in giving effect to the rights conferred by law upon the employee.
" 506 On a conspectus of all these decisions mentioned hereinbefore, the irresistible conclusion follows that the impugned order of discharge though couched in innocuous terms, is merely a camouflage for an order of dismissal from service on the ground of misconduct.
This order has been made without serving the appellant any charge sheet, without asking for any explanation from her and without giving any opportunity to show cause against the purported order of dismissal from service and without giving any opportunity to cross examine the witnesses examined, that is, in other words the order has been made in total contravention of the provisions of Article 311(2) of the constitution.
The impugned order is, therefore, liable to be quashed and set aside.
A writ of certiorari be issued on the respondents to quash and set aside the impugned order dated 9.9.1980 of her dismissal from service.
A writ in the nature of mandamus and appropriate directions be issued to allow the appellant to be reinstated in the post from which she has been discharged.
The appeal is thus allowed with costs.
The authorities concerned will pay all her emoluments to which she is entitled to in accordance with the extant rules as early as possible in any case not later than eight weeks from the date of this judgment.
P.S.S. Appeal allowed.
|
The appellant, a temporary lady constable, was discharged from service by an order under Rule 12.21 Volume 7 of the Punjab Police Rules 1934 on the allegation that she was unlikely to prove an efficient police officer.
A representation made by her to the Deputy Inspector General of Police against that order was rejected.
A revision filed by the appellant against the latter order was dismissed.
A suit filed by her challenging the order of discharge as bad, arbitrary and against the principles of law was dismissed.
This order was confirmed by the District Judge and the High Court in appeal.
In the appeal to this Court by special leave it was contended for the appellant that the impugned order of discharge from service was made not in accordance with the said Rule, in accordance with the terms and conditions of the service, but was made by way of punishment on the ground of her misconduct, as found on the basis of the investigation of certain allegations behind her back, without giving her any opportunity of hearing in the enquiry or to cross examine the witnesses.
Allowing the appeal, the Court, ^ HELD: The impugned order of discharge, though couched in innocuous terms and stated to be made in accordance with the provisions of Rule 12.21, Vol.7 of the Punjab Police Rules, 1934, was really a camouflage for an order of dismissal from service on the ground of misconduct as found on an enquiry into the allegations behind her back.
It was penal in nature as it cast a stigma on the service career of the 501 appellant.
This order was made without serving the appellant any chargesheet without asking for any explanation from her without giving any opportunity to show cause against the purported order of dismissal from service and without giving any opportunity to cross examine the witnesses.
It, therefore, contravenes article 311(2) of the Constitution and is liabie to be quashed and set aside.
[503F G; 504B; 506B C] P.L. Dhingra vs Union of India, [1958] SCR p. 828 at 862, K.H. Phadnis vs State of Maharashtra, [1971] SCR (Supp.)) p. 118, State of Bihar & Ors.
vs Shiva Bhikshuk Mishra, at 196, Shamsher Singh & Anr.
vs State of Punjab, [1975] 1 SCR p. 814 at 837 and Anoop Jaiswal vs Government of India & Anr., [1984] 2 SCR p. 453, referred to.
|
Civil Misc.
Petitions Nos.
20021 22 of 1986.
in Civil Appeal No. 2924 of 1984.
From the Judgment and order dated 22.7.1983 of the Delhi High Court in W.P. No. 963 of 1982.
S.N. Kacker, P.M. Amin, Atul, B. Munim and Ashok Grover for the Applicant.
A.K. Ganguli, Miss Sushma Relan and Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two Civil Misc.
Petitions are by Star Diamond Company India.
The applicant has referred to the judgments of this Court in Raj Prakash 's case dated 5th March, 1986 and Indo Afghan Chamber of Commerce 's case ; dated 15th May, 1986.
The applicant states that the applicant was neither a party nor was served with any notice of the said proceedings resulting in the.
said two decisions.
According to the applicant, it was not bound by the directions therein.
We are unable to accept the said contentions.
Such decisions of Court laying down the position in law are laws binding on all.
In the order of this Court dated 18th April, 1985, the question of 783 entitlement under certain circumstances came up for consideration.
The Government had wrongfully refused to allow Export House Certificates to those who had not diversified their exports.
It was held by this Court following the decisions of several High Courts that this was wrong.
This Court in the order dated 18th April, 1985 in Civil Appeal No. 1423 of 1984, (a) confirmed the orders of the High Court, quashed the impugned orders of the Government and directed the Government to issue necessary Export House Certificates for the year 1978 79; (b) It was further directed that Export House Certificates should be granted within three months from this date.
(c) Save and except items which are 'specifically banned under the prevalent import policy at the time of import ', the parties the merchants would be entitled to import all other items whether canalised or uncanalised, and in accordance with the relevant rules.
Both canalised and uncanalised items could be imported in accordance with the relevant rules except those which were specifically banned under the prevalent import policy at the time of import.
The effect of this direction came to be considered in Raj Prakash Chemicals Ltd. vs Union of India (supra).
We have this date explained the effect of the same in Union of India vs M/s Godrej Soaps Pvt. Ltd & Anr., (Civil Appeal No. 3418/86 arising out of SLP (Civil) No. 8144 of 1986).
This question further came up for examination in the case of M/s Indo Afghan Chamber of Commerce & Ors.
vs Union of India, (Writ Petition No. 199 of 1986) (supra).
This day we have also in the judgment in M/s Godrej Soap 's case explained the true purport of the said decision.
The respondents have not permitted, according to the applicant clearance of the goods in view of the said two decisions referred to hereinbefore.
The case of the applicant is that it is not bound as the applicant was neither a party to any of the aforesaid proceedings nor any notice was given.
We are unable to accept this position.
For what we held in the said two decisions, we crave leave to refer to the said two decisions.
We reiterate as we have mentioned in M/s Godrej Soaps ' case whether importation of canalised items would be covered by the order was not adverted to in the first order dated 18th April, 1985.
Use of the expression "whether canalised or not" was intended to convey that both canalised and non canalised items would be covered within the ambit of the order.
The position has been clarified by the letter dated 18th June, 1986 written by the respondent which appears at page 132 of the Paper 784 Book.
It has been mentioned that the holders of additional licence issued for 1978 79 would be entitled to import only those goods which are included in Appendix 6 Part 11 of AM 85 88.
The fact that the Additional Secretary to the Government of India, Ministry of Finance (Department of Revenue) on 23rd April, 1986 wrote a letter which is not in consonance with the subsequent direction would not in any way affect the position or create any estoppel.
Nor can such a letter be used as an argument that that was the government 's understanding of the matter.
That is irrelevant.
In the premises the interim order prayed for in these applications is refused.
The applications are thus disposed of.
There will be no order as to costs.
|
This Court by its order dated 18th April 1985 in Union of India vs Rajnikant Bros. (Civil Appeal No. 1423 of 1984) directed that save and except items which were specifically banned under the prevalent Import Policy at the time of import, parties would be entitled to import all other items whether 'canalised ' or 'uncanalised ' and in accordance with the relevant rules.
The effect of this direction came to be considered in Raj Prakash Chemicals Ltd. vs Union of India, , and M/s. Indo Afghan Chamber of Commerce & Ors.
vs Union of India, (AIR The effect has also been explained in Union of India vs M/s. Godrej Soaps Pvt. Ltd., (S.L.P.No. 8144 of 1986).
The applicant was neither a party nor was served with any notice of the aforesaid proceedings.
The respondents having not permitted clearance of its goods in view of the decisions in Prakash 's case and Indo Afghan Chamber of Commerce 's case the applicant filed petitions contending that it was not bound by the directions contained therein.
Disposing of the petitions, the Court, ^ HELD: Decisions of this Court laying down the position in law, are laws binding on all.
[782 G] 782 Whether importation of canalised items would be covered by the order was not adverted to in the first order dated 18th April, 1985.
Use of the expression "Whether canalised or not" was intended to convey that both canalised and non canalised items would be covered within the ambit of the order.
[783 G] The position has been clarified by the respondent 's letter dated June 18, 1986.
The Government of India 's letter dated April 23, 1986 which is not in consonance with the subsequent direction, would not in any way affect the position or create any estoppel.
Nor can such a letter be used as an argument that that was the Government 's understanding of the matter.
[783 H: 784 A B]
|
Special Leave Petition No. 8862 of 1986 From the Judgment and order dated 26.3.1986 of the Karnataka High Court in C.R.P. 3084 of 1985.
Padmanabha Mahale, K.K. Gupta and Mrs. Leelawati Mahale for the Petitioner.
The order of the Court was delivered by SEN, J.
In this special leave petition the short point involved is whether by reason of sub r.
(2) of r. 92 of order XXI of the Code of Civil Procedure, 1908, the deposit required by r. 89 not having been 736 made within thirty days from the date of sale, the application made by the judgment debtor was not maintainable.
Sub r.
(2) of r. 92 has been amended by section 72 of the Code of Civil Procedure (Amendment) Act, 1976 by adding the words "the deposit required by that rule is made within thirty days from the date of sale", the following ' 'or in cases where the amount deposited under rule 89. within such time as may be fixed by the Court" to prevent any controversy as to the power of the Court to extend the time to make good the deficit.
Unfortunately, the words added speak of the deficiency owing to 'any clerical or arithmetical mistake ' on the part of the depositor.
The amended r. 92(2) now reads: "92(2).
Where such application is made and allowed, and where, in the case of an application under rule 89, the deposit required by that rule is made within thirty days from the date of sale, or in cases where the amount deposited under Rule 89 is found to be dificient owing to any clerical or arithmetical mistake on the part of the depositor and such deficiency has been made good within such time as may be fixed by the Court, the Court shall make an order setting aside the sale: Provided that no order shall be made unless notice of the application has been given to all persons affected thereby.
" The failure to deposit the amount entails confirmation of sale under O.XXI, r. 91(1) and thereupon the sale becomes absolute.
The limitation prescribed for an application under O.XXI, r. 89 was thirty days from the date of sale under Schedule I, article 166 of the Limitation Act, 1908, now replaced by article 127 of the .
The words "may apply to have the sale set aside on his depositing in Court" etc.
show that not only the application, but also the deposit, should be made within thirty days from the date of sale.
It is not enough to make the application within thirty days.
Nor is it enough to make the deposit within thirty days.
Both the application and the deposit must be made within thirty days from the date of sale.
article 127 of the has now been amended by Act 104 of 1976 and the words 'sixty days ' have now been substituted for the words 'thirty days '.
As a result of the amendment, the limitation for an application to set aside a sale in execution of a decree, including any such application by a judgment debtor under O.XXI, r. 89 or r. 90 is therefore sixty days now.
Such being the law, there is need for an appropriate amendment of sub r.
737 (2) of r. 92 of the Code.
Under O.XXI, r. 89 as it now exists, both the application and the deposit must be made within thirty days of the sale.
The failure to make such deposit within the time allowed at once attracts the consequences set forth in sub r.
(2) of r. 92.
This is an unfortunate state of things and Parliament must enact the necessary change in law.
In the present case, the auction was held on July 26, 1985.
The decree holder brought to sale in execution of a money decree for Rs.21,948.45p., the property of judgment debtor No. 1 comprised of a house and open site appurtenant thereto.
The highest bid of Rs.22,500 offered by the auction purchaser was accepted and the bid was knocked down in his favour.
The executing Court fixed the case for confirmation of sale on September 30, 1985.
In the meanwhile, judgment debtor No. 1 deposited Rs.22,000 on August 29, 1985 towards payment of the decretal amount together with an application under O.XXI, r. 90 read with section 151 of the Code for setting aside the sale.
Again, on September 6, 1985 he made another application purporting to be under O.XXI, r. 89 read with section 151 of the Code and made a deposit of the balance amount.
The auction purchaser objected to the entertainment of the application contending inter alia that the deposit required by r. 89 not having been made within thirty days of the date of sale as required by r. 92(2) of the Code, the sale was liable to be confirmed under sub r.
(1) thereof.
It is undisputed that the judgment debtor has deposited the entire decretal amount together with 5% of the purchase money by way of commission to the petitioner auction purchaser.
The Principal Munsif, Dharwar by his order dated October 4, 1985 overruled the objection raised by the petitioner.
A learned Single Judge (Kulkarni, J.) by his judgment dated March 26, 1986 declined to interfere with the order of the learned Munsif setting aside the sale.
The learned Judge relying upon the decision of the Madras High Court in Thangammal & Ors.
vs K. Dhanalakshmi & Anr., AIR 1981 Mad.
254 held that the provisions of O.XXI, rr. 89 and 92(2) of the Code and that of article 127 of the should receive a harmonious construction.
In that view, the learned Judge held that the judgment debtor No. 1 having deposited the decretal amount together with 5% of the purchase money and having made the application under O.XXI, r. 89 of the Code within sixty days of the sale i.e. within the period as provided by article 127 of the , the sale was liable to be set aside.
The learned Single Judge has brought about the inconsistency between sub r.
(2) of r. 92 of O.XXI of the Code and article 127 of the Limitation 738 Act and suggested that steps should be taken to remove this inconsistency.
We fully endorse the view expressed by the learned Single Judge.
In the result, the special leave petition must fail and is dismissed.
A.P.J. Petition dismissed.
|
The auction of the property of judgment debtor No. 1, in execution of a money decree, was held on July 26, 1985.
The highest bid of Rs.22,000 offered by the auction purchaser was accepted.
The case for confirmation of sale was fixed on September 30, 1985.
In the mean while, judgment debtor No. l deposited the bid amount on August 29, 1985 together with an application under O,XXI,r.90 read with section 151 of the Civil Procedure Code for setting aside the sale.
On September 6, 1985, he made another application under O.XXI r. 89 read with section 151 of the Code and made a deposit of the balance amount.
The objection raised by the auction purchaser that the deposit required by r. 89 not having been made within 30 days of the date of the sale as required by r. 92(2) of the Code, the sale was liable to be con firmed under sub r.
(1) thereof, was overruled by the Principal Munsif.
This order was upheld by the High Court.
Dismissing the SLP, this Court, ^ HELD: 1.
Under O.XXI, r. 89 as it now exists, both the application and the deposit must be made within 30 days of the sale.
The failure to make such deposit within the time allowed at once attracts the consequences set forth under sub r.
(2) of r. 92.
[737 A B] 2.
The limitation prescribed for an application under O.XXI, r. 735 89 was 30 days from the date of sale under Schedule I, article 166 of the Limitation Act, 1908, now replaced by article 127 of the . article 127 has now been amended by Act 104 of 1976 and the words 'sixty days ' have been substituted for the words 'thirty days '.
[736 F G] 3.
As a result of this amendment, the limitation for an application to set aside a sale in execution of the decree including any such application by a judgment debtor under O.XXI, r. 89 or r.90 is, therefore, sixty days now.
[736 G] 4.
Sub r.
(2) of r. 92 of O.XXI of the Code is inconsistent with article 127 of the .
The Parliament must enact the necessary change in law for an appropriate amendment of sub r.
(2) of r. 92 of the Code.
[737 A B] In the instant case, the judgment debtor No. 1 having deposited the decretal amount together with 5% of the purchase money and having made the application under O.XXI, r. 89 within sixty days of the sale i.e. within the period as provided by article 127 of the , the sale was liable to be set aside.
[737 G H] 5.
The provision of O.XXI, rr. 89 and 92(2) of the Code of Civil Procedure and that of article 127 of the , should receive harmonious construction.
[737 F G] Thangammal & Ors.
vs K. Dhanalakshmi & Anr., AIR 1981 Mad.
254, approved.
|
ition (Civil) Nos.
15466 67 of 1984 Etc.
(Under Article 32 of the Constitution of India.) M.K. Ramamurthi, P. Gaur and Jitendra Sharma for the Petitioners.
G.B. Pai, O.C. Mathur, Miss Deepa Sabra and Mrs. Meera Mathur for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
All these applications under Article 32 of the Constitution are by officers called the Management Staff employed under the Respondent No. 1 and challenge in all the Writ Petitions is to the age of superannuation at 58 years.
The principal ground of attack is discrimination between the clerical staff for whom the age of retirement is 60 years and the management staff in whose case such terminal point is 58 years.
It is also the claim of the petition 741 ers that in keeping with the current trend in the commercial field such age should be fixed at 60.
Each of the petitioners in Writ Petition Nos.
15466 and 15467 of 1984 and 2745 of 1985 is a recent recruit for the management staff while each of the petitioners in the remaining cases was an employee under the Burmah Shell oil Storage and Distributing Company of India Limited and after the take over of that Company under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, has become an officer of respondent No. 1.
In Som Prakash Rekhi vs Union of India & Anr., ; this Court has held Respondent No. 1 to be "State" within the meaning of Article 12 of the Constitution.
There has, therefore, been no dispute before us that the petitioners would be entitled to invoke the protection of Article 14 in case there indeed be any discrimination.
This Court in Workmen of the Bharat Petroleum Corporation Ltd. (Refining Division) Bombay vs Bharat Petroleum Corporation Ltd. and another; , directed the retirement age of the clerical staff of the Refinery Division of Respondent No. 1 to be fixed at 60 years.
Petitioners have contended that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment.
This stand is not tenable for more than one reason.
Clerical staff and officers of the management staff belong to separate classifications and no argument is necessary in support of it.
Petitioners have not contended and perhaps could not legitimately contend, that the two classes of officers stand at par.
In the Workmen 's case itself, this Court did not extend the benefit of superannuation at the age of 60 to all clerical staff but limited the same to that category of employees working in the Refinery Division, Bombay.
Classification on the basis of reasonable differentia is a well known basis and we are of the view that the petitioners are not entitled in the facts of the case to seek support from Article 14 for their claim.
The claim of the clerical staff arose in an industrial dispute.
The scope of such an adjudication is wide and broad based.
The Tribunal has expansive jurisdiction to exercise when a reference is made to it.
This court in appeal against the Award was exercising the same jurisdiction in that case.
We do not think, it would be appropriate for this Court to exercise that jurisdiction in dealing with an application under Article 32 of the Constitution.
It must also be remembered that officers of the management staff are not workmen.
742 It is true that this Court in Workmen of the Bharat Petroleum Corporation Ltd. (Refining Division) Bombay; , quoted with approval its earlier observations in M/s. British Paints (India) Ltd. vs Its Workmen, ; where it was said: "But time in our opinion has now come considering the improvement in the standard of health and increase in longevity in this country during the last fifty years that the age of retirement should be fixed at a higher level, and we consider that generally speaking in the present circumstances fixing the age of retirement at 60 years would be fair and proper, unless there are special circumstances justifying fixation of a lower age of retirement." Again in G.M. Talang and others vs Shaw Wallace and Co. & Anr., this Court referred to the Report of the Norms Committee where it was said: "After taking into consideration the views of the earlier Committees and Commissions including those of the Second Pay Commission the report of which has been released recently, we feel that the retirement age for workmen in all industries should be fixed at 60." A distinction in the treatment on the point in issue between workmen and officers is clearly discernible in judicial thinking as also expert opinion.
Besides, the petitioners have not brought before the Court all the material relevant to the making of a claim as made from which support could be had.
On the other hand, the Respondent No. 1 in its affidavit in opposition has placed various aspects to justify fixation and continuation of the present age of retirement.
It may be that some day, in keeping with the trend of the times, a claim of the type as laid in these applications may nave to be examined.
We, however, hope that adjudication will be required to be made on more cogent and appropriate material than now.
If this Court is moved, it has then to be considered whether an application under Article 32 is the proper remedy for it.
We are, however, of the view that the petitioners are not entitled to their claim in these applications.
The Writ Petitions are dismissed but without costs.
A.P.J. Petitions dismissed.
|
The age of superannuation of the clerical staff employed under the Respondent No. 1 is 60 years while in the case of the management staff the terminal point is 58 years.
The officers of the management staff in their petitions under Article 32 alleged that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment.
They also claim that in keeping with the current trend in the commercial field such age should be fixed at 60.
Dismissing the petitions, the Court, ^ HELD: 1.
Classification on the basis of reasonable differentia is a well known basis.
Clerical staff and officers of the management staff belong to separate classifications.
Therefore, the petitioners, in the fact of the case, are not entitled to seek support from Article 14 for their claim.
[741 F] 2.
The claim of the clerical staff arose in an industrial dispute.
The scope of such adjudication is wide and broad based.
The Tribunal has expansive jurisdiction to exercise when a reference is made to it.
This Court in appeal against the Award was exercising the same jurisdiction in that case.
It would not be appropriate for this Court to exercise that Jurisdiction in dealing with an application under Article 32 of the Constitution.
The officers of the management staff are not workmen.
[741 G H] 3.
The petitioners have not brought before the Court all the mate 740 rial relevant to the making of a claim as made from which support could be had.
On the other hand, the Respondent No. 1 in its affidavit in opposition has placed various aspects to justify fixation and continuation of the present age of retirement.
[742 E F] 4.
In keeping with the trend of the times, a claim of the type as laid in the instant applications may have to be examined.
However, that adjudication will be required to be made on more cogent and appropriate material than now.
If this Court is moved, it has then to be considered whether an application under Article 32 is the proper remedy for it.
However, the petitioners are not entitled to their claim in these applications.
[742 F G] Som Prakash Rekhi vs Union of India & Anr., ; , followed.
Workmen of the Bharat Petroleum Corporation Ltd. (Refining Division) Bombay vs Bharat Petroleum Corporation Ltd. and another; , , M/s. British Paints (India) Ltd. vs Its Workmen, ; and G.M. Talang and others vs Shaw Wallace and Co. & Anr., , referred to.
|
N: Criminal Appeal No. 271 of 1986 From the Judgment and Order dated 31.1.
1985 of the Gauhati High Court in Cr. A. No. 66 of 1983.
S.K. Nandy for the Appellant.
R.K. Garg, Sunil K. Jain and Vijay Hansaria for the Respondents.
The Judgment of the Court was delivered by 1041 B.C. Ray, J.
This appeal by special leave is against the judgment and order passed in Criminal Appeal No. 66 of 1983 by the High Court of Gauhati acquiting both the accused respondents from the charges under Sec.
302 read with Sec.
34 I.P.C. as well as under Sec.
436 read with Sec.
34 of Indian Penal Code, 1860.
The prosecution case in short is that on 2nd November, 1978 at about 7 p.m. two accused respondents Muhim Chandra Barkataki and Dulu Dutta came together to the shop of Nagen Dey since deceased and sprinkled and poured kerosine oil in the shop as well as on the person of Nagen Dey and then set fire.
Immediately fire caught and spread over the shop as well on the body of Nagen Dey.
The shop was a Guliamal (grocery) shop where rice, Dahl, soap, mustered oil, kerosine oil, etc goods were sold and situate at Na Ali Road of Jorhat Town in front of M/s Baruah Printers.
Nagen Dey came out of the shop house with ablazing condition all over his body.
The witnesses Arun Barua, Prabin Barua and Kiron Saikia on seeing the fire rushed to the place of occurrance and put off the fire from the body of the Nagen Dey but Nagen Dey suffered extensive burnt injuries all over his body.
Pradip Jyoti Sarma, Assistant Sub Inspector of Police also came to the place of occurrence a few minutes later and he also witnessed the fire on the person of Nagen Dey as well as in the shop of Nagen Dey.
Prosecution case is, further, that Nagen Dey made a dying declaration before the witnesses stating that the two accused persons namely Muhim Barkataki and Dulu Dutta set fire on his body after pouring kerosine oil.
It was also the prosecution case that both the accused were found at the place of occurrence and public caught hold of the accused Muhim Barkataki red handed at the shop of occurrence whereas other accused Dulu Dutta fled away.
Injured Nagen Dey was immediately removed to Jorhat Civil Hospital for treatment, but he died at the hospital.
Accused Muhim Barkataki was handed over to the Police by the witness Pradip Joyti Sarma, Assistant Sub Inspector of Police.
The information of the incident was received over telephone message at 7.15 p.m. by the Officer Incharge of Jorhat Police Station who recorded an entry in the General Diary being G.D. Entry No. 47 dated 2.11.1978 at 7.15 p.m.
The Town Sub Inspector Sri P. Khatoniar was immediately deputed to make local investigation on the spot.
Sri P. Khatoniar made enquiry and investigation locally at the spot, arrested accused Muhim Barkataki at the spot and returned to police station.
He then informed the facts of occurrence to the Officer incharge of the Police Station who recorded the same under G.D. Entry No. 50 at 8.10 p.m. On 3rd November, 1978 at about 7 a.m. one Sri 1042 Montu Ch.
Dey, nephew of deceased Nagen Dey lodged Ejahar (Ext.5) with Jorhat Police Station.
Thereafter murder and arson cases have been registered against Muhim Barkataki and Dulu Dutta.
Investigation was carried on by Shri Prafulla Kumar Khatoniar.
The Investigation Officer forwarded witnesses Arun Barua, and Kiran Saikia to the court for recording their statements under Sec.
164 of the Criminal Procedure Code.
The Judicial Magistrate Shri Dharyya Saikia recorded the statements of these two witnesses on 7.11.1978.
The Sessions Judge found that the message received over telephone was an information relating to commission of cognizable offence and same was entered into General Diary of the Police Station as Entry No. 47.
On the basis of this information the investigation of the case was entrusted to the Town Sub Inspector Shri Prafulla Kumar Khatoniar with the recording of General Diary Entry No. 47 and the Investigating Officer fairly progressed with the investigation in that very night.
Subsequent information of Montu Chandra Dey on 3rd November, 1978 are nothing but statements during the course of investigation and as such those are hit by Sec. 162 of the Criminal Procedure Code.
It has, therefore, been held that Exhibit 5 cannot be recoganized as the First Information Report of the occurrence.
The General Diary Entry No. 47 which is proved as Ext.
7(1), is the First Information Report of the occurrence.
The Sessions Judge duly considered the evidences of P.W. 4 Arun Barua and C.W. 1 Pradip Joyti Sarma as well as the statements under Sec.
164 recorded by the Judicial Magistrate, P.W. 8 on 7.11.1978 and accepted the dying declaration made by the deceased Nagen Dey implicating the accused Muhim Barkataki and Dulu Dutta as pouring kerosine oil on his body and setting fire to his person.
P.W. 6 Kiran Saikia also stated in his statement under Sec.
164 of Criminal Procedure Code before the Judicial Magistrate, that Nagen Dey, deceased made a dying declaration that these two accused persons sprinkled kerosine over the body of the deceased Nagen Dey and then set fire to him.
These witnesses also proved that the accused Muhim Barkataki was caught hold of red handed at the place of occurrence whereas Dulu Dutta fled away from the place.
The Sessions Judge, therefore, convicted both the accused under sec.
302 read with Sec.
34 of the Indian Penal Code and sentence them to rigorous imprisonment for life.
The accused persons were further convicted and sentenced under Sec.
436 read with Sec.
34 of the Indian Penal Code and they were sentenced to suffer rigorous imprisonment for 5 years each.
Both the sentences shall run concurrently.
1043 Against this judgment and order of conviction and sentence the accused person preferred an appeal being Criminal Appeal No. 66 of 1983 in the High Court of Gauhati.
The High Court proceeded on the footing that entire evidence in the case was circumstantial as there was no eye witness to the occurrence and the clinching circumstances in which the case according to the prosecution is proved are the circumstances relating to the dying declaration.
The learned Judges held that the evidence of P.W. 4 Arun Barua who deposed to the dying declaration was wholly unreliable as there was serious infirmity in his evidence as he disputed his statement made to the Police that the three persons used to drink liquor and play cards which fact as we have observed, is very material to cast a serious doubt on prosecution version itself.
The learned Judges therefore, held that the prosecution failed to prove beyond doubt the offences for which the appellants were charged.
The conviction and sentence passed against the accused persons was set aside and the appeal was allowed.
There is no dispute that the shop of deceased Nagen Dey situated by the side of Na Ali Road was set on fire and fire was also set on the person of Nagen Dey by pouring kerosine.
Eye witnesses P.W. 4 Arun Barua, P.W. 6 Kiran Saikia and P.W. 5 Prabin Barua came to the place of occurrence immediately on seeing the fire.
It is also evident from the evidence of P.W. 4 that he and Kiran Saikia who was in the shop of P.W. 4 both came together at the place of occurrence and they tried to put out the fire by throwing dust on the body of Nagen Dey who was on fire by tearing off his dress and Kiran Saikia put the clothing on the person of deceased Nagen Dey.
It is also in the evidences of P.W. 4 and C.W. 1 Pradip Joyti Sarma, Assistant Sub Inspector, Police that the deceased Nagen Dey made a dying declaration to the effect that the accused persons Muhim Barkataki and Dulu Dutta poured kerosine oil in his shop and sprinkled kerosine oil on his person and then set on fire.
It is also evident from the depositions of P.W. 4 and C.W. 1 that the accused Muhim Barkataki was caught hold red handed on the spot and he was detained there by the public while Dulu Dutta fled away from the place of occurrence.
It is also evident from the G.D. Entry No. 47 i.e., telephonic message received at the Jorhat Police Station at about 7.15 p.m. on the date of occurrence that the said two men set fire to the person of Nagen Dey, deceased as well as to his Guliamal shop which is in front of Baruah Printers after pouring kerosine oil.
One of the accused persons was caught hold of by local rija (public) while it was informed that Shri P.K. Khatoniar was investigating for local investigation after giving all entries in the diary.
1044 This is proved by Investigation Officer P.W. 7 and marked as Ext.7(1).
It also appeared that immediately after the enquiry and investigation into the incident the Town Sub Inspector Shri Khatoniar returned to the Police Station and informed that Muhim Barkataki and Dulu Dutta entered in the Guliamal shop of Nagen Dey which was in front of Barua Printers of Na Ali and poured kerosine oil kept in the shop for sale and set fire on it and as a result the Guliamal shop was burnt.
Nagen Dey was the owner of the shop who also was set on fire.
It was also recorded in the G.D. Entry that Muhim Barkataki who was caught hold of at the place by the local people has been sent to the police station.
This G.D. Entry No. 50 was proved by P.W. 7 and it was marked as Ext.
It also appears that the witnesses P.W. 4 Arun Barua, P.W. 5 Prabin Barua, P.W. 6 Kiran Saikia and C.W.1 Pradip Joyti Sarma who was on duty on that Na Ali locality at that time arrived at the place of occurrence almost simultaneously and all of them found Nagen Dey out of his shop in a complete ablazing state all over his body.
It also appears from evidences of these three witnesses Arun Barua, Kiran Saikia and Pradip Joyti Sarma that the injured Nagen Dey was conscious and was crying out due to burning pain.
It was also their evidence that the deceased Nagen Dey made a dying declaration at the place of occurrence implicating accused Muhim Barkataki and Dulu Dutta as his assailants.
It is also evident from Exts. 3 and 4 that the Judicial Magistrate Shri Dharyya Saikia (P.W. 8) recorded the statements of Arun Barua (P.W. 4) and Kiran Saikia (P.W. 6) on 7.11.1978 under Sec.
164 of the Criminal Procedure Code stating about the dying declaration made by the deceased Nagen Dey implicating that Muhim Barkataki and Dulu Dutta had set fire on him.
P.W. 4 Arun Barua also in his evidence clearly testifies to this dying declaration made by the deceased Nagen Dey.
Of course P.W. 6 Kiran Saikia tried to contradict his statement made before the Police as well as before the Judicial Magistrate as to the dying declaration made by the deceased Nagen Dey.
He admitted in his examination in chief that he made a statement about this incident before the Magistrate of Jorhat Court.
Exhibit 4 is his statement and Ext.
4 (2) is his signature.
He further stated that the Magistrate has recorded his statement.
But in cross examination he contradicted himself by saying that he was tutored by the police to say so before the Magistrate.
Even if his statement is not taken into consideration there is a clear statement of P.W. 4 Arun Barua before the Magistrate (Ext. 3) as well as his deposition which clearly corroborates his statement before the Magistrate about the dying declaration made by the deceased implicating the two accused persons as his assailants.
The court of appeal below has acted 1045 illegally in discarding the evidence of P.W. 4 as well as his statement recorded under Sec. 164 of the Criminal Procedure Code by the Judicial Magistrate on the flimsy ground that it was not reliable because he contradicted his statement made before the Police that these three persons (the two accused and the deceased Nagen Dey) used to take liquor and play cards.
Moreover C.W. 1 Pradip Jyoti Sarma who came to the place of occurrence a few minutes after the arrival of P.W. 4 and P.W. 6 at the place of occurrence has stated in his evidence that he saw the body of the deceased under fire and the deceased is crying out of burnt pain.
He implicated in his dying declaration that Muhim Barkataki and Dulu Dutta had set fire on his person after pouring kerosine oil on him.
He also stated that at the place of occurrence he found that the accused Muhim Barkataki was caught by the public and he was being assaulted.
He further stated that to save Muhim Barkataki from assultant he handed him over to the Police Constable who was with him.
He also deposed that Nagen Dey has sense and he was speaking.
There was no cross examination of this witness as to the dying declaration made by the deceased.
This witness further stated that he came to the Thana in the night and told the inspector about the incident.
He also stated that he did not know whether O.C. recorded this in the General Diary or not.
P.W. 2 Dr. Jibakanta Borah who hold post mortum on the body of the deceased has stated in his evidence that a person sustaining burnt injuries of such nature may have consciousness for some time before death.
It cannot, therefore, be ruled out that the deceased Nagen Dey was conscious in spite of the severe burnt injuries on his person and he could speak and could make dying declaration as testified to by the witnesses P.W. 4, and C.W. 1.
It has been tried to be urged before us by the learned counsel on behalf of the respondents that there is no evidence to show that the deceased Nagen Dey made a dying declaration as has been alleged as the General Diary Entry was not produced to show such statement of C.W. 1 about the dying declaration recorded therein.
Moreover even if such a dying declaration has been made the same being not corroborated cannot be taken into consideration by the court in convicting the accused respondents.
It has been further submitted that the court of appeal below rightly discarded the alleged dying declaration as being not corroborated by any other evidence and duly acquitted the accused persons.
We have considered and appraised thoroughly the evidence on record and on an overall assessment of the same, we hold that the prosecution has proved beyond reasonable doubt, the charges framed 1046 against them.
The order of acquittal passed by the High Court is liable to be set aside for the reasons stated here after.
Firstly, eye witnesses P.Ws. 4, 5, 6 and C.W. 1 undoubtedly arrived at the place of occurrence immediately on seeing the fire in the grocery shop of the deceased Nagen Dey at about 7 p.m. on 2.11.1978.
All these witnesses have seen that the shop is ablaze and there is fire on the person of Nagen Dey.
It is also the specific evidence of P.W. 4 Arun Barua and C.W. 1 Pradip Jyoti Sarma, A.S.I. at Jorhat Police Reserve deputed by the Jorhat Thana at Jorhat Town in law and order duty on that day.
All these eye witnesses P.W. 4 and C.W. 1 also stated that Nagen Dey was crying a lot in pain out of burnt injuries and he stated clearly that the accused persons Muhim Barkataki and Dulu Dutta poured kerosine oil on him and set fire on his body.
So far as depositions of P.W. 4 and C.W. 1 are considered there is no cross examination on this point.
Further more, P.W. 4 and P.W. 6 made statements Exts.
3 and 4 under Sec.
164 of Criminal Procedure Code before the Chief Judicial Magistrate of Jorhat (P.W. 8) to the effect that the deceased Nagen Dey made a dying declaration implicating the accused persons as his assailants.
This recording of the statements of P.W. 4 and P.W. 6 was proved by the deposition of the Addl.
Chief Judicial Magistrate at Jorhat, Shri Dharyya Saikia (P.W. 8).
Of course, P.W. 6 Kiran Saikia tried to contradict his statement made before the Chief Judicial Magistrate.
As regards the evidence of C.W. 1 it has been tried to be contended that his statement before the O.C. of the Police Station that the deceased made a dying declaration cannot be accepted as there is nothing to show that this was recorded in the G.D. Entry.
This statement cannot be accepted inasmuch as the learned Sessions Judge has assigned cogent reasons as to why Pradip Jyoti Sarma was examined as a court witness under the provisions of Sec.
311 of the Code of Criminal Procedure.
It has been clearly found that Shri Sarma was an independent and disinterested witness and he was found to be reliable and trustworthy.
It has been also found that Shri Pradip Jyoti Sarma is an important witness of the case and his examination was for the just decision of the case and his evidence has full corroboration with another independent and disinterested witness namely Arun Barua who is also found to be trustworthy and reliable witness.
The evidence of Shri Pradip Jyoti Sarma cannot be under estimated merely because he is a police officer.
The Sessions Judge also stated in his order that the reasons for examining him as a court witness had been elaborately recorded in the order sheet dated 17.2.1982 and 22.3.1983.
Therefore, considering this finding of the Sessions Judge we hold that there is no infirmity in the findings of the Sessions Judge in treating Pradip Jyoti 1047 Sarma as a court witness under the provisions of Sec.
311 of the Code of Criminal Procedure.
There is no criticism regarding the evidence of P.W. 4 on behalf of the respondents as to why his testimony regarding the dying declaration shall not be taken into consideration apart from the evidence of C.W. 1 Pradip Jyoti Sarma.
Moreover it is evident from Exts. 3 and 4, the statements of P.Ws. 4 and 6 recorded under Sec. 164 of the Code of Criminal Procedure by the Addl.
Judicial Magistrate, Jorhat on 7.11.1978 that these two witnesses P.Ws. 4 and 6 clearly stated about the dying declaration made by Nagen Dey implicating both the accused as his assailants.
Along with this testimony of P.W. 4 and C.W. 1 that Muhim Barkataki was caught hold red handed on the spot and was detained by the public while Dullu Dutta fled away from the place of occurrence.
All these clearly go to prove the prosecution case beyond any reasonable doubt and it leads to the only conclusion that these two accused persons poured kerosine oil in the shop as well as sprinkled kerosine oil on him and set fire on the deceased as well as to the shop.
It has been tried to be contended that the dying declaration as referred to by P.W. 4 in his deposition has not been corroborated by any independent witness and as such the same cannot be relied upon in convicting the accused.
In support of this submission reference has been made to the decision reported in Ramnath Madho Prasad & Ors.
vs State of Madhya Pradesh, A.I.R. 1953 S.C. 420 wherein it has been observed: "It is settled law that it is not safe to convict and accused merely on the evidence furnished by a dying declaration without further corroboration because such a statement is not made on oath and is not subject to cross examination and because the maker of it might be mentally and physically in a state of confusion and might be well drawing upon his imagination while he was making the declaration.
It is in this light that the different dying declaration made by the deceased and sought to be proved in the case have to be considered.
" This observation has been overruled being in the nature of obiter dicta by this Court in a subsequent decision in Khushal Rao vs State of Bombay, ; The same view was taken by this Court in the case of Kusa & Ors.
vs State of Orissa; , at 562 para 9.
It is pertinent to refer to the observation of this Court on this point made in State of Assam vs Muaizuddin Ahmed, ; at 19 para 10 which are in the following terms: 1048 "Thus, the law is now well settled that there can be conviction on the basis of dying declaration and it is not at all necessary to have a corroboration provided the court is satisfied that the dying declaration is a truthful dying declaration and not vitiated in any other manner.
" It has been observed by this Court in Jayarajl vs State of Tamil Nadu, A.I.R. 1976 S.C. 1519 at 522 para 16 which reads: "When the deponent (while making his dying declaration) was in severe bodily pain (because of stab injuries in the abdoman) and words were scare, his natural impulse would be to tell the Magistrate, without wasting his breath on details as to who stabed him.
The very brevity of the dying declaration, in the circumstances of the case, far from being a suspicious circumstance, was an index of its being true and free from the taint of tutoring, more so when the substratum of the dying declaration was fully consistent with the occular account given by the eyewitness.
" In the instant case we have carefully considered the evidences of P.W. 4 as well as of C.W. 1 and we are clearly of the opinion that the deceased Nagen Dey made the dying declaration in question clearly implicating the two accused persons as his assailants.
The dying declaration made by the deceased while he was suffering severe pain from grievous injuries is truthful and reliable.
Therefore, on an overall as sessment of evidences recorded particularly the evidence of P.W. 4 and C.W. 1 and also the statements recorded under Sec. 164 of Criminal Procedure Code Exts.
6 and 4, we find that the charges under Sec. 382/34 and Sec.
436/34 of the Indian Penal Code, 1860 has been proved by the prosecution beyond reasonable doubt against the two accused persons.
They were rightly convicted by the Sessions Judge and sentence to rigorous imprisonment for life under Sec.
302/34 I.P.C. and also to rigorous imprisonment for 5 years under Sec.
436/34 of the Indian Penal Code.
Both the sentences will run concurrently.
The judgment and order of acquittal passed by the High Court is hereby set aside and the judgment and order of conviction and sentence awarded by the Sessions Judge is hereby affirmed.
Let warrant of arrest issue forthwith against the accused for serving out the sentence.
P.S.S. Appeal allowed.
|
The prosecution alleged that the accused respondents set fire to deceased 's body and his shop after sprink ling kerosene oil, that on seeing the fire P. Ws. 4, 5 and 6 rushed to the place and put off the fire from the body of the deceased who had come out of the shop ablaze, and that C.W. 1, the Assistant Sub Inspector of Police, who was on law and order duty also came to the place of occurrence simultaneously and witnessed the incident.
The deceased made a dying declaration before these witnesses stating that the said two accused had set fire to his body after pouring kerosene.
One of the accused was caught hold of by the public red handed at the shop whereas the other accused fled away.
The Officer in charge of Police Station was informed of the incident on the telephone.
The deceased was removed to the hospital where he later died.
Cases of murder and arson were thereafter registered against the accused.
P.Ws. 4 and 6 made statements under section 164 Cr.
P.C. before the Magistrate and deposed to the factum of dying declaration made by the deceased implicating the accused.
The Sessions Court after considering the evidences of P.W. 4 and C.W. 1 as well as the statements recorded under section 164 Cr.
P.C. accepted the dying declaration made by the deceased and convicted the accused under section 302 read with section 34 I.P.C. and sentenced them to 1039 rigorous imprisonment for life.
They were further convicted and sentenced under section 436 read with section 34 I.P.C.
The High Court on appeal, however, found that the prosecution had failed to prove beyond doubt the offences for which the appellants were charged, that the entire evidence in the case was circumstantial as there was no eye witness to the occurrence, that the evidence of P.W. 4 as to the dying declaration was wholly unreliable, and therefore, set aside the conviction and sentence passed against the accused.
The appeal by the State to this Court was opposed by the accusedrespondents contending that there was no evidence to show that the deceased made the dying declaration and even if such a declaration has been made the same having not been corroborated cannot be taken into consideration in convicting them.
Allowing the Appeal, the Court, ^ HELD: The accused were rightly convicted by the Sessions Court.
The prosecution has proved beyond reasonable doubt the charges framed against them.
The order of acquittal passed by the High Court is, therefore, liable to be set aside.
[1048G] The dying declaration made by the deceased while he was suffering severe pain from grievous injuries clearly implicating the two accused persons as his assailants is truthful and reliable.
[1048E] The eye witnesses, P. Ws. 4, 5 and 6 and C.W. 1 had undoubtedly arrived at the place of occurrence immediately on seeing the fire.
They had seen that the shop was ablaze and there was fire on the person of the deceased.
Then there is the specific evidence of P.W. 4 and C.W. 1 that the deceased was crying a lot in pain due to burn injuries and that he stated clearly that the accused persons poured kerosene on him and set fire to his body.
There are also the statements of P.W. 4 and 6 made under section 164 Cr.
P.C. to the effect that the deceased made a dying declaration.
P.W. 2, who held post mortem on the body of the deceased has stated in his evidence that a person sustaining burn injuries of such nature may have been conscious for some time before his death.
It cannot, therefore, be ruled out that the deceased was conscious in spite of the burn injuries on his person and he could speak and make dying declaration as testified to by P.W. 4 and C.W. 1.
[1046A D; 1045E] There is no infirmity in the action of the Sessions Court treating as a court witness.
It has assigned cogent reasons as to why P.W. 1 was examined as a court witness under the provisions of section 311 Cr.
P.C. He has been found an independent and disinterested witness, to be reliable and trustworthy.
He was an important witness of the case and his examination was for the just decision of the case.
His evidence has full corroborations with another independent and distinterested witness, P.W. 4, who was also found to be trustworthy and reliable.
The evidence of C.W. 1 cannot, therefore, be underestimated merely because he was a police officer.
[1046E G] The Court of appeal has acted illegally in discarding the evidence of P.W. 4 as well as his statement recorded under section 164 Cr.
P.C. There is no criticism regarding the evidence of this witness on behalf of the respondents as to why his testimony regarding the dying declaration shall not be taken into consideration.
[1044H; 1045A B] There is also the testimony of P.W. 4 and C.W. 1 that one of the accused was caught hold red handed at the spot and was detained by the public while the other fled away from the place of occurrence.
[1043F G] All these lead to the only conclusion that the two accused persons poured kerosene in the shop as well as on the deceased and set them on fire [1047C D] Ramnath Madho Prasad & Ors.
vs State of Madhya Pradesh, AIR 1953 SC 420; Khushal Rao vs State of Bombay, ; ; Kusa & Ors.
vs State of Orissa, ; at 562 para 9; State of Assam vs Muaizuddin Ahmed, ; at 19 para 10; and Jayaraj vs State of Tamil Nadu, AIR 1976 SC 1519 at 1522 para 16 referred to.
|
Civil Appeal No. 1763 (NT) of 1974 From the Judgment and Order dated 2.2.1973 of the Andhra Pradesh High Court in Case Reference No. 67 of 1971.
Y. Ratnakar, Mrs, A.K. Verma and D.N. Misra for the Appellant.
S.C. Manchanda, Ms. A. Subhashini and B.B. Ahuja for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by Special leave arises from the decision of the High Court of Andhra Pradesh and it seeks answers to two questions: 1079 "(i) Whether, on the facts and in the circumstances of the case, the properties in respect of which registered sale deeds had not been executed, but consideration had been received, belonged to the assessee for the purpose of inclusion in his net wealth within the meaning of section 2(m) of the ? (ii) Whether, on the facts and in the circumstances of the case, the assessee 's right to receive the sum of Rs.25 lakhs O.S. from the State Government was an asset for the purposes of inclusion in his net wealth under the ?" The year involved in this case is the assessment year 1957 58 under the (hereinafter called the 'Act ').
It may be mentioned that the valuation date is the first valuation date after coming into operation of the Act which came into force on 1st April, 1957.
The assessee was the Nizam of Hyderabad, an individual.
There were several questions involved in the assessment with all of which the present appeal is not concerned.
So far as the first question indicated hereinbefore which was really question No. (ii) in the statement of case before the High Court, it may be mentioned that the Wealth tax Officer had included a total sum of Rs.4,90,775 representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees.
The Wealth tax Officer held that the assessee still owned those properties and consequently the value of the same was included in his net wealth.
On appeal the Appellate Assistant Commissioner sustained the order with certain deductions in value.
On further appeal the Tribunal held that the assessee had ceased to be the owner of the properties.
The Tribunal was of the opinion that the assessee having received the consideration money from the purchasers and the purchasers having been put into possession were protected in terms of section 53A of the Transfer of Property Act and the term 'owner ' not only included the legal ownership but also the beneficial ownership.
The first question arises in the context of that situation.
The High Court following the ratio of Commissioner of Income Tax, A.P., Hyderabad vs Nawab Mir Barkat Ali Khan, (infra) answered the question in favour of the revenue.
1080 The second question set out before, which was question No. (v) before the High Court, has to be understood in the context of the facts of this case.
The right of the assessee to get the amount in question i.e. Rs.25 lakhs a year, arose in the wake of accession of the Hyderabad State to the Union of India.
Several communications followed between the Military Governor of Hyderabad,.
Gen. Chaudhuri and the Nizam of Hyderabad as well as other officers.
It has to be borne in mind that the assessee was a paramount ruler owning certain private properties called Sarf e khas.
He surrendered his paramountcy and acceded to the Union of India.
His private properties were taken over by the Government and it was agreed by the Government that in lieu of his income from the said properties, he would be paid Rs.25 lakhs in Osmania currency annually.
The communication between Major General Chaudhuri, the Military Governor and the Nizam about this particular sum in contained in the letter dated 1st February, 1949.
It stated inter alia as follows: "After this merger H.E.H. will be paid annually a total sum of Rs. 1 crore distributed as follows: (a) Rs.50 lacs as a privy purse, (b) Rs.25 lacs in lieu of his previous income from the Sarf e khas, and (c) Rs.25 lacs and for the upkeep of Palaces etc.
" The letter which appears in the Paper Book of this appeal from Military Governor of Hyderabad, Major General Chaudhuri to the Nizam of Hyderabad, states, inter alia, that Nizam 's Sarf e khas estates should not continue as an entirely separate administration independent of the Diwani administrative structure.
The Sarf e khas, it was stated in that letter, should therefore be completely taken over by the Diwani, its revenue and expenditure being merged with the revenues and expenditure of the State.
Thereafter we have extracted the relevant portion of the letter which stipulated for the payment of Rs.25 lakhs.
The other parts of the agreement contained in that letter are not relevant for the present purpose.
The Wealth tax Officer treating the said sum as an annuity and secondly as an asset or property, capitalised the same to Rs.99,78,572 1081 and included that amount as an asset of the assessee.
The appellate Assistant Commissioner agreed with the view taken by the Wealth tax Officer.
The Tribunal, however, refused to call it as an annuity and characterised it as an annual payment for surrender of life interest.
The Tribunal therefore held that the capitalised value of such life interest be added to the net wealth and taxed.
The High Court in the judgment under appeal agreed with the view taken by the Tribunal that it was only an annual payment made in compensation for the property which had been taken over by the Government.
It was, therefore, a part of the wealth, according to the High Court.
The High Court was of the view that it was possible to commute the annual payment of Rs.25 lakhs.
The High Court found that there was neither any express preclusion nor any circumstances from which legitimately an inference could be drawn precluding commutation of the said amount into a lumpsum grant.
The High Court, therefore, was of the view that the Wealth tax Tribunal had rightly rejected the contention of the assessee.
The question was accordingly answered by the High Court in the affirmative and against the assessee and in favour of the revenue.
The first question involved in this case is whether the properties in respect of which registered sale deeds had not been executed, but full consideration had been received by the assessee, belonged to the assessee for the purposes of inclusion in his net wealth in terms of section 2(m) of the Act.
Under section 3 of the Act, the charge of wealth tax is on the net wealth of the assessee on the relevant valuation date.
Net wealth is defined under section 2(m) of the Act.
The relevant portion of section 2(m) is as follows: "(m) "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. ." The material expression with which we are concerned in this appeal is 'belonging to the assessee on the valuation date '.
Did the assets in the circumstances mentioned hereinbefore namely, the properties in respect of which registered sale deeds had not been 1082 executed but consideration for sale of which had been received and possession in respect of which had been handed over to the purchasers belonged to the assessee for the purpose of inclusion in his net wealth? Section 53A of the Transfer of Property Act gives the party in possession in those circumstances the right to retain possession.
Where a contract has been executed in terms mentioned hereinbefore and full consideration has been paid by the purchasers to the vendor and where the purchasers have been put in the possession by the vendor, the vendees have right to retain that possession and resist suit for specific performance.
The purchasers can also enforce suit for specific performance for execution of formal registered deed if the vendor was unwilling to do so.
But in the eye of law, the purchasers cannot and are not treated as legal owners of the property in question.
It is not necessary in our opinion, for the purpose of this case to be tied down with the controversy whether in India there is any concept of legal ownership apart from equitable ownership or not or whether under sections 9 and 10 of the Indian Income tax Act, 1922 and sections 22 to 24 of the Indian Income tax Act, 1961, where 'owner ' is spoken in respect of the house properties, the legal owner is meant and not the equitable or beneficial owner.
Salmond On Jurisprudence, Twelfth Edition, discusses the different ingredients of 'ownership ' from pages 246 to 264. 'Ownership ', according to Salmond, denotes the relation between a person and an object forming the subject matter of his ownership.
It consists of a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons.
Firstly, Salmond says, the owner will have a right to possess the thing which he owns.
He may not necessarily have possession.
Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income from it.
Thirdly, the owner has the right to consume, destroy or alienate the thing.
Fourthly, ownership has the characteristic of being indeterminate in duration.
The position of an owner differes from that of a non owner in possession in that the latter 's interest is subject to be determined at some future time.
Fifthly, ownership has a residuary character.
Salmond also notes the distinction between legal and equitable ownership.
Legal ownership is that which has its origin in the rules of the common law, while equitable ownership is that which proceeds from rules of equity different from the common law.
The courts of common law in England refused to recognize equitable ownership and denied the equitable owner as an owner at all.
All the rights embedded in the concept of ownership of Salmond 1083 cannot strictly be applied either to the purchasers or the assessee in the instant case.
In the instant appeal, however, we are concerned with the expression 'belonging to ' and not with the expression 'owner '.
This question had come up before this Court before a bench of five learned judges in Commissioner of Wealth tax, West Bengal, vs Bishwanath Chatterjee and others, At page 539 of the report, this Court referred to the definition of the expression 'belong ' in the Oxford English Dictionary "To be the property or rightful possession of".
So it is the property of a person, or that which is in his possession as of right, which is liable to wealth tax.
In other words, the liability to wealth tax arises because of the belonging of the asset, and not otherwise.
Mere possession, or joint possession unaccompanied by the right to be in possession, or ownership of property would therefore not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee.
The first limb of the definition indicated in the Oxford Dictionary may not be applicable to these properties in the instant appeal because these lands were not legally the properties of the vendees and the assessee was the lawful owner of these properties.
The vendees were, however, in rightful possession of the properties as against the vendor in view of the provisions of section 53A of the Transfer of Property Act, 1908.
The scheme of the Act has to be borne in mind.
It has also to be borne in mind that unlike the provisions of Income Tax Act, section 2(m) of the Act uses the expression 'belonging to ' and as such indicates something over which a person has dominion and lawful dominion should be the person assessable to wealth tax for this purpose.
In Commissioner of Wealth tax, A.P. vs Trustees of H.E.H. Nizam 's family (Remainder Wealth) Trust, 108 I.T.R. 555, the question as to what is the meaning of the expression 'belonging to ' was raised (page 594 of the report) but this Court did not decide whether the trust property belonged to the trustee and whether the trustee was liable under section 3 of the Act apart from or without reference to section 21 of the Act.
The case was disposed of in terms of sections 21 of the Act.
In Commissioner of Income tax, A.P. Hyderabad vs Nwab Mir Barkat Ali Khan, , it was held by the Andhra Pradesh High Court that when a vendor had agreed to sell his property as in the instant case and had received consideration thereof but had 1084 not executed a registered sale deed, his liability to pay tax on income from that property did not cease.
His position as 'owner ' of the property within the meaning of section 9 of the Indian Income tax Act, 1922 and section 22 of the Income tax Act, 1961 did not thereby change.
According to the said decision, the agreement to sell and the receipt of consideration by the assessee, the Nizam of Hyderabad did not create any beneficial ownership according to Indian law in the purchaser neither did it create any equitable ownership in him.
The ownership did not change until registered sale deed was executed by the vendor.
The term 'owner ' in section 9 of the 1922 Act or section 22 of the 1961 Act did not mean beneficial or equitable owner which concept was not recognised in India.
In the instant case as we have noticed the position is different.
We are not concerned with the expression 'owner '.
We are concerned whether the assets in the facts and circumstances of the case belonged to the assessee any more.
This Court had occasion to discuss section 9 of the Income tax Act, 1922 and the meaning of the expression 'owner ' in the case of R.B. Jodha Mal Kuthiala vs Commissioner of Income tax, Punjab, Jammu & Kashmir and Himachal Pradesh, There it was held that for the purpose of section 9 of the Indian Income tax Act, 1922, the owner must be the person who can exercise the rights of the owner, not on behalf of the owner but in his own right.
As assessee whose property remained vested in the Custodian of Evacuee Property was not the owner of the property.
This again as observed dealt with the expression of section 9 of the Indian Income tax Act, 1922.
At page 575 of the report certain observations were relied upon in order to stress the point that these observations were in consonance with the observations of the Gujarat High Court which we shall presently note.
We are, however, not concerned in this controversy at the present moment.
It has to be borne in mind that in interpreting the liability for wealth tax normally the equitable considerations are irrelevant.
But it is well to remember that in the scheme of the administration of justice, tax law like any other laws will have to be interpreted reasonably and whenever possible in consonance with equity and justice.
Therefore, specially in view of the fact that the expression used by the legislature has deliberately and significantly not used the expression 'assets owned by the assessee ' but assets 'belonging to the assessee ', in our opinion, is an aspect which has to be borne in mind.
The bench decision of the Calcutta High Court in Commissioner 1085 of Income tax, West Bengal II vs Ganga Properties Ltd., rested on the terms of section 9 of the Income tax Act, 1922 and the Court reiterated again that in Indian law beneficial ownership was unknown; there was but one owner, namely, the legal owner, both in respect of vendor and purchaser, and trustee and cestui que trust.
The income from house property refers to the legal owner and further that in case of a sale of immovable property a registered document was necessary.
But these propositions as noted hereinbefore rested on the use of the expression in section 9 of the Income tax Act, 1922.
It used the expression 'owner ' unlike 'belonging to '.
The Gujarat High Court in Commissioner of Wealth tax Gujarat I vs Kum Manna G. Sarabhai , held that a spes successionis is a bare and naked possibility such as the chance of a relation obtaining a legacy and that could not form the basis of assessment under section 26 of the Act.
At page 174 of the report, the Gujarat High Court referred to the expression 'belonging to ' and referred to the fact that the expression has been the subject matter in a number of judicial decisions.
The Court observed that the words 'property ' and 'belonging to ' were not technical words.
The Gujarat High Court had occasion to deal with part performance in the case of an agreement of sale in Commissioner of Income tax, Gujarat vs Ashaland Corporation, The Gujarat High Court noted that in case of a person who was a dealer in land, the business transaction would be completed only when the purchase or sale transaction was complete.
In order to decide whether the business transaction was complete, the question of vital importance was whether title in the property had passed.
It was only on the passing of the title that the transaction became complete and unless the transaction was complete, any advance receipt of money towards the transaction would not form part of income or profit.
It was observed by the Gujarat High Court that the doctrine of part performance embodied in section 53A of the , had only a limited application and it afforded only a good defence to the person put in possession under an agreement in writing to protect his possession to the extent provided in section 53A, but an agreement in writing to sell, coupled with the parting of possession would not confer any legal title on the purchaser and take the land out of the stock in trade of the seller if the seller was a dealer in land.
The context in which the Gujarat High Court had to deal this question was entirely different.
The Gujarat High Court had to proceed on the basis that the assessee 1086 under the Income tax Act was the owner and he was dealing in land and therefore whether the land was stock in trade was the question.
In the instant appeal we are concerned with the expression 'belonging to '.
Therefore the observations of the Gujarat High Court would not be quite apposite to the problem of the instant appeal.
This question was again viewed by the Bombay High Court in a slightly different context in Commissioner of Income tax, Bombay City III vs Smt.
T.P. Sidhwa, The Bombay High Court was not concerned with the expression 'belonging to '.
Our attention was drawn to another decision of the Gujarat High Court in Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad, There the facts were more or less identical with the instant appeal on this aspect of the matter.
The assessee owned two properties and had agreed to sell one property to a company.
The vendees had paid Rs.30 lakhs in January, 1964 and were put in possession of the property.
Thereafter, four instalments of Rs. 17 1/2 lakhs each were paid and the property was conveyed by four deeds executed in 1970 71 and 1972.
It was contended that at the relevant time, the property did not belong to the assessee.
It was held by the Gujarat High Court that receipt of part of the sale price and parting of possession would not divest the vendor of immovable property of his title to the property.
The doctrine of part performance embodied in section 53A of the had limited application and afforded a good defence to the person put in possession.
The legal position and the relevant clauses of the agreement of sale showed that the assessee was the owner of the property at the relevant valuation dates.
Therefore, according to the Gujarat High Court, the property agreed to be sold which had been parted with was includible as an asset of the assessee.
Even in some cases the phrase 'belonging to ' is capable of connoting interest less than absolute perfect legal title.
See in this connection the observations of this Court in Raja Mohammad Amir Ahmed Khan vs Municipal Board of Sitapur and another, A.I.R. 1965 S.C. 1923.
This Court observed in that case that though the expression 'belonging to ' no doubt was capable of denoting an absolute title was nevertheless not confined to connoting that sense.
Full possession of an interest less than that of full ownership could also be signified by that expression.
Before concluding this aspect of the matter, there is certain as 1087 pect which has to be borne in mind.
Reliance was placed as we have mentioned hereinbefore on the decision of the Gujarat High Court in the case of Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad (supra) It was contended that if the Gujarat High Court 's view was correct, then the assessee 's contention on this aspect in the instant appeal cannot be accepted.
On behalf of the assessee it was submitted that the decision of the Gujarat High Court in Commissioner of Wealth tax, Gujarat I vs Kum.
Manna G. Sarabhai (supra) not having been taken into consideration by the Gujarat High Court in the later decision, the Gujarat High Court the judgment on which revenue relied was not correct.
It is not necessary in the view we have taken on the other aspect of the matter, namely, the use of the expression 'belonging to ' to discuss this point any further.
It was further submitted before us that from the said decision of the Gujarat High Court in Commissioner of Wealth Tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad (supra), a special leave petition was filed by the assessee, which was dismissed by this Court on 17th January, 1983.
(See in this connection 144 I.T.R. Statute page 23).
It is, however, well settled that dismissal of special leave petition in limine does not clothe the decision under appeal in special leave petition with the authority of the decision of this Court.
See in this connection the observations in Daryao & Ors.
vs State of U.P. & Ors.
, ; It may be mentioned as was rightly observed by a full bench of the Allahabad High Court in Sahu Govind Prasad vs Commissioner of Income tax, at 863, special leave is a discretionary jurisdiction and the dismissal of a special leave petition cannot be construed as affirmation by this Court of the decision from which special leave was sought for.
On this aspect, it may also be mentioned that our attention was drawn to some decisions which we shall presently note.
The Punjab and Haryana High Court in the case of Smt.
Kala Rani vs Commissioner of Income tax, Patiala I, had occasion to discuss this aspect of the matter.
But the Punjab and Haryana High Court was construing the meaning of the expression 'owner ' under section 22 of the Income tax Act, 1961.
There, the division bench of the Punjab & Haryana High Court held that the assessee occupied the property after the execution of the agreement of sale deed in his favour and after completion of the building, he was in a position to earn income from the property sold to him, though the registered sale deed was executed subsequently in April, 1969.
It was 1088 held that the assessee was 'owner ' in terms of section 22 of the Income tax Act, 1961.
The Madras High Court had occasion to discuss this aspect in Mrs. M.P. Gnanambal vs Commissioner of Income tax, Madras, There the facts were entirely different and the Madras High Court held that the rights with reference to the properties in question in that case could only be described as a delusion and a snare so long as the sons continued to occupy the property which they were entitled to under the will and to describe the assessee 's right as owner of the property would be a complete misnomer.
There, the court was construing the will and section 22 of Income tax Act, 1961 as to who were the owners in terms of the will.
In all these cases as was reiterated by the Calcutta High Court in S.B. (House & Land) Pvt. Ltd. vs Commissioner of Income tax, West Bengal, the question of ownership had to be considered only in the light of the particular facts of a case.
The Patna High Court in Addl.
Commissioner of Income tax Bihar vs Sahay Properties and Investment Co. (P) Ltd., was concerned with the construction of the expression 'owner ' in section 22 of the Income tax Act, 1961.
There, the assessee had paid the consideration in full and had been in exclusive and absolute possession of the property, and had been empowered to dispose of or even alienate the property.
The assessee had the right to get the conveyance duly registered and ex ecuted in its favour, but had not exercised that option.
The assessee was not entitled to say that because of its own default in having a deed registered in its name, the assessee was not the owner of the property.
In the circumstances, it was held that the assessee must be deemed to be the owner of the property within the meaning of section 22 of Income tax Act, 1961 and was assessable as such on the income from the property.
This is only an illustrative point where in certain circumstances without any registered conveyance in favour of a purchaser, a person can be considered to be 'owner '.
It may incidentally be mentioned that this Court has granted special leave to appeal against this judgment.
See in this connection Salmond 's conception of 'ownership ' has been noted.
The meaning of the expression 'belonging to ' has also been noted.
We have discussed the cases where the distinction between 'belonging to ' and 'ownership ' has been considered.
The following facts emerge here: (1) the assessee has parted with the possession which is one of the essen 1089 tials of ownership, (2) the assessee was disentitled to recover possession from the vendee and assessee alone until the document of title is executed was entitled to sue for possession against others i.e. others than the vendee in possession in this case.
The title in rem vested in the assessee, (3) The vendee was in rightful possession against the vendor, (4) the legal title, however, belonged to the vendor.
(5) The assessee had not the totality of the rights that constitute title but a mere husk of it and a very important element of the husk.
The position is that though all statutes including the statute in question should be equitably interpreted, there is no place of equity as such in taxation laws.
The concept of reality in implementing fiscal provision is relevant and the Legislature in this case has not significantly used the expression 'owner ' but used the expression 'belonging to '.
The property in question legally, however, cannot be said to belong to the vendee.
The vendee is in rightful possession only against the vendor.
Speaking for myself, I have deliberated long on the question whether in interpreting the expression 'belonging to ' in the Act, we should not import the maxim that "equity looks upon a thing as done which ought to have been done" and though the conveyance had not been executed in favour of the vendee, and the legal title vested with the vendor, the property should be treated as belonging to the vendee and not to the assessee.
I had occasion to discuss thoroughly this aspect of the matter with my learned Brother and in view of the position that legal title still vests with the assessee, the authorities we have noted are preponderantly in favour of the view that the property should be treated as belonging to the assessee in such circumstances, I shall not permit my doubts to prevail upon me to take the view that the property belongs to the vendee and not to the assessee.
I am conscious that it will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question.
But times perhaps are yet not ripe to transmute equity on this aspect in the interpretation of law much as I would have personally liked to do that.
As Benjamin Cardozo has said, "The judge, even when he be free, is not wholly free".
A Judge cannot innovate at pleasure.
It may be said that the legislature having designedly used the expression 'belonging to ' and not the expression 'owned by ' had perhaps expected judicial statesmanship in interpretation of this expression as leading to an interpretation that in a situation like this it should not be treated as belonging to the assessee but as said before 1090 times are not yet ripe and in spite of some hesitation I have persuaded myself to come to the conclusion that for all legal purposes the property must be treated as belonging to the assessee and perhaps legislature would remedy the hardship of assessee in such cases if it wants.
The assessee had a mere husk of title and as against the vendee the assessee had no reality of title but as against the world, he was still the legal owner and real owner.
As has been observed by this Court in Commissioner of Wealth tax, West Bengal vs Bishwanath Chatterjee and Others (supra) the property is owned by one to whom it legally belongs.
The property does not legally belong to the vendee as against the vendor, the assessee.
In Webstor 's Dictionary 'belonging to ' is explained as meaning, inter alia, to be owned by, be in possession of.
The precise sense in which the words were used, therefore, must be gathered only by reading the instrument or the document as a whole.
Section 53A of the Transfer of Property Act, 1908 is only a shield and not a sword.
In Aiyar 's Law Laxicon of British India, [1940] Edition page 128, it has been said that the property belonging to a person has two meanings (1) ownership; (2) the absolute right of the user.
The same view is reiterated in Stroud 's Judicial Dictionary 4th Edn.
page 260.
The expression: 'property belonging to ' might convey absolute right of the user as well as of the ownership.
A road might be said, with perfect propriety, to belong to a man who has the right to use it as of right, although the soil does not belong to him.
Under section 53A of the Transfer of Property Act, 1908 where possession has been handed over to the purchasers and the purchasers are in rightfuly possession of the same as against the assessee and the occupation of the property in question, and secondly that the entire consideration has been paid, and thirdly the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers were in possession had right to call upon the assessee to execute the conveyance, it cannot be said that the property legally belonged to the assessee in terms of section 2(m) of the Act in the facts and circumstances of the case even though the statute must be read justly and equitably and with the object of the section in view.
We are conscious that if a person has the user and is in the enjoyment of 1091 the property it is he who should be made liable for the property in question under the Act yet the legal title is important and the legislature might consider the suitability of an amendment if it is so inclined.
This question therefore must be answered in favour of the revenue and in the affirmative.
The appeal in this aspect must therefore fail.
For the second question it is necessary to refer to section 2(e) which provides for the definition of assets by stating that "assets" includes property of every description, movable or immovable, but does not include, ". . . (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant;" Therefore, in order to be excluded from the assets of the assessee, the right being the sum which was annually to be paid under the agreement or letter mentioned hereinbefore must be by the terms and conditions precluded commutation of any portion thereof into a lumpsum grant.
The question therefore is could this lumpsum grant of Rs.25 lakhs be commuted by the Nizam and the capital value of the commutation be received? Furthermore, the next question that arises was whether that commutation was precluded by the terms and conditions relating to that right.
It may be that preclusion might be either by express terms and conditions of the right or as an inference from the terms and conditions of the payment.
We need not go into the rights of the erstwhile princes before the abolition of the privy purses whether the privy purses could be commuted or not.
The term 'annuity ' is not defined in the Act.
According to the Oxford Dictionary, 'annuity ' means sums payable in respect of a particular year; yearly grant.
An annuity is a certain sum of money payable.
yearly either as a personal obligation of the grantor or out of property.
The hall mark of an annuity, according to Jarman On Wills (page 1113) is: (1) it is a money; (2) paid annually; (3) in fixed sum; and (4) usually it is a charge personally on the grantor.
1092 Whether a particular sum is an annuity or not has been considered in various cases.
It is not necessary in the facts and circumstances of the case and in view of the terms of the payment indicated to examine all these cases.
In Ahmed G.H. Ariff and Others vs Commissioner of Wealth tax, Calcutta, , this Court held that the word 'annuity ' in clause (iv) of section 2(e) of the Act must be given the signification which it has assumed as a legal term owing to judicial interpretation and not its popular and dictionary meaning.
In Commissioner of Wealth tax Gujarat vs Arundhati Balkrishna, , there were two deeds of trust.
The assessee 's father had settled certain shares in trust for the benefit of the assessee and her two brothers.
The trustees were to pay the residue of the income from the trusts in equal shares to the beneficiaries after deducting all costs and expenses.
The assessee had a right after she had attained majority and after the birth of her first child to require the trustees to pay her shares out of the corpus of the trust fund absolutely up to one half thereof.
Under another trust created by her mother in law of certain sums of money and certain shares the trustees were required to pay the income of the trust funds after deducting expenses to the assessee during her lifetime.
It was held that the payments to the assessee under the trust deeds were not 'annuities ' within the meaning of section 2(e) (iv) of the Act.
In Commissioner of Wealth tax, Rajasthan vs Her Highness Maharani Gayatri Devi of Jaipur, , this question arose again.
The Maharaja of Jaipur had executed a deed of irrevocable trust whereunder the properties mentioned in the schedule thereto stood transferred to the trustee.
The trust fund was to include the assets mentioned in the schedule and also such additions thereto and other capital moneys which might be received by the trustee.
The assessee was one of the beneficiaries under the trust to whom the trustee was to pay during her lifetime 50 per cent of the income of the trust fund.
The question was whether the assessee had a life interest in the corpus of the trust fund and her interest was therefore an 'asset ' liable to wealth tax or whether the assessee had only a right to an annuity and as such her right was exempt from wealth tax in view of section 2(e) (iv) of the Act.
It was held by this Court that since neither the trust fund nor the amount payable to the assessee was fixed and the only thing certain was that she was entitled to 50 per cent of the income of the trust fund, 1093 what the assessee was entitled to was not an annuity but an aliquot share in the income of the trust fund.
The assessee had a life interest in the trust fund and the right of the assessee under the trust deed was not exempt from wealth tax by virtue of the provisions of section 2(e) (iv).
In Commissioner of Wealth tax, Lucknow vs P.K. Banerjee, , it was held that the right of the assessee in the trust fund in that case was not an 'annuity ' and was not exempt from the wealth tax under section 2(e) (iv) of the Act.
It was further observed that in order to constitute an 'annuity ' the payment to be made periodically should be a fixed or predetermined one and it should not be liable to variation depending upon or on any ground relating to the general income of the fund or estate which was charged for such payment.
In this case, in view of the background of the terms of payment and the circumstances why the payment was made, there cannot be any doubt that Rs.25 lakhs annually was an 'annuity '.
It was a fixed sum to be paid out of the property of the Government of India in lieu of the previous income of the assessee from Sarf e khas.
Therefore, it was an annuity.
The only question that arises, was there any express provision which prevented commutation of this annuity into a lumpsum? Counsel for the revenue contended that there must be an express provision which must preclude commutation.
In this case indeed there is no express provision from the document itself.
The question is: can, from the circumstances of the case, such an express provision precluding commutation be inferred in the facts and circumstances of this case? The background of the facts and circumstances of the payment has to be kept in mind.
The Nizam had certain income.
He was being given three sums one was the privy purse which was not commutable; the other was payment of Rs.25 lakhs for the upkeep of palaces etc.
and the third of Rs.25 lakhs in lieu of his previous income from the Sarf e khas.
Income is normally meant for expenditure.
The Nizam had to incur various expenditures.
Commutation is often made when one is not certain as to whether the source from which that income comes for example, when a man retires from service, he normally commutes in order to ensure for himself and after his death for his family a certain income which he can ensure by getting the commuted amount invested in his private bank or otherwise which he may not be sure because upon his death the pension will cease.
1094 In this case this being an aggrement between erstwhile ruler and the Government of India, there is no such motivation and this payment of Rs.25 lakhs in lieu of the previous income of Sarf e khas must be read in conjunction with two other sums namely Rs.50 lakhs as privy purse and Rs.25 lakhs for upkeep of palaces.
This bears the same character.
As privy purses were not commutable, we are of the opinion that from the circumstances and keeping in background of the payment, there was an express provision flowing from the circumstances precluding the commutation of this amount of Rs.25 lakhs.
If that is the position, then, in our opinion, it was exempt under section 2(e) (iv) of the Act.
There was no right granted and can be gathered from the terms of the grant of payment for the assessee to claim commutation of the amount of Rs.25 lakhs.
That would defeat the purpose and the set up of the arrangement under which the payment of the amount was made.
The nature of privy purses have been discussed in H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India, ; We are, however, not concerned with the controversy of the privy purse.
But it is quite evident from the nature of the sum stipulated in the letter, the assessee had no right to claim commutation.
Taking that fact in conjunction with the circumstances under which the payment of Rs.25 lakhs was agreed to, we are of the opinion that it must be held that from the terms of the agreement, there was an express stipulation precluding commutation.
If that is so then it comes within clause (iv) of section 2(e) of the Act and the assessee was entitled to exemption.
The question therefore must also be answered in the negative and in favour of the assessee.
The appeal is disposed of in the aforesaid terms.
The judgment and order of the High Court are modified accordingly.
In view of the divided success, there will be no order as to costs.
A.P.J. Appeal allowed in part.
|
In the assessment year 1957 58, the Wealth Tax Officer had included a sum of Rs.4,90,775 representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees.
The question was whether the properties belonged to the assessee even after such sale for the purpose of inclusion of his net wealth within the meaning of section 2(m) of the Wealth Tax Act, 1957.
The Wealth Tax Officer held that the assessee 1073 still owned those properties and consequently the value of the same was included in his net wealth.
On appeal, the Appellate Assistant Commissioner sustained the order of the Wealth Tax Officer with certain deductions in value.
On further appeal, the Tribunal held that the assessee had ceased to be the owner of the properties because the assessee having received the consideration money from the purchasers and the purchasers having been put into possession were protected in terms of section 53A of the and the term 'owner ' not only included the legal ownership but also the beneficial ownership.
The High Court following the ratio of Commissioner of Income Tax, A.P. Hyderabad vs Nawab Mir Barkat Ali Khan, , reversed the order of Tribunal and upheld that of the Wealth Tax Officer and the Assistant Appellate Commissioner.
The Assessee Nizam of Hyderabad, was a paramount ruler owning certain private properties called Sarf e khas.
On surrendering his paramountcy and acceding to the Union of India, his private properties were taken over by the Government and it was agreed to pay him a sum of Rs. 1 crore annually distributed as follows: (a) Rs.50 lakhs as a privy purse; (b) Rs.25 lakhs in lieu of his previous income from the Sarf e khas, and (c) Rs.25 lakhs for the upkeep of palaces etc.
The Government in its letter to the assessee stated that his Sarf e khas estates should not continue as an entirely separate administration independent of the Diwani administrative structure and it should, therefore, be completely taken over by the Diwani, its revenue and expenditure being merged with the revenues and expenditure of the State.
Question was whether the assessee 's right to receive the sum of Rs.25 lakhs O.S. from the State Government was an asset for the purposes of inclusion in his net wealth under the Wealth Tax Act, 1957.
The Wealth Tax Officer treating the said sum as an annuity and as an asset or property, capitalised the same to Rs.99,78,572 and included that amount as an asset of the assessee.
The Appellate Assistant Commissioner agreed with this view.
The Tribunal, however, refused to call it as an annuity, characterised it as an annual payment for surrender of life interest and held that the capitalised value of such life interest be added to the net wealth and taxed.
The High Court agreed with the view taken by the Tribunal that it was only an annual payment made in compensation for the property which had been taken over by the Govern 1074 ment, therefore, it was a part of the wealth and it was possible to commute the annual payment of Rs.25 lakhs.
The High Court found that there was neither any express preclusion nor any circumstances from which legitimately an inference could be drawn precluding commutation of the said amount into a lumpsum grant.
Consequently, the High Court upheld the order of the Wealth Tax Tribunal.
Partly allowing the Appeal, ^ HELD: (1) Under section 3 of the Wealth Tax Act, 1957 the charge of wealth tax is on the 'net wealth ' of the assessee on the relevant valuation date as defined under section 2(m) of the Act.
[1081E F] (2) The material expression for the purposes of this appeal is "belonging to the assessee on the valuation date".
The properties in respect of which registered sale deeds had not been executed but consideration for sale of which had been received and possession in respect of which had been handed over to the purchasers belonged to the assessee for the purpose of inclusion of his net wealth.
[1081G H; 1082A] (3) It is not necessary for the purpose of section 2(m) to be tied down with the controversy whether in India there is any concept of legal ownership apart from equitable ownership or not or whether under sections 9 and 10 of the Indian Income Tax Act, 1922 and sections 22 to 24 of the Indian Income Tax Act, 1961, where 'owner ' is spoken of in respect of house properties, the legal owner is meant and not the equitable or beneficial owner.
All the rights embedded in the concept of ownership of Salmond cannot strictly apply either to the purchasers or the assessee in the instant case.
[1082C D; 1082H; 1083A] (4) The liability to wealth tax arises because of the belonging of the asset, and not otherwise.
Mere possession, or joint possession unaccompanied by the right to be in possession, or ownership of property would, therefore, not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee.
Unlike the provisions of Income tax Act, section 2(m) of the Act uses the expression 'belonging to ' to indicate that the person having lawful dominion of the assets would be assessable to wealth tax.
[1083C E] (5) Though the expression 'belonging to ' no doubt was capable of denoting an absolute title was neyertheless not confined to connoting that sense.
Full possession of an interest less than that of full ownership could also be signified by that expression.
[1086G H] 1075 Commissioner of Wealth tax, West Bengal vs Bishwanath Chatterjee and Others, and Raja Mohammad Amir Ahmed Khan vs Municipal Board of Sitapur and another.
A.I.R. , relied upon.
Webster 's Distionary and Aiyar 's Law Lexicon of British India, [1940] edn., p. 128 and Salmond on Jurisprudence, 12th edn., pp. 246 to 264, referred to.
(6) The property is owned by one to whom it legally belongs.
The property does not legally belong to the vendee as against the vendor, the assessee.
The precise sense in which the words 'belonging to ' were used in section 2(m) of the Act must be gathered only by reading the instrument or the document as a whole.
[1090C D] (7) Though all statute including the Wealth Tax Act should be equitably interpreted, there is no place of equity as such in taxation laws.
The concept of reality in implementing fiscal provision is relevant and the Legislature in section 2(m) has not significantly used the expression 'owner ' but used the expression 'belonging to '.
The Legislature having designedly used the expression 'belonging to ' and not the expression 'owned by ' had perhaps expected Judicial statesmanship in interpretation of this expression.
[1089G H] (8) On a distinction being made between 'belonging to ' and 'ownership ' the following facts emerge: (1) the assessee has parted with the possession which is one of the essentials of ownership; (2) the assessee was disentitled to recover possession from the vendee and assessee alone until document of title is executed was entitled to sue for possession against others i.e. others than the vendee in possession in this case.
The title in rem vested in the assessee; (3) the vendee was in rightful possession against the vendor; (4) the legal title, however, belonged to the vendor; and (5) the assessee had not the totality of the rights that constitute title but a mere husk of it and a very important element of the husk.
[1088H; 1089A B] (9) The property in question legally cannot be said to belong to the vendee.
The vendee is in rightful possession only against the world.
Since the legal title still vests with the assessee, the property should be treated as belonging to the assessee.
It will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question.
But times perhaps are not ripe to transmute equity on this aspect in the interpretation of law.
[1089C F] 1076 (10) Under section 53A of the Transfer of Property Act, 1908 where possession had been handed over to the purchasers and the purchasers are in rightful possession of the same as against the assessee, secondly that the entire consideration has been paid, and thirdly the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers were in possession had right to call upon the assessee to execute the conveyance, it cannot be said that the property legally belonged to the assessee in terms of section 2(m) of the Act in the facts and circumstances of the case, even though the statute must be read justly and equitably and with the object of the section in view.
If a person has the user and is in the enjoyment of the property it is he who should be made liable for the property in question under the Act, yet the legal title is important and the Legislature might consider the suitability of an amendment if it is so inclined.
[1090F H; 1091A] Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad, approved.
Commissioner of Income tax, A.P. Hyderabad vs Nwab Mir Barkat Ali Khan, referred to.
Commissioner of Wealth tax, A.P. vs Trustees of H.E.H. Nizam 's family (Remainder Wealth) Trust, , R.B. Jodha Mal Kuthiala vs Commissioner of Income tax, Punjab, Jammu & Kashmir and Himachal Pradesh, , Commissioner of Income tax, West Bengal II vs Ganga Properties Ltd., , Commissioner of Wealth tax Gujarat I vs Kum Manna G. Sarabhai, , Commissioner of Income tax, Gujarat vs Ashaland Corporation, , Commissioner of Income tax, Bombay City III vs Smt.
T.P. Sidhwa, 133 I.T.R.840, Smt.
Kala Rani vs Commissioner of Income Tax, Patiala I, , Mrs. M.P. Gnanambal vs Commissioner of Income tax, Madras, , S.B. (House & Land) Pvt. Ltd. vs Commissioner of Income tax, West Bengal, and Addl.
Commissioner of Income tax Bihar vs Sahay Properties and Investment Co. (P) Ltd., distinguished.
(11) Special leave is a discretionary jurisdiction and the dismissal of a special leave petition cannot be construed as affirmation by the Supreme Court of the decision from which special leave was sought for.
[1087E] Daryao & Ors.
vs State of U.P. & Ors.
, ; relied upon.
1077 Sahu Govind Prasad vs Commissioner of Income tax, at 863 approved.
(12) Section 2(e) (iv) of the Wealth Tax Act, 1957 provides that "assets" includes property of every description, movable or immovable, but does not include a 'right to any annuity ' in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant.
[1091B D] (13) The term 'annuity ' is not defined in the Act.
It must be given the signification which it has assumed as a legal term owing to judicial interpretation and not its popular and dictionary meaning.
An 'annuity ' is a certain sum of money payable yearly either as a personal obligation of the grantor or out of property.
The hall mark of an annuity is: (1) it is a money; (2) paid annually; (3) in fixed sum; and (4) usually it is a charge personally on the grantor.
[1091G H] (14) In this case, in view of the background of the terms of payment and the circumstances why the payment was made, there cannot be any doubt that Rs.25 lakhs annually was an 'annuity '.
It was a fixed sum to be paid out of the property of the Government of India in lieu of the previous income of the assessee from Sarf e khas.
Therefore, it was an 'annuity '.
[1093C D] (15) In the instant case, there is no express provision in the document itself which prevented commutation of this annuity into a lump sum.
For inferring whether such as express provision precluding commutation exists, the background of the facts and circumstances of the payment has to be kept in mind.
The assessee was given Rs.25 lakhs in lieu of his previous income from the Sarf e khas.
Income is normally meant for expenditure.
The assessee had to incur various exenditures.
Commutation is often made when one is not certain as to whether the source from which that income comes.
In this case, this being an agreement between earstwhile ruler and the Government of India, there is no such motivation and this payment of Rs.25 lakhs in lieu of the previous income of Sarf e khas must be read in conjunction with two other sums namely Rs.50 lakhs as privy purse and Rs.25 lakhs for upkeep of palaces.
This bears the same character.
[1093E H; 1094A B] (16) As privy purses were not commutable, from the circumstances and keeping in background of the payment, there was an express provision flowing from the circumstances precluding the 1078 commutation of this amount of Rs.25 lakhs and, therefore, it was exempt under section 2(e) (iv) of the Act.
[1094B C] (17) There was no right granted and can be gathered from the terms of the grant of payment for the assessee to claim commutation of the amount of Rs.25 lakhs.
That would defeat the purpose of the set up of the arrangement under which the payment of the amount was made.
From the nature of the sum stipulated in the letter written by the Government to the assessee, the assessee had no right to claim commutation.
Taking that fact in conjunction with the circumstances under which the payment of Rs.25 lakhs was agreed to, it is held that from the terms of the agreement, there was an express stipulation precluding commutation and, therefore, it comes within cl.
(iv) of section 2(e) of the Act and the assessee was entitled to exemption.
[1094C F] Oxford Dictionary: Jarman on Wills (P. 1113), relied on and Ahmed G.H. Ariff and Others vs Commissioner of Wealth tax, Calcutta, , Commissioner of Wealth tax Gujarat vs Arundhati Balkrishna, , Commissioner of Wealth tax, Rajasthan vs Her Highness Maharani Gayatri Devi of Jaipur, , Commissioner of Wealth tax, Lucknow vs P.K. Banerjee, and H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India; , referred to.
|
Special Leave Petition (Civil) No. 2023 of 1983.
From the Judgment and Order dated 26.8.82 of the High Court of Punjab & Haryana in L.P.A. No. 1172/82.
Hardev Singh and R.S. Sodhi for the Petitioners.
The Order of the Court was delivered by PATHAK, J. This case has been pending in this Court for some years.
On November 21, 1983 we directed issue of notice on the special leave petition.
Almost three years later, on August 11, 1986 when the case was taken up it was found that the respondents had not entered appearance yet and consequently notice was directed to issue afresh, indicating this time that the case would be decided on the merits of the controversy itself between the parties.
On the latter date when no one appeared for the respondents, the case was adjourned for two weeks again to enable the respondents to enter appearance.
Thereafter on September 22, 1986 an order was made for the last time directing issue of notice to the respondents returnable on October 20, 1986 and intimating that the special leave petition would definitely be taken up on that date for final disposal on the merits of the case.
It was made clear that the case would not be adjourned on any account.
We find that the respondents continue to be absent.
No reason has been shown for their absence, and in the circumstances we proceed to dispose of the case.
A bus belonging to the Punjab Roadways met with an accident on February 13, 1971, which resulted in the death of three persons.
One of those persons was Balbir Singh.
An application was filed by the petitioners, who are the widow and minor children of Balbir Singh, for compensation before the Motor Accident Claims Tribunal.
By an order dated October 23, 1975 the Tribunal held the claimants entitled to compensation in the sum of Rs.93,600 with interest at 6 per cent per annum.
Dissatisfied with the order, the claimants as well as the State 1097 Government appealed to the High Court of Punjab and Haryana.
The High Court dismissed the appeal filed by the claimants and partly allowed the appeal by the State.
The High Court, while holding that the accident was caused by the rash and negligent act of the driver of the bus, reduced the compensation to Rs.79,200 but confirmed the award of interest made by the Tribunal.
After carefully considering the matter we think that the High Court erred in reducing the quantum of compensation awarded by the Tribunal.
There was sufficient material, in our opinion, to justify the quantification determined by the Tribunal and we see no reason why the amount should have been reduced.
It was strenuously contended by learned counsel for the petitioners that the petitioners are entitled to an even greater amount of compensation, in view of the different sources of income arising to the deceased Balbir Singh.
We think, however, that having regard to the material on the record the amount of compensation assessed by the Tribunal should be maintained.
Accordingly we restore the order of the Tribunal awarding compensation in the sum of Rs.93,600.
In regard to the interest, however, we think the petitioners are entitled to a higher rate of interest than that awarded by the Tribunal and confirmed by the High Court.
We find that in Narchinva V. Kamat and Anr.
vs Alfredo Antonio Doe Martins & Ors., ; , this Court awarded interest at 12 per cent from the date of the accident up to the date of payment.
Subsequently in Smt.
Chameli Wati & Anr.
vs Delhi Municipal Corporation of Delhi and Others, , a larger Bench of this Court awarded compensation at 12 per cent per annum from the date of the application for compensation.
We are of opinion that the petitioners should be entitled to interest at 12 per cent per annum from the date of the application for compensation to the date of payment.
We order accordingly.
The special leave petition is disposed of in these terms.
|
A State Roadways bus met with an accident resulting in the death of three persons.
On an application being filed on behalf of one of the persons, the Motor Accident Claims Tribunal awarded a compensation of Rs.93,600 to the widow and the minor children of the deceased, with interest at 6 per cent per annum.
The claimants as well as the State appealed to the High Court, which dismissed the claimants ' appeal, and partly allowed the appeal by the State.
While holding that the accident was caused by the rash and negligent act of the driver of the bus, the High Court reduced the compensation to Rs.79,200 but confirmed the award of interest made by the Tribunal.
In the special leave petition it was contended for the petitioners claimants that they were entitled to an even greater amount of compensation on account of the different sources of income arising to the deceased.
Disposing of the special leave pention, the Court, ^ HELD: The High Court erred in reducing the quantum of compensation awarded by the Tribunal.
There was sufficient material on the record to justify the quantification determined by the Tribunal and there was no reason why the amount should have been reduced.
The amount of compensation assessed by the Tribunal should, therefore, be maintained.
[1097B D] The petitioners are entitled to interest at 12 per cent per annum 1096 from the date of the application for compensation to the date of payment.
[1097] Narchinva V Kamat & Anr.
vs Alfredo Antonio Doe Martins & Ors., ; and Smt.
Chameli Wati & Anr.
vs Municipal Corporation of Delhi & Ors., , referred to.
|
Special Leave Petition (Civil) No. 11015 of 1986.
From the Judgment and Order dated 2.5.86 of the High Court of Punjab & Haryana at Chandigarh in Regular Second Appeal No. 1504 of 1977.
R.K. Jain, D.S. Mehra and Ms. Abha Jain for the Petitioners.
Ram and Hari Chand are sons of one Kesaria.
The suit land be longed jointly to Respondents 5 to 7.
They sold it to Re spondents 1 to 4Nathi Mal Kejriwal, Radhey Shayam Kejriwal, Smt.
Daropdi Devi and Nagar Mal Kejriwal, who were strangers to their family for a consideration of Rs.33,000 under a sale deed registered on 25.10.1971.
The petitioners, who claimed themselves to be the sons and nephews of the ven dors, instituted a suit in Civil Suit No. 466 of 1972 on the file of the Sub Judge, 1st Class, Palwal for possession of the suit land on payment of Rs.33,000 claiming that they were entitled to the right of pre emption in respect of the suit land either under clause 'First ' or 'Secondly ' of Section 15(1)(a) of the Punjab Pre emption Act, 1913 (here inafter referred to as 'the Act ') as in force in the State of Haryana or under clause 'First ' or 'Secondly ' of Section 15(1)(b) of the Act.
The learned Sub Judge upheld the plea of the petitioners and decreed the suit for possession of the suit land against Respondents 1 to 4 who had purchased the suit land as well as against Respondents 5 to 7 who had sold it subject to the petitioners paying a sum of Rs.36,642 ' which included the consideration of Rs.33,000 and interest thereon at 8 per cent per annum.
The learned Sub Judge further directed the petitioners to deposit the sum of Rs.36,642 minus the zare punjam amount on or before 3rd May, 1976 and that on their failure to deposit the said amount, he directed that the suit should be deemed to have been 70 dismissed with costs.
Aggrieved by the judgment of the learned SubJudge, Respondents 1 to 4 filed an appeal before the District Judge, Gurgaon in Civil Appeal No. 69 of 1976.
The appeal was dismissed.
Against the judgment of the learned District Judge, Respondents 1 to 4 filed a second appeal before the High Court of Punjab and Haryana in Regu lar Second Appeal No. 1504 of 1977.
That second appeal was taken up for hearing on 2nd May, 1986.
By that time this Court had delivered its judgment in Atam Prakash vs State of Haryana and Others, ; declaring clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(a), clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(b), clauses 'First, 'Secondly ' and 'Thirdly ' of Sec tion 15(1)(c) and the whole of Section 15(2) of the Act as ultra vires the Constitution.
Following the said decision the High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the right of pre emption had been declared void by this Court.
This petition is filed praying for special leave to prefer an appeal against the judgment of the High Court in the second appeal.
At the hearing of this Special Leave Petition the learned counsel for the petitioners contended that even though the petitioners were not able to claim the right of pre emption under clauses 'First ', and 'Secondly ' of Section 15(1)(a) or clauses 'First ' and 'Secondly ' of Section 15(1)(b) by reason of the decision in the Atam Prakash 's case (supra) they were entitled to claim the right of pre emption under clause 'Fourthly ' in Section 15(1)(b) of the Act.
Section 15(1)(b) reads thus: "15.
Persons in whom right of pre emption vests in respect of sales of agricultural land and village immovable property (1)The right of pre emption in respect of agricultural land and village immovable property shah vest ( a ) . . . . . . . . (b) where the sale is of a share out of joint land or property and is not made by all the co sharers jointly First, in the sons or daughters or sons or daughters ' sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; 71 Thirdly, in the father 's brother or father 's brother 's sons of the vendor or vendors; Fourthly, in the other co sharers; Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof; . . . . . . . . . . " It is argued by the learned counsel for the petitioners that since the suit land belonged to the joint family and it had not been sold by all the co sharers they were entitled to claim the right of pre emption under clause 'Fourthly ' of Section 15(1)(b) of the Act because they happened to be the non alienating co sharers Although there is no specific finding that the property is the joint property in this case, we shall assume for purposes of this judgment that the suit land was joint property.
In order to understand the meaning of the ' words 'other co sharers ' in Section 15(1)(b) we have to read of the Act as it stood before the decision in Atam Prakash 's case (supra).
It is seen that the expres sion 'other co sharers ' in clause 'Fourthly ' of Section 15(1)(b) of the Act refers to only those co sharers who do not fall under clause 'First ' or 'Secondly ' or 'Thirdly ' of Section 15(1)(b) of the Act.
Since the petitioners admitted ly fall either under clause 'First ' or under clause 'Second ly ' of Section 15(1)(b) of the Act they are clearly outside the scope of clause 'Fourthly '.
Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourth ly '.
We do not, therefore, find any substance in this con tention which was urged for the first time before the High Court The suit was, therefore, rightly dismissed by the High Court holding that the petitioners were no longer entitled to any relief under the Act.
This petition, there fore, fails and it is dismissed.
M.L.A. Petition dis missed.
|
Respondent Nos.
5 to 7 were joint owners of the suit land.
They sold it to respondent nos.
1 to 4 on 25.10.71.
The petitioners, sous and nephews of the vendors, instituted a suit before the sub Judge, Palwal for possession of the suit land on payment of the sale consideration on the ground that they were entitled to the right of the pre emption in respect of the suit land either under clause "First", or Secondly, of section I5(1)(a) or under clause 'First ' or 'Second ly ' of section 15(1)(b) of the Punjab Pre emption Act 1913 as in force in the SLate of Haryana.
The Sub Judge decreed the suit for possession.
The appeal of Respondent Nos. 1 to 4 against the aforesaid order having been dismissed by the District Judge, they filed a second appeal before the High Court.
During the pendency of the second appeal, the Supreme Court delivered its judgment in Atam Prakash vs State of Haryana & Ors., ; The High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the fight of pre emption had been declared void by the Supreme Court in Atam Pra kash 's case.
Being aggrieved by the judgment of the High Court, the petitioners in the special leave petition contended that since the suit land belonged to the joint family and it had not been sold by all the sharers, they were entitled to claim the right of pre emption under dause 'Fourtidy ' of s.15(1)(b) of the Act because they happened to be the non alienating co sharers.
Dismissing the petition, HELD: The expression 'other co sharers ' in clause 'Fourthly ' of section 15(1)(b) of the Act refers to only those co sharers who do not fall 69 under clause 'First ' or 'Secondly ' or 'Thirdly ' of s.15(1)(b) of the Act.
Since the petitioners admittedly fail either under clause 'First ' or under clause 'Secondly ' of section 15(1)(b) of the Act, they are clearly outside the scope of clause 'Fourthly '.
Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourthly '.
[71D E]
|
ivil Appeal Nos.
3341 42/83 & S.L.P. No. 2693/84 .
From the Judgment & Order dated 25 1 83 of the High Court of Punjab & Haryana in Regular Second Appeal No. 254/83 Hardev Singh and R.S. Sodhi for the Appellants.
C.S. Vaidyanathan for the Appellants in C.A.No. 3342/83.
Respondent in person.
The Judgment of the Court was delivered by B.C. RAY, J.
These two appeals by special leave one by the 75 Punjab State Electricity Board, Patiala and the other by Gurdial Singh & Ors.
who were defendant respondent Nos.
3,4,6 and 7 in Civil Suit No. 293T/16 1 181/17 7 80 passed in R.S.A. No. 254/38 whereby the judgments and the decrees of the courts below were affirmed decreeing the plaintiff respondent 's suit declaring that the plaintiffrespondent be deemed to have been promoted from the date when his juniors as mentioned in the suit were promoted to the posts of Line Superintendents.
The case of the plaintiff in short is that the plaintiff respondent Ravinder Kumar Sharma joined the service under the respondent No. 1, Punjab State Electricity Board as a Line Man on 25th December, 1969 and he worked as apprentice Line Man from 29.12.1969 to 28.12.1970 on a fixed salary of Rs. 140 per month.
Thereafter he was allowed regular scale of pay of Rs. 110 330 since the date of his joining as a Line Man.
The terms and conditions of the service of the LineMen as well as of the Line Superintendent are governed by the rules framed by the Punjab Government in exercise of its powers under article 309 of the Constitution of India which were termed as P.W.D. (Electricity Branch) Provisional Class III (Subordinate posts) Rules 1952.
Subsequently the State Electricity Board came into being and the Electricity De partment came under the administration of the State Elec tricity Board.
The Plaintiff has stated in the plaint that as a Line Man he had been performing his duties efficiently and hon estly and there was never any complaint against his work.
His work and conduct had always been appreciated by his superiors from time to time.
He possesses the following qualifications: 1.
B.A. 2.
I.T.I. (in the trade of Electrician 2 year 's duration).
National Apprentice Certificate in the trade of Line Man (3 year 's duration).
All the Line Men under the defendant No. 1, that is, Punjab State Electricity Board are either diploma holders or I.T.I. trained or non diploma holders and they form and constitute one common cadre known as Line Man and in the same scale of Rs. 110 330.
The seniority list of all these Line Men is common and joint.
It has been further alleged that defendant No. 1 had been promoting officials from Line 76 Men to the Line Superintendent on a pick and choose basis in consideration of the qualifications by fixing a quota be tween the diploma holders and non diploma holders and this has resulted in arbitrary discrimination between the diploma holders and non diploma holders Line Men thereby adversely affecting the promotional prospect of the non diploma hold ers Line Men.
It has been further stated that this policy of the defendant No. 1 was set aside by the Punjab and Haryana High Court in L.P. No. 618, 619 of 1975 fixing the quota between diploma holders and non diploma holders Line Super intendents by orders dated 12.1.1965 and 27.6.1974.
Though the minimum qualification for promotion of Line Man to Line Superintendent is however matriculation.
The plaintiff also stated that by order dated 12.7.
1977 the respondent No. 1 promoted Gurdial Singh whose name appeared at section No. 1451 in the common seniority list and also the defendant Jaswant Singh whose name appeared at section No. 1546 in the said list as well as Ramesh Kumar standing at section No. 2309 in the said seniority list to the post of Line Superintendent even though the plaintiffs position in the seniority list was at section No. 995 and he was senior to these officials.
Thus the plaintiff was passed over while his juniors were promoted.
This policy of pick and choose, it has been stated, in promoting the officials is wholly illegal and discriminato ry.
It has been further pleaded that by office order No. 899 dated 17.8.1977 the defendant No. 2, that is, the Chief Engineer of the Electricity Board further promoted Sudesh Kumar and Virender Kumar whose name stand at section No. 1877 and 2279 in the joint seniority list as Line Superintendent from the Line Man.
The petitioner, therefore, pleaded that the action of defendants Nos. 1 and 2 in fixing the quota be tween diploma holders and non diploma holders Line Men for the purpose of promotion to the post of Line Superintendent and promoting the defendants 3 to 7 to the posts of Line Superintendent from Line Man is wholly illegal, unconstitu tional and arbitrary.
The plaintiff, therefore, prayed for a decree declaring that the orders dated 12.7.1977.
and 17.8.1977 promoting the defendants 3 to 7 are illegal, discriminatory and null and void as it arbitrarily affects the rights of the plaintiff who is senior to them in not being promoted to the cadre of Line Superintendent.
The plaintiff also prayed for a direction that he be promoted to the post of Line Superintendent from the date defendant Nos. 3 to 7 were promoted to the said post.
The defendant Nos. 1 and 2 contested the claim of the plaintiff by filing written statement stating that the terms and conditions of service of Line Men and Line Superintend ent are governed by the rules framed by the Punjab State Government under article 309 of the 77 Constitution and are termed as P.W.D. (Electricity Branch) Provisional Service Class III (Subordinate posts) Rule 1952.
It has been further stated that the State Electricity Board by office order dated 14.5.1970 prescribed a quota of 5% for diploma holders Line Men for promotion to the post of Line Superintendent This quota of diploma holders Line Men was increased to 20% by the Board by order dated 2.7.1973.
On 9.5.1974 the quota of diploma holders Line Men for promotion to the Line Superintendent was further increased to 33% whereas the quota for promotion of non diploma holders Line Men to the post of Line Superintendent was fixed at 33%.
It has been stated that according to this quota the defendant Nos. 3 to 7 have been promoted and the fixation of quota on the basis of educational qualification cannot be questioned as arbitrary or discriminatory.
After heating both the parties the Subordinate Judge, 1st Class, Patiala, held that the plaintiff was entitled to promotion to the post of Line Superintendent and the orders dated 12.7.1977 and 17.7.1977 whereby the defendant Nos. 3 to 7 were promoted even though they were junior to the plaintiff are illegal and in violation of the rights of the plaintiff.
The suit was decreed and the plaintiff was de clared to have been promoted from the date when his juniors mentioned in the plaint were promoted to the post of Line Superintendent.
Against this judgment and decree the Punjab State Elec tricity Board, Patiala filed an appeal being C.A. No. 4368 of 1982.
The Additional District, Judge, Patiala after heating the parties dismissed the appeal with costs holding that there was no reasonable nexus by fixing quota for promoting diploma holders Line Men to the post of Line Superintendent even though the non diploma holder as well as the diploma holders formed the joint cadre of Line Men for promotion to the post of Line Superintendent.
The judgment of the trial court was affirmed and it was also held that the appeal was not competent inasmuch as there was no reso lution of the board authorising the filing of the appeal.
The cross objection filed by the plaintiff respondent was allowed.
Against this judgment and decree the defendant Nos.
I and 2 preferred an appeal being R.S.A. 254 of 1983.
The said appeal was dismissed by the High Court of Punjab and Haryana and the judgment and decrees of the court below were af firmed.
It is against this judgment and decree the aforesaid two appeals on special leave petition have been filed in this Court.
78 The only issue raised in this appeal is whether the defend ant No. 1, that is, the Punjab State Electricity Board is competent to discriminate between diploma holders and non diploma holders Line Men forming the common cadre of Line Men having a common seniority list in promoting these Line Men on the basis of quota fixed by the order of the State Electricity Board even though the requisite qualification for promotion for Line Man to the post of Line Superintend ent is either the holding of diploma or certificate for electrical engineering from a recognised institute or the non diploma holders having passed one and half year 's course in the trade of Electrician/Line Man/Wire Man from recog nised Industrial Training Institute and are matriculates and have worked for four years as Line Man continuously and immediately before promotion, as has been provided by the office order No. 97/ENG/BET/G 33 dated 22.10.1968 the rele vant excerpt of which is quoted herein below: "Far Direct Recruitment: a) Possess 3 years, certificate or diploma course in Electrical Engineering from any recognised Institute, or a certificate of having passed the N. 'C.C. Test conducted by the State Board of Technical Education/All India Council for Technical Education.
b) Have passed action of the Institution of Engineering (India) Exam.
with Elementary Electrical Engineering as the optional paper.
For Pormotion c) (i) Have passed 11/2 years course in the Electrical Trades of Electrician/Line Man/Wire Man from recognised Industrial Training Institutes and are matric ulates and have worked for 4 years as a Line Man continuously and immediately before promo tion.
(ii) Have passed 11/2 years course in the Electrical Trades of Electrician/Line Man/Wire Man from recognised Industrial Training Institutes and are non matriculates but are capable of preparing estimates, writing up measurement books accu rately, keeping store accounts etc.
and have worked for 4 years as a Line Man continuously and immediately before promotion.
79 (iii) Persons holding diploma in Electrical Engineering of 3 to 4 years duration recruited as Line Man against the reservation of 60% fixed for recruitment of persons holding certificate of 11/2 years course in the Elec trical Trades of Electrician/Line Man/Wire Man from recognised Industrial Training Insti tutes, have worked as Lint Man for 3 years continuously and immediately before promotion.
On promotion as Line Superintendent they will be given weightage of 2 years ' service as compared to non diploma holders, at the time of fixation of their seniority and pay in accordance with the instructions contained in Board 's Memo No. 88774/84/BET/(33)L dated 29.12.1967.
D (i) Matriculates Line Man having a total continuous service of 9 years as at A.L.M. and Line Man out of which they should have worked as Line Man for 4 years continuously and immediately before promotion '.
(ii) Non matriculates Line Man having a total continuous service of 11 years as A.L.M. and Line Man out of which they should have worked as Line Man for four years, continuously and immediately before promotion, provided they are capable of preparing estimates, writing up measurement books accurately keeping store accounts and in addition are conversant with Consumer Accounts or possess a special experi ence for transmission line work.
The State Electricity Board by its order dated 14.5.1970 introduced the following quota for promotion to the cadre of Line Superintendents: 1.
Direct recruitment from the open market 62% 2.
Diploma holders Line Men 5% 3.
Line Men non diploma holders 33%.
This quota of promotion for diploma holders Line Man to the pest of Line Superintendent was further increased by office order No. 244 dated 2.7.1975 by fixing the quota fox promo tion of diploma holders Line Men already in Service of the Board from 5% to 20%.
Again by office order No. 78 dated 9.6.1974 the State Electricity Board further increased the quota of promotion of diploma holders Line Man already in the service of the Board from 20% to 33%.
80 There is no dispute, rather it is not controverted that the position of the plaintiff respondent in the joint sen iority list of Line Men in the scale of Rs. 110 330 of the Punjab State Electricity Board from 1.6.1967 to 31.8.1974 which has been filed as additional document by the Punjab State Electricity Board in C.A. No. 3341 of 1983 that the plaintiff respondent 's name was mentioned at section No. 995 whereas names of defendant Nos. 3 to 7 appear in the said list in section Nos. 1451, 1546, 2309, 1877 and 2279 respective ly.
Therefore all the defendant Nos. 3 to 7 are undoubtedly junior to the plaintiff respondent as LineMen in the joint seniority List of Line Men comprising of both diploma hold ers and non diploma holders Line Men in the same cadre.
It iS also clear and evident from the office Order No. 97 dated 22.10.1968 that the qualification for promotion to the post of Line Superintendent from Line Men is either holding cer tificate or diploma in electrical engineering from any recognised institute or having passed 1 1/2 years Course in the electrical trade of Electrician/Line Man/WireMan from reCognised Industrial Training Institute and are matricu lates and have worked as Line Man for four years continuous ly and immediately before the promotion.
The petitioner who is an Arts Graduate and have I.T.I. Certificate (in the trade of electrician 2 years ' duration) and also have Na tional Apprentice Certificate in the trade of Line Man 3 years ' duration is eligible for promotion to the post of Line Superintendent as he has fulfilled all the requisite qualifications.
There is no gain saying that all the Line Men either diploma holders or non diploma holders are per forming the same kind of work and duties and they belong to the same cadre having a common/joint seniority list for promotion to the post of Line Superintendent.
The orders dated 12.7.1977 being order No. 73 promoting defendant Nos. 3, 4 and 5 as well as office order No. 898 dated 17.8.1977 promoting defendant Nos. 6 and 7 on the basis of quota from diploma holders as fixed by the order of the State Electric ity Board dated 9.5.1974 is wholly arbitrary, illegal, discriminatory and violative of the equality clause Con tained in articles 14 and 16 of the Constitution of India inasmuch as it purports to promote defendant Nos. 3 to 7 who are admittedly junior to the respondent No. 1 in service as Line Man in the State Electricity Board.
It has been rightly held by following the decision in Shujat Ali 's case ; at 480 that the promotion of defendant Nos. 3 to 7 who are admittedly junior to the plaintiffrespondent in the service as Line Man to the post of Line Superintendent are illegal, arbitrary and discriminatory and so bad.
It is pertinent to refer to the observations of this Court in the said case which read as follows: 81 "But where graduates and non graduates are both regarded as fit and, therefore, eligible for promotion, it is difficult to see how, consistently with the claim for equal opportu nity any differentiation can be made between them by laying down a quota of promotion for each and giving preferential treatment to graduates over non graduates in the matter of fixation of such quota.
The result of fixation of quota of promotion for each of the two categories of Supervisors would be that when a vacancy arises in the post of Assistant Engi neer, which, according to the quota is re served for graduate Supervisors, a non gradu ate Supervisor cannot be promoted to that vacancy, even if he is senior to all other graduate Supervisors and more suitable than they.
His opportunity for promotion would be limited only to vacancies available for non graduate Supervisors.
That would clearly amount to denial of equal opportunity to him." This observation apply with full force to the present case, and it has been rightly held by the High Court of Punjab and Haryana that the promotion of defendant Nos. 3 to 7 who are junior to the plaintiffrespondent from Line Man to the post of Line Superintendent is wholly bad and discrimi natory and directed that the petitioner be deemed to have been promoted to the post of Line Superintendent from the date the said defendants 3 to 7 had been promoted from Line Man to Line Superintendent In our considered opinion there is no infirmity in the judgment of the High Court affirming the judgment and decree of the courts below.
and we agree with the reasonings and conclusions arrived at by the courts below.
The two appeals on special leave are, therefore, dismissed with costs, quantified at Rs.5000 to be paid by the appellant of C.A. No. 3341 of 1983 to the re spondent No. 1.
The Punjab State Electricity Board, Patiala also filed special leave petition (Civil) No. 2693 of 1984 against the judgment and order dated 14.2.1984 passed in Civil Revision No. 407 of 1984 by the High Court of Punjab and Haryana dismissing the Revision Petition.
This Revision Petition was filed against the order rejecting the appellant 's applica tion for correction of the decree.
As we have already dis missed the appeals there is no merit in this special leave petition and the same is accordingly dismissed A. P .J.
Appeals & Petition dismissed.
|
Plaintiff respondent Ravinder Kumar Sharma joined serv ice as a Line Man under the respondent Electricity Board.
The terms and conditions of the service of the Line Man as well as of the Line Superintendent were governed by the P.W.D. (Electricity Branch) Provisional Class III (Subordi nate posts) Rules 1952.
The Line Man are either diploma holders or I.T.I. trained or non diploma holders and they form and constitute one common cadre known as Line Man and were in the same scale of pay.
The seniority list of all the Line Man is common and joint.
By order dated 12.7.1977, the respondent Board promoted Gutdial Singh, Jaswant Singh and Ramesh Kumar shown in the common seniority list at section Nos. 1451, 1546 and 2309 respectively, to the pest of Line Super intendent even though the plaintiff respondent 's position in the seniority list was at section No. 995 and he was senior to the said officials.
By order dated 17.8.1977 the Chief Engineer of the respondent Electricity Board further promot ed Sudesh Kumar and Virender Kumar whose name stand at section No. 1877 and 2279 in the joint seniority list.
The Plain tiff respondent filed a suit alleging that this policy of promotion from Line Man to Line Superintendent on a pick and choose basis by fixing a quota between the diploma holders and non diploma holders is wholly illegal, unconstitutional and arbitrary as it adversely affected the promotional prospect of the non diploma holders Line Men and prayed for a decree declaring that the orders dated 12.7.1977 and 73 17.8.1977 promoting the defendants 3 to 7 are illegal, discriminatory and null and void as it arbitrarily affects the rights of the plaintiff who is senior to them and that he be promoted to the post of Line Superintendent from the date defendant Nos. 3 to 7 were promoted.
The defendant Nos. :1 and 2 contested the claim of the plaintiff contending that the terms and conditions of serv ice of Line Man and the Line Superintendent are governed by the P.W.D. (Electricity Branch) Provisional Service Class III (Subordinate Posts) Rules 1952 framed by the State Government under article 309 of the Constitution, that the Electricity Board by various orders prescribed quota for diploma holders Line Men for promotion to the post of Line Superintendent, that according to this quota the defendant Nos. 3 to 7 have been promoted and that the fixation of the quota on the basis of educational qualification cannot be questioned as arbitrary or discriminatory The Subordinate Judge First Class decreed the suit, holding that the plaintiff was entitled to promotion to the post of Line Superintendent and the orders dt.12.7.1977 and 17.8.1977 whereby the defendant Nos. 3 to 7 were promoted even though they were junior to the plaintiff are illegal and in violation of the rights of the plaintiff and, there fore, the plaintiff was declared to have been promoted from the date when his said juniors were promoted.
The appeal filed by the State Electricity Board was dismissed by the Additional District Judge holding that there was no reasonable nexus by fixing quota for promoting diploma holders Line Men to the post of Line Superintendent even though the non diploma holders as well as the diploma holders formed the joint cadre of Line Man for promotion to the post of Line Superintendent The judgments and decrees of the Courts below were affirmed by the High Court.
Dismissing the Appeals and the Special Leave Petition, HELD: 1.
There is no dispute, rather it is not contro verted that in the joint seniority list of Line Men the plaintiff respondent 's name was mentioned at section No. 995 whereas names of defendant Nos. 3 to 7 appear in the said list at section Nos. 1451, 1546, 2309, 1877 and 2279 respective ly Therefore, all the defendant Nos. 3 to 7 are junior to the plaintiff respondent It is also clear and evident from the Office Order No. 97 dated 22.10.68 that the qualifica tion for promotion to the post of Line Superintendent from Line Man is either holding certificate or diploma in Elec trical Engineering from any recognised institute or 74 having passed 11/2 years course in the electrical trade of Electrician/ Line Man/Wire Man from recognised Industrial Training Institute and are matriculates and have worked as Line Man for four years continuously and immediately before the promotion.
[80A C] 2.
The plaintiff respondent who is an Arts Graduate and have I.T.I. Certificate (in the trade of electrician two years ' duration) and also have National Apprentice Certifi cate in the trade of Line Man 3 years ' duration is eligible for promotion to the post of Line Superintendent as he has fulfilled all the requisite qualifications.
All the line men either diploma holders or non diploma holders are performing the same kind of work and duties and they belong to the same cadre having common/joint seniority list for promotion to the post of Line Superintendent.
The Orders dated 12.7.1977 being Order No. 73 promoting defendant Nos. 3, 4 and 5 as well as Office Order No. 898 dated 37.8.77 promoting defend ant Nos. 6 and 7 on the basis of quota from diploma holders as fixed by the order of the State Electricity Board dated 9.5.74 is wholly arbitrary, illegal, discriminatory and violative of the equality clause contained in articles 14 and 16 of the Constitution in as much as it purports to promote defendant Nos. 3 to 7 who are admittedly junior to the plaintiff respondent in service as Line Man in the State Electricity Board.
[80D G] Shujat Ali 's case ; at 480 followed.
There is no infirmity in the judgment of the High Court affirming the judgment and decree of the Courts below.
|
vil Appeals Nos.
2 4 of 1975.
From the Judgment and Order dated 8th 9th November 1973 of the Gujarat High Court in Estate Duty Reference Nos. 2, 3 and 4 of 1971.
Dr. V. Gauri Shankar and Miss A. Subhashini for the Appel lant.
V.S. Desai, Mrs. A.K. Verma and Joel Peres for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
The facts in these appeals lie within a narrow compass.
One Abdulhussein Gulamhussein Merchant died on 8 February, 1959.
The accountable persons filed returns under the provisions of the and an assessment was made by the Deputy Controller of Estate Duty on 26 February, 1960.
The Estate Duty (Amendment) Act, 1958, repealed the original sections 56 to 65.
Section 59, which substituted for the original section 62, made provision for reassessment.
It came into force with effect from 1 July 1960.
On 21 February, 1962 a notice under the new section 59 of the Act was issued to the accountable person concerned for reopening the assessment on the ground that some property had escaped the levy of estate 990 duty.
The accountable persons raised objections to the reopening of the assessment under section 59.
The Assistant Controller rejected the contentions of the accountable persons and reopened the assessment.
Against the order of reassessment the accountable persons filed three different appeals before the Appellate Controller.
The Appellate Controller allowed the appeals and set aside the reassess ment orders holding that section 59 under which action had been taken by the Assistant Controller was not retrospective in operation.
On appeal by the Revenue, the Tribunal upheld the view of the Appellate Controller relying on the decision of the Bombay High CoUrt in A.N. Mafatlal vs Deputy Controller of Estate Duty, Thereafter three references were made to the High Court at the instance of the Revenue raising the identical question: "Whether Section 59 of the is retrospective in operation and if so, in the facts and circumstances of the case, the reopening of the assessment under section 59 of the said Act was bad in law?" Section 62 as originally enacted read as follows: "Rectification of mistakes relating to valua tion for estate duty:, (1) If, after the determination of the estate duty payable in respect of any estate, it appears to the Controller that by reason of any mistake apparent from the record or of any mistake in the valuation of any property in any case other than a case in which the valuation has been the subject matter of an appeal under the Act or of the omission of any property, the estate duty paid thereon is either in excess of or less than the actual duty payable, he may, either on his own motion or on the appli cation of the person accountable and after obtaining the previous approval of the Board, at any time within three years from the date on which the estate duty was first determined (a) refund the excess duty paid, or, as the ease may be, (b) determined the additional duty payable on the property; Provided that where the person accountable had fraudulently under estimated the value of any property or omitted any property, the period will be six years: 991 Provided further that no order shall be made under this sub section unless the person accountable has been given an opportu nity of being heard.
(2) Nothing contained in sub section (1) shall render any.
person accountable to whom a certificate that the estate duty has been paid is granted liable for any additional duty in excess of the assets of the deceased which are still in his possession, unless the person accountable had fraudulently attempted to evade any part of the estate duty in the first instance.
" The provisions of section 59 introduced by the Amendment Act of 1958 are as follows: "59.
Properly escaping assessment. ' If the Controller, . . (a) has reason to believe that by reason of the omission or failure on the part of the person accountable to submit an account of the estate of the deceased under Section 53 or Section 56 or to disclose fully and truly all material facts necessary for assessment, any property chargeable to estate duty has escaped assessment by reason of undervaluation of the property included in the account or of omission to include therein any property which ought to have been included or of assessment at too low a rate or otherwise, or (b) has, in consequence of any infor mation in his possession, reason to believe notwithstanding that there has not been such omission or failure as is referred to in clause (a) that any property chargeable to estate duty has escaped assessment, whether by reason of under valuation of the property included in the account or of omission to include therein any property which ought to have been included, or of assessment at too low a rate or otherwise, he may at any time, subject to the provisions of section 73A, require the person accountable to submit an account as required under section 53 and may proceed to 992 assess or reassess such property as if the provisions of Section 58 applied thereto." The High Court considered the question of law referred to it at great length and after a detailed judgment answered the question in each case in favour of the assessee.
The Revenue now appeals.
The question is whether the newly enacted section 59 of the is retrospective in operation so as to affect the assessment already completed on the accountable persons.
It is urged that the new section 59 is substantially similar in content as the old section 62 and therefore the new provision must be regarded as retrospective.
The contention may be examined.
The Estate Duty (Amendment) Act, 1958 effected a sub stantial change in the parent Act.
56 to 65 were substi tuted in place of the existing sections 56 to 65, and the origi nally enacted section 62 was repealed.
The original section 62 provid ed essentially for the rectification of mistakes apparent from the record or in the valuation of any property or by reason of the omission of any property.
The newly enacted section 59 deals with property escaping assessment.
The provision is analogous to section 34 of the Indian Income Tax Act, 1922 and section 147 of the Income Tax Act, 1961.
It seems to us that the new section 59 endeavours to cover a substantially different area from that treated by the old section 62.
The only area which seems common to the two provisions relates to the "omission of any property", but it seems to us that the incidents of the power under section 62 relate to a situation materially different from the incidents of the power contemplated under section 59.
The High Court has closely analysed the provisions of the two sections and has come to the conclusion that the power of reassessment conferred by the new section 59 is quite different from the power conferred by the old section 62.
We are in agreement with the High Court.
The contention on behalf of the Revenue based on the identity alleged between the new section 59 and the old section 62, and that, therefore, the new sec tion should be regarded as retrospective cannot be accepted.
As .it stands, there are no specific words either which confer retrospective effect to section 59.
To spell out retro spectivity in section 59, then, there must be something in the intent to section 59 from which retrospective operation can be necessarily inferred.
We are unable to see such intent.
The new section 59 is altogether different from the old section 62 and 993 there is nothing in the new section 59 from which an intent to give retrospective effect to it can be concluded.
The new section 59 came into force from 1 July, 1960.
Much earlier, on 26 February, 1960 the assessment on the account able person had already been completed.
There is a well settled principle against interference with vested rights by subsequent legislation unless the legislation has been made retrospective expressly or by necessary implication.
If an assessment has already been made and completed, the assessee cannot be subjected to re assessment unless the statute permits that to be done.
Reference may be made to Controller of Estate Duty, West Bengal vs Smt.
IIa Das and others, where an attempt to reopen the Estate Duty assessment consequent upon the insertion of the new section 59 of the was held infructuous.
We hold that section 59 of the is not retro spective in operation and that the reopening of the assess ment under section 59.
of the Act is bad in law.
In the result the appeals fail and are dismissed with costs.
N.V.K. Appeals dismissed.
|
The respondents who were the accountable persons filed returns under the , and an assessment was made by the Deputy Controller of Estate Duty Appellant on 26th February.
The Estate Duty (Amendment) Act, 1958 repealed the original sections 56 to 65.
Section 59 which substituted for the original section 62 made provision for re assessment.
It came into force with effect from 1st July, 1960.
On 21st February, 1962, a notice under the new section 59 of the Act was issued to the respondents for re opening the assessment on the ground that some property had escaped the levy of estate duty.
The respondents raised objections but the same were rejected by the Assistant Controller who reopened the assessment.
Against the aforesaid order three different appeals were filed by the respondents before the Appellate Controller, who allowed the appeals.
set aside the reassessment order holding that section 59 under which action had been taken by the Assistant Controller was not retrospective in operation.
On appeal by the Revenue, the Tribunal upheld the view of the Appellate Controller relying on the decision of the Bombay High Court in A.N. Mafatlal vs Deputy Controller of Estate Duty, Thereafter.
at the instance of the Revenue 3 references were made 988 to the High Court raising the indentical question whether section 59 was retrospective in operation and reopening of the assessment under section 59 was bad.
The High Court analysed the provisions of the new section 59 and the old section 62.
came to the conclusion that the power of reas sessment conferred by the new section 59 Is quite different from the power conferred by the old section 62.
and answered the question in each case in favour of the assessee.
The Revenue appealed to this Court.
On the question: whether the newly enacted section 59 of the is retrospective in operation so as to affect the assessment already completed on the accountable persons.
Dismissing the appeals, the Court HELD: 1.
Section 59 of the is not retro spective in operation and reopening of the assessment under section 59 of the Act in the instant case is bad in law.
[993D] 2.
The Estate Duty (Amendment) Act.
1958 effected a substantial change in the parent Act.
Sections 56 to 65 were substituted in place of the existing sections 56 to 65.
and the originally enacted section 62 was repealed.
The original section 62 provided essentially for the rectification of mistakes apparent from the record or in the valuation of any property or by reason of the omission of any property.
[992D E] 3.
The newly enacted section 59 deals with properly escaping assessment.
The provision is analogous to section 34 of the Indian Income Tax Act.
1922 and section 147 of the Income Tax Act.
The new Section 59 endeavours to cover a substantially different area from that treated by the old section 62.
The only area which seems common to the two provisions relates to the "omission of any property", but the incidents of the power under section 62 relate to a situation materially different from the incidents of the power contemplated under section 59.
[992E F] 4.
There are no specific words which confer retrospec tive effect to section 59 as it stands.
To spell out retro spectivity in section 59 there must be something in the intent to section 59 from which retrospective operation can be necessarily inferred.
There is no such intent.
[992G H] 5.
The new section 59 is altogether different from the old section 989 62 and there is nothing new in the new section 59 from which an intent to give retrospective effect to it can be conclud ed.
[992H; 993A] 6.
There is a well settled principle against interfer ence with vested right by subsequent legislation unless the legislation has been made retrospective expressly or by necessary implication.
If an assessment has already been made and completed, the assessee cannot be subjected to re assessment unless the statute permits that to be done.
[993B C] 7.
The new section 59 came into force from 1st July, 1960.
Much earlier, on 26th February, 1960.
the assessment on the accountable persons in the instant case had already been completed.
there can be no question of reopening the assessment.
[993B] Controller of Estate Duty, West Bengal vs Smt.
IIa Das and Others, [198l] relied on.
|
vil Appeal No. 1862 (NT) of 1971.
From the Judgment & Order dated 13.7.1970 of the High Court of Allahabad at Lucknow Bench in Writ Petition No. 849/70.
Ms. Lira Goswami and D.N. Mishra for the Appellants.
A.D. Singh, Mrs. Ashok K. Gupta, Raj Singh Rana, Mrs. section Dikshit and B .P.
Maheshwari for the Respondents.
The Judgment of the Court was delivered by BHAGWATI, CJ.
This appeal by certificate raises a short question as to the constitutional validity of section 29 A of the U.P. Sales Tax Act, 1948.
This section, which was introduced in the U.P. Sales Tax Act, 1948 by section 17 of the U.P. Taxation Laws (Amendment) Act, 1969, has been held to be constitutionally valid by a Division Bench of the Allahabad High Court on 13th July 1970.
The appellants question the correctness of this view taken by the High Court.
The appellants carry on business as dealers in coal and they are 88 registered as such under the U.P. Sales Tax Act, 1948.
Prior to 1st October 1965, there was no sales tax levied on sale of coal and for the first time on 1st October 1965, coal became a taxable commodity under the U.P. Sales Tax Act, 1948.
The appellants, proceeding on the footing that sales tax was payable by them on sale of coal from and after 1st October 1965, collected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum of Rs. 10,073.86 repre senting the amount of tax payable by them in accordance with their returns.
It was, however, found as a result of the assessment order made by the Sales Tax Officer on 28th March 1970 that no sales tax was payable by the appellants on sales of coal under the U.P. Sales Tax Act, 1948.
The appel lants thereupon claimed refund of the sum of Rs. 10,073.86 but the Sales Tax Officer rejected the claim made by the appellants on the ground that by reason of section 29 A, no refund was claimable by the appellants and the only persons entitled to claim refund were those from whom the appellants had collected the tax.
This order made by the Sales Tax Officer was challenged by the appellants by filing a writ petition in the High Court of Allahabad and the principal ground on which the correctness of this order was challenged was that section 29 A was ultra vires as being outside the legislative competence of the State Legislature.
The High Court negatived this challenge and upheld the constitutional validity of section 29 A and on this view, sustained the order made by the Sales Tax Officer.
The appellants there upon preferred the present appeal after obtaining certifi cate of fitness from the High Court.
It is necessary at this stage to set out the relevant provisions of the U.P. Sales Tax Act, 1948 as they stood at the material time.
Subsection (4) of section 8 A made the following provision: "(4) Without prejudice to the provisions of clause (f) of section 14, the amount rea lised by any person as tax on sale of any goods, shall, notwithstanding anything con tained in any other provision of this Act, be deposited by him in a Government treasury within such period as may be prescribed, if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof.
" Sub section (5) was added in section 8 A by section 11 of the U.P. Taxation Laws (Amendment) Act, 1965 and it read as follows: 89 "(5) Where a dealer is found not liable to be assessed to tax by reason of his turnover being less than the amount specified in or under section 3, or sub section (1) or (2) of section 18, but has realised any tax as such in respect of such turnover, he shall, not withstanding anything contained in this Act, be liable to pay the same to the State Govern ment and shall deposit it into the treasury within 30 days of the date of the order by which he was found not so liable, unless it has already been so deposited." Since, having regard to the judgment of this Court, in R. Abdul Qader & Co. vs Sales Tax Officer, Hyderabad, ; it was doubtful whether sub sections (4) and (5) of section 8 A, standing by themselves, would fail within the legislative competence of the State Legislature.
Section 29 A was inserted in the U.P. Sales Tax Act, 1948 by section 17 of the Taxation Laws (Amendment) Act 1969: Refund in Special Cases Notwithstanding anything contained in this Act or in any other law for the time being in force or in any judgment, decree or order of any court, where any amount is either deposited or paid by any dealer or other person under sub section (4) or sub section (5) of section 8 A, such amount or any part thereof shall on a claim being made in that behalf in such form and within such period as may be prescribed, be refunded to the person from whom such dealer or the person had actually realised such amount or part, and to no other person.
" The question is whether this section, as it stood at the material time in the form in which it was introduced by section 17 of the U.P. Taxation Laws (Amendment) Act, 1969, was within the legislative competence of the State Legisla ture.
The only entry under which section 29 A was sought to be brought was Entry 54 in List II of the Seventh Schedule to the Constitution.
Clause (3) of Article 246 read with this entry empowers the State Legislature to make laws with respect to taxes on the sale or purchase of goods.
It is now well settled that an entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legisla tion.
Can section 29 A be justified as exercise of an ancil lary or incidental power of legislation under Entry 547 Now, 90 this question is no longer res integra.
It stands concluded by the decision of this Court in R.S. Joshi vs Ajit Mills, ; It is no doubt true that the decision of this Court in Ashoka Marketing Ltd. vs State of Bihar & Anr., ; does seem to indicate that a provi sion such as section 29 A would not be justifiable as an exercise of incidental or ancillary power.
There also, the impugned legislative provision, namely, section 20 A of the Bihar Sales Tax Act was very similar to section 29 A and this Court held that it fell outside the legislative competence of the State Legislature.
The Court in Ashoka Marketing Ltd, 's case (supra) did not follow the decision in Orient Paper Mills Ltd. vs State of Orissa & Ors.
, ; where a similar provision was attacked on the same ground but the attack was repelled by the Court.
If the decision in Ashoka Marketing Ltd. 's case (supra) were to be regarded as good law, lsection 29 A would have to be struck down as being outside the legislative competence of the State Legis lature.
But this Court in R.S. Joshi 's case (supra) clearly and categorically disapproved of the decision in Ashoka Marketing Company 's case and reaffirmed the view taken in Orient Paper Mill 's case (supra).
The Court held that the taking over of sums collected by dealers from the public under guise of tax solely with a view to return them to the buyers so deprived is necessarily incidental to 'tax on the sale and purchase of goods '.
Such a provision is manifestly a consumer protection measure since "while suits against dealers to recover paltry sums by a large number of custom ers would lead to endless and expensive litigation, a sim pler process of returning those sums on application by the relevant purchasers would protect the common buyer while depriving the dealers of their unjust gains.
" This Court in a subsequent decision in State of Orissa vs Orissa Cement Ltd. & Ors., also took the same view and pointed out that the decision in Ashoka Marketing Ltd. 's case (supra) was expressly dissented from by the decision in R.S. Joshi 's case (supra).
The decision in R.S. Joshi 's case (supra) must, therefore, be regarded as laying down the correct law on the subject and if that be so.
it is obvious that section 29 A must be held to fall within the legislative competence of the State Legislature and its constitutional validity must be upheld.
The appeal must, therefore, be dismissed.
but since it was filed at a time when the position in law was nebulous and had not been finally settled by the decision in R.S. Joshi 's case (supra) we would direct that there shall be no order as to costs.
P.S.S. Appeal dismissed.
|
Section 29 A of the U.P. Sales Tax Act, 1948 inserted by section I7 of the U.P. Taxation Laws (Amendment) Act, 1969 pro vided for refund of the amount, realised by a dealer as tax on sale of goods and deposited under sub s.(4) or sub s.(5) of s.8 A of the Act, to the person from whom such dealer had actually realised the same, and to no other Coal became a taxable commodity under the U.P. Sales Tax Act for the first time on 1st October 1965.
The appellants, who were registered as dealers in coal under the Act, on the assumption that sales tax was payable by them on sale of coal from and after 1st October 1965, corrected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum representing the amount of tax payable by them in ac cordance with their returns.
The Sales Tax Officer, however, found that no sales tax was payable by the appellants on sale of coal under the Act.
The appellants thereupon claimed refund of the amount deposited but the Sales Tax Officer rejected their claim under s.29 A of the Act.
A Writ Petition challenging the correctness of that order and the constitutional vires of s.29 A was rejected by the High Court.
Dismissing the appeal by certificate, the Court, HELD: Section 29 A of the U.P. Sales Tax Act, 1948 introduced by section I7 of the U.P. Taxation Laws (Amendment) Act, 1969 fails within the legislative competence of the State Legislature and is constitutionally valid.
[9OF, 89F] Clause (3) of Art.246 of the Constitution read with Entry 54 in List H of the Seventh Schedule thereto empowers the State Legislature 87 to make laws with respect to taxes on the sale or purchase of goods.
An Entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legislation Taking over of sums collected by dealers from the public under guise of tax solely with a view to returning them to the buyers so deprived is necessarily incidental to tax on the sale and purchase of goods.
The enactment of s.29 A can thus he said to be justified as exercise of an ancillary or incidental power of legislation under Entry 54.
[89G, 90D, 89H] R.S. Joshi v; A}it Mills; , , followed.
Ashoka Marketing Ltd. vs State of Bihar & Anr., ; , dissented from.
R. Abdul Qader & Co. vs Sales Tax Officer, Hyderabad, ; , Orient Paper Mills Ltd., vs State of Orissa & Ors., ; and State of Orissa vs Orissa Cement Ltd. & Ors., , referred to.
|
Civil Appeal No. 157 of 1985 From the Judgment and Order dated 20.1.1984 of the Allahabad High Court in W.P. No. 1404 of 1983.
V.M. Tarkunde and Shakeel Ahmed Syed for the Appellant.
S.C. Maheshwari, R.D. Upadhyay and Manoj Saxena for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
This appeal by special leave is directed against the judgment of the High Court of Allahabad (Lucknow Bench) dt.
January 20, 1984 setting aside order of the Addl.
District Judge, Lucknow dt.
January 18, 1983 and quashing the allotment order made in appellant 's favour and directing the Addl.
District Magistrate (Civil Supplies), Lucknow to reconsider the applications made for allot ment of the premises in dispute after giving notice to the respondent landlord.
129 The dispute relates to 1st floor of House No. 109/16 situate in Model House Colony, Aminabad, Lucknow.
Mauji Ram Gupta the owner of the house was residing in the ground floor of the house while the 1st floor was let out to a tenant.
Vacancy in the first floor arose, several persons including the appellant, H.C. Ghildiyal and Ramakant Srivastava made appli cations for allotment of the same.
Mauji Ram Gupta, the landlord also made an application for the release of the premises to him under sec.
16 of the U.P Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as the Act).
The Addl.
District Magistrate, respondent No. 4 by his Order dt.
25.2.76 rejected Mauji Ram Gupta 's application and allotted the premises to H.C. Ghildiyal, but he did not occupy the premises; instead he informed respondent No. 4 that he did not require the premises.
Thereaf ter respondent no.4 allotted the first floor of the house to the appellant by his order dt.
July 23, 1976 and in pursuance to that order she obtained possession of the premises on 25.7.76.
Mauji Ram Gupta, the landlord chal lenged the allotment order by means of revi sion application before the District Judge but the same was rejected.
Mauji Ram Gupta entered into an agreement for the sale of the house with G.L. Pahwa, respondent No. 1 and in part performance of the agreement he permitted G.L. Pahwa to occupy the ground floor of the house in November 1976.
G.L. Pahwa made application for allotment and the respondent No. 4 allot ted the ground floor to him on 31.12.76, this appears to have been done with a view to regularise his possession.
Mauji Ram Gupta executed a registered sale deed in favour of G.L. Pahwa on 18.7.77 transferring the entire house including the premises in dispute to him, as a result of which respondent No. 1 became the owner and the landlord of the premises in dispute.
R.K. Srivastava on unsuc cessful applicant for the allotment of the premises in dispute had challenged the allot ment order dt.
23.7.86 made in appellant 's favour under sec.
18 of the Act.
The District Judge by his order dt.
18.8.77 allowed his revision application set aside the allotment order made in appellant 's favour and directed respondent No. 4 to reconsider the applica tions made for allotment of the premises in accordance with law.
In pursuance of the directions issued by the District Judge re spondent No. 4 considered the applications and by his order dt.
4.1.78 he again allotted the premises to the appellant and rejected the claims of other applicants.
Notice of the allotment proceedings was not given to re spondent No. 1, although by that time he had acquired full rights of a landlord.
It appears that respondent had made an application to the State Govt.
for release of the first floor and that had been forwarded by the Govt.
to re spondent No. 4, which he disposed of by the same order dt. 4.1.78.
Respondent No. 1 filed a 130 revision application under sec.
18 of the Act challenging the allotment order dt. 4.1.78.
He filed a review application also before re spondent No. 4 for recall of the order dt. 4.1.78.
During the pendency of the review application the revision application made by respondent No. 1 was dismissed by the District Judge on 28.2.78 for want of prosecution.
However the review application of respondent No. 1 was allowed by respondent No. 4 by his order dr. 14.12.81 on the finding that since the premises in dispute was a part of land lord 's building which he was occupying, it was mandatory that notice should have been issued to the landlord and since no notice had been issued to him the allotment order was vitiat ed.
On these findings, he recalled his Order dated 4.1.78.
The appellant challenged the order by means of a revision application before the District Judge under sec.
18 of the Act.
The Addl.
District Judge, Lucknow exer cising powers of the District Judge allowed the revision application by his order dt.
18.1.83, and set aside the order of respondent No. 4 dt.
14.12.81, on the findings that review application was not maintainable and respondent No. 4 had no jurisdiction to review his order on the ground of absence of notice to respondent No. 1 who was transferee land lord.
Respondent No. 1 challenged the validity of the order of the Addl.
District Judge dt.
18.1.83 by means of a writ petition under article 226 of the Constitution before the High Court.
A learned Single Judge of the High Court allowed the writ petition by his order dt.
January 20, 1984 and quashed the order of the Addl.
District Judge and directed respondent No. 4 to consider the application for allot ment for giving notice to respondent No. 1.
Aggrieved the appellant challenged the validi ty of the order of the High Court.
Before we consider the submissions made on behalf of the appellant it is necessary to briefly notice the findings recorded by the High Court.
The High Court held that since the District Judge while setting aside the initial order of allotment made in appellant 's favour dt.
23.7.76 directed respondent No. 4 to consider the allotment applications in accord ance with law.
Respondent No. 4 was under a legal duty to issue notice to respondent No. 1 who had by that time acquired rights of land lord.
Since no notice was given to him the allotment proceeding was rendered illegal.
The High Court further held that even though the landlord 's application for release of the premises in dispute had been rejected, the transferee landlord had right to nominate a tenant of his choice in accordance with sec.
17(2) of the Act.
But as no notice was issued to him, he could not exercise his right to nominate a tenant of his choice although the appellant as well as the authority considering the application, for allotment both had ac quired 131 knowledge that respondent No. 1 was the trans feree landlord occupying a portion of the building.
The High Court held that provisions of sec.
17(2) were mandatory and its non compliance rendered the allotment order void.
The High Court held that as the order of allotment dt. 4.1.78 was made without giving notice to the landlord, the alloting authority was competent to recall its order in exercise of its inherent jurisdiction.
On these find ings the High Court set aside the order of the Addl.
District Judge and directed the alloting authority to reconsider the applications for allotment after giving notice to the landlord respondent No. 1.
Shri Tarkundc learned counsel for the appellant urged that the High Court committed error in setting aside the allotment order and directing the District Magistrate to reconsid er the allotment applications at the instance of G.L. Pahwa, respondent No. 1.
He further urged that since Mauji Ram Gupta, the erst while landlord 's application for release of the premises in dispute had been dismissed and revision against that was also dismissed for non prosecution, the erstwhile landlord had exhausted all his rights available to him under the Act.
G.L. Pahwa being the successor in interest of Mauji Ram Gupta, did not and could not acquire any further right either to get the premises in dispute released in his favour or to challenge the validity of the allotment order.
G.L. Pahwa was not entitled to maintain a review application and Addition al District Magistrate had no jurisdiction to recall his order dated 4.1.78 alloting the premises to the appellant and further he was not entitled to any notice either under sec tion 17(2) of the Act or under Rule 9(3), as the requisite notice had already been issued to the erstwhile landlord Mauji Ram Gupta who had contested the allotment proceedings.
Having given our anxious consideration to these submissions and having regard to the facts and circumstance of the case we do not find any merit in the submissions.
When a building or a part of a building falls vacant or is likely to fail vacant, the District Magistrate under section 16(1)(a) of the Act has jurisdiction to issue allotment order requiring the landlord to let the build ing or part thereof to the person specified in the order.
The landlord may apply to the District Magistrate for release of the whole or any part of such building under section 16(1)(b) of the Act, if the release applica tion is allowed, the landlord is permitted to occupy the building or part thereof as the case may be.
But if release application is dismissed the District Magistrate is empowered to issue allotment order in favour of an applicant, and in pursuance thereof the allot tee is entitled to take possession.
Before applications for allotment are con 132 sidered by the District Magistrate it is mandatory for him to serve notice of the vacancy on the landlord informing him the date on which the allotment is to be considered as prescribed by Rule 9 of the U.P. Urban Build ings (Regulation of Letting, Rent and Evic tion) Rules, 1972 (hereinafter referred to as the Rules).
Rule 9(3) requires service of notice and intimation of the date fixed for considering the allotment of the premises which may have fallen vacant or is likely to fall vacant.
This is mandatory as has been held by this Court in Yoginder Tiwari vs District Judge, Gorakhpur and Ors., and in catena of cases the High Court of Allahabad, has taken the same view, it is not necessary to burden the judgment by refer ring to all those decisions.
The object and purpose of the notice to the landlord regard ing the date fixed for allotment proceedings is to enable him to file his objections if any, to the allotment proceedings or to make application for release of the premises as contemplated by section 16(1)(a) of the Act or to nominate a tenant of his choice if he himself is in occupation of a portion of the building.
An allotment order made without giving notice to the landlord as required by Rule 9(3) would be rendered illegal.
We there fore agree with the view taken by the High Court.
At the initial stage of allotment proceed ings for the year 1976, Mauji Ram Gupta, the erstwhile landlord had made application for release of the accommodation and the first floor of the house, but that application was rejected and thereupon the District Magistrate allotted the premises to H.C. Ghildiyal by his order dated 23.7.76 Mauji Ram Gupta 's revision application against the order rejecting his release application was rejected by the Dis trict Judge on 5.8.76.
Meanwhile the District Magistrate allotted the premises to the appel lant by his order dated 23.7.76.
On the dis missal of the revision application of Mauji Ram Gupta, his claim for release of the premises in dispute stood rejected final ly.
As noted earlier Mauji Ram Gupta sold the entire house in dispute to G.L. Pahwa on 18.7.77 and the allotment order in appellant 's favour was set aside by the Additional Dis trict Judge on 8.8.77 at the instance of R.K. Srivastava on unsuccessful applicant for the allotment of the premises in dispute.
It is noteworthy that the appellant took no pro ceedings to challenge the order of Additional District Judge dt. 8.8.77 under which the allotment order was set aside and the District Magistrate was directed to reconsider the allotment applications in accordance with law.
In such a situation G.L. Pahwa who had admittedly became the landlord of the premises in dispute was entitled to exercise fights of the landlord available to him under the Act.
Section 17(2) lays down that where a part of a building is in occu 133 pation of landlord for a residential purpose, the allotment of any other part thereof under section 16(1)(a) shall be made in favour of a person nominated by the landlord.
This provision safeguards interest of the landlord to have a tenant of his choice if he is occupying a portion of the building.
The legislature enacted sec.
17(2) with a view to ensure peaceful living to a landlord and for that purpose it permitted the landlord to have a tenant of his choice.
The. landlord 's valuable right cannot be taken away by the Dis trict Magistrate while exercising his powers of allotment under sec.
16(1)(a) of the Act.
The scope and purpose of sec.
17(2) of the Act was considered by this Court in Babu Singh Chauhan vs Rajkumar Jain & Ors., ; and the Court observed: "A perusal of this statutory provision would clearly dis close that the object of the Act was that where a tenant inducted by the landlord voluntarily vacates the premises, which arc a part of the building occupied by the landlord, and allotment in the vacancy should be made only to a person nominated by the landlord.
The dominant purpose to be sub served by the Act is manifestly the question of removing any inconvenience to the landlord by imposing or thrusting on the premises an unpleasant neighbour or a tenant who invades the right of privacy of the landlord.
It is obvious that if the tenant has vacated the premises by himself and not at the instance of the landlord, there is no question of the landlord occupying the said premises because he has got a separate remedy for evicting the tenant on the grounds of personal necessity.
The statute, however, while empowering the prescribed authority to allot the accommodation, safe guards at least the right of the landlord to have a tenant of his choice.
" In the instant case there is no dispute that when the allotment proceedings were taken in pursuance of the Dis trict Judge 's Order dt. 8.8.77 and when the allotment was made in appellant 's favour on 4.1.78 no notice of the allot ment proceedings was issued to G.L. Pahwa, respondent No. 1, although the appellant as well as the Addl.
District Magis trate both knew that G.L. Pahwa had stepped in the shoes of landlord and that he was occupying ground floor of the building.
The allotment order was made in appellant 's favour on 4.1.78, but the landlord, though residing in a part of the building was denied opportunity of nominating a tenant of his choice as contemplated by sec.
17(2) of the Act.
In these circumstances there can be no doubt that 134 the order of the Addl.
District Magistrate alloting the premises to the appellant was completely without jurisdic tion and against the plain terms of sec.
17(2) of the Act.
The submission of Shri Tarkunde that on dismissal of the revision application of Mauji Ram Gupta the erstwhile land lord, all fights of the landlord stood exhausted and G.L. Pahwa being the transferee landlord could not exercise any further fight of landlord in the matter relating to allot ment of the premises in dispute are untenable.
Mauji Ram Gupta 's application for release of the premises was dis missed and a revision application filed 'by him against the order of the Addl.
District Magistrate refusing to release premises in dispute stood rejected, but if the conditions set out in sec.
16(1)(b) existed we see no reason as to why the transferee landlord could.
not press his case for re lease but we do not think it necessary to consider this question in detail or to express any opinion on this ques tion as admittedly the transferee landlord respondent No. 1 made no application for release of the premises in dispute to the District Magistrate or to the prescribed authority and his application made to the State Government for release of the accommodation which was forwarded to the District Magistrate was rejected and the High Court has upheld that order and no challenge has been made by G.L. Pahwa to that order.
Assuming that the transferee landlord 's fight to get the premises in dispute released stood exhausted, G.L. Pahwa being the landlord had every fight to nominate a tenant of his choice in accordance with sec.
17(2) of the Act.
Admit tedly no notice had been issued to G.L. Pahwa affording any opportunity of nominating a tenant of his choice before the order of allotment dt. 4.1.78 was made.
The landlord has fight to apply for release of the premises on the falling of a vacancy failing which he has another fight under sec.
17(2) to nominate a tenant of his choice if he is occupying a portion of the building.
It is the duty of the authority considering the allotment under sec.
16(1)(a) of the Act, to afford opportunity to the landlord to nominate tenant of his choice and if the landlord nominates a person of his choice the authority is bound to allot the premises in favour of the nominee of the landlord.
Mauji Ram Gupta was not given that opportunity, there was thus no question of his having exhausted his right to nominate a tenant of his choice.
Learned counsel for the appellant urged that the Addl.
District Magistrate had no power to allow the review appli cation made by G.L. Pahwa or to recall his order dt. 4.1.78 alloting the premises in dispute to the appellant.
16(5) provides for review of an order of allotment at the instance of a landlord on an application made within 7 135 days.
In the instant case the Addl.
District Magistrate by his Order dt.
14.12.81 recalled his order dt.
4.1. 78 allot ing the premises in dispute to the appellant on the ground that no notice of the proceeding had been served on the landlord, respondent No. 1 and that there was enough evi dence on record to show that the premises in dispute was a part of the landlord 's accommodation, yet he was not given opportunity to nominate a tenant of his choice.
The Addl.
District Magistrate therefore recalled the order on the ground that the allotment order had been issued in violation of the mandatory provision of sec.
17(2) of the Act.
No exception can be taken to the correctness of the merit of the order of the Addl.
District Magistrate.
As discussed above we have already expressed our opinion that the allot ment order dt. 4.1.78 issued in appellant 's favour was rendered illegal for the non compliance of the mandatory provision of sec.
17(2) of the Act.
In that view even if there was any procedural defect in entertaining the review application, it would not be proper and desirable to inter fere with the order of the Addl.
District Magistrate, more so, when the High Court has already upheld that order.
In view of the above discussion we are of the opinion that the High Court 's order does not suffer from any error of law and the appellant is not entitled to any relief.
We accord ingly dismiss the appeal with costs.
M.L.A. Appeal dis missed.
|
One Mauji Ram Gupta was the owner of a house consisting of ground floor and first floor.
When the vacancy in the first floor arose, the landlord applied for release of the premises section 16 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
Respondent No. 4, the Additional District Magistrate, rejected the claim of the landlord and allotted the first floor to the appellant.
Thereafter, Respondent No. 1 pur chased the disputed house on 18.7.77 and occupied the ground floor.
The aforesaid order of allotment was set aside on 18.8.77 by the District Judge with a direction to respondent No. 4 to reconsider the applications made for allotment of the premises in accordance with law.
Respondent No. 4 reconsidered the applica tions and by his order dated 4.1.78, again allotted the premises to the appellant after rejecting the claims of other applicants.
However, in a review petition filed by re spondent No. landlord, Respondent No. 4 set aside the aforesaid order of allotment by his order dated 14.12.81 on the ground that since the premises in dispute was a part of the landlord 's building which he was occupying, it was mandatory under section 17(2) of the Act that notice should have been issued to the landlord and since no notice had been issued to the landlord, the order was vitiated.
Aggrieved by the order of Respondent No. 4 the appellant filed a revision application before the District Judge.
The District Judge set aside the order dated 14.12.81 passed by Respondent No. 4 but the same was restored by the High Court in a writ petition filed by respondent No. 1.
The High Court also directed respondent No. 4 to consider the 127 applications for allotment after giving notice to the landlord respondent No. 1.
Dismissing the appeal to this Court, HELD: 1.
The allotment order dated 4.1.78 issued in appellant 's favour was rendered illegal for the non compliance of the mandato ry provisions of sec.
17(2) of the Act.
In that view even if there was any procedural defect in entertaining the review application, it would not be proper and desirable to inter fere with the order of the Addl.
District Magistrate, more so, when the High Court has already upheld that order.
[I35C] 2.1 When a building or a part of a build ing falls vacant or is likely to fall vacant, the District Magistrate under section 16(1) of the Act has jurisdiction to issue allotment order requiring the landlord to let the building or part thereof to the person specified in the order.
The landlord may apply to the District Magistrate for release of the whole or any part of such building under section 16(i)(b) of the Act.
If the release application is allowed, the landlord is permitted to occupy the build ing or part thereof as the case may be.
But if release application is dismissed the District Magistrate is empowered to issue allotment order in favour of an applicant, and in pursu ance thereof the allottee is entitled to take possession.
[131G H] 2.2.
Before applications for allotment are considered by the District Magistrate, it is mandatory for him to serve notice of the vacancy on the landlord informing him the date on which the allotment is to be considered as prescribed by Rule 9 of the U.P. Urban Build ings (Regulation of Letting, Rent and Evic tion) Rules, 1972.
The object and purpose of the notice to the landlord regarding the date fixed for allotment proceedings is to enable him to file his objections, if any, to the allotment proceedings or to make application for release of the premises as contemplated by section 16(1)(a) of the Act or to nominate a tenant of his choice if he himself is in occupation of a portion of the building.
An allotment order made without giving notice to the land lord as required by Rule 9(3) would be ren dered illegal.
[131H 132A, C D] 2.3.
Section 17(2) of the Act lays down that where a part of a building is in occupa tion of landlord for a residential purpose, the allotment of any other part thereof under section 16(1)(a) shah be made in favour of a person nominated by the landlord.
This provision safeguards interest of the landlord to have a tenant of his choice if he is 128 occupying a portion of the building.
The legislature enacted sec.
17(2) with a view to ensure peaceful living to a landlord and for that purpose, it permitted the landlord to have a tenant of his choice.
The landlord 's valuable right cannot be taken away by the District Magistrate while exercising his powers of allotment under sec.16(1)(a) of the Act.
[132H 133B] In the instant case, no notice of the allotment proceedings was issued to G.L. Pahwa, respondent No. I, although the appel lant as well as the Addl.
District Magistrate both knew that G.L. pahwa had stepped in the shoes of landlord and that he was occupying ground floor of the building.
The allotment order was made in appellant 's favour on 4.1.78, but the landlord, though residing in a part of the building was denied opportunity of nominating a tenant of his choice as contem plated by sec.
17(2) of the Act.
In these circumstances there can be no doubt that the order of the Addl.
District Magistrate allot ing the premises to the appellant was com pletely without jurisdiction and against the plain terms 0/sec.
17(2) of the Act.
[133G 134A] Yoginder Tiwari vs District Judge, Gorakhpur and Ors., & Babu Singh Chau han vs Rajkumar Jain & Ors., ; , relied upon.
|
ivil Appeal No. 3947 of 1986 From the Judgment and Order dated 30.8.1982 of the Allahabad High Court in Civil Misc.
Writ Petition No. 5105 of 1982.
Pramod Swarup, R. Singh Rana and Ashok K. Srivastava for the Appellant.
G.N. Dixit, M.K. Dua, Aman Vachher and S.K. Mehta for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
Smt.
Amna Begum was a resident of Rehpura Village, Tehsil Kichha, District Nainital in the State of Uttar Pradesh.
She owned a fairly large extent of agricultural land.
On 8.6.1973 the Uttar Pradesh Imposition of Ceiling on Land Holdings (Amendment) Act, 1972 came into force.
Section 5 of the Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960 (hereinafter referred to as 'the Act ') provided that on and from the commencement of the Uttar Pradesh Imposition of Ceiling on Land Holdings (Amend ment) Act, 1972 no tenure holder would be entitled to hold in the aggregate throughout Uttar Pradesh, any land in excess of the ceiling area applicable in him or her.
The expression 'ceiling area ' is defined in sub section (2) of section 3 of the Act as the area of land not being exempted under the Act, determined as such in accordance with the provisions of section 5 thereof Since Smt.
Arena Begum, the tenure holder, was holding in the aggregate in the State of Uttar Pradesh land in excess of the ceiling area applicable to her, she became liable to surrender the surplus land, i.e., the land held by her in excess of the ceiling area.
applicable to her, in favour of the Government under the Act.
A general notice was issued under section 9 of the Act to all tenure holders holding land in excess of the ceiling area for submission of statements in respect thereof.
She did not file any statement before the Prescribed Authority as provided by section 9 of the Act.
After the publication of the said general notice but before she could be served with a notice under section 10(2) of the Act to submit her statement, Smt.
Arena Begum died.
The Prescribed Authority 103 who had no knowledge of the.
death of Smt.
Amna Begum, however, issued a notice addressed to her under section 10(2) of the Act calling upon her to show cause within the period specified in the notice why the statement prepared by him under section 10(1) of the Act should not be taken as correct.
The said notice could not, no doubt, be served on her, but one Fazai Ahmad, the father of Shams Ahmad re spondent No. 4, who was one of the heirs of Smt.
Amna Begum filed objections before the Prescribed Authority to the notice issued under section 10(2) of the Act.
The Prescribed Authority overruled the said objections and declared that Smt.
Amna Begum was holding 17.37 hectares of land as sur plus land by his order dated November 29, 1975.
Aggrieved by that order Fazal Ahmad, since deceased, and Shams Ahmad, son of Fazal Ahmad filed on appeal in Ceiling Appeal No. 541 of 1975 before the District Judge, Nainital.
That appeal was allowed on February 14, 1977.
The order against which the appeal had been filed was set aside and the case was remand ed to the Prescribed Authority to issue fresh notice to the tenure holders concerned, if necessary.
The reason given in the order passed by the District Judge, Nainital for allow ing the appeal was that the tenure holder, Smt.
Amna Begum was dead by the time the notice under section 10(2) of the Act was issued and the order of the Prescribed Authority passed against a dead person could not be allowed to stand.
The learned District Judge did not record any other finding on the merits of the case.
After remand the case was en quired into by the Prescribed Authority.
In that proceeding fresh notices under section 10(2) of the Act was issued to the heirs of Smt.
Amna Begum.
Sharifan Begum.
respond ent No. 3, one of the heirs of Smt.
Amna Begum appeared before the Prescribed Authority and contended inter alia that she held only 91.12 bighas of land in village Rehpura, as her one fourth share in the estate of Smt.
Amna Begum along with the other heirs of Smt.
Amna Begum.
She also pleaded that 12 acres of land had been transferred in favour of Daulat Ram and Prem Nath through registered sale deed for adequate consideration, the transfer was in good faith and, therefore, the said extent of land should be excluded from the holding while determining the surplus land.
She further contended that the determination of the surplus land should be made on the basis of the share held by each of the heirs of Smt.
Amna Begum treating each of them as an individual tenure holder entitled to land equal to one ceiling area in the estate of Smt.
Amna Begum as she had died prior to the service of the notice.
The Prescribed Authority accepted the contentions urged on behalf of the heirs of Smt.
Amna Begum and found that there was no surplus land that could be claimed from the holding in question since none of the heirs of Smt.
Amna 104 Begum was in possession of the land in excess of the ceiling area.
Against the order of the Prescribed Authority, the State Government filed an appeal before the Civil Judge, Nainital in Civil Appeal No. 32 of 1981.
The learned Civil Judge dismissed the appeal holding that Smt.
Amna Begum could not be treated as a tenure holder after her death and that after her death each of the heirs of Smt.
Amna Begum should be treated as an independent tenure holder entitled to one unit of ceiling area for purposes of determination of the surplus land.
He agreed with the Prescribed Authority that since none of the heirs of Smt.
Amna Begum was holding the land in excess of the ceiling area, they were not liable to surrender any surplus land.
The learned Civil Judge also held that the contention urged on behalf of the State Gov ernment that Smt.
Amna Begum who was alive on 8.6.1973 which was the relevant date for determining the surplus land should be treated as the tenure holder could not be main tained because the said contention was barred by res judica ta on account of the decision of the District Judge, Naini tal in Ceiling Appeal No. 541 of 1975, under which the case had been remanded earlier to the Prescribed Authority for fresh disposal.
The appeal filed by the State Government was, therefore, dismissed.
Aggrieved by the decision of the learned Civil Judge, Nainital, the State Government filed a writ petition before the High Court.
That writ petition was dismissed by the learned Judge, who heard it by his order dated August 30, 1982.
The only reason given by the learned Judge, who heard the writ petition, for dismissing it was that the State Government was not entitled to question the correctness of the orders of the Prescribed Authority and the Civil Judge as the order of remand of the case passed by the District Judge had become final and the contentions of the State Government were barred by the rule of res judica ta.
This appeal by special leave is filed against the order of the High Court dismissing the writ petition.
At the outset it should be stated that the reason given by the High Court for holding that the contentions urged on behalf of the State Government were barred by the rule of res judicata is wholly untenable since the learned District Judge, who disposed of the appeal on 14.2.1977 had not recorded any finding on the merits of the contentions of the parties.
He had set aside the order of the Prescribed Au thority passed earlier only on the ground that a proceeding which had been commenced against a dead person was a nulli ty.
He, however, remanded the case to the Prescribed Author ity for fresh disposal in accordance with law after issuing notices to the heirs of Smt.
Amna Begum whom he wrongly described as tenure holders solar as the estate of Smt.
Amna Begum was concerned.
The High Court was, 105 therefore, wrong in dismissing the writ petition on that ground.
As regards the contention urged on behalf of re spondent Nos. 3 to 5 Smt.
Sharifan Begum, Shams Ahmad and Smt.
Ahmadi Begum who were the heirs of Smt.
Amna Begum, namely, that for purposes of computation of the surplus land in their hands the relevant date that should be taken into consideration is the date on which such computation was made and not the date on which the ceiling was imposed by section 5 of the Act it has to be stated that the orders of the Prescribed Authority and the Civil Judge passed after the order of remand are wholly erroneous.
Arena Begum was alive on 8.6.1973 on which date the ceiling on the holdings in the State of Uttar Pradesh was imposed by section 5 of the Act.
Amna Begum became liable to surrender the surplus land in her hands in excess of what she could retain in accordance with that section.
Merely because she had died before the issue of the notice under section 10(2) of the Act her liability to surrender the surplus land would not come to an end.
Rule 19 of the Uttar Pradesh Imposition of Ceiling on Land Holdings Rules, 1961 flamed under the Act provides that where a tenure holder dies before the publication of the general notice under section 9 of the Act, such publication shall be deemed to apply to the executor, administrator or other legal representatives and the Prescribed Authority may proceed to determine the ceiling area applicable to the deceased person as if such executor, administrator, or other legal represen tatives were the tenure holder.
It also provides that where a tenure holder dies before he is served with a notice under sub section (2) of section 10 of the Act, the Prescribed Authority may serve such notice on his executor, administra tor or other legal representatives and may proceed to deter mine the ceiling area applicable to the deceased person as if such executor, administrator, or other legal representa tives were the tenure holder.
The principle applicable to the determination of the surplus land under the land reform laws in the hands of persons holding land on the date on which the ceiling is imposed is explained by this Court in Raghunath Laxman Wani vs State of Maharashtra, at page 397, thus: "The scheme of the Act seems to be to deter mine the ceiling area of each person (includ ing a family) with reference to the appointed day The policy of the Act appears to be that on and after the appointed day no person in the State should be permitted to hold any land in excess of the ceiling 106 area as determined under the Act and that ceiling area would be that which is determined as on the appointed day.
Therefore, if there is a family consisting of persons exceeding five in number on January 26, 1962, the ceil ing area for that family would be the basic ceiling area plus 1/6th thereof per member in excess of the number five.
The ceiling area so fixed would not be laible to fluctuations with the subsequent increase or decrease in the number of its members, for, there is, apart from the explicit language of sections 3 and 4, no provision in the Act providing for the redetermination of the ceiling area of a family on variations in the number of its members.
The argument that every addition or reduction in the number of the members of a family requires redetermination of the ceiling area of such a family would mean an almost perpetual fixation and refixation in the ceiling area by the Revenue authorities, a state of affairs hardly to have been contem plated by the legislature.
" The principle enunciated in the above decision has been followed by this Court in Bhikoba Shankar Dhumal (dead) by Lrs.
and Others vs Mohan Lal Punchand Tatbed and Others.
, ; In that case it was held that the surplus land in the case of a person who held land in excess of the ceiling area on the appointed day had to be deter mined as on the appointed day even though such person might have died before the actual extent of surplus land was determined and notified.
It was further held that the per sons on whom his holding devolved on his death would be liable to surrender the surplus land as on the appointed day because the liability attached to the holding of the de ceased would not come to an end on his death.
Although the above decisions are rendered in cases arising under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 the principle set out therein applies to all cases where there is an imposition of ceiling on lands held bY land holders by land ceiling laws with effect from a specified date.
In fact rule 19 of the Rules framed under the Act which is referred to above also leads to the same view.
Whatever surplus land was liable to be surrendered by a tenure holder has to be determined as on 8.6.1973 and taken possession under the Act even though the tenure holder might have died after 8.6.1973 and before such ascertain ment.
We, therefore, do not agree with the view of the Prescribed 107 Authority and the Civil Judge that for purposes of determin ing the surplus land the share of land in the hands of each of the heirs of Smt.
Amna Begum should be treated as a separate unit for determining the surplus land.
We hold that for purposes of deciding the surplus land which is liable to be surendered from out of the estate of Smt.
Amna Begum, the relevant date that should be taken into account is 8.6.1973 on which date the ceiling on holdings was imposed and Smt.
Arena Begum became liable to surrender the surplus land in accordance with the provisions of the Act.
The heirs or legal representatives of Smt.
Amna Begum together are enti tled to retain out of the estate of Smt.
Amna Begum only an extent of land equal to the area which Smt.
Arena Begum could have retained in her hands after the imposition of ceiling on land holdings and are liable to surrender the surplus land.
The High Court failed to consider this aspect of the question when it disposed of the writ petition.
We, therefore, set aside the orders passed by the High Court, by the Civil Judge on 4.12.1981 and by the Prescribed Authority on 16.1.1981 and remand the case to the Prescribed Authority for fresh disposal in accordance with law and in the light of this judgment.
All other questions are left open.
This appeal is accordingly allowed will be no order as to costs.
A.P.J. Appeal al lowed.
|
Section 5 of the Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960 provided that on and from the com mencement of the U.P. Imposition of Ceiling on Land Holdings (Amendment) Act, 1972, which came into force on 8.6.1973, no tenure holder would he entitled to hold in the aggregate throughout Uttar Pradesh, any land in excess of the 'ceiling area ', as defined in Sub s.(2) ors.3 of the Act.
Since Smt.
Anma Begum, the tenure holder was holding in the aggregate land in excess of the ceiling area, she became liable to surrender the surplus land.
Pursuant to a general notice issued under s.9 to all tenure Imlders, holding land in excess of the ceiling area, she did not file any state ment before the Prescribed Authority After the publication of the general notice but before she could he served with a notice under s.10(2) she died.
The Prescribed Authority not knowing of her death issued a notice under s.10(2) calling upon her to show cause why the statement prepared by him under section 10(1) should not he taken as correct.
The father of respondent No. 4, one of the .heirs, filed objections which were over ruled, and it was declared that Smt.
Arena Begum was holding 17.37 hectares of land as surplus land.
The District Judge holding that since the tenure holder was dead by the time the notice under section 10(2) was issued, the order of the Prescribed Authority passed against a dead person could not be allowed to stand, allowed the appeal, set aside the order of the Prescribed Authority and remanded the case.
Fresh notices under s.10(2) were issued to the heirs.
Respondent No. 3 contended that she held only 91.12 bighas of land as her onefourth share and that 12 acres of land had been transferred through registered sale deed far adequate consideration and in good faith and 100 the land to that extent should be excluded from the holding while determining the surplus land and that the determina tion of the surplus land should be made on the basis of the share held by each of them as an individual tenure holder.
The Prescribed Authority held that there was no surplus land that could be claimed from the holding in question since none of the heirs of deceased tenure holder was in possession of the land in excess of the ceiling area.
The appeal by the State Government against the order of the Prescribed Authority was dismissed by the Civil Judge holding that Smt.
Anma Begum could not be treated as a tenure holder after her death, and that since none of the heirs of Amna Begum was holding the land in excess of the ceiling area they were not liable to surrender any surplus land.
The petition under Article 226 filed by the State Gov ernment was dismissed holding that the State Government was not entitled to question the correctness of the orders of the Prescribed Authority and the Civil Judge as the order of remand of the case passed by the District Judge had become final.
Allowing the Appeal, HELD: 1.
The orders passed by the High Court, the Civil Judge and the Prescribed Authority are set aside and the case is remanded to the Prescribed Authority for fresh disposal.
[107D] 2.
The reason given by the High Court for holding that the contentions urged on behalf of the State Government were barred by the rule of res judicata is wholly untenable since the District Judge while remanding the case had nut recorded any finding on the merits of the contentions of the parties.
He had set aside the order of the Prescribed Authority passed earlier only on the ground that a proceeding which had been commenced against a dead person was a nullity.
He, however, remanded the case to the Prescribed Authority for fresh disposal in accordance with law after issuing notices to the heirs of Smt.
Amna Begum whom he wrongly described as tenure holders so far as her estate was concerned.
The High Court was, therefore, wrong in dismissing the writ petition on that ground.
[104D 105A] 3. Smt.
Amna Begum was alive on 8.6.1973 on which date ceiling 101 on the holdings in the State of Uttar Pradesh was imposed by s.5 of the Act.
Amna Begum became liable to surrender the surplus land in excess of what she could retain in accordance with that section.
Merely because she had died before the issue of the notice under s.10(2) of the Act the liability to surrender the surplus land would not come to an end.
[105C] 4.
Rule 19 of the Uttar Pradesh Imposition of Ceiling on Land Holdings Rules, 1961 framed under the Act provides that where a tenure holder dies before the publication of the general notice under s.9 of the Act, such publication shah be deemed to apply to the executor, administrator or other legal representatives and the Prescribed Authority may proceed to determine the ceiling area applicable to the deceased person as if such executor administrator of other legal representatives were the tenure holder It also pro vides that where a tenure holder dies before he is served with a notice under sub section
(2) of section 10 of the Act, the Prescribed Authority may serve such notice on his executor, administrator or other legal representatives and may proceed to determine the ceiling area applicable to the deceased person as if such executor, administrator or other legal representatives were the tenureholders.
[105D F] 5.
The principle applicable to the determination of the surplus land under the land reform laws in the hands of person holding land is the date on which the ceiling is imposed.
[105G] 6. 'The surplus land in the case of a person who held land in excess of the ceiling area on the appointed day had to he determined as an the appointed day even though such person might have died before the actual extent of surplus land was determined ,tad notified.
The persons on whom his holding devolved on his death would be liable to surrender the surplus land as on the appointed day because the liabil ity attached to the holding of the deceased would not come to an end on his death.
[I06E F] Raghunath Laxman Wani vs
State of Maharashtra, at page 397 & Bhikoba Shankar Dhumal (dead) by Lrs.
and Others vs Mohan Lal Punchand Tathed and Others, [1982] 1 S.C.C680, followed.
For the purpose of deciding the surplus land which is liable to be surrendered from and out of the estate of Smt.
Arena Begum, the relevant date that might be taken into account is 8.6.1973 on which date the ceiling on holdings was imposed and she became liable to surrender the surplus land.
Her hews or legal representatives together are enti tled 102 to retain out of her estate only an extent of land equal to the area which she could have retained in her hands after the imposition of ceiling on land holdings and are liable to surrender the surplus land.
[107B C]
|
ivil Appeal No. 2847 of 1986 290 From the Judgment and Order dated 1.8.1986 of the Delhi High Court in F.A.O. No. 146 of 1986.
Soli J. Sorabjee, E.C. Agarwala and Lalit for the Appel lants.
T.S.K. Iyer, B.P. Maheshwari, V.N. Ganpule, S.K. Agniho tri and J. Singh for the Respondent.
The Judgment of the Court was delivered by OZA, J.
This appeal arises as a result of leave granted by this Court against the summary dismissal of the first appeal by the appellant before the High Court of Delhi.
The first appeal was filed against an order passed by Sub Judge 1st Class, Delhi rejecting the review petition filed by the petitioner.
The facts necessary for disposal of this case are that in a suit filed against the present appellant in the Court of Sub Judge 1st Class, Delhi when the matter was fixed for evidence of the defendant as the plaintiff 's evidence was over and defendant present appellant 's evidence was to begin when the case was taken up on 24th January, 1985.
The order sheet of the Court shows that no DW is present and at the request of the counsel of the defendant the case was adjourned to 7th May, 1985.
It is stated that on this date for some reason, the. case was transferred to another board and in the transferee court, the order sheet showed presence of the counsel for parties and it further shows that as the case was received on transfer it was ordered to be put up on 21st August, 1985.
Learned counsel for the appellant disputed the mention in these proceedings about the presence of the counsel of the defendantappellant.
But in any event as it is not impor tant for the decision of this appeal it is not necessary to go into that question.
On 21st, August, 1985 it appears that there was a holi day and therefore the case was put up before the learned Judge on 22nd August, 1985 and it was postponed to 30th October, 1985 for the evidence of the defendant.
On 30th October, 1985 the order sheet showed that the counsel for plaintiff was present but no one was present for the defend ant.
The Court therefore directed the case to be taken up at 1 P.M.
At 1 P.M. again the situation remained the same as it is clear from the order sheet.
It also shows that none of the witnesses for defendant was also present and therefore the Court passed the order: "the case was called but none has appeared on behalf of the defendant and no DWs present.
The evidence of defendant closed.
291 Now to come up for arguments.
" The next date fixed was 1st November, 1985.
On this date also nobody appeared for the defendant and counsel for the plaintiff who was present sought adjournment and the case was adjourned to 8th Novem ber, 1985.
On 8th November, 1985 arguments of the plaintiffs counsel were heard and as none was present for the defendant the case was fixed for judgment on 11th November, 1985.
On this date also counsel for the plaintiff was present.
Nobody was present for the defendant and order sheet shows that as judgment was not ready it was postponed to 21st November, 1985.
On 21st November, the judgment was dictated and pro nounced and the order sheet also shows that the learned Judge ordered decree to be prepared.
It appears that after this the defendant claimed that they came to know about the decree on 18th January, 1986 as on that day the plaintiff came to take possession and therefore filed an application under Order 9 Rule 13 for setting aside the exparte decree which was dismissed by the trial court holding that the case was disposed of not in accordance with Order 17 Rule 2 but in accordance with Order 17 Rule 3 and therefore the appli cation under Order 9 Rule 13 was not maintainable.
The appellant defendant thereafter filed an application for review but that application also was dismissed by the trial court.
Thereafter the first appeal Was filed before the High Court of Delhi which was dismissed summarily by the impugned order.
Learned counsel for parties submitted at length the controversy that existed before the amendment of Code of Civil Procedure in 1976 about the interpretation of Order 17 Rule 2 and Order 17 Rule 3.
Apparently there were two views.
one was that Order 17 Rule 3 could be used for deciding the matter on merits if the party is present but has failed to do what was expected of that party to do and this rule could not be used against a party who was present whereas the other view was that even if a party is absent but has failed to do what was expected of him then it was the discretion of the Court either to proceed under Order 17 Rule 2 or under Order 17 Rule 3.
In some decisions, the High Courts have gone to the extent of saying that even if the trail court disposes of the matter as if it was disposing it on merits under Order 17 Rule 3 still if the party against whom the decision was pronounced was absent it could not be treated to be a dis posal in accordance with Order 17 Rule 3 and provisions of Order 9 will be available to such a party either for resto ration or for setting aside an exparte decree.
Learned counsel placed before us a 292 number of decisions of various High Courts on this aspect of the matter.
But in our opinion in view of the amendment to these two rules which have been made by 1976 amendment of the Code of Civil Procedure it is not disputed that to the facts of this case, Code of Civil Procedure as amended will be applicable and therefore it is not necessary for us to go into that question.
Order 17 Rule 2 and Rule 3 as they now stand reads: "Order 17, Rule 2: Procedure if parties fail to appear on day fixed: Where, on any day to which the beating of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf of Order IX or make such other order as it thinks fit.
(Explanation Where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion proceed with the case as if such party were present.
Order 17 Rule 3: Court may proceed notwith standing either party fails to produce evi dence, etc.
Where any party to a suit to whom time has been granted fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act neces sary to the further progress of the suit, for which time has been allowed, the Court may, notwithstanding, such default, (a) if the parties are present, proceed to decide the suit forthwith, or (b) if the parties are, or any of them is absent, proceed under Rule 2.
" It is clear that in cases where a party is absent only course is as mentioned in Order 17(3)(b) to proceed under Rule 2.
It is therefore clear that in absence of the defend ant, the Court had no option but to 293 proceed under Rule 2, Similarly the language of Rule 2 as now stands also clearly lays down that if any one of the parties fail to appear, the Court has to proceed to dispose of the suit in one of the modes directed under Order 9.
The explanation to Rule 2 gives a discretion to the Court to proceed under Rule 3 even if a party is absent but that discretion is limited only in cases where a party which is absent has led some evidence or has examined substantial part of their evidence.
It is therefore clear that if on a date fixed, one of the parties remain absent and for that party no evidence has been examined upto that date the Court has no option but to proceed to dispose of the matter in accordance with Order 17 Rule 2 in any one of the modes prescribed under Order 9 of the Code of Civil Procedure.
It is therefore clear that after this amendment in Order 17 Rules 2 and 3 of the Code of Civil Procedure there remains no doubt and therefore there is no possibility of any con troversy.
In this view of the matter it is clear that when in the present case on 30th October 1985 when the case was called nobody was present for the defendant.
It is also clear that till that date the plaintiffs evidence has been recorded but no evidence for defendant was recorded.
The defendant was only to begin on this date or an earlier date when the case was adjourned.
It is therefore clear that upto the date i.e. 30th October, 1985 when the trial court closed the case of defendant there was no evidence on record on behalf of the defendant.
In this view of the matter there fore the explanation to Order 17 Rule 2 was not applicable at all.
Apparently when the defendant was absent Order 17 Rule 2 only permitted the Court to proceed to dispose of the matter in any one of the modes provided under Order 9.
It is also clear that Order 17 Rule 3 as it stands was not applicable to the facts of this case as admittedly on the date when the evidence of defendant was closed nobody appeared for the defendant.
In this view of the matter it could not ' be disputed that the Court when proceeded to dispose of the suit on merits had committed an error.
Unfor tunately even on the review application, the learned trial Court went on in the controversy about Order 17 Rules 2 and 3 which existed before the amendment and rejected the review application and on appeal, the High Court also unfortunately dismissed the appeal in limine by one word.
The learned counsel for the respondent attempted to contend that in this view of law as it now stands an appli cation under Order 9 Rule 13 will be maintainable.
However it was suggested that there was also an objection of limita tion about the acceptance of that applica 294 tion.
It is apparent that the learned trial Court has not considered the application on merits but has only rejected it as not maintainable and that order has been maintained.
This objection of the learned counsel for the respondent is not necessary for us to go into at this stage as in view of the law discussed above, the order rejecting the application as not maintainable, has to be set aside and it will be open to the learned trial Court to consider the application under Order 9 Rule 13 and dispose it of in accordance with that law and while so doing, it may even examine the objections that may be raised by the respondent.
The appeal is therefore allowed with costs.
The order passed by Hon 'ble the High Court and also the trial court rejecting the application of the appellant under Order 9 Rule 13 is set aside and it is directed that the learned trial court will proceed to hear and dispose of the applica tion under Order 9 Rule 13 filed by the appellant in accord ance with law.
A.P.J. Appeal al lowed.
|
In a suit in which the appellant was defendant, after the plaintiff 's evidence was over, the defendant was to begin his evidence on 24th January, 1985.
As no witness was present, at the request of defendant 's counsel the case was adjourned to 7th May, 1985.
On that day, the case was trans ferred to another Court and the transferee Court ordered the case to be put up on 21st August, 1985.
It being a holiday, the case was put up on 22nd August, 1985 when it was ad journed to 30th October, 1985.
On that day, no one was present for the defendant.
The case was again taken up at 1 p.m. but the situation remained the same.
Since none of the witnesses for defendant was also present, evidence was closed and case fixed for arguments for 1st November 1985.
On this date also nobody appeared for the defendant and the case was adjourned to 8th November, 1985.
On that day, arguments of the plaintiff 's counsel were heard and as none was present for defendant, the case was fixed for judgment on 11th November, 1985.
On this date also nobody was present for defendant and since judgment was not ready it was post poned to 21st November, 1985.
On this date the judgment was dictated, pronounced and decree was ordered to be prepared.
The defendant filed an application under Order 9 Rule 13 of the Code of Civil Procedure, 1908 for setting aside ex parte decree urging that he came to know about decree on 18th January, 1986 when the plaintiff came to take posses sion.
The trial Court dismissed the application holding that it was not maintainable because the case was disposed of not in accordance with Order 17 Rule 2, but in accordance with Order 17 Rule 3.
An application for review was also dis missed by the Trial Court.
The first appeal too was summari ly dismissed by the High Court.
Allowing the appeal, 289 Held: 1.
The order passed by the High Court and also the trial Court rejecting the application of the appellant under Order 9 Rule 13 of the Civil Procedure Code 1908 are set aside and the trial Court is directed to dispose of the application in accordance with law.
[294C] 2.
In cases where a party is absent, only course is as mentioned in Order 17(3)(b) to proceed under Rule 2.
The language of amended Rule 2 also lays down that if any one of the parties fails to appear, the Court has to proceed to dispose of the suit in one of the modes directed under Order 9.
The Explanation to Rule 2 gives a discretion to the Court to proceed under Rule 3 even if a party is absent but that discretion is limited only in case where a party which is absent has led some evidence or has examined substantial part of their evidence.
Therefore, if on a date fixed, one of the parties remains absent and for that party no evidence has been examined upto that date the court has no option but to proceed to dispose of the matter in accordance with Order 17 Rule 2 in any one of the modes prescribed under Order 9 of the Code of Civil Procedure.
After this amendment in Order 17 Rules 2 and 3 in 1976 there remains no doubt, and therefore, there is no possibility of any controversy.
[292H 293C] 3.
In the present case, on 30th October 1985 when the case was called nobody was present for the defendant, and till that date the plaintiff 's evidence had been recorded but no evidence for defendant was recorded.
The defendant was only to begin on this date or an earlier date when the case was adjourned.
It is, therefore, clear that upto 30th October 1985 when the trial Court closed the case of defend ant there was no evidence on record on his behalf.
There fore, the Explanation to Order 17 Rule 2 was not applicable at all.
Apparently when the defendant was absent Order 17 Rule 2 only permitted the Court to proceed to dispose of the matter in any one of the modes provided under Order 9.
[293D E] 4.
Order 17 Rule 3 as it stands was not applicable to the facts of this case as admittedly on the date when the evidence of the defendant was closed nobody appeared for the defendant and, therefore, the Court when it proceeded to dispose of the suit on merits had committed an error.
Even on the review application, the trial Court went on in the controversy about Order 17 Rules 2 and 3 which existed before the amendment and rejected the review application and on appeal, the High Court also unfortunately dismissed the appeal in limine by one word.
[293F G]
|
Criminal Appeal No. 12 of 1978 From the Judgment and Order dated 19.4.1976 of the Andhra Pradesh High Court in Referred Trial No. 2 of 1976.
K. Ram Kumar for the Appellant.
G. Narasimhulu and S.K. Mehta for the Respondents.
The Judgment of the Court was delivered by B.C. RAY, J.
This appeal by special leave is against the judgment and order dated 19.4.1976 made by the High Court of Andhra Pradesh in the Referred Trial No. 2 of 1976 and Criminal Appeal Nos. 159, 168 and 169 of 1976 acquitting all the 7 accused who were convicted and sentenced by the Ses sions Court, West Godawari Division at Eluru, Andhra Pradesh in Sessions Case No. 71 of 1975.
The prosecution case in short is that on 23rd July, 1974 at 7.30 a.m. the accused persons forming themselves into an unlawful assembly in the house of the 1st accused and arming themselves with spears, sticks and crow bars attacked the deceased while he was returning from the canal carrying water in what is locally known as "Kavadi".
When the de ceased reached the house of the 1st accused, all the ten accused came from behind and the 2nd accused gave a blow with a stick on the back of the head of the deceased as a consequence of which he fell down on his back.
Then the 1st accused speared the deceased on his face and legs, the 5th accused poked the deceased on his right wrist with a crow bar and the 6th accused speared the deceased on his legs and hands.
The 329 rest of the accused then beated the deceased with sticks indiscriminately.
The deceased cried "Bobu".
This was heard by his wife (P.W.5) from her house which is situated about 150 yards.
She immediately ran to the scene of occurence and saw accused 1 to 8 and two others entering into the house of the 1st accused.
P.W. 5 then sent intimation to her brother P.W. 2 who was working as labourer in a sugar factory through P.W. 8.
P.W. 2 and others took the deceased to Bhimadole Police Station in a cart which is about 4 kms.
away from their house and lodged the F.I.R., exhibit P 1 wherein all the names of accused Nos. A1 to A4 and A6 to A8 as well as the nature of injuries inflicted on the person of the deceased were mentioned.
This FIR was registered at 9.30 a.m. and a case u/s 326 I.P.C. was registered.
Subsequently, the deceased was found dead on examination by the Doctor, P.W. 12 at the Government Hospital, Elurn.
The F.I.R. was then altered to one u/s 302 I.P.C.
The Inspector of Police made inquest of the dead body and the inquest report has been marked as exhibit P5.
All the 10 accused were charged u/s 147 I.P.C. The accused Al, A4, A5 and A6 who were armed with deadly weapons were also charged u/s 148 I.P.C. and accused A1 to A10 were charged u/s 302 read with section 149 I.P.C. They were all committed to the Court of Sessions.
The Sessions Judge after considering the entire evidence and also heating the counsel for the prosecution as well as the defence found that accused A 1 to A3 and A5 to A8 were guilty of the offence u/s 147 I.P.C. and also u/s 302 read with section 149 I.P.C. A1, A5 and A6 were also held guilty u/s 148 I.P.C.
The accused A4, A9 and A10 were however acquitted of the offence u/s 147 I.P.C. Accused A4 was also not found guilty of offence u/s 148 I.P.C. The accused A 1, A5 and A6 who were convicted u/s 302 read with section 149 I.P.C. were sentenced to death and they were directed to he hanged by their necks till their death subject to confirma tion by the High Court.
A3, A7 and A8 were convicted u/s 302 read with section 149 I.P.C. and they were sentenced to undergo imprisonment for life.
A2, was also convicted u/s 302 read with section 149 I.P.C. and he was sentenced to death and directed to be hanged by his neck till death.subject to confirmation by the High Court.
The accused A1 to A3 and A5 to A8 who were convicted u/s 147 I.P.C. were sentenced to undergo rigorous imprisonment for one year.
A1, A5 and A6 were convicted u/s 148 I.P.C. and they were sen tenced to rigorous imprisonment for two years.
All the above sentences were to run concurrently.
Against this judgment and order 3 criminal appeals being Criminal Appeal Nos.
159/1976, 168/1976 and 169/1976 were filed.
These criminal appeals along with R.T. No. 2 of 1976 were heard by the High Court of Andhra Pradesh, Hyderabad and the learned Judge by his order dated 5th May, 1976 acquitted all the accused of both the charges of rioting and murder levelled 330 against them and set aside the convictions and sentences allowing all the appeals and rejecting the reference.
It is against this judgment and order the instant appeal on special leave was filed before this court by the State.
This court granted special leave to appeal by its order dated 11.1.1978 and also ordered issue of bailable warrants against each of the accused persons in the sum of Rs.10,000 with one surety to the satisfaction of Additional Sessions Judge, Eluru.
We have heard the learned counsel for both the parties and we are constrained to hold that the judgment passed by the High Court acquitting all the accused is not a proper judgment in accordance with the provisions of Section 354 of the Code of Criminal Procedure 1973.
The learned Judge has not at all considered and marshalled the evidences examined on behalf of the prosecution particularly the evidences of PWs 1, 3, 4, 6 and 7 who were eye witnesses to the gruesome murder committed in the morning at about 7.30 a.m.
The names of all the 7 accused appeared in the F.I.R. lodged by PW 2 in the Police Station at 9.30 a.m., exhibit PI and exhibit P.23 and P.24 dated 23.7.1974.
The learned Judge did not formulate properly the points for decision and did not marshal the evidences on record and did not come to specific finding on each of the points for determination by recording specific reasons for arriving at the decision.
It is really unfortu nate that the learned Judge approached the case from wrong angle and without properly formulating the points for deci sion and without any proper appraisal of the evidences adduced by the prosecution to prove the guilt of the accused persons and also without adverting to the reasonings of the Sessions Judge, has perfunctorily come to the finding that the prosecution has failed to prove beyond doubt the case against the accused even though there are eye witnesses P.Ws. 1, 3, 4, 6 and 7 to the occurence.
In our considered opinion, this judgment is not in accordance with the mandatory requirements as laid down in Section 354 of the Code of Criminal Procedure.
We therefore, set aside the judgment and order of acquittal passed by the High Court of Andhra Pradesh and remit the ease back to the High Court, Andhra Pradesh for deciding the case in accord ance with law on a proper appraisal and marshalling of the evidences on record as early as possible.
The order of interim stay is vacated and bail bonds are cancelled.
The records be sent to the High Court forthwith.
The High Court will be free to consider whether the accused will be en larged on bail.
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The ten accused persons forming themselves into an unlawful assembly in the house of A 1 and arming themselves with spears, sticks and crow bars attacked the deceased while he was returning from the canal carrying water in 'Kavadi '.
As a result of the injuries sustained by the deceased he died.
All the ten accused were charged under section 147 I.P.C. accused A 1, A4, A5 and A 6, who were armed with deadly weapons were also charged under section 148 I.P.C. and accused A 1 to A I0 were further charged under section 302 read with section 149 I.P.C.
The trial Court acquitted A 4, A 9 and A I0 of all the charges levelled against them.
Accused A 1 to A 3 and A 5 to A 8 were convicted section 147 I.P.C. and sentenced to undergo rigorous imprisonment for one year.
Accused A I, A 5 and A 6 were convicted section 148 I.P.C. and sentenced to undergo rigorous imprisonment for two years.
Accused A 1, A 2, A 5 and A 6 were convicted u/s 302 read with section 149 I.P.C. and sentenced to death.
Accused A 3, A 7 and A 8 were also convicted section 302 read with section 149 I.P.C. but sentenced to undergo imprisonment for life.
The High Court allowed the appeals flied by the convict ed accused and acquitted all of them of the charges levelled against them and rejected the reference.
Allowing the appeal of the State to this Court, HELD: 1.
The judgment passed by the High Court acquit ting all the accused is not a proper judgment in accordance with the provisions of section 354 of the Code of Criminal Proce dure 1973.
The learned Judge has not at all considered and marshalled the evidence of witnesses examined on behalf of the prosecution particularly the evidence of PWs.
1, 3, 4, 6 and 7 who were eye witnesses to the gruesome murder commit ted in the morning at about 7.30 a.m. 328 The names of all the seven accused appeared in the F.I.R. [330 C] 2.
The learned Judge approached the case from wrong angle and without properly formulating the points for deci sions and without any proper appraisal of the evidences adduced by the prosecution to prove the guilt of the accused persons and also without adverting to the reasoning of the Sessions Judge, has perfunctorily come to the finding that the prosecution has failed to prove beyond doubt the case against the accused even though there are eye witnesses P.Ws. 1, 3, 4, 6 and 7 to the occurrence.
[330 E] 3.
The judgment of the High Court is set aside and the case is remitted back to the High Court for deciding it in accordance with law on a proper appraisal and marshalling of the evidence on record as early as possible.
[330 F G]
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Appeal No. 222 (N) of 1973.
From the Judgment and Order dated 13.3.1972 of the Delhi High Court in Civil Writ No. 731 of 1971.
M.K. Dua, Aman Vachher and S.K. Mehta for the Appellants.
B. Datta, Additional Solicitor General, G.D. Gupta and Mr. C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by KHALID, J.
1.
This appeal by certificate is directed against the Judgment of a Division Bench of the Delhi High Court, in C.W. No. 731 of 1971.
The prayer in the Writ Petition is for the issuance of an appropriate writ, order or direction declaring (a) the Police Forces (Restriction of Rights) Act No. 33 of 1966 (for short the Act) as ultra vires the Constitution, (b) the Police Forces (Restriction of Rights) Rules 1966 and Police Forces (Restriction of Rights) Amendment Rules, 1970 (for short the Rules) ultra vires of Act 33 of 1966 and the Constitution of India, (c) that the Circular dated 1st April, 1971 as invalid, illegal, ultra vires, null and void and (d) for a declara tion that the Delhi Police Non Gazetted Karmchari Sangh, petitioner No. 1 in the Writ Petition, is a legally and validly constituted service organisation.
350 2.
The first appellant is the Non Gazetted Karmachari Sangh (for short the 'Sangh ') and the appellant Nos. 2 to 7, its members.
The High Court dismissed the petition holding that the challenge was not sustainable and that neither the Act nor the Rules violated any provisions of the Constitu tion.
The High Court dealt at length with the preliminary objections that a challenge based on the violation of any fundamental right was not permissible in view of the emer gency declared by the President of India, in December, 1977.
This need not detain us now in this Judgment.
The appellants ' case is that the Act referred above violates Article 19(1)(c) of the Constitution of India and that the restrictions imposed by it., being arbitrary, violates Article 14 of the Constitution.
The Non Gazetted members of the Delhi Police Force wanted to form an organi sation of their own and for that purpose constituted the Karmachari Union in 1966 and applied for its registration under the Trade Union Act, 1926.
Initially the registration asked for was declined.
Then Act 33 of 1966 was enacted.
It came into force on 2nd December, 1966.
An application for recognition was again made on 9th December, 1966.
Recogni tion was granted by the Central Government on 12th December, 1966.
The Non Gazetted members of the Delhi Police Force were permitted to become members of the Sangh.
On 12th December, 1966, the Central Government made rules under the Act which were amended in December, 1970.
The Circular in question was issued under these rules.
The Circular attempts to derecognise the Sangh.
This occassioned the filing of the writ petition.
Before considering the rival contentions urged before us, it would be useful to refer to the salient features of the Act to appreciate its ambit and the restrictions imposed by its provisions.
The Act was enacted to delineate the restrictions imposed of the rights conferred by part III of the Constitution, in their application to the members of the forces charged with the maintenance of public order so as to ensure the proper discharge of their duties ' and the mainte nance of discipline among them.
The Parliament obviously has this power under Article 33 of the Constitution of India.
The provisions of the Act seek to place certain restrictions on members of the police force in exercise of their funda mental rights guaranteed by Article 19(1)(c) to form Associ ation or Unions.
Section 3 of the Act reads as follows: "3(1) No member of a police force shall with out the express sanction of the Central Gov ernment or of the prescribed authority (a)be a member of, or be associated in any way with, any trade union, labour union, political association or with any class of trade unions, labour unions or political 351 associations; or (b) be a member of, or be associated in any way with, any other society, institution, association or organisation that is not recognised as part of the force of which he is a member or is not of a purely social, recretional or religious nature; or (c) communicate with the press or publish or cause to be published any book, letter or other document except where such communication or publication is in the bona fide discharge of his duties or is of a purely literary, artistic or scientific character or is of a prescribed nature.
Explanation: If any question arises as to whether any society, institution, association or organisation is of a purely social, recre tional or religious nature under clause (b) of this subsection, the decision of the Central Government thereon shall be final.
(2) No member of a police force shall partici pate in or address, any meeting or take part in any demonstration organised by any body of persons for any political purposes or for such other purposes as may be prescribed.
" Section 4 of the Act provides for penalties if Section 3 is contravened by any person.
Section 5 gives power to the Central Government by notification in the official gazette, to amend the schedule by including therein any other enact ment relating to a force charged with the maintenance of public order or omit therefrom any enactment already speci fied therein.
Section 6 gives the rule making power to the Central Government.
The only contention that now survives is whether the impugned statute, rules and orders are violative of the fights of the appellants guaranteed under Article 19(1)(c) of the Constitution of India.
This appeal could be disposed of by a short Order.
Appellants No. 2 to 7 are no longer in service.
They have been dismissed.
As such they do not have the necessary locus standi to sustain this petition.
But the appellants ' counsel submitted that the first petitioner the Sangh, was still interested in pursuing this appeal and that persuaded us to hear the appeal on merits.
It is true that recognition was given to the Sangh originally.
Subsequently by order dated 1 st April, 1971, the Sangh was derecognized.
This was pursuant to the amended rules.
Rule 3 provided that "no member of the police forces shall participate in, or address, any meeting or take part in any demonstration organised by any body of persons (a)for the purpose of protesting against any of the provisions of the Act or these rules or any other 352 rules made under the Act; or (b)for the purpose of protest ing against any disciplinary action taken proposed to be taken against him or against any other member of a police force; or (c)for any purpose connected with any matter pertaining to his remuneration or other conditions of serv ice or his condition of work or living condition, or the remuneration, other conditions, of any other member or members of a police force. "Provided that nothing contained in clause(c) shall preclude a member of a police force from participating in a meeting convened by an association of which he is a member and which has been accorded sanction under sub section (1) of section3 of the Act, where such meeting is in pursuance of or for the furtherance of, the objects of such associa tion.
" The above rules were amended by a notification dated 19th December, 1970 the material change for our purpose being an amendment in the proviso to clause (c) of rule 3.
The original proviso to clause(c) was substituted by another proviso which reads as follows: "Provided that nothing contained in clause (c) shall preclude a member of a police force from participating in a meeting (i) which is convened by an association of police officers of the the same rank of which he is a member and which has been granted recognition under clause (b) of sub section (1) of section 3 of the Act; (ii) which has been specifically provided for in the articles of association or/and has been, by general or special order, permitted by the Inspector General of Police having regard ' to the object of such meeting and other relevant factors; and (iv) which has been convened to consider the agenda circulated to all concerned according to the relevant provisions of the articles of association, after giving intimation in ad vance to the ' Inspector General of Police or an officer nominated by him." (Emphasis sup plied).
Rule 5 was added to the Rules by virtue of which minutes had to be recorded of the meetings of a recognised associa tion.
The Inspector General of Police could send observers by virtue of rule 6 to such meetings.
Outsiders were prohib ited from attending the meetings of the association without permission of the Inspector General of Police by Rule 7.
Rules 8, 9 & 11 may also be usefully read: 353 "8.
Recognition: Members of police force belonging to the same rank desiring to form an association may make an application for the grant of recognition under clause (b) of sub section (1) of section 3 and such application shall be in writing under the hand of a repre sentation of such association addressed to the Inspector General of Police who shall be the authority to grant, refuse or revoke such recognition; Provided that before refusing or revoking recognition, the Association shall be given a reasonable opportunity of making representation against the proposed action." "9.
Suspension of recognition: The Inspector General of Police may in the interests of the general public or for the maintenance of discipline in the police force and with the prior approval of the Central Government, the State Government or as the ease may be the Administrator of the Union Territory suspend the recognition granted under rule 8 for a period not exceeding three months which may be extended for a further period of three months by the Central Government, State Government or as the case may be the Administrator of the Union Territory so however that the total period for which such recognition may be suspended shall, not, in any case, exceed six months." "11.
Special provision regarding recognition already granted: Recognition granted prior to the commencement of the Police Forces (Restriction of Rights) Amendment Rules, 1970, to any association the articles of association of which are not in conformity with these rules shall, unless the said artides of association are brought in conformity with the provisions of these rules within a period of thirty days, stand revoked on the expiry of the said peri od.
It is the change effected by the new Proviso to Rule 3(c) which has come in for attack at the hands of the appel lants.
Previously all non gazetted officers of the Delhi Police Department could be members of the Sangh.
Now, the amended proviso to rule 3(c) mandates that only members of the Police Force having the same rank could constitute themselves into one Association.
The effect of this amended rule is that the Sangh will have to be composed of various splinter associations consisting of members holding differ ent ranks.
This according to the appellants violates not only Article 19(1)(c) which protects freedom of association, but also the provisions of the Act.
354 The immediate provocation for filing the writ petition was the Circular by which the recognition granted to the Sangh was revoked.
The operative part of the Circular reads as follows: "Rule 11 of the Police Force (Restriction of Rights) Amendment Rules, 1970 published vide extraordinary Gazette of India notifica tion No. GSR 2049 dated 19 12 70 lays down that recognition granted prior to the com mencement of these rules, to any association the articles of which are not in conformity with these rules shall unless the articles are brought in conformity with the provisions of these rules within a period of 30 days, stand revoked on the expiry of the said period.
Whereas the Constitution of the Delhi Police NonGazetted Karmchari Sangh which was granted recognition vide Government of India, Ministry of Home Affairs letter No.8/70/66 P.I., dated 12 12 66 and which contains a number of provisions not in con formity with the above rules, the recognition already granted to the Delhi Police Non Gazet ted Karmachari Sangh, stands revoked.
This may be brought to the notice of a11 ranks.
A copy of this circular may be published in the Delhi Police Gazette.
" The appellants ' counsel Submits that recognition of the association carries with it the right to continue the asso ciation as such.
It is a right flowing from the fact of recognition.
To derecognise the association in effect of fends against the freedom of association.
It is urged that once the Government had granted recognition to the Sangh and approved its constitution neither the Parliament nor any delegated authority can take away that recognition or dic tate to the association who could be its members.
The right available to the members of the association at the commence ment should continue as such without any hindrance.
Before considering the questions of law raised by the appellants ' counsel with reference to the decided cases, it would be useful to bear in mind the fact that this associa tion consists of members of Police Force who by virtue of this fact alone stands on a different footing from other associations.
The Constitution of India has taken care to lay down limitations on such, associations from exercising rights under Article 19(1)(c).
Article 33 read with 355 Article 19(4) of the Constitution offers an effective reply to the contention raised by the appellants.
Article 33 reads as follows: "Parliament may, by law, determine to what extent any of the rights conferred by this Part shall, in their application to the mem bers of the Armed Forces or the Forces charged with the maintenance of public order, be restricted or abroagated so as to ensure the proper discharge of their duties and the maintenance of discipline among them.
" Article 19(4) reads as follows: "Nothing in sub clause (c) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restric tions on the exercise of the right conferred by the said sub clause.
" That the Sangh and its members come within the ambit of Article 33 cannot be disputed.
The provisions of the Act and rules taking away or abridging the freedom of association have been made strictly in conformity with Article 33.
The right under Article 19(1)(c) is not absolute.
Article 19(4) specifically empowers the State to make any law to fetter, abridge or abrogate any of the rights under Article 19(1)(c) in the interest of public order and other considerations.
Thus the attack against the Act and rules can be successful ly met with reference to these two Articles as members of the Police Force, like the appellants herein, are at a less advantageous position, curtailment of whose fights under Article 19(1)(c) comes squarely within Article 33 in the interest of discipline and public order.
This conclusion of ours is sufficient to dispose of this appeal.
However, we will deal with the submissions made before us for the com pleteness of the Judgment.
The scope of Article 19(1)(c) came up for considera tion before this Court in Damyanti Naranga vs The Union of India & Ors., ; The question related to the Hindi Sahitya Sammelan, a Society registered under the .
The Parliament enacted the Hindi Sahitya Sammelan Act under which outsiders were per mitted to become members of the Sammelan without the voli tion of the original members.
This was challenged and this Court held that any law altering the composition of the Association compulsorily will be a breach of the right to form the association because it violated the composite right of forming an association and the right to continue it as the original members desired it.
356 10.
Here we have an entirely different situation since we are dealing with a group distinct in its nature and composition from others.
Here we are dealing with a force that is invested with powers to maintain public order.
Article 33 enables Parliament to restrict or abrogate the fundamental rights in their relation to the Armed Forces including Police Force.
In Ous Kutilingal Achudan Nair & Ors., vs Union India & Ors., ; this Court had to consider two questions; whether the employees of the defence establishment such as cooks, barbers and like civil employees were "members of the Armed Forces" and if so whether they could be validly deprived of their right to form unions in violation of Article 19(1)(c).
This Court held that they fell within the category of members of the Armed Forces and that the Central Government was competent by notification to make rules restricting or curtailing their right to form associations, Article 19(1)(c) not withstanding.
In Raghubar Dayal Jai Prakash vs The Union of India and Ors., ; this Court had to deal with this question in relation to the functions of an incorporated body the objects of which were, interalia, to regulate forward transactions in the sale and purchase of various commodities, Freedom of association is a fundamental right.
It was contended that if a law regulated the recognition of an association under certain conditions subject to which alone recognition could be accorded or continued, such conditions were bad.
This Court had to consider whether the freedom of association implied or involved a guaranteed right to recognition also.
The contention was that if the object of an association was lawful, no restriction could be placed upon it except in the interest of public order and that freedom to form an association carried with it the right to determine its internal arrangements also.
Repelling this contention this Court held that restrictions cannot be imposed by statute for the purpose of regulating control of such associations.
While the right to freedom of association is fundamental, recognition of such association is not a fundamental right and the Parliament can by law regulate the working of such associations by imposing conditions and restrictions on such functions.
It cannot be disputed that the fundamental rights guaranteed by Article 19(1)(c) can be claimed by Government servants.
A Government servant may not lose its right by joining Government service.
Article 33 which confers power on the Parliament to abridge or abrogate such rights in their application to the Armed Forces and other similar forces shows that such rights are available to all citizens, including Government servants.
But it is, however, necessary to remember that Article 19 confers fundamental rights which are not absolute but are subject to reasonable restrictions.
What has happened in this case is only to impose reasonable restrictions in the interest of discipline and public order.
357 13.
The validity of the impugned rule has to be judged keeping in mind the character of the employees we are deal ing with.
It is true that the rules impose a restriction on the right to form association.
It virtually compels a Gov ernment servant to withdraw his membership of the associa tion as soon as recognition accorded to the said association is withdrawn or if, after the association is formed, no recognition is accorded to it within six months.
In other words, the right to form an association is conditioned by the existence of the recognition of the said association by the Government.
If the association affairs recognition and continues to enjoy it, Government servants can become mem bers of the said association; if the said association does not secure recognition from the Government or recognition granted to it is withdrawn, Government servants must cease to be members of the said association.
That is the plain effect of the impugned rule.
These rules are protected by Articles 33 and 19(4) of the Constitution.
Besides, it is settled law that the right guaranteed by Article 19(1)(c) to form associations does not involve a guaranteed right to recognition also.
The main grievance of the appellants is that the first appellant Sangh when recognised, comprised of Police Officers of various ranks, the common factor being that all its members were non gazetted police officers.
This composi tion was changed by the impugned rules.
Not only is the composition changed; the entire Sangh stood derecognised for failure to alter its constitution complying with the new rules.
This attack cannot be sustained.
Section 3 of the Act permits the rule making authority to define any group of Police Force that can form an Association.
It also gives power to prescribe the nature of activity that each ' such association of members can indulge in.
It, therefore, fol lows that if rules can be framed defining this aspect, a rule can also be framed enabling the authorities to revoked or cancel recognition once accorded, if the activities offended the rules.
The further grievance of the appellant is that non gazetted officers who once formed one block have been fur ther divided with reference to ranks and that this again is an inroad into their right under Article 19(1)(c).
This submission has been already met.
Besides, this classifica tion based on ranking has its own rationale behind it.
We are dealing with a Force in which discipline is the most important pre requisite.
Non gazetted officers consist of men of all ranks; the lowest cadre and officers who are superior to them.
If all the nongazetted officers are grouped together irrespective of rank, it is bound to affect discipline.
It was perhaps, realising the need to preserve discipline that the changes in the rule were effected.
We are not satisfied that there has been violation of any law in doing so.
358 On a careful consideration of the questions involved in this appeal, we hold that the High Court was right in its decision.
We accordingly dismiss the appeal.
S.R. Appeal dismissed.
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The non gazetted members of the Delhi police Force wanted to form an association of their own and for that purpose constituted the Karmachari Union in 1966 and applied for its registration under the Trade Union Act, 1926 and this was refused.
After the coming into effect from 2.12.1966 of the Police Force (Restriction of Rights) Act, 33 of 1966 another, application for recognition was again made on 9.12.1966 which was granted on 12.12.1966.
The non gazetted members of the Delhi Police Force were permitted to become members of the Sangh.
The Police Force (Restriction of Rights) Rules, 1966 made by the Central Government on 12.12.1966 were amended by the Amendment Rules of 1970.
Rule 11 thereof provides for revocation of the recognition grant ed to an association, if the said associations articles are not in conformity with the Rules or are not brought in conformity with the provisions of the amended Rules within a period of 30 days.
Since the Articles of Association of the appellant Sangh contained a number of provisions not in conformity with the rules and since the Sangh failed to bring the same in conformity, by a circular dated 1.4.1971 the recognition granted was revoked.
The appellants, there fore, filed a writ petition before the Delhi High Court challenging the constitutional validity of the Act, Rules and the impugned circular.
The writ petition having been rejected the appellants have come by way of special leave.
Dismissing the appeal, the Court, 348 HELD: 1.1 The Police Force (Restriction of Rights) Act (33 of) 1966, the Police Force (Restriction of Rights) Rules 1966 (as amended by the 1970 Rules) and the circular dated 1.4.1971 are all constitutionally valid.
They do not offend the provisions of Articles 14 and 19(1)(c) of the Constitu tion.
[350 C, 355 E F] 1.2 The right under Article 19(1)(c) is not absolute.
Article 19(4) specifically empowers the State to make any law to fetter, abridge or abrogate any of the fights under Article 19(1)(c) in the interest of public order and other considerations.
While the right to freedom of association is fundamental, recognition of such association is not a funda mental fights and the Parliament can by law regulate the working of such associations by imposing conditions and restrictions on such functions.
[355 E, 356 F] 1.3 The fundamental fights guaranteed by Article 19(1)(c) can be claimed by Government servants.
A government servant may not lose his right by joining government serv ice.
Article 33 which confers power on the Parliament to abridge or abrogate such rights in their application to the Armed Forces and other similar forces shows that such fights are available to all citizens, including government serv ants.
What has happened in this case is only to impose reasonable restrictions in the interest of discipline and public order.
[356 G H] 1.4 Rule 11 read with Rule 3(c) of the Amended Police Force (Restriction of Rights) Rules, 1966 has to be judged keeping in mind the character of the employees to whom it applies.
It is true that the rules impose a restriction on the right to form association.
It virtually compels a gov ernment servant to withdraw his membership of the associa tion as soon as recognition accorded to the said association is withdrawn or if, after the association is formed, no recognition is accorded to it within six months.
In other words, the right to form an association is conditioned by the existence of the recognition of the said association by the government.
If the association obtains recognition and continues to enjoy it, government servants can become mem bers of the said association, if the said association does not secure recognition from the government or recognition granted to it is withdrawn, government servants must cease to be members of the said association.
That is the plain effect of the impugned role.
These rules are protected by Articles 33 and 19(4) of the Constitution.
Besides, it is settled law that the right guaranteed by Article 19(1)(c) to form associations does not involve a guaranteed right to recognition also.
[357 A C] 1.5 Section 3 of the Police Force (Restriction of Rights) Act permits the rule making authority to define any group of Police Force that can form an Association.
It also gives power to prescribe the nature of activity that each such association of members can indulge in.
It, therefore, follows that if rules can be 349 framed defining this aspect, a rule can also be framed enabling the authorities to revoke or cancel recognition once accorded, if the activities offended the rules.
Besides the classification based on ranking has its own rationale behind it.
The Court is dealing with a Force in which disci pline is the most important prerequisite.
Non gazetted officers consist of men of all ranks; the lowest cadre and officers who are superior to them.
If all the non gazetted officers are grouped together irrespective of rank, it is bound to affect discipline.
It was perhaps, realising the need to preserve discipline that the changes in the rule were effected.
[357E, G ] Damyanti Naranga vs The Union of India & Ors., ; ; Ous Kutilingal Achudan Nair & Ors., vs Union of India & Ors., ; ; and Raghubar Dayal Jai Prakash vs The Union of India & Ors., ; fol lowed.
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Appeal No. 5032 of 1985 From the Judgment and Order dated 20.8.1985 of the Kerala High Court in C.R.P. Nos.
1643 and 2552 of 1980.
P.S. Poti and E.M.S. Anam for the Appellant.
G. Vishwanath lyer, P.K. Pillai and K. Dileep Kumar for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave from the decision of learned single judge of the High Court of Kerala is disposed of on a short question of law.
The appellant is a tenant.
The High Court had reversed the concurrent findings and the decisions of three courts below it and ordered eviction of the appellant.
The dispute relates to a portion of the ground floor of a three storeyed building situated in one of the busiest commercial areas Pazhavangadi of the city of Trivandrum.
where the appellant had been conducting a tea shop by 488 name 'Sourashtra Hotel '.
In the adjacent rooms on the ground floor, the landlord was conducting a business in textiles namely 'Sarada Textiles '.
The tenancy began on 12th June, 1965.
The tenancy was taken by the husband of the appellant.
The rent was Rs. 140 per month.
The husband of the appellant died.
Thereafter the appellant had been conducting the business from there.
On or about 15th April, 1976, the respondent purchased.a three storeyed building.
The petition schedule premises is a portion of the ground floor of the said three storeyed building.
It is the case of the appellant that there were seven rooms on the first floor of the said building out 'of which four were in the possession of the respondent and three rented out as aforesaid.
The premises on the second floor were used by the respondent landlord as a lodge.
On 9th April, 1977, the respondent filed an application under section 17 of the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter called the Act) for permission to convert the non residential building to a residential build ing.
On 30th November, 1977, the Accommodation Controller rejected the said application.
On 2nd June, 1978, the respondent filed the petition for eviction of the appellant on the ground of bona fide need of the premises in question for his residence.
Arrears of rent was also one of the grounds taken against the appellant.
The tenant duly filed his objection.
On 31st October, 1978, the Rent Control Court dismissed the respondent landlord 's petition for eviction.
It was found that the landlord had other buildings in his own possession and therefore.
no order of eviction could be passed by virtue of the first proviso to section 11(3) of the Act.
The Rent Control Appel late Authority on or about 2nd July, 1979 dismissed the respondent landlord 's appeal.
On 28th March, 1980, the revision petition filed by the respondent was also dismissed by the District Court.
The High Court was moved by the respondent landlord under section 115 of the Code of Civil Procedure.
The husband of the appellant died on 8th May, 1985.
She was therefore impleaded as the legal representative and she is conducting the business since the death of her husband; By the order dated 20th August, 1985, the High Court by its impugned order has set aside all the orders of the courts below.
The tenant, the appellant herein has come up in appeal to this Court under article 136 of the Constitu tion.
489 Several questions were posed before us in this case, inter alia, (i) whether the revision under section 115 of the Code of Civil Procedure lies to the High Court from a revision order passed under section 20 of the said Act? (ii) whether the High Court has exceeded its jurisdiction under section 115 in setting aside the judgments and orders of the courts below in ordering eviction of the appellant from the premises in question reversing the findings of facts? (iii) whether eviction of a tenant from a non residential building could be ordered for the user of the building for residence of the landlord, if the Accommodation Controller had refused permission under section 17 of the Act to convert the build ing from non residential to residential? (iv) where the Accommodation Controller refused the permission to convert the building from non residential to residential, does the claim to the building by the landlord for a residential purpose become illegal and not recognised by law and whether the claim of the landlord can still be held to be bona fide? (v) whether in ordering eviction the special reasons relied on by the High Court on a reappreciation of facts are borne out from the evidence in this case and whether the facts stated by the High Court constitute "special reasons" re quired under the first proviso to section 11 (3) in ordering eviction and setting aside the judgments and orders of the courts below.
For the present purpose, it is relevant to refer to section 11(3) of the Act which provides as follows: "11 (3).
A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building if he bona fide needs the build ing for his own occupation or for the occupa tion by any member of his family dependent on him; Provided that the Rent Control Court shall not give any such direction if the landlord has another building of his own in his possession in the same city, town or village except where the Rent Control Court is satisfied that for special reasons, in any particular case it will be just and proper to do so: Provided further that the Rent Control Court shall not give any direction to a tenant to put the landlord in possession, if such tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such trade or business; Provided further that no landlord whose right to recover 490 possession arises under an instrument of transfer inter vivos shall be entitled to apply to be put in possession until the expiry of one year from the date of the instrument; Provided further that if a landlord after obtaining an order to be put in posses sion transfers his rights in respect of the building to another person, the transferee shall not be entitled to be put in possession unless he proves that he bona fide needs the building for his own occupation or for the occupation by any member of his family depend ent on him.
" In the view we have taken on the question that no revi sion lay to the High Court, it is not necessary to refer to other provisions of the Act or to the details of the facts of this case.
It is, however, necessary to refer to sections 18 and 20 of the Act which are as follows: "18.
Appeal (1) (a) The Government may, by general or special order notified in the Gazette, confer on such officers and authori ties not below the rank of a Subordinate Judge the powers of appellate authorities for the purposes of this Act in such areas or in such classes of cases as may be specified in the order.
(b) Any person aggrieved by an order passed by the Rent Control Court may, within thirty days from the date of such order, prefer an appeal in writing to the appellate authority having jurisdiction.
In computing the thirty days aforesaid, the time taken to obtain a certified copy of the order appealed against shall be excluded.
(2) On such appeal being preferred, the appellate authority may order stay of further proceedings in the matter pending decision on the appeal.
(3) The appellate authority shall send for the records of the case from the Rent Control Court and after giving the parties an opportunity of being heard and, if necessary, after making such further inquiry as it thinks fit either directly or through the Rent Con trol Court, shall decide the appeal.
Explanation: The appellate author ity may, while confirming the order of evic tion passed by the Rent Control 491 Court, grant an extension of time to the tenant for putting the landlord in possession of the building.
(4) The appellate authority shall have all the powers of the Rent Control Court including the fixing of arrears of rent.
(5) The decision of the appellate authority, and subject to such decision, an order of the Rent Control Court shall be final and shall not be liable to be called in ques tion in any Court of law, except as provided in section 20. 20.
Revision: (1) In cases where the appellate authority empowered under sec tion 18 is a Subordinate Judge, the District Court, and in other cases the High Court may, at any time, on the application of any ag grieved party, call for and examine the re cords relating to any order passed or proceed ings taken under this Act by such authority for the purpose of satisfying itself as to the legality regularity or propriety of such order or proceedings and may pass such order in reference thereto as it thinks fit.
(2) The costs of and incidental to all proceedings before the High Court or District Court under Sub section (1 ) shall be in its discretion.
" It has further to be borne in mind that the Act in question was an Act to regulate the leasing of buildings and to control the rent of such buildings in the State of Kera la.
It was contended by Shri Poti, learned counsel for the appellant, that no revision lay to the High Court.
He sub mitted that section 18(5) read with section 20 of the Act has completely ousted the High Court 's jurisdiction to interfere in this matter under section 115 of the Code of Civil Procedure.
Under the scheme of the Act it appears that a landlord who wants eviction of his tenant has to move for eviction and the case has to be disposed of by the Rent Control Court.
That is provided by sub section (2) of section 11 of the Act.
From the Rent Control Court, an appeal lies to the Appellate Authority under the conditions laid down under sub section (1)(b) of section 18 of the Act.
From the Appel late Authority a revision in certain circumstances lies in case where the appellate authority is a Subordinate Judge to the District Court and in other cases to the High Court.
In this case as mentioned hereinbefore the appeal lay from Rent Control Court to the 492 appellate authority who was the Subordinate Judge and there fore the revision lay to the District Judge.
Indeed it is indisputed that the respondent has in this case taken resort to all these provisions.
After the dismissal of the revision by the District Judge from the appellate decision of the Subordinate Judge who confirmed the order of the Rent Con troller, the respondent landlord chose again to go before the High Court under section 115 of the Code of Civil Proce dure.
The question, is, can he have a second revision to the High Court? Shri Poti submitted that he cannot.
We are of the opinion that he is fight.
This position is clear if sub section (5) of section 18 of the Act is read in conjunc tion with section 20 of the Act.
Sub section (5) of section 18, as we have noted hereinbefore, dearly stipulates that the decision of the appellate authority and subject to such decision, an order of the Rent Controller 'shall be final ' and 'shall not be liable to be called in question in any court of law ', except as provided in section 20.
By section 20, a revision is provided where the appellate authority is Subordinate Judge to the District Judge and in other cases, that is to say, where the appellate authority is District Judge, to the High Court.
The ambits of revisional powers are well settled and need not be re stated.
It is inconceiv able to have two revisions.
The scheme of the Act does not warrant such a conclusion.
In our opinion, the expression 'shall be final ' in the Act means what it says.
In Kydd vs Watch Committee of City of Liverpool.
[1908] Appeal Cases 327 at 331 332.
Lord Loreburn L.C., construing the provisions of section 11 of the Police Act, 1890 of England which provided an appeal to quarter sessions as to the amount of a constable 's pension, and also stipulated that the Court shall make an order which would be just and final, observed: "Where it says, speaking of such an order, that it is to be final, I think it means there is to be an end of the business at quarter sessions . . " The said observation could most appropri ately be applied to the expression used by the legislature in sub section (5) of section 18 of the Act in question.
It means what it says that subject to the decision of the appellate authority, the decision of the Rent Controller shall be final and could only be questioned in the manner provided in section 20 and in no other manner.
The intention of the legislature in enacting the said Act is clear and manifest from this section and the scheme of the Act, that is to say, to regulate the leasing of buildings and to control the rent of such buildings and to provide a tier of courts by themselves for eviction of the rented premises.
This is writ large in the different provisions of the Act.
This Court, referring to the aforesaid observations of Lord Loreburn, L.C. in the case of South Asia Industries Private Ltd. vs
S.B. Sarup Singh and Others.
observed at 493 page 766 of the report that the expression "final"prima facie meant that an order passed on appeal under the Act was conclusive and no further appeal lay.
This Court was con struing sections 39 and 43 of the Delhi Rent Control Act, 1958 and the effect thereof in the context of Letters Patent Appeal.
There sections 39 and 43 provided as follows: "Section 39.
(1) Subject to the provisions of sub section (2), an appeal shall lie to the High Court from an order made by the Tribunal within sixty days from the date of such order.
(2) No appeal shall lie under sub section (1), unless the appeal involves some substantial question of law.
Section 43.
Save as otherwise ex pressly provided in this Act, every order made by the Controller or an order passed on appeal under this Act shall be final and shall not be called in question in any original suit, application or execution proceedings.
" This Court observed at page 766 that a combined reading of the said two sec tions made it clear that subject to the fight of appeal to the High Court on a substantial question of law, the order passed by the Controller or an order passed on appeal was final and could not be called in question in any original suit, application or execution proceeding.
The use of the expression "shall be final" will have to be understood in the proper context and keeping in view the purpose of the different sections.
On behalf of the respondent, Shri Iyer relied on a decision of the Full Bench of the Kerala High Court on which the High Court had rested its decision in Ouseph Vareed vs Mary, in repelling the submission by the appellant on this aspect.
There the High Court was concerned with the identical Act.
Balakrishna Eradi, J. speaking for the Full Bench of the Kerala High Court on this contention after referring to several decisions observed at pages 588 589 of the report as follows: "The contention of the respondent that the decision of the District Court rendered under section 20(1) is not amenable to revisional juris diction of the High Court under section 115 of the Civil Procedure Code is based mainly on the provision for 494 finality contained in section 18(5) of the Act.
That Section is in the following terms: "The decision of the appellate authority, and subject to such decision, an order of the Rent Control Court shall be final and shall not be liable to be called in question in any Court of law, except as provided in section 20.
" What is to be noted here is that there is nothing in the Section which says that the decision of the revisional authority under section 20 shall be final and shall not be called in question in any higher court.
" The learned judge referred to the decision of the Judi cial Committee in the case of Maung Ba Thaw and Another Insolvents vs Ma Pin, AIR 1934 P.C. 111.
The learned judge also referred to a decision of this Court in South Asia Industries (P) Ltd. vs S.B. Sarup Singh & Ors.
(supra).
The learned judge concluded that so long as there was no specific provision in the statute making the determi nation by the District Court final and excluding the super visory power of the High Court under section 115 of the Code of Civil Procedure, it had to be held that the decision rendered by the District Court under section 20(1) of the Act being a decision of a court subordinate to the High Court to which an appeal lay to the High Court was liable to be revised by the High Court under section 115 of the Code of Civil Procedure.
In that view of the matter, the Full Bench rejected the view of the division bench of the Kerala High Court in Kurien vs Chacko, With re spect, we are unable to sustain the view of the Full Bench of the High Court on this aspect of the matter.
In our opinion, the Full Bench misconstrued the provisions of subsection (5) of section 18 of the Act.
Sub section (5) of section 18 clearly states that such decision of the appel late authority as mentioned in section 18 of the Act shall not be liable to be questioned except in the manner under section 20 of the Act.
There was thereby an implied prohibi tion or exclusion of a second revision under section 115 of the Code of Civil Procedure to the High Court when a revi sion has been provided under section 20 of the Act in ques tion.
When section 18(5) of the Act specifically states that "shall not be liable to be called in question in any Court of law" except in the manner provided under section 20, it cannot be said that the High Court which is a court of law and which is a civil court under the Code of Civil Procedure under section 115 of the Code of Civil Procedure could revise again an order once again after revision under sec tion 20 of the Act.
That would mean there would be a trial by four courts, that would be repugnant to the scheme mani fest in the different sections of the Act in question.
Public policy or public interest demands curtailment of law 's delay and justice demands finality within quick dis posal of 495 case.
The language of the provisions of section 18(5) read with section 20 inhibits further revision.
The courts must so construe.
Judicial Committee in Maung Ba Thaw vs Ma Pin (supra) was dealing with the Provincial Insolvency Act and the Judicial Committee observed that when a right of appeal was given to any of the ordinary courts of the country, the procedure, orders and decrees of that Court would be gov erned by the ordinary rules of the Civil Procedure Code, and therefore an appeal to Privy Council was maintainable from the decision of the High Court.
Here in the instant case the right of appeal has been given under the Act not to any ordinary court of the country under the Code of Civil Proce dure but to the courts enumerated under the Rent Act.
In that view of the matter, the ratio of that decision cannot be applied in aid of the submission for respondent in this case.
Indeed this view, in our opinion, is concluded by the decision of this Court in the case of Vishesh Kumar vs Shanti Prasad; , where this Court was concerned with section 115 of the Code of Civil Procedure and the amendments made therein which superseded the bifur cation of the revisional jurisdiction between the High Court and the District Court.
The High Court possessed revisional jurisdiction from an order of District Judge disposing of revision petition.
This Court observed that section 115 of the Code of Civil Procedure conferred on the High Court of a State power to remove any jurisdictional error committed by a subordinate court in cases where the error could not be corrected by resort to its appellate jurisdiction.
There after tracing the history of the amendment of the Code of Civil Procedure by Amendment Act, 1976, this Court observed that the amendment superseded the scheme of bifurcation of revisional jurisdiction with effect from 1 st February, 1977.
Section 25 of the Provincial Small Cause Courts Act was amended from time to time in its application to the State of U.P.
The two questions that fell for consideration before this Court were (i) whether the High Court possessed the revisional jurisdiction under section 115 of the Code of Civil Procedure in respect of an order of the District Court under section 115 disposing of a revision petition and (ii) whether the High Court possessed revisional jurisdiction under section 115 of C.R.C. against an order of District Court under section 25 of Provincial Small Cause Courts Act.
It was held that the High Court was not vested with that.
revisional jurisdiction.
This Court was of the view that an order under section 25 of the Provincial Small Cause Courts Act was not of a court of District Court and was not amena ble of revisional jurisdiction.
This COurt 'further observed that an examination of the several provisions of the Provin cial Small Cause Courts Act indicated that it was self sufficient code so far as the enquiry covered by that Act was concerned.
All the indications in the Act were to that effect.
After 496 analysing the scheme and referring to the decisions of this Court, this Court held that the jurisdiction of the High Court under section 115 of the Code of Civil Procedure was excluded.
In that view of the matter, we are of the opinion that the Full Bench of the Kerala High Court was in error and the High Court in the instant case had no jurisdiction to inter fere in this matter under section 115 of C.P.C.
It was urged that in case we are of the opinion that a revision under section 115 of the Code of Civil Procedure does not lie, the case should be remitted to the High Court for consideration as a petition under article 227 of the Constitution.
We are unable to accede.
A petition under article 227 of the Constitution is different from revision under section 115 of the Code of Civil Procedure.
The two procedures are not interchangeable though there are some common features.
It must, however, be emphasised that we are not dealing in this appeal with the constitutional powers of the High Court under article 227 of the Constitution nor are we concerned with the powers of the High Court regulating appeals under the Kerala High Court Act, 1958.
We are con cerned in this case whether the High Court, in view of the scheme of the Act, had jurisdiction to interfere under section 115 of the Code of Civil Procedure.
We reiterate that to vest the High Court with any such jurisdiction would be contrary to the scheme of the Act, would be contrary to the public policy, and would be contrary to the legislative intent as manifest from the different sections of the Act.
In that view of the matter, the appeal must be allowed on that ground alone and it is not necessary for us to refer to the other grounds.
We must necessarily overrule the decision of the Full Bench of the Kerala High Court referred to hereinbefore.
Before we conclude, we must, however, note that Shri Poti appearing for the tenant has conceded that rent should be increased to Rs. 500 per month for the premises in ques tion, as the existing rent is too low.
The appeal is accord ingly allowed and we direct on the concession of Shri Poti that rent would be Rs. 500 per month from this date.
The judgment and order of the High Court are set aside.
In the facts and circumstances of this case, there will be no order as to costs.
M.L.A. Appeal allowed.
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The Kerala Buildings (Lease and Rent Control) Act, 1965, by section 13(3) provides that a landlord 's petition for eviction of his tenant from a premises on the ground of bona fide personal need, has to be disposed of by the Rent Control Court.
Section 18(1)(b) makes provision of an appeal to the Appellate Authority against the order of the Rent Control Court.
Sub s.(5) of section 18, stipulates that the decision of the appellate authority and subject to such decision, an order of the Rent Controller 'shall be final ' and 'shall not be liable to be called in question in any court of law ', except as provided in section 20.
By section 20, a revision is provided where the appellate authority is Subordinate Judge to the District Judge and in other cases, that is to say, where the appellate authority is District Judge, to the High Court.
The respondent landlord filed an eviction petition against the appellant 's husband tenant on the ground of bona fide personal need.
The Rent Controller passed an order dismissing the petition.
The order was confirmed in appeal filed by the respondent before the Appellate Authority.
Thereafter, the respondent preferred a revision petition before the District Judge.
That petition having been dis missed, he moved the High Court under section 115 of the Code of Civil Procedure.
During the pendency of the second revision, the appellant 's husband died and she was brought on record as the legal representative.
The High Court set aside all the orders of the courts below and ordered eviction of the appellant.
486 In appeal to this Court, it was contended on behalf of the appellant tenant that the High Court had exceeded its jurisdiction in setting aside the judgments and orders of the courts below, since no revision lies to the High Court against the order of the District Judge in view of section 18(5) read with s.20 of the Act which has completely ousted the High Court 's jurisdiction to interfere section 115 of the Code of Civil Procedure.
Allowing the appeal, HELD: (1) The High Court had no jurisdiction to inter fere in the matter section 115 of C.P.C. Therefore, the judg ment and order of the High Court are set aside.
The ambits of revisional powers are well settled and need not be restated.
It is inconceivable to have two revisions.
The scheme of the Kerala Buildings (Lease & Rent Control) Act, 1965 does not warrant such a conclusion.
[492 D] 2(ii) Sub section
(5) of section 18 of the Act says that subject to the decision of the appellate authority, the decision of the Rent Controller shall be final an,] could only be ques tioned in the manner provided in section 20 and in no other manner.
The expression 'shall be final ' in the Act means what it says.
The intention of the legislature in enacting the said Act is clear and manifest from section 18(5) and the scheme of the Act, that is to say, to regulate the leasing of buildings and to control the rent of such buildings and to provide a tier of courts by themselves for eviction of the rented premises.
This is writ large in the different provisions of the Act.
[492 G] 2(iii) When section 18(5) of the Act specifically states that "shall not be liable to be called in question in any Court of law" except in the manner provided under section 20, it cannot be said that the High Court which is a court of law and which is a civil court under the Code of Civil Procedure under section 115 of the Code of Civil Procedure could revise again an order on again after revision under section 20 of the Act.
That would mean there would be a trial by four courts, that would be repugnant to the scheme manifest in the different sections of the Act in question.
Public policy or public interest demands curtailment of law 's delay and justice demands finality within quick dis posal of case.
The language of the provisions of section 18(5) read with section 20 inhibits further revision.
The courts must so construe.
[494 G 495 A] Kydd y. Watch Committee of City of Liverpool, (1908) Appeal Cases 327 at 331 332; South Asia Industries Private Ltd. vs S.B. Sarup Singh and 487 Others, & Vishesh Kumar vs Shanti Prasad, [1980]3 SCR 32, relied upon.
Ouseph Vareed vs Mary, , over ruled.
Maung Ba Thaw and Another Insolvents vs Ma Pin, AIR 1934 P.C. 81, distinguished.
Kurien vs Chacko, , approved.
In the instant case, the appeal lay from Rent Control Court to the appellant authority who was the Subordinate Judge and therefore the revision lay to the District Judge.
After the dismissal of the revision by the District Judge from the appellate decision of the Subordinate Judge who confirmed the order of the Rent Controller, the respondent landlord chose again to go before the High Court under section 115 of the Code of Civil Procedure.
But, he could not have a second revision to the High Court, since the jurisdiction of the High Court section 115 of the C.P.C. was excluded by the Act.
[491 H 492 B, D]
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al Writ Petition No. 15 of 1962 Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights.
B. Sen and K. L. Hathi for the petitioner.
C. K. Daphtary, Solicitor General of India, B. B. L. Iyengar and B. H. Dhebar, for the respondents.
S.Choudhury, section C. Banerjee and P. K. Chatterjee for the Intervener.
May 3.
The judgment of Sinha, C. J., Gajendradagkar, Wanchoo and Shah, JJ., was delivered by Gajendragadkar, J., Subba Rao, J. delivered a separate Judgment.
GAJENDRAGADKAR, J.
The four petitioners who are in charge of the working of the mine owned by the colliery known as Salanpur ,A" Seam Colliery in the District of Buidwan, are being prosecuted for the alleged contravention of the provisions of Regulation 127(3) of the Coal Mines Regulations, 1957, framed under the (35 of 1952) (hereinafter called the Act).
By their petition filed under article 32 of the Constitution, the petitioners pray that an order or writ in the mature of prohibition should be issued quashing the said criminal proceedings on the ground that the said proceedings contravene article 20(1) of the Constitution and as such, are void.
To this petition have been impleaded as opponents 1 to 4, the Union of India, the Chief Inspector of mines, Dhanbad (W.B.), the Regional Inspector of Mines, Sitarampur and the Sub Divisional Magis trate, Asansol, respectively.
The prosecution of 907 the petitioners has commenced at the instance of opponents 2 and 3 and the case against them is being tried by opponent No. 4.
The petitioners ' contention is that Regulation No. 127(3)whose alleged contravention has given rise to thepresent proceedings against them is invalid, ultra vires and inoperative and so, the prosecution of the petitioners contravenes article 20(1) of the Constitution.
It is on this basis that they want the said proceedings to be quashed and ask for an order restraining opponents 2 and 3 from proceeding with the case and opponent No. 4 from trying it.
The case in question is C. 783 of 1961 pending in the court of opponent No. 4.
Regulation 127(3) is a part of the Coal Mines Regulations framed by opponent No. 1 in exercise of the powers conferred upon it by section 57 of the Act, the same having been previously published as required by sub section (1) of B. 59 of the said Act.
Regulation 127(3) provides that no working which has approached within a distance of 60 metres of any disused or abandoned workings (not being workings which have been examined and found to be free from accumulation of water or other liquid matter), whether in the same mine or in an adjoining mine, shall be extended further except with the prior permission in writing of the Chief Inspector and subject to such conditions as he may specify therein.
There is a proviso and explanation attached to this provision, but it is unnecessary to refer to them.
The case against the petitioners is that they have contravened the provisions of Regulation 127(3) in that they extended the working of the mine further than the permitted limits without the prior permission in writing of opponent No. 2.
The petitioners ' case is that this Regulation is invalid and inoperative and so, its contravention cannot validly be made 908 the basis of their prosecution having regard to the provisions of article 20(1) of the Constitution.
According to the petitioners opponent No, 1 is no doubt conferred with the power of making Regulations under section 57 of the Act,but O. as it stood at the relevant time, has imposed an obligation on opponent No. 1 that the draft of the said Regulations shall not be published unless the Mining Boards therein specified have had a reason.
able opportunity of reporting to it as to the expediency of making the Regulations in question and as to the suitability of its provisions.
The petitioners allege that at the relevant time, 'when the Regulations were made in 1957, no Mining Boards bad been established under section 12 of the Act.
Three Boards had been established under section 10 of the Indian of 1923, but as a result of the subsequent amendments made in the provisions of section 10, the composition of two of the 'said Boards became invalid with the result that two of them could not be treated as Boards validly constituted.
These invalid Boards were the Madhya Pradesh Mining Board and the West Bengal Mining Board.
A third Board existed at the relevant time and that is the Bihar Mining Board.
This Board had been constituted on the 22nd February, 1946 under section 10 of the earlier Act as it then stood.
The petitioner ' case is that it was obligatory for opponent No. 1 to consult all the three Boards and since to out of the three Boards were not properly constituted, the fact that reference was made to the individual members of the said two invalid Boards did not satisfy the requirement of section 59(3).
According to the petition, a reference was made to the Bihar Mining Board, but the Board did not, make a report to opponent No. 1 as a Board but its individual members communicated their opinions to opponent No. 1.
Therefore, on the whole, section 59(3) had not been complied with and that makes the whole body 909 of Regulations issued in 1957 invalid and inoperative.
That, in brief, is the basis on which the petitioners want the criminal proceedings pending against them to be quashed.
The respondents dispute the main contention of the petitioners that section 59(3) has not been complied with.
According to them, section 59(3) has been duly complied with and the Regulations made ire valid.
The respondents concede that two of the three existing Boards were invalid; but their case is that it is only the validly existing Board that had to be consulted and the Bihar Mining Board, which was the validly existing Board at the relevant time, had been duly consulted.
The respondents allege that the fact that individual members of the Bihar Mining Board communicated their opinions to opponent No. 1 does not introduce any infirmity in the Regulations which were subsequently published in the Gazette and which, under section 59(5) have, in consequence, the effect as if enacted in the Act.
On behalf of the petitioners, Mr. Sen contends that section 59(3) 'imposes 'an obligation on the Central Government to consult the Boards therein specified and he argues that reading section 12 of the Act in the light of section 59(3), it follows that the Central Government has to constitute Mining Boards for the areas or mines in respect of which the Regulations are intended to be made and since two of the Boards had not been validly constituted, section 12 had not been complied with and section 59(3) had been contravened.
Mr. Sen suggested that his contention about the mandatory character of the provisions contained in sections 12 and 59(3) is concluded by a recent decision of this Court.
On the other hand, the learned Solicitor General for the respondents contends that the said decision has no material or direct bearing on the question about the construction of section 12.
He concedes that 910 the said decision has concluded the point that the requirement of a. 59(3) is mandatory.
It is, therefore, necessary, in the first instance, to examine the effect of the said decision.
In "Banwari Lal Agarwalla vs State of Bihar" (1), this Court had occasion to consider the validity of the prosecution launched against the appellant on the ground of the contravention of one of the Regulations made in 1957.
It appears that in that case, the respondents stated before the Court that the Mining Boards constituted under s.10 of the Act of 1923 were continuing to operate at the time the relevant Regulations were framed and that there was full consultation with the said Mining Boards before the said Regulations were framed.
The respondents, no doubt, contended that s.59(3) was directory and not mandatory and according to them, no obligation had been imposed upon the Central Government to consult Mining Boards even if they were in existence.
Alternatively, it was suggested that the Mining Boards which had been constituted under the earlier Act were continued under the Act by virtue of s.24 of the General Clauses Act and that the said Boards bad been duly consulted.
On the other hand, the appellant urged that the Boards to which the respondents referred were not validly constituted under the Act and had not been properly consulted.
It was also argued on his behalf that both sections 12 and 59(3) were mandatory.
It is in the light of these facts that the effect of the decision of this Court in Banwari Lal 's case (1) has to be appreciated.
Das Gupta, J., who spoke for the Court set out in his judgment the argument of the appellant that both sections 12 and 59 were mandatory, but, as the judgment shows, the Court considered the question as to whether s.59 (3) was mandatory and came to (1) ; 911 the conclusion that it was.
The Court did not consider whether s.12 was mandatory and in the course of the judgment, there is no reference at all either to the question of construing s.12 or to its effect.
Having held that s.59 (3) was mandatory, the Court remanded the case to the learned Magistrate before whom the proceeding were pending with a direction that he should try the issue as to whether the Boards constituted under the earlier Act validly functioned under the Act and whether they had been duly consulted.
It would be noticed that if the Court had considered the question about the mandatory character of the provisions of s.12, it would have construed the said provisions and would have addressed itself to the question as to whether the failure of the Central Government to constitute valid Boards as suggested by the appellant in that case itself made the impugned Regulation invalid.
This course was not adopted obviously for the reason that the respondents pleaded that the requisite Boards were in existence and had been consulted and so, the controversy between the parties was narrowed down to the question as to whether section 59 (3) requires that the Central Governments must consult existing Boards or not.
Apparently, the respondents contended that even if Boards have been constituted under section 1 2, it is not obligatory on the Central Government to consult them under s.59(3).
The requirement about the said consultation is directory and not mandatory.
It is this contention which has been rejected by the Court and having held that s.59 (3) was mandatory and that existing Board must be consulted before Regulations are framed, the question of fact which then fell to be considered was remitted to the trial Magistrate for his decision.
Therefore, we are satisfied that the effect of the decision of this Court in Banwari Lal Agarwalla 's case is that if a Board is in existence at the relevant time, it is obligatory, on the Central Government to consult it before a draft 912 Regulation is published and in that sense s.59(3) is mandatory.
It would, we think, not be right to assume that the contention of appellant that s.12 like a.59(3) is mandatory was decided without discussing the question about its construction and its effect.
The facts pleaded by the respondents in that case made it unnecessary to decide the appellant 's contention based on the mandatory character of s.12.
Therefore we do not think Mr. Sen is justified in contending that the point which he seeks to raise in the present appeal about the effect of section 12 is concluded by the decision in Banwari Lal Agarwalla 's case.
That being so, we must proceed to examine Mr. Sens contention on the merits.
At this stage, it is necessary to read both sections 12 and 59.
Section 12 deals with the constitution of Mining Boards.
Section 12(1) provides that the Central Government may constitute for any part of the territories to which the Act extends, or for any group or class of mines, a Mining Board consisting of seven persons as specified in clauses (a) to(e).
The point which calls for our decision is whether the first part of section 12(.1) imposes an obligation on the Central Government to constitute Board when it is proposed to make Regulations to which s.59(3) applies.
Section 59 as it stood in the Act prior to its amendment in 1959 read thus: "59 (1) The power to make regulations and rules conferred by sections 57 and 58 is subject to the condition of the regulations and rules being made after previous publication.
(2) The date to be specified in accordance, with clause (3) of section 23 of the (10 of 1897), as that after which a draft of regulations or rules proposed to be 913 made will be taken under consideration, shall not be less than, three months from the date on which the draft of the proposed regulations or rules is published for general information.
(3) Before the draft of any regulation is published under this section, it shall be referred to every Mining Board which is, in the opinion of the Central Government, concerned with the subject dealt with by the regulation and the regulation shall not be so published until each such Board has had a , reasonable opportunity of reporting as to the expediency of making the same and as to the suitability of its provisions.
(4) No rule shall be made unless the draft thereof has been referred to every Mining Boar( constituted in that part of the territories to which this Act extends which is affected by the rule, and unless each such , Board has had a reasonable opportunity of reporting as to the expediency of making the same and as to the suitability of its provisions.
(5) Regulations and rules shall be published in the Official Gazette and, on such publication, shall have effect as if enacted in this Act.
(6) The provisions of sub sections (1), (2) and( 4) shall not apply to the first occasion on which rules referred to in clause (d) or clause (e) of section 58 are made.
914 (7) The regulations and rules made under sections 57 and 58 shall be laid down before Parliament, as soon as may be, after they are made.
" The petitioners ' contention is that in construing section 12, we must have regard to the provisions of s.59(3).
By an amendment made in 1959 by Act 62 of 1959, sub.
s(3) of section 59 has been deleted and combined provision is made both for regulations and rules by subsection (4) by making a suitable amendment in the said sub section so as to include both regulations and rules within its scope.
Sub section (4) thus amended reads thus: "59(4).
No regulation or rule shall be made unless the draft thereof has been referred to every Mining Board constituted in that part of the territories to which this Act extends which is affected by the regulation or rule and unless each such Board has had a reasonable opportunity of reporting as to the expediency of making the same and as to the suitability of its provisions.
" Before construing s.12, it may be useful to refer to the relevant provisions of the Act which confer power on or assign some duties or functions to the said Boards.
Section 14(1) provides inter alia that a Board constituted under section 12 may exercise such of the powers of an Inspector under this Act as it thinks necessary or expedient to exercise for the purpose of deciding or reporting upon any matter referred to it.
Section 14(2) confers upon the Board the powers of a Civil Court for the purposes therein specified.
It would thus be seen that the Boards constituted under section 12 may have occasion 915 either to make a report in respect of regulations or rules referred to them tinder section 59, or ' they may have to decide cases sent to them under section 81.
Section 59 which speaks of reference of the rules and regulations to the Boards has already been cited.
Section 81(1) provides that if the court trying any case instituted at the instance of the Chief Inspector or other officers therein specified is of opinion that the case is one which should, in lieu of a prosecution, be referred to a Mining Board, it may stay the criminal proceedings, and report the matter to the Central Government with a view to such reference being made.
Section 81(2) authorises the Central Government either to refer the case to the Mining Board or to direct the court to proceed with the trial.
Thus, if the Central Government decides to refer a pending criminal case to the Board, the Board has to decide it.
That is the two fold function which may be assigned to the Board under provisions of the Act.
Mr. Sen contends that if section 59(3) is mandatory, it follows that consultation with the relevant Board was treated as essential by the legislature before the Central Government finalised the regulations ; and from this obligation imposed by section 59(3), it must follow as a corollary that the relevant Boards must be constituted by the Central Government ' under section 12.
In other words, the argument is that a. 59(3) postulates the existence of the relevant Boards and makes it obligatory on the Central Government to consult them and this can be satisfied only if the Central Government is compelled to constitute Boards under section 12.
Prima facie.
, there is some force in this contention.
But, on the other hand, if section 59(3) is read as imposing an obligation on the Central Government to consult the Board if it is in existence, then no corollary would follow from the mandatory character of the said provision as 916 is suggested by Mr. Sen. Section 59(3) as it stood before the amendment of 1959, provides that every Mining Board which, in the opinion of the Central Government, is concerned with the subject dealt with by the regulation, shall be consulted ; and this means that there should be a Mining Board before it is consulted and that the said Mining Board should, in the opinion of the Central Government, be concerned with the subject dealt with by the regulation.
This provision does not mean that a Mining Board must be constituted, for that is the subject matter of the provisions contained in section 12.
If section 12 is not mandatory, then section 59(3) must be read in the light of the position that it is open to the Central Government to constitute the Board or not to constitute it, and that being so, section 59(3) would then mean only this and no more that if the Board is in existence and it is concerned with the subject, it must be consulted.
Similarly, a. 59(4) as it stands after the amendment of 1959, requires that the draft of the rule or regulation shall be referred to every.
Mining Board constituted in 'that part of the territories to which the Act extends which is affected by.
the regulation or rule.
That again means no more than this that if a Board is constituted in the part of the territories which is affected by the regulation, it shall be consulted.
It is not as if this construction adds any words in section 59(3) or section 59(4); it merely proceeds on the basis that s.12(1) is not mandatory.
Therefore.
in our opinion, in construing section 12 (1) it would not be logical to assume that section 59(3) or s.59(4) imposes an obligation on the Central Government to constitute a Board, because as we have just indicated the constitution of the Boards is not the subject matter of s.59 (3) or section 59 (4) ; that is the subject matter ' of 917 the Central Government to constitute a Board must be determined in the light of the construction of section 12.
Reverting then to the material words used in section 12 itself, if, it seems clear that the said words do not permit the construction for which Mr. Sen contends.
It is not disputed that the context may justify the view that the use of the word "may" means " 'shall"; but if we substitute the word "shall" for "may" in section 12(1), it would be apparent that the argument about the mandatory character of the provisions of section 12(1) would just not work.
To say that the Central Government shall constitute for any part of the territories to which the Act extends, or for any group or class of mines a Mining Board, would emphatically being out the contradiction between the obligation sought to be introduced by the use of the word "shall" and the obvious discretion left to the Central Government to constitute the Board for any part of the territories or any group or class of mines ' The discretion left to the Central Government in the matter of constitution of Boards which is so clearly writ large in the operative part of the said provision indicates that in the context, "may" cannot mean "shall".
Section 12(1) really leaves it to the discretion of the Central Government to constitute a Board for any part of the territories and that means, it may not constitute a Board for some parts of the territories.
Likewise, discretion is left to the Central Government to constitute.
a Board for a group or class of mines and that means that for some groups or classes of mines, no Board need be constituted.
Whether or not Boards should be constituted for parts of territories or for groups or classes of mines, has been left to be determined by the Central Government according, to the requirements of the territories or the exigencies of the groups or classes of mines.
Therefore, we are 918 unable to accept the argument that a. 12(1) imposes an obligation on the Central Government to constitute Boards in order that in making regulations, there should be appropriate Boards who have to be consulted under section 59(3).
The directory nat ner of the provisions of section 121(1) rather strengthen the construction placed upon section 59(3) by this Court in the case of Banwari Lal Agarwalla that if there are Boards in existence, they must be consulted before draft regulations are published under section 59.
But that is very different from saving that Boards must be constituted in all areas or in respect of all groups or classes of mines which are intended to be covered by the regulations ,proposed to be made by the Central Government.
Mr. Sen relied on section 5 for showing that the use of the word "may" in that section really means "shall".
The said section provides that the Central Government may appoint such a person as possesses the prescribed qualifications to be the Chief Inspector of Mines for all territories to which the Act extends; and it may be conceded that the implementation of the material provisions of the Act depends upon the appointment of the Chief Inspector of Mines and so, in the context, " 'may" in a. 5 would really mean , 'shall" so far as the appointment of the Chief Inspector is concerned.
But this section itself shows that "may" may not necessarily mean , 'shall" in regard to the appointment of Inspectors contemplated by the latter part "may" means "may" or it means ""shall".
would inevitably depend upon the context in which the said word occurs and as we have just indicated, the context of section 12(1) is not in favour of the construction for which Mr. Sen contends.
It cannot be said that like the appointment of the Chief Inspector of Mines, the constitution of the Boards 919 is essential for the working of the Act, for, without the constitution of the Boards, the working of the Act can smoothly proceed apace.
We have already pointed out that there are only two functions which can be assigned to the Boards; under section 81(2) it is; discretionary for the Central Government to refer a pending criminal case to the Board or not, and under a. 59(3) consultation with the Board is necessary only if the Board is in existence.
Therefore, the working of the Act is not necessarily dependent on the constitution of the Boards, and that distinguishes the context or section 12 from the context of section 5.
There is another provision of the Act to which reference may be made in this connection.
Section 61 deals with the making of the bye laws.
Section 61(1) provides that the owner, agent or manager of a mine may, and shall, if called upon to do so by the Chief Inspector, or Inspector, frame and submit to the Chief Inspector or Inspector a draft of bye law,% in the manner indicated in the said sub section.
Section 61(2), inter alia, authorises the Chief Inspector or the 'Inspector to propose amendments in the said draft.
Section 61(3) then lays down that if within a period of two months from the date on which ' any draft bye laws or draft amendments are sent by the Chief Inspector or Inspector to the owner, agent or manager under sub section (2), and the Chief Inspector or Inspector and the owner, agent or manager are unable to agree as to the terms of the bye laws to be made under sub section (1), the Chief Inspector or Inspector shall refer the draft bye laws for settlement to the Mining Board, or where there is no Mining Board, to such officer or authority as the Central Government may, by general or special order, appoint in this behalf It would be noticed that this sub section assumes that there may not be in exi stence a Mining Board in the area where the mine 920 in question is situated or for the group or class of mines to which the said mine belongs.
Now, if the petitioners ' construction of section 12 read with section 59(3) is accepted, it would follow that in order to make the regulations binding on all the mines situated in the whole of the country, there must be Mining .Board in respect of all the said mines either territory wise or group wise or class wise and that would not be consistent with the assumption made by section 61(3) that in certain areas or in respect of certain groups or classes of mines a Mining Board may not be in existence.
It is in this indirect way that s.61(3) supports the construction which we are disposed to place on section 12(1).
It is then urged that if the respondents ' construction of s.12 is upheld, section 59(3) or section 59(4) would be rendered nugatory and the whole purpose of consuiting the Boards would be defeated.
We are not impressed by this argument.
In testing the validity of this argument, it is necessary to recall the scheme of section 59.
Section 57 confers power on the Central Government to make regulations and section 58 confers power on the said Government to make, rules as therein specified respectively.
Section 59(1) requires that the power.
to make regulations is subject to the condition that the said regulations would be made after previous publication.
Section 59(2) then provides for the period which has to pass before the said draft can be taken into consideration.
Section 59(3) refer to the consultation with the Boards.
Logically, consultation with the Boards is the first step to be taken in making ,regulations; publication of the draft regulations is ' the second step; allowing the prescribed period to pass before the draft is considered is the third step and publishing the regulations after considering them is the last step.
After the regulations are thus published, they shall have effect as if enacted in the Act.
That is section 59,5).
The 921 'first publication is the publication of the draft under section 23(3) of the and it is significant that the object of this publication is to invite objections or, suggestions from persons or bodies affected by the draft regulations.
Section 23(4) of the provides that the authority having power to make the rules or, regulations shall consider any objection or suggestion which may be received with respect to the draft before the date specified therein, so that the whole object ,of publishing the draft is to give notice to the parties concerned with the regulations which are intended to be framed and the object of the requirement that the said draft will not be considered until the prescribed period has passed is to enable parties concerned to file their objections.
Therefore, the scheme of section 59 clearly shows that apart from consulting the Boards to which section 59(3) refers, all parties affected, by the draft would have an opportunity to make their suggestions or objections and they would be considered before the draft is settled and regulations are finally made.
Therefore, in our opinion, it would not be correct to say that the construction of section 59(3) for which the respondents contend would enable the Central Government to make regulations without consulting the opinion of persons affected by them.
The result then is that section 12(1) is directory and not .mandatory and section 59(3), or a. 59(4) after the amendment in 1959 is mandatory in the sense that before the draft regulation is published, it is obligatory for the Central Government to consult the Board which is constituted under section 12.
If no Board is constituted, there can be, and need be, no consultation.
It is in the light of this position that the grievance made by the petitioners against the validity of their prosecution has to be judged.
We have already noticed that it is common ground 922 between the parties that the Madhya Pradesh Minning Board and the West Bengal Mining Board which were constituted under a. 10 of the Act of 1923 have become invalid after the amendment of section 10 by the Amending Act 5 of 1935.
Under section 10 as it originally stood, the Board was constituted by the Provincial Government and it was composed of five members.
After the amendment, a Board had to be constituted by the Central Government and, it was to consist of seven members.
That is why the respondents concede that the Madhya Pradesh and West Bengal Mining Boards could not be said to be validly constituted for the purpose of section 12 even by the application of section 24 of the .
The position then is that at the time when the regulations were framed in 1947, there, was only one Board which properly constituted and that is the Bihar Mining Board.
It was constituted in 1946 and by virtue of a. 24 of the , it continued as a valid Board under s.12.
This Board has been consulted by the Central Government before the regulations were made.
It is not disputed that the draft regulations were sent by the Central Government to the Bihar Mining Board through the State Government.
It_ appears that after the Board received the said draft, it was circulated by the Chairman of the Board to all the members of the Board and the members communicated their opinions individually.
It is argued that the communication by individual members of the Board of their opinions to the Central Government cannot be said to amount to the consulation with the Board and so, it is urged that the requirement of s.59(3) has not been complied with.
We do not think there is any substance in this argument.
All that s.59(3) requires is that a reasonable opportunity should be 'given to the Board to make its report as to the expediency or the suitability of the proposed regulations.
How 923 the Board chooses to make its report is not a matter, which the Central Government can control.
The Central Government has discharged its obligation as ' soon as it is shown that a copy of the draft regulations was sent to the Board, and if the Board thereafter, instead of making a collective report, chose ' to.
sent individual opinions, that cannot be said to constitute the contravention of s.59(3).
Indeed, s.59(3) does not impose an obligation on the Board to make any report at all It is true that since under s.14, the Board is empowered to make a report, it is unlikely that any Board, when consulted, would refuse to make a report.
But, nevertheless, the position still remains that if the Board refused to make a report, that will not introduce any infirmity in the regulations which the Central Government may ultimately frame and publish under s.59(5).
We must accordingly hold that the regulations framed in 1957 have been duly framed and published under s.59(5) and as such, they shall have effect as if enacted in the Act.
The result is, the petition fails and is dismissed.
SUBBA RAO, J.
I regret my, inability to agree.
The facts relevant to the question raised lie in a small compass.
The petitioners are incharge of the working of a mine, known as Salanpur "A" Seam Colliery, in the District of Burdwan, West Bengal.
On the allegation that they contravened the provisions of Regulation 127(3) of the Coal Mines Regulations, 1957 (hereinafter called the Regulations), a criminal complaint was filed against them in the Court of Sub divisional Magistrate, Asansol, and the said Magistrate has taken cognizance of the said complaint under section 190(1) (c) of the Code of Criminal Procedure, read with section 73 of the .(hereinafter called the Act).
The petitioners challenge the validity of the maid Regulations on the ground that they were 924 made in contravention of the provisions of section 59(3) of the Act.
Section 59(3) of the Act imposes a condition on the Central Government to give a reasonable opportunity to a Mining Board before making regulations in exercise of the power conferred on it by the Act.
Under s.10 of the Indian Mines Act, 1923, the Central Government in the year 1946 constituted the Bihar Mining Board with jurisdiction over the area covered by the Province of Bihar.
The Central Government sent the draft Regulations to the said Board.
The Chairman of the Board circulated the said draft Regulations to all the members of the Board and the members communicated their opinions individually to the Central Government.
Thereafter the Central Government made the said Regulations governing the whole of India, except Jammu and Kashmir, and to every coal mine therein, in compliance with the other provisions of section 59 of the Act.
The question in this petition is whether the Regulations so made after consulting the Bihar, Board alone would be valid and in force in the West Bengal area so as to sustain a criminal prosecution on the basis of an infringement of the said Regulation in respect of a mine in that area.
This question may be divided into two parts, namely (1) where the Central Government has ' not constituted a Mining Board, can it ignore the condition laid down under section 59(3) of the Act and (2) if giving a reasonable opportunity within the meaning of section 59(3) of.
the Act is necessary condition for the validity of the Regulations made thereunder, can the Central Government validly make a regulation in respect of West Bengal after giving such a reasonable opportunity to a Mining Board constituted for Bihar ? In my view, the first question is directly 925 covered by the decision of this Court in Banwari Lal V. State of Bihar(,).
There, Das Gupta J., delivered the judgment of the Court.
As it is contended that the said decision should be confined only a case where a Mining Board has been validly constituted under the Act and should not be applied to a case where such a Board has not been constitu ted, it would be necessary to scrutinize the decision carefully to ascertain ' the exact scope of the said decision.
The facts of that case where there was an accident in the Central Bhowra Colliery in Dhanbad in Bihar, as a result of which 23 persons lost their lives the Regional Inspector of Mines, Dhanbad filed a complaint against the appellant for allegedly committing an offence under section 74 of the , i.e., for contravening regulations 107 and 127 of the Coal Mines Regulations, 1957 ; after the Sub Divisional Officer took Cognizance of the complaint, the appellant made an application to the Patna High Court under article 226 of the Constitution contesting the validity of the said proceedings on the ground, inter alia, that there was no Mining Board constituted under section 12 of the Act and therefore the Central Government had made the Regulations without, consulting Mining Board as it, should do under section 59(3) of the Act.
The second ground on which a prayer for quashing the proceedings was based, with which alone we are now concerned, was stated in the judgment thus : "the Coal Mines Regulations, 1957, are invalid having been framed in contravention of section 59(3) of the ." The contention of learned counsel, who elaborated this ground, was stated thus : " 'As regards the other contention that the regulations are invalid the appellant 's argument is that the provisions of section 12 and section 59 of the , are mandatory.
" Then the, learned Judge quoted in extenso section 59(3) of the Act and (1) ; 926 proceeded to state the relevant basic facts and posed the question raised in the case thus: "It was not disputed before us that when the Regulations were framed, No. Board , as required under section 12 had been constituted and so, necessarily there had been no reference to any Board as required under section 59. 'the question raised is whether the omission to make such a reference make the rules invalid.
" It is manifest from the question so posed that the question considered by the Court was whether the making of the Regulation without reference to a Mining Board, as it was not in existence, would be invalid.
Then the learned Judge considered the language of a. 59(3) of the Act and observed at P. 851 : ". . . it is legitimate to note that the language used in.
this case is emphatic and appears to be designed to express, an anxiety of the legislature that the publication of the, regulation, which it; condition precedent to the making of the regulations, should itself be subject to two conditions precedent first, a reference to the Mining Board concerned, and secondly, that sufficient opportunity to the Board to make & report as regards.
the expediency and suitability of the proposed regulations.
" The learned Judge then proceeded to considered the reasons for imposing such a condition and observed.
"Even a cursory examination of the purposes set in the 27 clauses of section 57 shows that that most of them impinge heavily on the actual working of the mines.
To mention only a few of these are sufficient to 927 show that the very purpose of the Act may will be defeated unless suitable and practical regulations are ' framed to help the achieve ment of this purpose.
" Then he pointed out that section 12 of the Act unabled the Government to appoint Boards providing representations for different interests which would be in a position to help the Central Government to make suitable and practical regulations.
In the words of the learned Judge, "The constitution is calculated to ensure that all aspects including on the one hand the need for securing the safety and welfare of labour and on the other hand the practicability of the provision proposed from the point of view of the likely expense and other considerations can be throughly examined.
It is certainly to the public benefit that Boards thus constituted should have an opportunity of examining regulations proposed in the first place,% by an administrative department of the government and of expressing their opinion.
" According to him, the constitution of the Board in the manner prescribed served a real purpose and, therefore the constitution by the Central Government with such 'a Board was made a condition of the making of the Regulations.
When it was contended that the insistence upon consultation might effect the public welfare under emergent circumstances he.
pointed out that under section 60 of the Act, which provided for such a contingency, the Central Government might make regulations without previous reference to Mining Boards and therefore no such 'consideration could prevent the Court from holding that ' the giving of an opportunity to the Board was a condition precedent to the exercise of the power of making regulations.
The learned Judge summarised his reasoning thus: 928 " 'An examination of all the relevant circumstances viz., the language used, the scheme of the legislation, the benefit to the public on insisting on strict compliance as well as the risks to public interest on insistence on such compliance leads us to the conclusion that the legislative intent was to insist on these provisions for consultation with the Mining Board as a prerequisite for the validity of the regulations.
This conclusion is strengthened by the fact that in section 60 which providing for the framing of regulations in certain cases without following the procedure enjoined in section 59, the legislature took care to add by a proviso that any regulation so made "shall not remain in force for more than two years from the making thereof ".
By an amendment made in 1959 the period has been changed to one year.
It is not unreasonable to read this proviso as expressing by implication the legislature 's intention that when the special circumstances mentioned in section 60 do not exist and there is no scope for the application of that section no regulation made in contravention of a. 59 will be valid for a single day.
" The learned Judge concluded his discussion thus, a ' p. 853 : "For all the reasons giving above, we are of opinion that the provisions of section 59(3( of the Mining Act, 1952, are mandatory.
" Pausing here for a moment, I find it very difficult to bold that this Court held, expressly or by necessary implication, that section 59(3) of the Act was mandatory only if the concerned Board was in existence.
The argument advanced, the question 929 posed, the reasons given and the conclusion arrived at were all against giving such a limited scope to the said judgment, It was contended that both section 12 and section 59 were mandatory.
III Posing the question to be decided, the learned Judge clearly referred to "the omission to make such a reference".
The word "such" clearly refers to the omission to make a reference, as no Board was constituted under section 12 of the Act.
So, as regards the posing of the question there was absolutely no ambiguity and the learned Judge had clearly in mind what the Court was asked to decide upon.
The reasons given by the learned Judge for holding that it was obligatory of the Central Government to consult the Board before the making the regulation would equally apply whether the Board existed or not.
The conclusion arrived at by the learned Judge that consultation with such a Board was a condition precedent for the exercise of the power would apply to both the cases.
If it was a condition precedent for the exercise of the power, how could it cease to be one if a Board was not in existence? The condition is not the existence of the Board, but the consultation with a Board.
In one case, the Government would not consult the Board though it existed, and in the other case it would not consult, as the Board did not exist.
In either case, the condition was broken.
But it is said that the last three, paragraphs of the judgment make it clear that the learned Judge was not considering the case where a Board had not been constituted.
There, the learned Judge was considering the question whether the Mining Boards constituted under section 10 of the Mines Act, 1923, were continuing to operate at the time the Regulation were made and there was full consultation with the ,Mining Boards before the, Regulations were framed.
put tile learned Judge was not able to decide that 930 question, as there was not sufficient material on the record.
Therefore, this Court directed the Magistrate to decide that question.
I fail to see how these paragraphs in any way help us to hold that this Court confined its decision only to a case where a Board has been constituted.
On the other hand, the observations in the first of these three paragraphs clearly indicate to the contrary.
The relevant observations are "As has been pointed out above, it was not disputed before us that at time when the regulations were framed to now Mining Board had been constituted under the and consequently no consultation with any Mining Board constituted under the 1952 Act took place.
" This shows that the entire judgment up to that point proceeded on the basis that there was no consultation with the Mining Board, as no such Board was constituted.
Thereafter the learned Judge was only considering the alternative contention advanced by the State, namely, that the pro existing Board was consulted and that that consultation was sufficient compliance with the provisions of section 59(3) of the Act.
If I might analyse the mind of the learned Judge, the process of reasoning may be summarized thus: On behalf of the appellant it was argued that there was no consultation with the Board as it was not constituted under section 12 of the Act and, therefore, the Regulations made under the Act without such consultation were void.
The learned Judge accepted the contention.
Then it was argued for the Government that though there was no consultation with the Board constituted under section 12 of the Act, consultation with a pre existing Board would be enough compliance with the section.
As there was no material on the record, the learned Judge could 931 not decide on that question and therefore directed it to be decided by the Magistrate.
On the other hand, as it was common case that no Board under section 12 of the Act had been constituted, if the contention of the Government, now pressed before us, was correct, no other question would have arisen for, according to the State, a. 59 (3) could not be invoked in a case where no Board had been in existence.
The plea that there was a consultation with the pre existing Board was taken not by the appellant but by the State and such a plea would be unnecessary if section 58 (3) of the Act did not lay down the condition of consultation with the Board when it did not exist.
To my mind, the judgment of the Court is clear and unambiguous on this point and it decided that, as there was no consultation with any Mining Board under section 59(3) of the Act, as the Board was not in existence, the Regulations were bad.
The present argument is an attempt to persuade us to go back on a clear pronouncement on the point by a Constitution Bench of the Court.
That apart, I am satisfied on a true construction of the provisions of section 12 and a. 59(3) of the Act that the Central Government has to exercise the power under section 12 if it intends to exercise the power under a. 59 of the Act.
Under section 12, ,the Central Government may constitute for any part of the territories to which this Act extends or for any group or class of mines, a Mining Board", consisting of persons with specific qualifications representing different interests in the mines.
Under ,R. 59, the power to make regulation conferred by a. 57 is subject to the condition of the regulations being made after previous publication, and under sub section
(3) thereof ""Before the draft of any regulations is published under this section,it shall be referred to every Mining Board which is, the opinion of the Central Government, con 932 cerned with the subject dealt with by the regulation, and the regulation shall not be so published until each such Board has had a reasonable opportunity of reporting as to the expediency of making the same and as to the suitability of its provisions".
As interpreted by this Court, the said condition is a condition precedent for the making of the Regulations under the said section.
If the contention of the learned Solicitor General be accepted, the condition may have to be disannexed from the power by a situation brought about the conscious withholding of the exercise of the connected power by the Central Government under section 12 of the Act.
Central Government by its own default can ignore the condition imposed in public interest.
The construction leading to this anomalous result can.
not be accepted unless the provisions compel us to do so.
It is a well settled principle of construction that when it is possible to do so, it is the duty of the Court to construe provisions which appear to conflict so that they harmonies.
To put it differently, of two possible constructions, one which gives a consistent meaning to different parts of an enactment should be preferred.
In the instant case, the two sections can be harmonized without doing violence to the language used.
Section 12 is an enabling provision under it a power it; given to the Central Government to appoint a Mining Board.
Section 57, read with section 59, confers another power on the Central Government to make regulation subject to, among others a condition that the draft of the regulations shall be referred to a Mining Board.
These two powers are connected: if they are read together, as we should do in an attempt to reconcile them, it could be reason '.
ably hold that the power conferred under a. 12 has to be exercised by the Central Government if it intends to make regulations under section 57 of the Act.
This construction carries out the full intention of Legislature in enacting s.59 as interpreted by this 933 Court.
Both the powers can be exercised without the one detracting from the other.
The construction suggested by the respondents enables the Central Government to defeat the public purpose underlying the imposition of the condition under s.59 of the Act and that suggested by the petitioners enables the exercise of the two powers without the one coming into conflict with the other.
I would on the principle of harmonious construction, prefer 'to accept the latter construction to the former.
Let us took at the provisions from a different perspective.
It is a well established doctrine that when the power is coupled with a duty of the person to whom it is given to exercise it, then the exercise of the power is imperative: see Maxwell on interpretation of Statutes, 11th Edn., p. 234.
It has also been bold that "if the object for which the power is conferred contemplates giving of a right, there would then be a duty cast on person to whom the power is given to exercise it for the benefit of the party to whom the right is given when required on his behalf.
" Dealing with section 51, Income tax Act, 1918 which provides that the Chief Revenue Authority may" state the case to High Court Lord Phillimore observed in Alcock Ashdown & Co. vs The Chief Revenue Authority Bombay(1). "No doubt that the section does not say that the authority "shall" state the case, it only says that it may and it is rightly urged that "may" does not mean "shall, only the capacity or power is given to the authority.
But when a capacity or power is given to a public authority there may be circumstances which couple with the power a duty to exercise it, and where there is a serious (1) A. 1.
R. 934 point of law to be considered there does lie a duty upon the Revenue authority to state a case for opinion of the Court and if he does not appreciate that there is such a serious point, it is in the power of the Court to con trol him and to order him to state the case.
" Under the Act, there are two connected powers a power to appoint a Mining Board and a power to make regulations subject to a condition.
The condition imposed on the power confers a right on a Mining Board to be consulted before a regulation is made.
A combined reading of section 12 and sections 57 and 59 shows that the power or powers conferred on the Central Government are coupled with a duty to consult the Board whenever the Central Government seeks to exercise the power under s.57.
I have no hesitation in holding that the power is coupled with a duty and that the power has to be exercised when the 'duty demands it.
The Central Government in making the Regulations has a duty to consult the Mining Board and the Mining Board has a right to be so consulted and to discharge its duty it is incumbent upon the Central Government to exercise the connected power by appointing the Board.
It is said that under section 59 of the Act, the Regulations and the Rules shall be referred to a Mining Board and that under section 58 the Central Government has the power to make a rule providing for the appointment of the Chairman and members of the Mining Board and that if section 59 is mandatory, the Government can never exercise the power under section 58(a).
No such difficulty could arise under the Act before its amendment in 1959.
Under a. 69(3), as it stood then, the condition of consultation with a Mining Board was imposed only on the power of the Government to make a. regulation and that s.57 of the Act which confers a 935 power on the Central Government to make regulations did not contain any.
clause corresponding to cl.
(a) of section 58 of the Act.
That apart, section 58(a) may legitimately be invoked by the Central ' Government only after a Board had been consti tuted in regard to the future appointments.
how this argument may have some bearing when this question of construction of the provisions of section 59 was raised before this Court on the last occasion and none at present, as the true construction of the said section was finally settled by this Court.
That apart, a comparative study of the other provisions of the Act would also lead to the same conclusion.
Under the Act, there are many enabling provisions empowering the Central Government to appoint specified authorities to discharge different duties and functions described in various sections.
Should it be held that the Central Government need not appoint the authorities under any circumstances, the Act would become a dead letter.
Even the appointment of 'the Chief Inspector and Inspectors is left to the discretion of the Central Government: see section 5 of the Act.
If the Government need not appoint the Chief Inspector or the Inspectors, the duties and functions allotted to them could not be discharged or performed.
A resonable construction would, therefore, be that if the said duties and functions have to be per.
formed, the Government hat; to appoint the officers.
So too, if the Central Government seeks to exercise the powers under section 57 of the Act, read with section 59 thereof, it has to appoint the Board.
I therefore , hold on a fair construction of sections 12 and 59 of the Act, that ' the Central Government has a duty to appoint the, Mining Board if it seeks to exercise its power under section 57 of the Act.
The next argument is that the Bihar Board has been consulted in the manner prescribed by 936 section 59(3) of the Act and, therefore.
the regulation made after such consultation are valid.
I cannot agree with this contention either.
The said Board was appointed under section 10(1) of the Indian Mines Act, 1923 and it is not disputed that the Board must be deemed to have been duly constituted under the present Act.
It is also not disputed that the said Board was only constituted to have jurisdiction over the area comprised in the present Bihar State, that is, it has no jurisdiction over West Bengal.
Under section 12 of the Act, the Central Government may constitute for any part of the territories to which this Act extends or for any group or class of a Mines., a Mining Board.
Under section 59, the Central Government shall refer the draft to every Mining Board which, in the opinion of the Central Government, is concerned with the subject dealt with by the regulation '.
Now, can it be said that the Board constituted for a part of the territories to which the Act extends, namely, to the State of Bihar, could be a Board concerned with the subject dealt with by the regulations, namely, the mines in West Bengal area ? The entire object of section 59 is to consult the persons intimately connected with the mining operations of a particular area so that suitable regulations may be made to govern the working of those mines.
It could never have been the intention of the Legislature to empower the Government to make regulations in regard to mines in one part of the country by consulting a Board constituted for another part of the country.
Such an intention could not be attributed to the Legislature.
Indeed, the Central Government, when it is constituted the Boards, expressly indicated its intention that all the Boards, including the Board functioning in West Bengal, should be consulted, but as the Board constituted there was not one constituted legally under the Act, the consultation with.
the said Board 937 had become futile.
I therefore, hold that the Regulations in so far as they purport to regulate the mines situate in West Bengal have not been validly made under the Act inasmuch as a condition precedent imposed by section 59 of the Act on the exercise of the Government 's power to make a regulation was not complied with.
In the result, I direct the issue of a writ of prohibition against respondents 1 to 4 restraining them from proceeding with the criminal case launched against the petitioners.
The petitioners will have their costs.
By COURT : In view of the majority opinion of the Court the Writ Petition fails and is dismissed.
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Section 12 of the , provides that the Central Government may constitute a Mining Board for any part of the territories to which the Act extended or for any group or class of mine .
In 1957 only one mining board i.e. the Bihar Mining Board was in existence and other mining boards were not constituted.
Section 57 empowers the Central Government to make Regulations.
Section 59(3), as it then stood, provided that before the draft of any regulation was published it should be referred to every Mining Board concerned and that it shall not be published until each such Mining Board had had a reasonable opportunity of reporting on it.
The Central Government referred the draft of the Coal Mines Regulations to the Bihar Mining Board which circulated the draft to all the members of the Board and the members communicated their opinions individually to the Central Government.
Thereafter, the Regulations were duly published and came into force.
The petitioner 's, who were being prosecuted in Bengal for violation of the Regulations, contended that the Regulations were invalid as : (i) it was incumbent upon the Central Government under 'section 12 of the Act to constitute all the Mining Boards and to refer the draft Regulations to all the Boards before they.
could be published under section 59.
and (ii) the communication of opinions by individual members 'of the Bihar Mining Board did not amount to consultation with the Board within the meaning of section 59(3).
Held (Per majority, Subba Rao, J., dissenting), that the 'Coal Mines Regulations, 1957, had been duly framed and published.
Section 59(3) merely provided that if a Mining Board was in existence at the relevant time it was obligatory on the Central Government to consult it before 905 the draft Regulation was published.
But section 12 was not mandatory and it was not obligatory on the Central Government to constitute any or all of the Mining Boards.
There was nothing in the Act or.
in the context which justified reading the word "may" in section 12 as "shall".
The Mining Board constituted under section 12 had to perform two functions, viz., to make a report in respect of regulations or rules referred to it and to decide cases which may be referred to it under section 81.
The working of the Act was not dependent on the constituting of Mining Boards.
This construction of section 12 did not render the provisions of section 59(3) nugatory.
Apart from consulting the Boards, all parties affected by the draft had an opportunity to make their suggestions or objections and these had to be considered before the draft was settled and the regulations were finally made.
Banwarilal Agarwalla vs state of Bihar, , explained.
Held, further, that the requirement of section 59(3) had been complied with in referring the draft Regulations to the Bihar Mining Board.
All that section 59(3) required was that a reasonable opportunity should be given to the Board to make its report.
How the Board chose to make its report, was not a matter which the Central Government could control.
Per Subba Rao, J. ,The Coal Mines Regulations were not validly made.
The Supreme Court had directly decided in Banwarilal vs State of Bihar that the Regulations were bad as there was no consultation with any Mining Board under section 59 (3) as the Boards were not in existence.
A fair construction of sections 12 and 59 (3) of the Act ' also showed that if the Central Government wanted to ' make regulations under section 57 it had to appoint Mining Boards and to refer the regulations to them before publication.
If the Central Government wanted to exercise the power under section 59 it had first to exercise the power under section 12.
The power to make regulations was coupled with a duty to consult the Mining Boards, and to discharge its duty it was incumbent upon the Central Government to appoint the Mining Boards.
Apart from this, the Regulations is so far as they purported to regulate mines in West Bengal had not been validly made as no Mining Board for the West Bengal area had been consulted before making the Regulations.
The Act did not empower the Central Government to make regulations in regard to mines in one part of the country by consulting a Board constituted for another part of the Country.
906 Banwarilal Agarwalla vs State of Bihar. , followed.
Alcock Ashdown & Co. vs The Chief Revenue Authority, Bombay, A. I. R. , referred to.
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Civil Appeal No. 918 of 1973 From the Judgment and Order dated 10.12.1986 of the Punjab and Haryana High Court in Civil Revision No. 895 of 1972.
S.K. Mehta, M.K. Dua and Aman Vachher for the Appellant.
S.N. Kacker and B.P. Maheshwari for the Re spondent; The Judgment.
of the Court was delivered by B.C. RAY, J.
This appeal by special leave is directed against the judgment and order passed on 27th February, 1973 in Civil Revi sion No. 895 of 1972 by the High Court of Punjab and Haryana whereby the revision case was allowed reversing the judgment and order of the appellate authority and allowing the application for ejectment.
The tenant appellant was granted three months ' time to vacate the shop and was also directed to deposit arrears of rent, if any within one month from the date of the order.
He was also directed to deposit advance rent for three months on the date of the order failing which he will be evicted on the expiry of one month.
511 The appellant is a tenant in respect of a room forming part of the property unit No. B VI 33(old) and B IX I48(New), Chaura Bazar, Ludhiana, which has been rented on a monthly rental of Rs. 23 by the landlady Smt.
Goran Devi on the basis of rent deed dated 7th July, 1967 for a period of three months.
After the expiry of the term of the tenancy, he contin ued in possession of the suit premises as a statutory tenant under Smt.
Guran Devi.
Guran Devi however, gifted away this property in favour of the Respondent on February 13, 1968 and from that date the appellant became a tenant under the respondent.
The ejectment was sought on the ground of default in payment of rent from 13.2.1968 till the date of filing of the application for ejectment in July, 1969 under Sec. 13 of East Punjab Urban Rent Re striction Act, 1949.
The summons of this application was served on the tenant appellant and the returnable date was fixed for 26.6.1969.
On that date, the appellant ap peared before the Rent Controller, Ludhiana with his counsel and prayed for adjournment for filing written statement.
The case was adjourned to 2.7.1969.
On that date the writ ten statement was filed and the tenant ten dered a sum of Rs. 336 on account of arrears of rent from 13.2.1968 to 12.6.1969 together with Rs. 15 as interest and Rs. 25 as costs as fixed by the Rent Controller.
The landlord accepted the amount under protest.
One of the issues framed in the said case was whether the tender was avalid tender within the meaning of proviso to Sec.
13(2) of East Punjab Urban Rent Restriction Act, 1949.
The Rent Controller after hearing the parties found that the tenant appellant having failed to tender the arrears of rent and interest at 6% per annum on such arrears together with the costs of the application, on 26.6.1969 which according to him was the first hearing of the application for ejectment, the tenant was not entitled to get the protection of Sec. 13(2)(i) proviso.
The Rent Controller repelled the contention made on behalf of the tenant that the said date was not the date of first hearing and that the cost of the appli cation having not been assessed on 26.6.1969, that day cannot be taken as the first day of heating of the application and the tenant having deposited all the arrears of rent together with interest and costs as assessed on the next date i.e. 2.7.1969 he could not be considered to be a defaulter.
In that view of the matter the Rent Controller allowed the application for ejectment and directed the tenant to vacate the premises and to deliver possession to 'the landlord petitioner in respect of the room in question within one month of the date of the order.
Against this judgment and order the tenant filed an appeal being M.C.A. No. 165/131 of 1970 before the appellate authority Ludhiana under the East Punjab Urban Rent Restriction Act.
The appellate authority reversed the order of the Rent Controller by holding that as the Rent Controller failed to discharge his duty in assessing the costs to be deposited by the tenant along with the arrears of rent and interest on 26.6.1969, the tenant cannot be 512 penalised for the mistake of the Court and the deposit that has been made by the tenant on the next date i.e. 2.7.1969 when the cost of the application was assessed by the Rent Controller, should be treated as deposit made in accordance with the provisions of Sec. 13 of the said Act.
It has been further held that for the mistake of the Court or its officers nobody could be made to suffer.
The appellate authority further held that the words 'first day of hearing ' presuppose the existence of an occasion enabling the parties to be heard and the court to hear them in respect of the cause.
The tender was accordingly held to be valid tender within the meaning of the provi sions of the said Act.
The appeal was allowed and the order of eviction made by the Rent Controller was set aside.
Against this judgment and order a Revi sion Application being Civil Revision No. 895 of 1972 was filed before the High Court of Punjab and Haryana.
The said Revision Case was allowed by holding that the day of first heating was 26.6.1969 when the tenant appeared before the Rent Controller with his counsel and sought time for filing written statement and the tender of the arrears of rent together with interest and costs of the application being not made on that date, the subsequent tender of the same on 2.7.1969 was not a valid tender within the meaning of proviso (i) to sub Sec. 2 of Section 13 of the said Act.
An order was made directing the tenant appellant to vacate the premises within three months.
The tenant was also directed to deposit the.
rent for three months within one month from the date of this order, in default he will suffer eviction after expiry of one month.
It is against this judgment and order the instant appeal on special leave has been preferred before this Court.
The only question that poses itself for consideration in this appeal is whether the date of appearance as mentioned in the summons i.e. 26.6.1969 is the date of first hearing of the application for ejectment and non payment or non tendering of arrears of rent together with interest and costs of the application on that very date will make the tenant liable for eviction from the rented premises on the ground of default.
In the instant case on the returnable day of the summons the tenant defendant appeared with his counsel i.e. on 26.6.1969 and prayed for an adjournment for filing written statement.
The case was accordingly a djourned to 2.7.1969.
It is also pertinent to note that on the re turnable day i.e. 26.6.1969 the Rent Controller did not make any order assessing the costs of the application which was required to be deposited along with arrears of rent and interest at 6% per annum on such arrears.
It is on 2.7.1969, the Rent Controller assessed the cost of the application and the tenant appellant deposited the arrears of rent up to date together with interest at the rate of 6% on such ar rears and the costs assessed by the Rent Controller on that date.
The said amount tendered in the Court was accepted by the landlord under protest.
513 The day mentioned in the summons i.e. 26.6.1969 in our considered opinion cannot be treated to be the day of first hearing of the ejectment application but it is the day for appearance of the defendent as on that day the Court does not take up the hearing or apply its mind to the hearing of the application.
It is only after written statement is filed, the issues are framed and hearing commences.
We draw inspiration and support from a decision of this Court ren dered in Ved Prakash vs Vishwa Mohan , wherein this Court was concerned with the same expression viz. 'first hearing ' employed in Sec.
20(4) of the U.P. Rent Act of 1972 (prior to the amendment of U.P. Act XXVIII of 1976) which is in pari materia with the corresponding provi sion in the Punjab Rent Act.
The analogous provisions in these two Rent Acts in so for as material are reproduced in juxtaposition hereunder.
20(4) of U.P. Urban Buildings Sec. 13 of the East (Regulation of Letting, Rent and Punjab Urban Rent Eviction) Act,1972 Restriction Act,1949 "In any suit for eviction on the "Eviction of tanants (1) ground mentioned in clause (a) of xxx(2)xxxx If the Contr Sub Sec.(2) if at the first heari oller,after giving the ng of the suit the tenant uncondi tenent a reasonable opp tionally pays or tenders to the ortunity of showing cau landlord the entire amount of rent se against the applicat and damages for use and occupation ion, is satisfied: of the building from him (such) (i) that the tenant has damages for use and occupation not paid or tendered the being calculated at the same rate rent due by him in resp as rent) together with interest ect of the building or thereon at the rate of nine per rented land. provided cent per annum and the landlord 's that if the tenant on costs of the suit in respect there the first hearing of the of. the court may,in lieu of pass application for ejectme ing a decree for eviction on that nt after due service,pay ground pass an order relieving the or tenders the arrears tenent against his liability for of rent and interest at eviction on that ground." (Emphasis six per cent per annum added).
on such arrears together with the cost of applicat ion assesed by the Contro ller, the tenent shall be deemed to have duly paid or tendered the rent with in the time aforesaid.
(ii) X X X (iii) X X X (iv) X X X (v) X X X the controller may make an order directing the tenant to put the landlord in po ssession of the building or granted land. " (Emphaise added) 514 This Court whilst interpreting the critical expression "first hearing" enunciated the law as under: "The question of law raised before us may perhaps be pronounced upon as it is of general importance.
Section 20(4) of the Act which we have excepted above fixes the crunical date for deposit of rent as "at the first hearing of the suit.
" What is "the first hearing of the suit"?.
Certain decisions have been cited before us of the Allahabad High Court which indicate that "the first hearing of the suit" is when, after framing of issues, the suit is posted for trial, that is, production of evidence .
We see none here and therefore, adopt as correct the decision of the High Court regarding the meaning of the expression "at the first hearing of the suit".
We may however add that the expression "at the first hearing of the suit" is also to be found in Order 10, Rule 1, Order 14 Rule 1(5) an Order 15, Rule 1 of the Code of Civil Procedure.
These provisions indicate that "the first hearing of the suit" can never be earlier than the date fixed for the preliminary examination of the parties (Order 10 Rule 1 ) and the settlement of issues (Order 14, Rule 1(5).
" The Punjab and Haryana High Court itself in Mangat Rai vs Ved Prakash ( 1969 Vol. 1 Rent control Reporter p. 96) has expressed the same view in paragraph 15 of the judgment: "15.
The principles that can be deduced from the plethora of case law on the point, including the authorities referred to above, are consistent with the literal meaning of word 'hearing ' which in its Dictionary sense means 'the listening of evidence and pleading in Court of law, the trial of a cause '.
It seems to be abundantly clear that in order to constitute, 'first hearing ' within the meaning of Sec. 13(2)(i) proviso, the following prerequisites must co exist: (i) There should be a 'hearing ' which presupposes the existence of an occasion enabling the parties to be heard and the court to hear them in respect of the cause.
(ii) Such hearing should be the first in point of time after due service of the summons/notice on the tenant.
Both these essentials are positive, and in the absence of either of them, there can be no "first hearing" It appears that there is consensus in regard to the interpretation of the expression 'first day ' in the context of the rent legislations of several other 515 states, for instance, the Gujarat High Court in Shah Ambalal Chhotalal and others.
vs Shah Babal Das Dayabhai and Ors., AIR [1964] (Gujarat) p. 9, dealing with the identical ques tion as to the meaning of the words "the first day of the hearing of the suit" as provided in sub Sec.
3(b) of Sec. 12 of Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 has observed after considering several decisions that "the words 'the first day of hearing ' as meaning not the day for the return of the summons or the returnable day, but the day on which the Court applies its mind to the case which ordinarily would be at the time when either the issues are determined or evidence taken.
" Similar view was also taken by the High Court of Bombay earlier in the case of Khanderao Malkarjun Dhotre vs
Anandrao Laxmanrao Mashalkar.
AIR [1959] (Bombay) p. 47| It has been observed in this case as follows: "I am of opinion that "the first day of hearing" in S.12(3)(b) means, not the day fixed for return of the sum mons or what is sometimes called the returnable day, but the day on which the learned Judge applies his mind to the case, which ordinarily he would do at the time when the issues are determined, is the day mentioned and that is the day before which the rent should have been paid.
" It was tried to be contended that these decisions being rendered in connection with the 'suit ' cannot be taken into consideration in the case of a 'proceeding ' before the Rent Controller.
We do not find 'any substance in this contention which seeks to draw a distinction without a difference in substance.
It is appropriate to point out in this connection that the object of the East Punjab Urban Rent Restriction Act as stated in the Preamble to the Act is to restrict the increase of rent of certain premises situated within the limits of urban areas and eviction of tenants therefrom.
From the objects of this Act it is abundantly clear that this Act was enacted with the object of affording protection to the tenants against arbitrary increase of rent of certain premises within the limits of urban areas as well as from eviction of the tenants from the rented premises.
In this context, it is imperative that the word "the first hearing of the application" have to be interpretted in a manner which promote the object of this beneficial legislation.
Viewed from this aspect we cannot but hold that the words "first hearing of the application" as used in provise (i) to sub section 2 of Section 13 of the said Act does not mean the day fixed for return of the summons or the returnable day but the day when the Court applies its mind to the case.
In the premises aforesaid, we allow the appeal and set aside the order of eviction passed by the High Court and confirm the judgment and order of the lower appellate court dismissing the application for eviction.
There will however be no order as to costs in the peculiar circumstances of the case.
S.R. Appeal allowed.
|
The appellant is a tenant in respect of a room forming part of the property Unit No. B IX 148 (New), Chaura Bazar, Ludhiana, which has been rented on a monthly rental of Rs. 23 by the landlady Smt.
Guran Devi on the basis of rent deed dated 7th July, 1967 for a period of three months.
After the expiry of the term of the tenancy, he continued in possession of the suit premises as a statutory tenant under Smt.
Guran Devi.
Guran Devi, however, gifted away this property in favour of the Respondent on February 13, 1968 and.
from that date the appellant became a tenant under the respondent.
The ejectment was sought on the ground of default in payment of rent from 13.2.1968 till the date of filing of the application for ejectment in July, 1969 under Section 13 of East Punjab Urban Rent Restric tion Act, 1949.
The summons of this applica tion was served on the tenant appellant and the returnable date was fixed for 26.6.1969.
On that date, the appellant appeared before the Rent Controller, Ludhiana with his counsel and prayed for adjournment for filing written statement.
The case was adjourned to 2.7.1969.
On that date the written statement was filed and the tenant tendered a sum of Rs. 336 on account of arrears of rent from 13.2.1968 to 12.6.1969 together with Rs. 15 as interest and Rs. 25 as costs as fixed by the Rent Control ler.
The landlord accepted the amount under protest.
One of the issues framed in the said case was whether the tender was a valid tender within the meaning of proviso to section 13(2) of East Punjab Urban Rent Restriction Act, 1949.
The Rent Controller allowed the eviction petition being of the view that since on the first day of appearance the tenant did not tender payment he was in default.
On appeal, the appellate authority reversed the finding holding that the next date fixed by the Rent Controller for filing written statement and on which date the payment was tendered ,and received by the landlord under protest was the "first day of hearing" contemplated by proviso to section 13(2Xi) of the Rent Act.
In Revi sion, the High Court restored the order of the Rent Controller.
Hence the appeal by special leave.
Allowing the appeal, the Court, 510 HELD: The day mentioned in the summons i.e. 26.6.1969, in the instant case, cannot be treated to be day of first hearing of the ejectment application but it is the day for appearance of the defendent as on that day the Court does not take up the hearing or apply its mind to the hearing of the application.
It is only after written statement is filed, the issues are framed and hearing commences.
[513A] The object of the East Punjab Urban Rent Restriction Act as stated in the Preamble to the Act is to restrict the increase of rent of certain premises situated within the limits of urban areas and eviction of tenants therefrom.
From the objects of this Act it is abundantly clear that this Act was enacted with the object of affording protection to the tenants against arbitrary increase of rent of certain premises within the limits of urban areas as well as from eviction of the tenants from the rented premises.
In this context, it is imper ative that the word "the first hearing of the application" have to be interpreted in a manner which promote the object of this bene ficial legislation.
Viewed from this aspect it must be held that the words "first hearing of the application" as used in proviso (i) to sub section 2 of section 13 of the said Act does not mean the day fixed for return of the summons or the returnable day but the day when the Court applies its mind to the case.
[515E G] Ved Prakash vs Vishwa Mohan, , followed.
Mangat Rai vs Ved Prakash, 1969 Vol. 1 Rent Control Reporter p. 96; Shah Ambalal Chhotalal & Ors., vs Shah Babal Das Dayabhai & Ors., AIR 1964 (Gujarat) p. 9 and Khanderao Malkarjun Dhotre vs Anandrao Laxmanrao Mashal kar, AIR 1959 (Bombay) p. 471, approved.
|
ON: Criminal Appeal No. 127 of 1957.
Appeal by special leave from the judgment and order dated the 12th February, 1957, of the Madras High Court in Crimi nal Appeal No. 728 of 1956 and Referred Trial No. 144 of 1956, arising out of the judgment and order dated the 23rd October, 1956, of the Court of the Addl.
Sessions Judge of the Coimbatore Division in section C. Nos.
120 & 135 of 1956.
H.J. Umrigar and T. section Venkataraman, for the appellant.
P.Rama Reddy and T. M. Sen, for the respondent.
September 17.
The following Judgment of the Court was delivered by GOVINDA MENON J. Before the Additional Judge of the court of Sessions of Coimbatore Division there were four accused, of whom the first accused Subramania Goundan has now appealed to this court against the confirmation by the High Court of Madras of the conviction and sentence by the trial court, by which, 430 on charges Nos. 1 & 2, he was sentenced to death, and also sentenced to rigorous imprisonment for two years on charge No. 3.
Special leave to appeal was granted by order of this court, dated the 6th of May, 1957.
Along with the appellant were tried three others, of whom the second accused (Marappa Goundan) was his father.
The third accused (Karuppa) was the grandson of the second accused 's paternal uncle, while the fourth accused (Iyyavu) was an agnate in the fourth degree of the second accused.
It is thus seen that all the accused were related to each other.
The learned Sessions Judge framed four charges of which the first was against the appellant, that he on June 6, 1956, at night in the Village of Vengakalpalayam, committed the murder of Marappa Goundan by cutting him with an aruval; while the second charge was that at about the same time and place and in the course of the same transaction, he commit ted the murder of Muthu Goundan by stabbing him with a spear.
The third count of the charge was against the first and the second accused that they conjointly committed the offence of attempt to murder by stabbing one Munia Goundan with a spear and knife, and the last count of the charge was against accused Nos. 3 & 4 that they abetted the commission of the offence of attempt to murder of Munia Goundan by being present on the scene.
The learned Sessions Judge acquitted accused Nos. 2, 3 & 4, but convicted and sentenced the appellant before us in the manner stated above.
The village, where the offences were committed, was faction ridden in which the appellant, his father and others took one side, whereas the two deceased individuals along with Munia Goundan and others, former the leaders of the rival faction.
It was also stated that the appellant 's father was the leading man of the village, having been assigned that dignity by the consent of the villagers.
The prosecution case is that the dignity of the appellant 's family had been offended by certain actions of the rival party and it was apprehended by the appellants father that his prestige and 431 influence, as the chief man of the village, were being gradually undermined and usurped by the rival group.
About three days prior to the occurrence, which took place on the night between the 6th and the 7th of June, 1956, Munia Goundan is said to have stated to the hearing of the appel lant that he (Munia Goundan) would wipe out the appellant 's father and his partisans, and if that were not possible, in a spirit of humiliation, Munia Goundan would shave off his moustache.
It is further alleged that the two deceased individuals also proclaimed words to that effect.
Angered at this threat of extermination of his family and inflamed by the enmity due to the faction that had already existed, the appellant, according to the prosecution, having armed himself with an aruval (a sickle) a spear and a knife left his house on the night of the 6th and 7th June, 1956, proceeded to a place known as Chettithottam where the de ceased Marappa Goundan was sleeping in his field shed, and cut him on the neck with the aruval, and inflicted other injuries on him before leaving the place.
Thereafter while on his way to the house of Munia Goundan to do away with him, the appellant met the deceased Muthu Goundan who was coming in the opposite direction and thinking that Muthu Goundan would catch him, inflicted a stab wound on Muthu Goundan.
After this the appellant went to the house of Munia Goundan (P. W. 5) and stabbed him also.
Not being content with committing these crimes, he set fire to the shed of Sennimalai Goundan (P. W. 4 who was also a partisan of the rival faction) which lay at a distance about four furlongs from the village.
Thereafter the appellant re turned to his own garden and lay down.
Karuppa Goundan (P.W. 1) hearing cries and noise from the direction of the house of Munia Goundan, ran towards that place, followed by Sennimalai Goundan (P.W. 4) who similarly heard the same cries.
They found Munia Goundan (P.W. 5) with injuries on him and also saw the shed of Sennimalai Goundan (P.W. 4) aflame.
At this P.W. 4 and P.W. 5 proceed ed to the burning shed and on the way saw Natarajan 432 (P.W. 10), the son of the deceased Marappa Coundan, weeping and lamenting in his field.
Reaching the place wherefrom P.W. 10 was wailing, P.W. 4 and P.W. 5 saw Marappa Goundan lying dead on a cot in s the shed with injuries.
It is in evidence that the witnesses then saw the shed of P.W. 4 completely burnt down and after that Karuppa Goundan and Sennimalai Goundan went to the house of the village Munsif who was living about four miles away from the village and gave a report about the occurrence at about 5 a.m. on 7 6 1956 and which is on record as Exhibit P.I. Information reached the Sub Inspector of Police of Avanashi (P.W.17) at 8 30 a.m. who reached the place of occurrence at 11 a.m.
Investigation was then started, the details of which it is unnecessary to mention.
At about 12 noon near a temple in the village finding the appellant there, the SubInspector of Police arrested him after which the appellant made a state ment, the admissible portions of which are marked as Exhibit P. 13.
From the appellant material objects Nos.
10 and 11, a bloodstained drawer and a baniyan respectively worn by him were seized and the appellant thereafter took the Police Officer to his garden and took out M. 0. 12, a blood stained bed sheet from a rafter in the garden shed which, according to the prosecution, was used by the appellant for wrapping himself up after he lay down in his shed subsequent to the commission of the crime.
Statements were taken by the Sub Inspector from a number of persons, including Natarajan (P.W. 10), son of Marappa Goundan, Nachimuthu Goundan (P.W. 11) son of Muthu Goundan, Munia Goundan (P.W. 5) and others.
We do not think it necessary to describe the details of the investigation and the examination of witnesses regarding the accusations against the acquitted persons.
On June 9, 1956, at about 3 50 p.m. the appellant was pro duced before Sri P. I. Veeraswami, Sub Magistrate (P. W. 7), who administered the necessary warnings under the Crimi nal Rules of Practice and being satisfied that the appellant wanted to make a voluntary statement, he was given two day 's time for 433 reflection till June 11, 1956, on which date the appellant was produced before the same Magistrate at 3 50 p.m.
The same warnings were again administered to him and the Magis trate was satisfied that the statement about to be made was a voluntary one.
Thereafter it was recorded in the, appellant 's own words, read over to him and acknowledged by him to be correct.
This statement in which the appellant confessed to having committed the murder of Marappa Goundan and Muthu Goundan and also inflicted injuries on Munia Goundan on the night in question, is exhibited as P. 3/A.
In order to prove the case against the appellant the main reliance on the side of the prosecution was on Natarajan (P.W. 10), the eye witness to the attack on his father Marappa Goundan, and with regard to the murder of Muthu Goundan, the case rested on the testimony of Nachimuthu Goundan (P.W. 11), son of Muthu Goundan, who is said to have told the witness (P.W. 12) that the appellant had stabbed Muthu with a spear.
Subbanna Goundan (P.W. 12), a neighbour of Muthu Goundan, also spoke to the fact that he heard Muthu Goundan saying that the appellant had stabbed him with a spear.
The assault on Munia Goundan (P.W. 5) is spoken to by himself.
In addition to this evidence, the prosecution rested its case on the confession of the appellant .
Before the learned Sessions Judge the appellant denied the offence and retracted the confession made by him on the ground that the Sub Inspector and the Circle Inspector of Police threat ened to implicate the appellant 's father and five others in the crime if he did not confess and that was the reason why he made a false confession.
The learned Sessions Judge accepted the testimony of Natara jan (P. W. 10), Nachimuthu Goundan (P.W. 11) and Subbanna Goundan (P.W. 12) with regard to the murders and also that of Munia Goundan (P.W. 5) and Komaraswami Goundan (P.W. 6) with regard to the attack on Munia Goundan.
He also held that the confession, Exhibit P. 3/A, was voluntary and true and on the footing of the oral evidence, 434 corroborated amply by the confession, the appellant was convicted and sentenced.
In the High Court Somasundaram J. who delivered the judgment of the court, was not inclined to place reliance on the oral testimony of P.W. 5, P.W. 10 and P.W. 1 1.
The learned Judge was of the opinion that it was not safe to act on the evidence of Natarajan (P.W. 10) and convict the appellant of the offence of murder of Marappa Goundan.
The High Court did not accept the evidence of Nachimuthu Goundan (P.W. 11) and Subbanna Goundan (P.W. 12).
In the same strain the judgment of the High Court states that it is not safe to act on the evidence of Munia Goundan (P.W. 5) and (P.W. 6) Komaraswami Goundan.
The conclusion was that the oral evidence did not reach that standard of proof necessary for reliance to sustain a conviction, but the learned judge upheld the conviction on the ground that as the confession was voluntary and true, it can be believed though the same was retracted.
Opinion was also expressed that the confession was corroborated by the recovery of M. 0.
12, as a result of the statement made by the appellant which contained human blood for which there was no explana tion whatsoever.
Corroboration was also afforded by the existence of human blood on M. Os.
10 & 11.
The question, therefore, before us is whether the High Court erred in law in agreeing with the trial court regarding the guilt of the appellant.
Had the High Court come to the conclusion that the evidence of P.Ws. 5, 10 & 11 can be accepted in order to sustain the conviction of the appellant, the question would have been simpler of solution, and alternatively were this court inclined to appraise the credibility or otherwise of their testimony, whether a different conclusion would have been arrived at, is unnecessary to speculate.
On a perusal of the evidence of these witnesses, it cannot be said that their testimony is such as should be relegated to the realm of disbelief Even so, we have decided to proceed on the footing that the testimony of the important prosecution witnesses would not be sufficient 435 for a conclusion that the appellant is guilty beyond reason able doubt.
The ultimate approach, therefore, to the question should be whether the confession, exhibit P. 3/A, is entitled to credence and be acted upon.
The learned counsel for the appellant, Sri Umrigar, was at pains to show, firstly that the confes sion was not voluntary ; secondly it is not true and lastly that even if these ' two tests are answered in the affirma tive so far as the prosecution is concerned, it would be very unsafe to act on this retracted confession which, according to him, was resiled from as early as an opportuni ty occurred.
Dealing with the first question, he pointed out that the appellant was produced at 3 45 p.m., on June 9, 1956, before the Sub Magistrate in the court hall which was cleared of all police officials, and the Jail Warder alone was placed in charge; thereafter the Sub Magistrate gave the necessary warnings and enough time was given for reflection.
The criticism levelled by the appellant 's counsel is that despite these beneficient actions, still the influence of the police on the appellant still remained and that even at the time when the confession was given.
it cannot be said that the appellant was free from police pressure.
Our attention was invited to passages in cross examination of P.W. 7 where he had stated that on both the occasions when the appellant was produced for recording of the confession, the Police Constable in guard at the Sub Jail was in charge and further that there is a gate way between the Police Station and the court, and that gate way is the approach to the Subjail.
From these circumstances inference is sought to be drawn that though during the relevant periods the incarceration of the appellant was in a Sub Jail, still he was under police custody and influence and, therefore, there was no clearance of the supervening police control on him, in order to make his mind free from all such influence.
We have carefully gone through the questions put by the Magis trate, not only on June 9, 1956, when the appellant was given time for reflection, but also on those on June 11, 1956, when he gave the confessional statement, and we are satisfied 56 436 that nothing could be said against the procedure followed.
The learned Magistrate has clearly conformed to the proce dure prescribed by sections 164 and 364 of the Criminal Procedure Code, as well as to the directions laid down in the Madras Criminal Rules of Practice as a preliminary to the recording of the confession.
The meagre cross examination of the Sub Magistrate has not brought out any material circumstances which would, in any way, detract from the satisfactory was in which he has performed his official duty.
In the en dorsement at the foot of the confessional statement the Sub Magistrate (P.W. 7) says that he had explained to the appel lant that he (the appellant) was not bound to make a confes sion and if he does so, it may be used as evidence against him; and the endorsement further goes on to add that the Sub Magistrate believed that the confession was voluntarily made.
The next remark is that it was taken in his presence and hearing and read over to the confessor who admitted it to be correct.
But it is urged against the voluntary nature of the confession, that an inducement was given by the Magistrate by the manner in which the questions were put.
One of the questions was 'Why do you want to give a state ment and the answer given was It is suspected that those who have committed murder are others.
To prove that it is I who have stabbed, I am giving the statement. ' The above was the question put and the answer given on June 9, 1956.
On June 11, 1956, the question and the answer were as follows: " Q.
For what purpose are you going to make a statement ? A. Others will be implicated in the case for murder, I alone have committed murder.
I am going to give the state ment to that effect.
" When he resiled from the confession in the Sessions Court, the appellant stated that the Sub Inspector and the Circle Inspector went to him in Sub Jail and threatened to impli cate his father, accused No. 2 in the lower court, and five others, unless he confessed.
Therefore, it was on this account that the statement exhibit P. 3/A was made before the Magistrate which the 437 accused alleged was neither true, nor voluntary.
The argu ment of the learned counsel is that in order to save his father and some others, the appellant implicated himself and confessed falsely to an act which he did not commit.
Criti cism has been levelled against the mode and manner in which the question was put as directly inducing the appellant to immolate himself and thereby save his kith and kin.
We are asked to say that the appellant, being an emotional young man of noble sentiments and spirit, did not desire to have his father implicated in a crime of this sort and what may be ascribed as a filial obligation was performed in trying to get release of his father from the enmeshes of the po lice.
Such an argument, we are afraid, cannot carry any conviction.
The form of the question is prescribed by the Criminal Rules of Practice and if the officer before whom the confession is made, fails to put it, then his failure will be criticised as blameworthy.
We do not feel that any nefarious object existed in putting a perfectly innocuous and obligatory question to the appellant asking him "Why he wants to make a statement?" Further, P.W. 17, the Investi gating Sub Inspector, has clearly denied the alleged induce ment by the police that if be did not confess, others, including his father, would be implicated in the case.
It is, therefore, difficult to conclude that there was any kind of inducement or threat as a result of which an involuntary confession was made.
A complaint is made by the learned counsel that before the Committing Magistrate no question under section 342 Cr. P. C. was put to the appellant with regard to the confession and, therefore, he had no opportunity to put forward his com plaint about the confession until the case came before the Sessions court.
No doubt a scrutiny of the statement of the accused before the Sub Magistrate does not reveal any spe cific questions as having been put to him about the confes sion, but the fact remains that the confession was exhibited before the Committing court and the contents were known to the appellant then and there.
Under section 207 A, sub cl.
(3) of the Criminal Procedure Code, even at the commencement of the enquiry into a case triable by a 438 Sessions Court the Committing Magistrate is enjoined, when the accused is brought before him, to satisfy himself that the documents mentioned in section 173 have been furnished to the accused and if it is found that they have not so far been furnished, it is the duty of the Magistrate to cause the same to be furnished.
Section 173, sub cl.
(4) makes it obligatory upon the Police to furnish the accused free of cost with a copy of the police report, the F.I.R. under section 154 and all other documents on which the prosecution propose to rely, including statements and confessions if any record ed under section 164.
The result, therefore, is that even before the commencement of the committal proceedings the ' appellant had been provided with the copy of the confessional state ment sought to be relied upon for justifying a prima facie case against him.
We do not ,think, granting that the confession was not placed in the fore front as a piece of evidence against the accused in the Committing Court, such a default if it is one, would in any way show that the confes sion was involuntary.
The second aspect of the learned counsel 's contention is that the confession is not true.
In Sarawan Singh and Harbans Singh v, The State of Punjab (1) this court ex pressed the opinion that for the purpose of finding out whether a confession is true, it would be necessary to examine the same and compare it with the rest of the prose cution evidence and the probabilities of the case, and Mr. Umrigar relying on these observations urges that on a com parison of the confession with the other parts of the prose cution evidence, the irresistible conclusion should follow that on the face of it the confessional statement is untrue.
The material portions of the confessional document concern ing the actual crime are to the following effect: " So, on Wednesday night at about 11 O 'clock, I took aruval, spear and knife sharp on both sides and went to Chetty Thottam, near our garden.
Marappa Goundan, then was lying on the cot in his shed and sleeping.
I cut him with aruval on the neck.
While coming from there, to the house of Muniappa Gouildan (1) Criminal Appeals NOS.
22 and 23 Of 1957, decided April 10, 1957.
439 in our village, Muthu Goundail came opposite to me in our village street.
Thinking that he came to catch me, I stabbed him.
The aruval fell there itself.
Then, I went to Muniappa Gouudan 's house, and stabbed Mu niappa Goundan.
Afterwards, I set fire to the shed of Sennimalai Goundan at a distance of four furlongs to our village.
Then I came to our garden and lay." From this, according to the defence counsel, it is seen that only one cut was inflicted with an aruval on the neck of Marappa Goundan and a single stab was given to Muthu Goun dan.
Similarly Munia Goundan was only stabbed once, but in exhibit P. 4 the postmortem certificate on the body of Marappa Goundan there are as many as thirteen injuries of which the neck injuries were 4, 5 and 6, the others being on other parts of the body.
It is, therefore, urged that the unques tionable fact of the existence of a number of injuries on Marappa belies the truth of the confession, in that only one cut was given on the neck.
Similarly the confession does not make any mention of the presence of any One else when Munia Goundan was stabbed, though both P. W. 5 and P.W. 6 have deposed that there were three persons who were coming northward from the shed of Marappa Goundan at the time P.W. 5 was stabbed.
The statement made by P.W. 5 (exhibit D. 2) before the Medical Officer on June 8, 1956, was also to the effect that more persons than one were involved in the attack on him.
The confession also does not make any refer ence to the recovery of the incriminating articles such as M. 0.
12 as a result of a statement made by the appellant to the police officer.
From these circumstances we are asked to say that the confession cannot be true.
Mr. Umrigar urges that the learned Judges of the High Court have not paid sufficient attention to this method of examining how far a confession is true by comparing it with the other evidence in the case in accordance with the test laid down by this court.
Even in the absence of such comparison in the judgment of the High Court we do not think that on that ground it can be predicated that the appellant made an untrue statement voluntarily.
After all the absence of elaborate 440 details in a confession cannot brand it as false.
There is no statement in the confession which is contrary to the oral evidence though the details put forward when the witnesses were examined in court do not appear in extenso in the confession and for that reason we are not prepared to say that the confession.
in untrue.
The next question is whether there is corroboration of the confession since it has been retracted.
A confession of a crime by a person, who has perpetrated it, is usually the outcome of penitence and remorse and in normal circumstances is the best evidence against the maker.
The question has very often arisen whether a retracted confession may form the basis of conviction if believed to be true and volun tarily made.
For the purpose of arriving at this conclusion the court has to take into consideration not only the rea sons given for making the confession or retracting it but the attending facts and circumstances surrounding the same.
It may be remarked that there can be no absolute rule that a retracted confession cannot be acted upon unless the same is corroborated materially.
It was laid down in certain cases one such being Kesava Pillai alias Koralan and another and Kesava Pillai alias Thillai Kannu Pillai (1) that if the reasons given by an accused person for retracting a confes sion are on the face of them false, the confession may be acted upon as it stands and without any corroboration.
But the view taken by this court on more occasions than one is that as a matter of prudence and caution which has sancti fied itself into a rule of law, a retracted confession cannot be made solely the basis of conviction unless the same is corroborated one of the latest cases being 'Balbir Singh Versus State of Punjab (2), but it does not necessari ly mean that each and every circumstance mentioned in the confession regarding the complicity of the accused must be separately and independently corroborated, nor is it essen tial that the corroboration must come from facts and circum stances discovered after the confession was made.
It would be sufficient, in our opinion, that the (1) I.L.R. (2) A.I.R. 1957 S.C. 216.
441 general trend of the confession is substantiated by some evidence which would tally with what is contained in the confession.
In this connection it would be profitable to contrast a retracted confession with the evidence of an approver or an accomplice.
Though under section 133 of the Evidence Act a conviction is not illegal merely because it proceeds on the uncorroborated testimony of witnesses, illustration (b) to section 114 lays down that a court may pre sume that an accomplice is unworthy of credit unless he is corroborated in material particulars.
In the case of such a person on his own showing he is a depraved and debased individual who having taken part in the crime tries to exculpate himself and wants to fasten the liability on another.
In such circumstances it is absolutely necessary that what he has deposed must be corroborated in material particulars.
In contrasting this with the statement of a person making a confession who stands on a better footing, one need only find out when there is a retraction whether the earlier statement, which was the result of remorse, repentance and contrition, was voluntary and true or not and it is with that object that corroboration is sought for.
Not infrequently one is apt to fall in error in equating a retracted confession with the evidence of an accomplice and.therefore, it is advisable to clearly understand the distinction between the two.
The standards of corroboration in the two are quite different.
In the case of the person confessing who has resiled from his statement, general corroboration is sufficient while an accomplice 's evidence should be corroborated in material particulars.
In addition the court must feel that the reasons given for the retrac tion in the case of a confession are untrue.
Applying this test to the present case, we are of the opin ion that when the appellant has given no satisfactory expla nation for the presence of human blood on material objects Nos. 10, 11 & 12, it follows that the blood of the murdered was on these material objects.
The reasons for retraction are also false.
A criticism is levelled that the Chemical Examiner 's report does not show the extent of blood on M.O. 442 No. 12, the bed sheet, in which the appellant wrapped him self after the offence.
All that the document states is that among other items it is also stained with humanblood, but Mr. Umrigar argues that this description only shows that there would have been only a speck or a spot of blood on the bed sheet, for according to him, as a matter of fact, there should have been a large quantity of blood on the hands of the appellant if he had, without washing, used a bed sheet, thereafter large patches of blood are likely to be present on the bed sheet.
If that is so, the mere fact that the presence of blood is described as stains would show that the prosecution case cannot be true.
We do not feel inclined to put such a restricted meaning on the word I stain '. 'Stained with human blood ' is an expression commonly found in Chemical Examiner 's reports and it does not necessarily refer to specks of blood alone.
We do not think that any inference can be drawn from the use of the word 'stain ' in the Chemical Examiner 's report, that there was not suffi cient blood on the bed sheet.
The appellant has given no explanation as to how blood came to be present on material objects Nos.
10 to 12.
Agreeing with the High Court that this is corroboration of the confession made by the appel lant, we are of the opinion that the confession can be acted upon.
If that is so, the appellant 's guilt has been proved beyond reasonable doubt.
The appeal is dismissed.
Appeal dismissed.
|
The appellant was charged with murder.
The eye witnesses against him were not relied upon.
He made a confession before a magistrate.
One of the questions put by the magis trate to the appellant before recording the confession was: " For what purpose are you going to make a statement?" To this he replied, " Others will be implicated in the case for murder, I alone have committed murder.
" It was argued that an inducement was given by the magistrate by the manner in which the question was put.
The next day after the murder " a drawer, a baniyan and a bed sheet", all stained with human blood were recovered from the appellant, for which no expla nation was given by him.
The confession was retracted before the Court of Session.
These recoveries 429 were used as corroboration of the confession.
It was con tended that this was no corroboration.
Held, that the confession was voluntary and the putting by the magistrate of a perfectly innocuous question which was prescribed by the Madras Criminal Rules of Practice did not amount to an inducement to make a confession.
Held, further, that there can be no absolute rule that retracted confession cannot be acted upon unless it is corroborated materially.
But as a matter of prudence and caution, which has sanctified itself into a rule of law, a retracted confession cannot be made solely the basis of conviction unless it is corroborated.
It is not necessary that each and every circumstance mentioned in the confession regarding the complicity of the accused should be separately and independently corroborated, nor is it essential that the corroboration must come from facts and circumstances discov ered after the confession was made.
It would be sufficient if the general trend of the confession is substantiated by some evidence which would tally with what is contained in the confession.
In the instant case the recovery of clothes stained with human blood for which the appellant gave no explanation was sufficient corroboration of the confession.
Balbir Singh vs State of Panjab, A.I.R. (1957) S.C. 216 relied on.
|
vil Appeal No. 1491 (NN) of 1988.
From the Judgment and Order dated 30.5.
1986 of the Delhi High Court in W. No. 578 of 1981.
A. Subba Rao, P. Parmeshwaran and Mrs. Sushma Suri for the Appellants.
H.N. Salve, P.K. Ram and D.N. Misra for the Respondent.
872 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal by special leave and is connected with Civil Appeal No. 859.
This is an appeal from the judgment and order of the High Court of Delhi dated 30th May, 1986.
It appears that in October, 1975, Trade Notices were issued on the basis of the directive of the Ministry of Finance to the effect that the owners of the brand name are to be treated as the manufacturers of the goods.
In April, 1977, price list submitted by the respondent declaring the assessable value on the basis of the price at which the assessee respondent sold the goods.
Thereafter on 16th April, 1977, there was a letter written by respondent giving the list of the customers of the respondent and clarifying the terms and conditions on which the assessee sold the goods.
On August 22, 1977, the appellants wrote a letter to the assessee respondent seeking certain information, intera lia, to the effect whether the assessee and its buyers were related persons.
A reply was given on 10th September, 1977 by the assessee to the aforesaid letter.
First notice was issued asking the assessee to show cause as to why the assessable value be not determined at the price the buyers of the assessee sold the goods (instead of the price at which the assessee sold the goods to its buyers).
There was a reply and the second show cause notice was issued on 28th January, 1981.
These show cause notices were challenged and the High Court quashed the said notices.
Aggrieved thereby, this appeal has been filed.
The respondent is a registered company carrying on the business of manufacturing and selling filters.
Some of the goods are sold by the respondent to its customers under the respective brand names.
The respondent filed a price list at which price the goods were sold to the customers.
In view of the principles indicated in the judgment in Civil Appeal No. 859 and the facts adduced before the High Court, the High Court 's judgment cannot be interfered.
The appeal, therefore, fails and is accordingly dismissed.
T.N.A. Appeal dismissed.
|
The respondent company, manufacturer of filters, was selling the goods to its customers under brand names.
It declared its assessable value on the basis of the price at which it sold the goods.
Show Cause Notices, requiring assessable value to he determined at the price the buyers of the respondent company sold the goods, issued to the re spondent were challenged by it and quashed by the High Court.
Hence this appeal by the Revenue.
Dismissing the appeal, this Court HELD: 1.
For the purposes of the excise duty, the market value of the goods of the respondent company was the price charged by it, and not the market value at which the buyers of the respondent company sold the goods.
The High Court, therefore, rightly quashed the Show Cause Notices.
[872C] The Union of India & Ors.
vs M/s Playworld Electronics Pvt. Ltd. & Anr., Civil Appeal No. 859 of 1988 (S.C.) decid ed on 2nd May, 1989, applied.
|
Appeal Nos.
4452 53 of 1986 463 From the Judgment and Order dated 16.6.1986 of the Bombay High Court in Appeal No. 216 of 1986.
D.R. Dhanuka, V.M Tarkunde, and Dr. L.M. Singhvi, Pramod Swarup, Milind Sathe, P.N. Gupta, P.C. Srivastava, U.S. Prasad, A.M. Singhvi, C. Mughopadhaya, Raian Karanjawala, Mrs. Manik Karanjawala, Hardeep section Anand, Ejaz Moqbool, section Radhakrishn anand Surya Kant for the appearing parties.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two special leave peti tions arise out of the decision of the Bombay High Court in the appeal No. 216 of 1986.
Leave as asked for is granted in both and appeals arising therefrom are disposed of by this judgment.
The first appeal was filed by the appellant Shivajirao Nilangekar Patil who was at the.
relevant time the Chief Minister of the State Maharashtra and the second one was filed by Dr. Mahesh Madhav Gosavi, the applicant in the original writ petition out of which appeal ultimately came to the Division Bench of the Bombay High Court resulting in Civil Appeal No. 216 of 1986.
The controversy in this case centers round the conduct, if any, of the appellant in the first appeal in the M.D. Theory examination in the discipline of Gynaecology and Obstetrics held by the University of Bombay on 14th to 17th October, 1985.
In that subject, the practical examination was held by the University at K.E.M. Hospital, Bombay.
This is a well known hospital in Bombay and we are told that it is run by the Municipality.
The total number of candidates registered for the examination was 52 of which 5 remained absent.
One Dr. Mahesh Madhav Gosavi, original petitioner, who was at the relevant time Assistant Medical Officer of K.E.M. Hospital, Bombay was the petitioner.
He and Smt.
Dr. Chandrakala Patil alias Dawale, a Junior Assistant Medical Officer in the said K.E.M. Hospital, Bombay, who was re spondent No. 4 to the original petition and one Dr. Mrs. Smita Thakkar who was respondent No. 5 were three candidates amongst others who had appeared for the examination.
One Dr. M.Y. Rawal was the head of the Department of Gynaecology and Obstetrics in the said hospital and was the convener of the Board for the said examination.
Respondent No. 4 of the original petition, Smt.
Chandrakala Patil is the daughter of the appellant, the erstwhile Chief Minister of Maharashtra.
The appellant was at the relevant time the Chief Minister of Maharashtra.
On 15th November, 1985, a circular was issued by the Univer sity of 464 Bombay convening a meeting of local examiners for the final isation of M.D. results on 18th November, 1985.
On the said 18th November, 1985, the meeting was attended only by Dr. Rawal as Dr. Mukherjee, another coexaminer was not available at Bombay.
On 30th November, 1985 the result of M.D. exami nation was declared.
Out of the 47 candidates who had ap peared for the examination, 34 candidates were declared successful including Dr. Chandrakala Patil alias Dawale and Dr. Mrs. Smita Thakkar.
The petitioner, Dr. Gosavi was declared to have failed.
Upon these, a petition was filed by Dr. Gosavi under article 226 of the Constitution of India in the High Court of Bombay.
Our attention was drawn to the fact that in the affida vit in support of the petition one Dr. Manikant Mishra had stated that he had approached Dr. Rawal to find out whether his wife had appeared in the said M.D. examination and it was alleged that on this occasion he had over heard certain alleged conversation between Dr. Rawal and Smt.
Chandrakala Patil, daughter of the Chief Minister.
It transpired later that Mrs. Kalpna Misra wife of the said Manikant Misra was not even registered as a candidate.
In the petition under, article 226 of the Constitution filed before the High Court of Bombay on 16th January, 1986 Dr. Gosavi challenged the results declared in the said examination.
The petitioner had claimed that he had been working as a junior Assistant Medical Officer and that he had done his housemanship in the Department of Obstetrics and Gynaecology at K.E.M. Hospital Respondent No. 2 i.e. Dr. Rawal was the Head of the Department of the same.
It was further the case of the petitioner that due to some reasons the petitioner had no good terms with the said respondent No. 2.
The petitioner had passed the MBBS examination in April, 1981 and after completion of internship got registra tion for M.D. (Obstetrics and Gynaecology) in June, 1982.
It was further the case of the petitioner that the petitioner had completed all the requirements and conditions for ap pearing for the M.D. examination.
The petitioner stated that the University had declared examination programme and the petitioner thereafter had appeared for the said M.D. exami nation in the month of October/November, 1985.
There are several allegations made by the petitioner about the irregularities and it was further alleged, inter alia, that the grade sheets were manipulated and tampered with as a result of which the said Dr. Chandrakala Patil and Dr. Smita Thakkar were passed by respondent No.2 Dr. Rawal at the instance and behest of respondent No. 3 in that petition, the appellant in the first appeal, being the Chief Minister of Maharashtra at the relevant time.
He prayed that the record of grade sheet submitted to the University of Bombay 465 by all the four examiners of M.D. in Obstetrics and Gynae cology examination, necessary papers and rules and regula tions, should be produced and to set aside the result of the M.D. examination to the extent that those students who had secured P minus grade be disqualified.
It was further asked to declare those students who secured upto any number of P minus to be passed.
A prayer was made in the writ petition filed in the High Court for producing grade sheets.
The petitioner incidentally verified the petition stat ing that the contents of paragraphs 1 to 22 and paragraphs 24 to 30 were true to his own knowledge while various other relevant paragraphs were verified as information received from reliable sources but the source was not disclosed.
In these circumstances the petitioner claimed that the results declared in respect of some of the candidates declared failed should have been declared passed.
The allegations had been made against the appellant in paragraphs 14 and 25 of the petition.
In paragraph 14 it was alleged that after these irregularities came to light, the petitioner in the original petition had started enquiring.as to the way in which respondent No. 2 had committed these irregularities.
The petitioner thereafter learnt that one Sree P.K. Shah who happened to be a good friend of Dr. M.Y. Rawal, respondent No. 2 in the original petition and also happened to be a good friend of respondent No. 4 as they were together as the assistant medical officers at K.E.M. Hospital, Bombay.
The petitioner also learnt that the said Dr. P.K. Shah and Dr. M.Y. Rawal though not permitted by Rules and Regulations had been practising in Zaveri Clinic for Dr. C.L. Zaveri, since long time, and thus they became dose friends.
It is also learnt that on behalf of Dr. (Mrs.) Chandrakala Patil, who is the daughter of erstwhile Chief Minister of Maharashtra the said P.K. Shah met respondent No. 2 and requested him that Dr. (Mrs.) Chandrakala Patil had appeared several times for M.D. Examination (Obs. & Gyn.) but could not get through and therefore she should be shown some favour.
It was learnt that the respondent No. 2 informed the said Dr. P.K. Shah that he would definitely favour Dr. Mrs. Chandrakala Patil if she failed, provided the Chief Minister himself phoned him personally.
The respondent No. 2 also told the said Dr. P.K. Shah that he would come to know about the result only after the submission of the grade sheet to the University because thereafter only one would know the position with regard to the names of the students who have failed and till that time he would not know.
It was further stated that it was learnt that the respondent No. 2 also informed the said Dr. P.K. Shah that he would take the risk only if the Chief Minister gave him a telephone ring otherwise he would not.
It was alleged that the respondent No. 3 in the original petition and the appellant herein after receiving this message from the respondent No. 4 and from Dr. P.K. Shah accordingly contacted respondent No. 2 and requested him to favour his daughter.
466 In paragraph 25 of the petition, the petitioner stated as follows: "The petitioner states that on the basis of information from reliable source, the peti tioner has made allegations on Chief Minister of Maharashtra, therefore, he has been made respondent No. 3 in this writ petition.
" These were the only allegations upon which the petition was factually based.
The necessary verification has been set out hereinbefore.
The appellant Shri Shivajirao Nilengekar Patil filed an affidavit denying the allegations in para graphs 14 and 25 of the application stating that he had played no part in the said examination as alleged or other wise.
It was also stated in the aforesaid affidavit that the petitioner has not disclosed the 'so called ' reliable sources of information.
No affidavit was filed by the peti tioner himself.
The alleged source of information was not disclosed at any time.
As mentioned hereinbefore an affida vit was filed by one Dr. Manikant Mishra on 28th February, 1986 in support of the allegations.
Further affidavit was sought to be tendered on behalf of the petitioner to the learned single judge regarding certain additional facts after the final hearing had started before the learned single judge of the High Court of Bombay.
It may be men tioned as a matter of historical record that Dr. M.S. Gore, Vice Chancellor of University of Bombay resigned.
The learned single judge by his judgment held that the evidence of the petitioner as well as of Dr. Misra were unsatisfactory and unreliable.
Reference was made to the submissions of the petitioner 's counsel relying under sec tion 114 of the Evidence Act.
In para 18 of the judgment it was held that it could be reasonably inferred that altering and tampering of the gradesheets were done by Dr. Rawal at the behest of respondents No. 3 and 4.
On 7th March, 1986 the day after the judgment, the appellant Shivajirao Ni langekar Patil resigned as the Chief Minister of State of Maharashtra in view of the Judgment.
It may be mentioned that on or after 14th April, 1986 certain affidavits were sought to be filed on behalf of the petitioner in pending appeals purporting to rely upon certain allegations in writ petition No. 1709 of 1985 filed by Sub Inspector Lambe challenging the order of transfer and also an article which had appeared in INDIA TODAY.
The Division Bench of the Bombay High Court rejected the prayer to adduce the additional evidence.
We have perused the nature of the additional evidence which were sought to be adduced as is apparently from the special leave applica tion by Dr. Gosavi, the original petitioner in the writ petition and the respondent in the first appeal herein.
These deal with the alleged involvement of the erstwhile Chief Minister of Maharasthra in the matter of 467 the careers of his son, his son in law and in respect of transfer of one Inspector Lambe.
As the additional evidence were not admitted and the appellant in the first appeal herein had no opportunity to deal with the same, it would not be, fair to take these allegations into consideration.
But these if true make dismal reading and give a sordid picture of the state of administration prevailing at that time in the State of Maharashtra.
But as the High Court did not admit these, perhaps because these were belated and perhaps would have unnecesserily prolonged the trial and were not directly connected with the immediate issues before the High Court, this Court in the exercise of its jurisdic tion under Article 136 of.the Constitution would not inter fere with the decision of non admission of these additional evidence and say no more.
On 16th June, 1986, the Division Bench of the Bombay High Court in appeal No. 216 of 1986 delivered judgment holding in para 35 of the judgment that the conclusion arrived at against Shri Nilangekar Patil was to be regarded merely as an adverse comment and not as a finding of fact.
To that extent the finding of the learned single judge was upset.
The special appeal has been preferred by the original petitioner against the appellant challenging the findings respectively.
In the appeal by the original petitioner an affidavit had been filed in this case claiming the right to adduce additional evidence.
The controversy before this court is rather narrow namely; was there justification for the remarks made by the learned trial judge against the appellant Patil in his judgment to the extent that manipulations in the grade sheets of M.D. examination was done at the behest of the appellant, the then Chief Minister of Maharashtra to help respondent No. 4 to pass the M.D examination can the same be justified either as a finding of fact or as a comment? In order to consider the same must be examined in little de tail.
"Something is rotten in the state of Denmark" sensed Marcellus in Scene V of Act 1 in Shakespeare 's Hamlet.
It can well be lamented that there was something rotten in once premier and prestigious University of Bombay: as the facts reveal.
Justice Pendse of the Bombay High Court, the learned single judge before whom the matter came up for hearing has in an exhaustive discussion narrated the sad state of af fairs in this University of Bombay which has produced so many eminent professors and students.
The University of Bombay conducts M.D. examinations, inter alia, in the disciplines of Obstetrics and Gynaecology in the Faculty of Medicine.
The theory examination consists of four papers, of which paper No. IV is of Essay.
The theory papers 1 to 111 consist of three questions each.
The practical clinical examination consists of a long and short case in obstetrics and a long and short case in Gynaecology and Viva.
The theory papers are assessed by individual 468 examiners and the grades are allotted in respect of each question in each paper n accordance with the provisions set out in the note giving special instructions to the examiners in the Faculty of Medicine.
The M.D. theory examination in the instant case was held between 14th October and 17th October, 1985 and was followed by practical examination which was held between 4th November and 9th November, 1985.
The University had appointed four paper setters and examin ers in accordance with the necessary provisions of the Act, two of which were internal examiners, namely Dr. M.Y. Rawal as mentioned hereinbefore and one Dr. S.N. Mukherjee from Indian Navy.
There were two external examiners who were Dr. (Mrs.) A. Nafeesa Beebi from Madras and gr.
S.T. Watwe of Sangli.
It is not necessary to deal in more detail with the 7actual aspects which as mentioned hereinbefore have been exhaustively set out in the judgment of the learned single judge, and which were not disputed before us by any of the parties.
We may mention that grading had to be made on the following lines as noted in the judgment of the trial judge: "G" Good. "p" Little better than passing. , 'p" Passing Border line failure "F" Failure.
The learned single judge noted that 37 candidates had been declared successful including respondent No. 4 being Chandrakala Patil and respondent No. 5 Dr. Mrs. Smita Thak ker.
The other respondents No. 6 to 15 mentioned hereinbe fore were other successful candidates whose result came to be nullified and made subject to re examination by the judgment of the learned single judge.
We are not concerned with this aspect or with them any more.
The petitioner had claimed that he had wrongly been declared as failed.
The petitioner stated that he had some doubts as to whether his code number was properly decoded and he made various other allegations.
The petitioner complained and the gravamen of his charges was that there were large number of irregulari ties in the declaration of result and mark sheet was tam pered in favour of respondent No. 4 Chandrakala Patil who is the daughter of the erstwhile Chief Minister and that Dr. Rawal was instrumental in tampering with the result which was done at the behest of the then Chief Minister.
The learned judge came to the conclusion that Dr. Rawal alone was responsible for tampering with and altering the tabulat ed grade sheet of theory examination.
After discussing all these aspects in detail at the concluding paragraph 15 of the judgment, the learned judge had observed that he had no hesitation in concluding that Dr. Rawal was responsible for manipulating the result by tampering with and altering the grade sheet so as to favour respondent No. 4 469 and respondent No. 5 in the writ petition namely Chandrakala Patil and Dr. Smita Thakkar.
The next question, and which is the main issue before us, to which the learned judge 's attention was drawn was whether the manipulation was done by Dr. Rawal at the in stance of or behest of respondent No. 3, the appellant herein, the then Chief Minister of Maharashtra.
The learned judge discussed the evidence in great detail.
The allega tions in respect of the same are contained in paragraph 14 of the petition which have been set out hereinbefore.
The learned judge noted after setting out the gist of the allegation in paragraph 14 of the petition that the averments made in that paragraph were wholly unsatisfactory and insufficient because the petitioner to the writ petition and the respondent herein had not disclosed from whom he had learnt what he had averred.
We are in entire agreement with that conclusion of the learned single judge.
Indeed this aspect was not disputed by any of the parties before us.
The learned single judge further noted that the allegations were not only denied by Dr. Rawal, Dr. Shah and Chandrakala Patil but also by the Chief Minister, the appellant, on oath by filing affidavit.
Dr. Shah had claimed that he had never contacted Dr. Rawal in connection with the examination of respondent No. 4 and so was the claim of respondent No. 4 and of Dr. Rawal.
The appellant in his affidavit dated 26th January, 1986 had stated that Dr. Shah did not send any message nor did be contact Dr. Rawal at any stage.
An effort was made by the original petitioner, respondent herein to establish by direct evidence the link between Dr. Rawal and respondent No. 4 by relying upon the evidence of one Dr. Mishra sworn on 28th February, 1986.
Dr. Mishra had claimed that his wife who is a doctor had left home to appear in M.D. examination in November, 1985, but subsequently the wife declined to answer as to whether she had appeared or not.
Dr. Mishra claimed that he went to Dr. Rawal to enquire and he noticed that respondent No. 4 was sitting in the doctor 's chamber.
Dr. Mishra claimed that he over heard Dr. Rawal telling respondent No. 4 about her poor performance in the examination and suggested that he could do something only if her father, the Chief Minister, gave any message.
The learned single judge observed in his judgment the less said about this affidavit was better.
The learned judge further observed that it was impossible to place any reli ance on the evidence of Dr. Mishra as it was not known how he came to contact the original petitioner respondent herein or why he did not choose to file affidavit till 28th February, 1986.
Dr. Rawal had denied in his evidence that this Mishra came to see him and pointed out that on that relevant date, that he was heavily occupied and he had hardly any time to contact any visitor.
Chandrakala Patil also denied the meeting that 'transpired between her and Dr. Rawal.
In the judgment of the learned trial 470 judge, it was unsafe to place any reliance on the words of Mishra.
We respectfully agree.
The learned judge thereafter concluded that there was no direct evidence to establish the involvement of respondent No. 3, the erstwhile Chief Minis ter or the daughter, respondent No. 4 in the original writ petition in securing favourable result from Dr. rawal.
The learned judge noted that counsel appearing on behalf of the petitioner before the trial judge had accepted this position but had urged that it was not possible or in any event extremely difficult to establish by direct evidence the link between the wrong doer and the benefit seeker in such cases.
It was, therefore, submitted that it was necessary for the court to draw inference from the probabilities of the case as well as the surrounding circumstances.
Reliance was placed on the principles of section 114 of the Indian Evi dence Act and it was claimed that from the facts found by the High Court, the inference was irresistible that the results were tampered with or altered at the behest of the erstwhile Chief Minister and his daughter.
After referring to the factual position and noting the principles of law, the learned judge observed that undoubt edly there was no direct evidence that the result of re spondent No. 4 namely Smt.
Chandrakala Patil was tampered with at the behest of the appellant, Shivajirao Nilangekar Patil, respondent No. 3 in the original petition but that would not automatically lead to the conclusion that the charges against the said respondents No. 3 and 4 to the original petition were not established.
The learned judge went on to observe that it would be a mockery of justice if the courts chose to close their eyes to the facts which were brought on record by the University by producing the origi nal documents etc.
The learned judge observed that it, in the facts and circumstances of this case, could reasonably be inferred that the alteration was done at the behest of Nilangekar Patil, erstwhile Chief Minister and her daughter, Chandrakala Patil.
It could not be overlooked, according to the learned judge, that only these three were interested in securing favourable result at the examination According to the learned judge there were two contingencies which had to be taken into consideration.
The first was that respondent No. 4, Smt.
Chandrakala Patil, might have used the name of her father, the erstwhile Chief Minister to secure favour able result from Dr. Rawal and secondly, the appellant, the erstwhile Chief Minister might have used his office to obtain a favourable result for his daughter.
Learned counsel on behalf of the original petitioner had urged before learned trial single judge that the third contingency could not be overlooked that it was probable that Dr. Rawal on his own did all these.
Learned trial judge rejected the third contingency as wholly improbable.
He was of the view that Dr. Rawal was an experienced examiner and he was not young or immature and it was impossible to accept the view that a person like Dr. Rawal would proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to 471 please the people in power.
No same person, according to learned judge, was likely to take such risk unless he was prompted to do so and given an assurance of protection by the persons in power.
The learned judge was of the view that the risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own.
It was further urged by learned counsel before learned trial judge that respondent No. 4, Chandrakala Patil had failed in the examination on three previous occasions when her father was Law Minister and yet previously the said Nilangekar Patil, respondent No. 3 had not used his influence and power, therefore it was difficult to accept the position that he would do it on this occasion.
This hypothetical question, according to the learned trial judge, overlooked the fact that every examiner was not necessarily obliging or subservient as Dr. Rawal was.
The learned judge, therefore, concluded that the corollary of this finding was that Dr. Rawal had done it at the behest of either the appellant Nilangekar Patil or Chandrakala Patil or both of them.
Then the learned judge passed some strictures on Dr. Rawal and suggested some punishment and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal.
As these appeals are not concerned with the same, it is not necessary to refer to these.
The learned judge directed that the result declared on 30th November, 1985 in respect of respondents nos.
4 to 15 be revoked and that there should be fresh examination by the other examiners.
These appeals are also not concerned with such direction.
It may be mentioned that an application was made before the learned trial judge for adducing certain additional evidence on behalf of the petitioner.
As the learned trial judge thought that it would prolong the trial and for other reasons, he declined to admit the additional evidence.
As mentioned hereinbefore there are three appeals filed namely appeal No. 214 of 1986 by Dr. Rawal, appeal No. 215 of 1986 by Chandrakala Patil and appeal No. 216 of 1986 by Nilangekar Patil.
These appeals came up before a division bench consisting of Kania, Ag.
C.J. Shah, J. of the Bombay High Court.
By a judgment delivered on 16th June, 1986, these appeals were disposed of.
So far as appeal No. 214 of 1986 by Dr. Rawal was concerned, the division bench found that some of the remarks against Dr. Rawal were too harsh and the punishment was too severe.
They directed that enquiry be held against him.
These appeals are not concerned with this.
So far as appeal No. 215 of 1986 preferred by Chandrakala Patil was concerned, the same was dismissed with no order as to costs.
No appeal had been preferred to this Court from the said decision, So far as appeal No. 216 of 1986 before the divi sion bench was concerned, the learned judges pointed out after discussing the evidence and the principles of law that there was no direct 472 evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant.
According to the division bench, the reasoning of the learned trial judge in coming to the conclusion that respondent Nos. 3 and 4 to the original petition were responsible for getting Dr. Rawal to alter the grades aforesaid was based on certain contingencies.
According to the division bench the reason ings adopted by the learned trial judge were too tenuous for the conclusion based on such reasoning to amount to a posi tive finding.
The Division Bench observed that merely be cause respondent No. 3 in the original petition had held a position of great power and would have been happy to see that his daughter respondent No. 4 and passed the M.D. examination, it was little difficult to conclude as a find ing of fact that he must have influenced respondent No. 2 to alter the grades of his daughter.
The learned Division Bench noted that it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure of persuasion.
The position that grades were altered was upheld by the division bench.
The Division Bench, however, was of the opinion that there might have been various motives which might have induced Dr. Rawal to take the risk and alter the grades.
The division bench observed that theoretically it was possible to conclude as was urged by Mr. Dhanuka, the learned coun sel, that the respondent No. 4 might have used the name of her father and persuaded Dr. Rawal to alter the grades or some other influential person might have intervened and persuaded Dr. Rawal to alter the grades on the footing that respondent No. 3 would be very happy to see his daughter passed and would reward Dr. Rawal or take care of him or there might be some other inducement.
However, the Division Bench was of the view that in a11 probability Dr. Rawal would not have acted unless he had made him assured that the appellant in the first appeal was behind the person who persuaded him to alter the grades.
In the view of the Divi sion Bench therefore the conclusion of the learned trial judge that the grades of respondent No. 4 must have been altered by respondent No. 2 at the instance of respondent No. 3 by using his official position under a promise of protection was certainly not one which could properly amount to a finding.
The Division Bench further observed that the evidence in support of such a conclusion is too slender to support a finding of such gravity.
The Division Bench was of the view that merely because the appellant held a position of great prestige and power, it could not be said that the action of Dr. Rawal must have been induced by him and in fact when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded.
The Division Bench in its exhaustive judgment noted various decisions of this Court as well as of the English Courts.
The High Court referred to the decision of this Court in Niranjan Patnaik vs Sashibhu shan Kar and Another, ; , a decision in which the judgment was delivered by one of us (section Natarajan, J.).
473 The High Court observed that the remarks made against the appellant, Nilangekar Patil cannot be supported as conclu sions arrived at against him but these can be regarded as comments and not finding of fact and such comments were not wholly unjustified in the facts of this case.
The said appeal No. 216 of 1986 was disposed of accordingly.
The Division Bench also upheld the finding of the learned single judge that there was tampering with the grade sheets.
The Division Bench also uphold the finding that Dr. Rawal was mainly responsible for the same.
The setting aside of the results of Smt.
Chandrakala Patil and Smt.
Smita Thakkar was also upheld.
So far as the learned trial judge, held that the same was done at the behest of the erstwhile Chief Minister, the same was not upheld as a finding of fact but remarks to that fact made by the learned trial judge were not interfered with.
An affidavit was filed claiming the right to adduce certain additional evidence and introducing certain writings from the magazine INDIA TODAY etc.
Such additional evidence were sought to be introduced as part of the claim of public interest litigation because it involved the conduct of the Chief Minister in respect of the affairs of the University.
Such claim for introduction of additional evidence, was, however, not entertained by the Division Bench.
The Division Bench, however, in its judgment noted that the appellant was party to the writ petition and had an opportunity of explaining and defending himself.
There were materials on record bearing on his conduct justifying the remarks which the Division Bench characterised as comments and not findings.
A prayer was made before the Division Bench for deletion of such remarks.
The Division Bench was of the view that as the appellant had opportunity to meet such remarks and such remarks were made upon hearing of the petition the question as to the conduct of the appellant in the episode was a matter of argument and it naturally fell for consideration before the Court.
Judging the conduct of respondent No. 2 i.e. Dr. Rawal the part played by the appellant, erstwhile Chief Minister naturally fell for con sideration.
If the finding of the learned trial judge, according to the Division Bench, was looked upon as more adverse comments and not as a finding as such, there could not be any objection to the same.
The Division Bench was further of the view that the circumstances noted by the learned judge against the appellant Nilangekar Patil, afore said, formed a reasonable and cogent basis for adverse comment on his conduct.
However, the Division Bench made it clear that these were merely in the nature of adverse com ments and based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavits.
According to the Division Bench, a fuller enquiry might lead to a conclusion that the comment was not justified.
In view of this, the Division Bench had asked the learned counsel for the appellant Shri Dhanuka, whether the appellant desired that there should be a full fledged factu al enquiry into the charges of the alteration of the grades of respondent No. 4 having been altered as aforesaid with a view to pass respondent No. 4, Smt.
Chandrakala Patil and 474 further that this was done at the instance of the erstwhile Chief Minister.
The Division Bench noted that the appellant made no request for any such enquiry and he was merely taking a stand on the footing that the evidence on record did not justify any conclusion being arrived at or a comment being made against respondent No. 3.
The Division Bench suggested that even at that stage, if the appellant wanted a full fledged enquiry and requested the University to hold the same, the University might hold such an enquiry into the results of M.D. examination in Gynaecology and Obstectrics held in November, 1985, particularly in respect of the results of respondents Nos. 4 & 5, but if such an enquiry was held, the person designated to hold the enquiry should be selected with the consent of the Chief Justice of the Bombay High Court.
Two appeals one arising out of Special Leave Petition (Civil) No. 7568 of 1986 filed by Shivajirao Nilangekar Patil against the alleged adverse remarks and the other arising out of Special Leave Petition (Civil) No. 10665 of 1986 by the original petitioner are before this Court.
There is an application for introduction of additional evidence.
There are three points involved in these two appeals.
Firstly, we have to determine in the appeal by the appel lant, Nilangekar Patil, the erstwhile Chief Minister of Maharashtra, whether the observations made by the division bench about the comments on the conduct of the Chief Minis ter were justified or not or should be expunged.
Secondly, and connected with the first question is the question wheth er the Division Bench of the Bombay High Court was right in upsetting the finding that the tampering with the grade sheets was done at the behest of the Chief Minister was a finding based on no evidence; and thirdly whether, in the facts and circumstances of this case the court was justified in refusing to admit additional evidence and whether we should at this stage admit additional evidence.
The additional evidence as we have mentioned hereinbe fore consist of certain report in INDIA TODAY and certain other Magazines and certain affidavits.
The basic principle of admission of additional evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance.
Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence.
Thirdly, that additional evidence was relevant for the determination of the issue.
The additional evidence sought to be introduced mainly consist of alleged instances when the Chief Minister on previous occasions had in respect of some criminal proceedings and other matters pending used his influence to drop those proceedings.
Now about these, these are controvertial allegations.
There is no satisfacto ry explanation that these so called material in the form of 475 additional evidence could not have been obtained before the institution of the petition in the High Court.
To this Mr. Tarkunde 's submission was that it was difficult to gather evidence against a Chief Minister in office but as the case had gathered momentum, people had come in and after decision of the learned trial judge, the Chief Minister had resigned and there was an atmosphere of belief for offering to adduce evidence which people were hesitant to give before that.
We are of the opinion that at this belated stage there was not sufficient material ground on which additional evidence should be admitted for the determination of the issues involved in these appeals.
In the appeal filed by the original petitioner Dr. Mahesh Madhav Gosavi, it was submitted that there were sufficient materials upon which the conclusion arrived at by the learned trial judge that the tampering was done at the behest of the erstwhile Chief Minister and the Division Bench was in error in deciding that, that was not the find ing of fact.
Mr. Tarkunde conceded, and in our opinion rightly, that the view of the Division Bench that the obser vation of the learned single judge that tampering of the grade sheets in M.D. examination was done at the behest of the Chief Minister was in the nature of a comment and not a finding was a distinction without any difference.
We are of the opinion that he is right in this submission.
We are also of the opinion that the Division Bench was right in holding that there was no direct evidence.
We are conscious that in a situation of this type it is difficult to obtain direct evidence.
So far as admission of additional evidence is concerned, we are unable to accept the position that such additional evidence should have been admitted in order to show the nature of the conduct of the Chief Minister in other cases in similar situations.
The admissibility of evidence as to 'similar fact ' has been considered by the courts.
In this connection it may be instructive to refer to the observations of Lord Denning in Mood Music, Publishing Co. Ltd. vs Dc.
Wolfe Ltd., [1976] 1 All England Law Reports 763 at 766.
, to the following ef fect: "The admissibility of evidence as to 'similar facts ' has been much considered in the crimi nal law.
Some of them have reached the highest 'tribunal, the latest of them being Boardman vs Director of Public Prosecutions (1974)3 All ER 887, (1975) A C 421.
The criminal courts have been very careful not to admit such evidence unless its probative value is so strong that it should be received in the interests of justice: and its admission will not operate unfairly to the accused.
In civil cases the courts have followed a similar line but have not been 476 so chary of admitting it.
In civil cases the courts will admit evidence of similar facts if it is logically probative, that is if it is logically relevant in determining the matter which is in issue, ' provided that it is not oppressive or unfair to the other side; and also that the other side has fair notice of it and is able to deal with it.
" On this aspect cross On Evidence, Sixth Edition page 346 has observed that although in some early Civil cases in England rejected similar fact evidence as res inter alias act, it was soon accepted that the rule of exclusion was certainly no stricter than that in criminal cases.
The real question was whether there was a special rule of exclusion at all, or whether it were not rather a question of simple relevance in each case.
The learned author noted that in more recent time, there has been a further relaxation of the exclusionary rules in civil cases.
Cross at page 346/347 further noted that the aforesaid observations of Lord Den ning might be interpreted as applying in civil cases a similar sort of balancing approach to the rules for the admissibility of similar fact evidence as applied in crimi nal cases.
The factors to be weighed were however different on account of the peculiar position of the accused in crimi nal cases.
The learned author noted that there was very high authority accounting for the existence of an exclusionary discretion in criminal cases solely by reference to the accused 's vulnerability to prejudice.
Applying the aforesaid principles to the facts as we have mentioned hereinbefore, we are of the opinion that the allegations of alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit addi tional evidence, in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced.
In support of the appellant in Civil Appeal arising out of Special Leave Petition No. 7568 of 1986, Dr. Singhvi submitted that the petitioner/appellant had suffered and would continue to suffer serious civil consequences on account of findings or adverse comments or strictures made by the learned single judge.
It was in those circumstances that this appeal had been filed, The appellant had resigned as Chief Minister and he is due, according to Dr. Singhvi, to contest the bye election in November, 1986.
He has fur ther submitted that the question in these appeals had to be viewed in the perspective of law and strictly on the basis of the record and should not be permitted to be politicised either by extraneous allusions or by.
presumptions and pre suppositions inconsistent with legal principles or by an attempt by political opponents to convert the proceedings into a political trial.
It was his submission that the averments and the supporting affidavits which formed the 477 basis of the allegations against the appellant were dealt with in the two courts below in the manner as we have indi cated.
He specially referred to the observations of the learned single judge about the affidavit in support of these allegations.
He also relied on the observation on Dr. Mi shra 's affidavit and the adverse comments made by the learned single judge on Dr. Mishra 's affidavit.
He also referred to the finding of the Division Bench that the petitioner had no personal knowledge of this incident nor had he disclosed the source of the information.
That the petitioner had filed the affidavit of one Manikant Misra and then drew our attention to the various allegations and infirmities of the affidavit and specially relied on the various motives which might have induced Dr. Rawal, respond ent No. 2 in the original petition to take the risk and alter the grades and also he referred us to the finding at page 132 of the Paper Book of the Division Bench that the evidence was much too slender in support of the charge against the appellant.
He emphasised that these appeals arose out of exercise of extra ordinary jurisdiction by the civil court, not by trial on examination and cross examina tion of evidence but an exercise of extra ordinary jurisdic tion on the basis of the affidavit, and the court should insist that there should be 'commensurate ' proof for judi cial certitude and that the distinction between 'finding ' and 'adverse comment ' was a distinction without any differ ence because it was throughout recognised as a finding.
The Division Bench in Appeal No. 216 of 1985 has held that the conclusion arrived at against Shri Nilangekar Patil was a comment and not a finding of fact.
Dr. Singhvi re ferred extensively to the affidavit of Dr. Mishra and com ments of learned single judge and the Division Bench as to how unreliable such affidavit was.
It was submitted that in view of the infirmities of the affidavit of Dr. Mishra upon which the original petitioner, Dr. Mahesh Madhav Gosavi based his own petition was of such an unreliable credience that the courts should not have entertained the application.
The Division Bench was unable to accept that position.
We are in agreement with the Divi sion Bench.
The allegations made in the petition disclose a lament able state of affairs in one of the premier universities of India.
The petitioner might have moved in his private inter est but enquiry into the conduct of the examiners of the Bombay University in one Of the highest medical degrees was a matter of public interest.
Such state Of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into.
It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary 478 and private litigation assumes the character of public interest litigation and such an enquiry cannot be avoided if it is necessary and essential for the administration of justice.
The allegations of the petitioner have been noted about the role of the Chief Minister.
It is well to remember that Rajagopala Ayyangar, J. Speaking for this Court in CS.
Rowjee & Ors., vs Andhra Pradesh State Road Transport Corpo ration observed at page 347 of the report that where allegations of this nature were made, the court must be cautious.
It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased in recent times.
This Court made these observations as early as 1964.
It is more true today than ever before.
But it has to be borne in mind that things are happening in public life which were never even anticipated before and there are several glaring instances of misuse of power by men in authority and position.
This is a phenomenon of which the courts are bound to take judicial notice.
In the said deci sion the court noted that it is possible to decide a matter of probabilities and of the inference to be drawn from all circumstances on which no direct evidence could be adduced.
The court further noted that it was somewhat unfortunate that allegations of mala fide which could have no foundation in fact were made and several cases which had come up before this Court and other courts and it had been found that these were made merely with a view to cause prejudice or in the hope that whether they have basis in fact or not some of which might at least stick.
It is therefore the duty of the courts, warned this Court in the said decision, to scruti nize these allegations with care so as to avoid being in any manner influenced by them in cases where they have no foun dation in fact.
In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their version of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allega tions of mala fides on the part of the authorities had been discharged in proving it.
Of course, the facts in the in stant case are different.
It is true that the basis of the allegations being the affidavit of Dr. Mishra was considered by the learned single judge as well as the Division Bench to be thoroughly unreliable.
In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest.
Therefore, while the court should be conscious to deal with the allegations of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances.
Our attention was drawn by learned counsel Dr. Singhvi on the observations of this Court in The Barium Chemicals Ltd. and Anr., vs The 479 Company Law Board and Others, [1966] Supp.
SCR 311 where at page 352 of the report the Court observed that where evi dence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources.
But the basis of such knowledge or source of information must be clearly stated.
This was laid down as early as 1909 by Jenkins, C.J. and Woodroofe, J. in Padmabati Dasi vs Rasik Lal Dhar, [ILR XXXVII Calcutta 259] where the Division Bench of the Calcutta High Court observed that the provisions of Order XIX, rule 3 of the Code of Civil Procedure, must be strictly observes: every affidavit should clearly express how much is a statement of the deponent 's knowledge and how much of the statement was in his belief, and the grounds of belief must be stated with sufficient particularity.
This has been followed more or less universally by courts in matters where reliance is placed on affidavits.
This view has been reiterated by this Court in The State of Bombay vs Purushottam Jog Naik. ; It is on this principle that Dr. Singhvi urged that the original petition should not have been entertained because of the defective affidavit in this case.
Undoubtedly the affidavit and the petition were defective as mentioned hereinbefore.
But the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the Court.
Reliance was also placed on the observations of this Court in E.P. Royappa vs State of Tamil Nadu & Anr., ; The Facts or that case need not be referred in detail except to mention that there allegation was made against the Chief Minister by a member of the Indian Admin istrative Service in the cadre of the State of Tamil Nadu for not appointing him as the Chief Secretary.
Ray, C.J. noted in the judgment several facts which were alleged as instances indicating mala fide.
It was stated that those instances gave rise to the wrath of the Chief Minister against the petitioner in that case.
After noting the al leged incidents, the Chief Justice rejected these events and indicated that from the affidavit evidence it could not have been said that the Chief Minister had committed acts of violence or intimidation and the entire affidavit evidence established beyond any measure of doubt that the allegations of the petitioner in that case imputing mala fides against the Chief Minister were baseless.
In a judgment concurring Bhagwati, J. as the learned Chief Justice then was, observed at page 389 of the report that in dealing with the allega tion of mala fide, it was necessary to bear in mind two important considerations; that the court was not concerned to investigate into the acts of maladministration by the political Government headed by the Chief Minister at that time.
It was not within the province of the court to embark on a far flung enquiry into the facts of commission and.
omission charged against the Chief Minister in the adminis tration of the affairs of Tamil Nadu.
That was not the scope of the inquiry before the court and the court must decline to enter upon any such. inquiry.
It was one thing to say that the Chief Minister had 480 malus animus against the petitioner in that case.
The court was only concerned with the later limited issue and not with the former popular issue.
The court cannot permit the peti tioner to side track the issue and escape the burden of establishing hestility and malus animus on the part of the Chief Minister by diverting courts attention to incidents of suspicious exercise of executive power.
It is perhaps on this basis that the Division Bench of the Bombay High Court in the instant case rejected the application for additional evidence and rejected the contention in support of the view of misrule or misconduct by the erstwhile Chief Minister of Maharashtra, Nilangekar Patil, the appellant in the first appeal.
The same principles in respect of affidavit evidence were reiterated in different context by this Court in Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198.
This Court reiterated that the High Court was not too wrong in dismissing the writ petition in limine in that case because a prima facie case requiring investiga tion had not been made out by the appellant.
This Court reiterated that the High Court would be justified in refus ing to carry on investigation into the allegations of mala fide if necessary particulars of the charge making out a prima facie case Were not given in the petition.
Since the burden of establishing mala fide lay very heavily on the person who alleged and the allegations made in regard there to in the writ petition were not sufficient in that case to establish malus animus, this Court found that the High Court was justified in dismissing the petition without issuing notice.
Dr. Singhvi submitted that precisely the same was the position in the instant case.
Reliance was also placed on Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; where at page 40 of the report after dealing with the allegations in the writ petition, this Court observed that the allegations in the writ petition were not sufficient to constitute an averment of mala fides so as the vitiate the orders of suspension issued in that case.
In such a situation the court was justified in refusing to carry out investigation into the allegations of mala fides if necessary particulars of the charge making a prima facie case were not there in the petition.
This Court reiterated that burden of mala fide prima facie lay very heavily on the person who alleged it.
There the petitioner sought to invalidate certain orders of suspension and it was the onus on them to establish the charge of bad faith or misuse of its power by the govern ment.
Halsbury 's laws of England, Fourth Edition, Volume 17 page 16 paragraph 19 deals with the standard of proof neces sary in these types of cases.
It has been stated that in civil cases the standard of proof is satisfied on a balance of probabilities.
However, even within this formula, there are variations depending upon the subject matter of allega tions.
481 About the adverse remarks being made against the erst while Chief Minister, we were reminded of the observations of this Court in The State of Uttar Pradesh vs Mohammad Naim 363 where this Court reiterated that it is a principle of cordinal importance in the administration of justice that the power, freedom of judges and Magistrates must be maintained and they must be allowed to perform their functions freely and without interference by any body, even by this Court.
But it is equally necessary that in express ing their opinions, Judges and Magistrates must be guided by considerations of justice, fair play and restriant.
Judicial pronouncements must be judicial in nature, and should ' not normally depart from sobriety, moderation and reserve.
In that case this Court found that the remarks in the judgment in respect of the entire police force of the State were not justified in the facts of the case, nor were they necessary for the disposal of the case and should have been expunged.
We are clearly of the opinion that the principle enunciated by that decision can have no application in the facts of this case.
In the instant case, the first issue was whether there was tampering of the gradesheet, a fact which has been found by the learned single judge and by the Division Bench and which is not in dispute in any of these appeals before us.
The other dispute was the allegation and the finding of the learned single judge was that the same was at the behest of the appellant in the first appeal and the respondent in the second appeal, Nilangekar Patil, the erstwhile Chief Minister.
This point was very much in issue.
He was a party.
He had been heard on this point.
So, therefore, whether the remarks were correct or not, is another issue but there was, no question of the remarks being beyond the issue and no question of the party against whom the remarks had been made had not been given an opportunity.
Our attention was drawn to the decision of this Court in Vineet Kumar vs Mangal Sain Wadhera AIR [1985] SC 817 in aid of the submission that additional evidence should have been allowed but in our opinion the context in which the said observation was made was entirely different and cannot have any relevance to the facts of this Case.
The Privy Counsil in The Bank of India and Others vs Jamesetji A.H. Chinoy and Messers.
Chinoy and Co. AIR reiterated that speculation is not enough to bring home the charge of fraudulent conspiracy.
In a different context dealing with the election matter in Sri Harasingh Charan Mohanty vs Sh.
Surendra Mohanty, ; the question arose was whether the consent or agency was there.
This Court observed that consent or agency of Shri Biju Patnaik could not be inferred from mere close friendship or other relationship or political affilia tion.
However, close was the relationship, unless there was evidence to prove that the person publishing or 482 writing the editorial was authorised by the returned candi date or he had undertaken to be responsible for all the publications, no consent could be inferred.
In our opinion, the observations must be read in the context of the facts of that case.
Seth Gulabchand vs Seth Kudilal and Others ; at 629] was a case under the Contract Act, 1872 where under section 3 of the applied the same standard of proof in all civil cases.
There this Court after referring to certain observations referred to the observations of the Division Bench of the Calcutta High Court in Jarat Kumari Dassi vs Bissesur.
ILR C.W.N. 265.
The Court thereafter referred to the definition of section 3 of the words 'proved ', 'disproved ' and 'not proved '.
Reference was made to the decision of the Patna High Court by Meredith, J. at page 630 in Raja Singh vs Chaichoo Singh AIR 1940 Patna 281 at 203 where it was ob served by Meredith, J. that it was well settled that where fraud had to be inferred from the circumstances and was not directly proved, those circumstances must be such as to exclude any other reasonable possibility.
In other words, the criterion was similar to that which was applicable to circumstancial evidence in criminal cases.
This Court ob served that this Court was unable to agree with those obser vations.
In that case this Court observed in respect of the allegation that a party had accepted bribe in a civil case did not convert it into a criminal case and ordinarily rule of civil cases would apply.
Reliance was placed on the observations of this Court in the case of Niranjan Patnaik vs Sashibhushan Kur and Another (supra) to which one of us (section Natarajan, J.) was a party where this Court dealt with certain adverse remarks made against the Minister.
This Court reiterated that the High Court and this Court must be deemed to have power to see that the courts below do not unjustly and without any lawful excuse take away the character of a party or of a witness or of a counsel before it.
The observations in that case in our opinion are inapplicable in the instant case.
There an adverse remark had been made which the court found to be unjustified which was not relevant to the issue in point and the party 'against whom such observations having been made was not a party to the said proceedings but only a witness.
Our attention was also drawn to certain English eases which have been noted by the Division Bench in the order under appeal and it is not necessary for us to refer to these in detail.
The Division Bench noted that this Court had in the case of State of Uttar Pradesh vs Mohammad Naim (supra) had exhaustively dealt with the limitation in making these remarks i.e. (1) whether a party whose conduct in question was before the court had an opportunity of explaining or defending himself; (2) whether there was evidence on record hearing on that conduct 483 justifying the remarks; (3) whether it was necessary for the decision of the case as an integral part thereof to refer to that conduct; and (4) the observations must be judicial in nature.
These tests, the Division Bench observed were satis fied in respect of the remarks made by the learned single judge.
The Division Bench was of the view that the circum stances relied before the learned single judge formed a reasonable and cogent basis for the adverse comment on the conduct of the appellant herein in the first appeal.
Howev er, the Division Bench made it clear that it was merely in the nature of an adverse comment based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavit.
A fuller enquiry might lead to a conclusion that the comment was not justi fied.
In that view of the matter the Division Bench asked the learned counsel whether the appellant in the first appeal desired that there ' should be a full fledged factual enquiry into the charge of the grades of respondent No. 4 having been altered as aforesaid.
Such enquiry, however, must be done by a body, the Division Bench suggested, nomi nated by the Chief Justice of Bombay High Court.
Counsel for the appellant in the first appeal before us made no request for such an enquiry, however, must be done by a body, the Division Bench suggested, nominated by the Chief Justice of Bombay High Court.
Counsel for the an enquiry, before the High Court.
In other words, he was not willing to invite an enquiry to clear his image.
Shri Tarkunde, appearing on behalf of the respondent in the first appeal and appellant in the second one, submitted before us that there was sufficient substantial evidence before the learned single judge to come to the conclusion that the tampering was done at the behest of the erstwhile Chief Minister of Maharashtra.
He submitted it was a finding of fact based on substantial evidence and there was clear material on such evidence.
He further submitted that in a matter of this nature where public interest was involved namely, state of affairs in the University of Bombay in respect of a high degree in the medicine and in which the conduct of the Chief Minister was involved, public interest demanded that the High Court should have investigated the matter even though there might be some infirmities in the affidavit supporting the petition.
He submitted that in this case that after the initiation of the proceeding, public interest was involved and the High Court was justified in entertaining the application.
He, therefore, submitted that the second appeal arising out of Special Leave Petition No. 10665 of 1986 should be allowed.
He further submitted that in a case of this nature, additional evidence should have been admitted.
It was further submitted by Mr. Karanjawala, counsel, that even if this Court was inclined to accept that there was no distinction between a comment and a conclusion of fact in view of the facts disclosed in this case, this Court in exercise of its judicial discretion under article 136 of the 484 Constitution should not interfere in the facts and circum stances of this case.
He urged that neither the cause of justice nor public interest demanded interference under Article 136 of the Constitution.
It is true that exercise of the power under article 136 of the Constitution is discre tionary.
There is no question in this case of giving any clean chit to the appellant in the first appeal before us.
It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest.
It is true that there is no direct evidence.
It is also true that there is no evi dence to link him up with tampering.
Tampering is estab lished.
The relationship is established.
The reluctance to face a public enquiry is also apparent.
Apparently Shri Patil, though holding a public office does not believe that "ceaser 's wife must be above suspicion".
The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court.
The facts disclose a sorry state of affairs.
Attempt was made to pass the daughter of the erstwhile Chief Minister who had failed thrice before by tampering the record.
The person who did it was an employee of the Corporation.
It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment, we substitute the observations made by the aforesaid observa tions as herein.
This Court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale.
It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere.
The pollution in our values and standards is an equally grave menace as the pollution of the environment.
Where such situations cry out the Courts should not and cannot remain mute and dumb.
In that view of the matter, we dispose of the two ap peals and application for adducing additional evidence with the observations made aforesaid.
In the facts and circum stances of this case, there will be no order as to costs.
|
Dr. Mahesh Madhay Gosavi appellant in CA 4453/86 and respondent in CA 4452/86 was a failed candidate at the M.D. examination in the speciality of Gynaecology and Obstetrics held in the year 1985.
He filed a writ petition under Arti cle 226 of the Constitution of India in the High Court of Bombay challenging the results of the M.D. examination held in November ' 85.
He alleged that favouritism was shown by one Dr. Rawal who went to the extent of tampering with grade sheets of the examinees so as to clear unsuccessful candi dates and in particular Smt.
Chandrakala Patil daughter of the Chief Minister of Maharashtra appellant in CA 4452/86 and respondent in cross appeal CA 4453/86.
In support of the writ petition alleging how the malpractice took place, he filed an affidavit (hearsay evidence) of one Dr. Manikant Mishra, who is supposed to have heard certain talks that took place between Dr. Rawal and Smt.
Chandrakala Patil at Dr. Rawals ' Chambers and that what the deponent heard came to be proved by the M.D. (Gynae) results in which one Dr. Smita Thakkar and Smt.
Chandrakala Patil who could not clear the said examination thrice were shown to have passed.
It was alleged that the tampering of the grade sheets were done by Dr. Rawal at the behest of the appellant in C.A. 4452/86.
The said allegations were refuted by the appellant Shivaji Rao Patil, Smt.
Chandrakala Patil, his daughter, Dr. Rawal and another Dr. Shah on oath by filing their affidavits.
The 459 respondent, though he had verified his petition, did not disclose the so called reliable source of information de rived by him.
(about the allegations made against the appel lant & others.
The learned Single Judge held: (i) that the evidence of Respondent Madhav Gosavi as well as of Dr. Mishra were unsatisfactory and unreliable: (ii) that it was impossible to place any reliance on the evidence of Dr. Mishra as it was not known how he came to contact Dr. Gosavi or why he did not choose to file affidavit till 28.2.1986 when the appellant Patil had already filed his affidavit on 26.1.86; (iii) that the allegation and the averments made in para graph 14 of the writ petition were wholly unsatisfactory and insufficient because the Respondent petitioner had not disclosed from whom he derived them; (iv) that there was tampering with grade sheets of Respondents 4 to 15 by Dr. Rawal and (v) that in the facts and circumstances of this it could reasonably be inferred that the alteration was done at the behest of the appellant in CA 4452/86 and her daughter Chandrakala.
This was because Dr. Rawal was an experienced examiner, not young or immature and a person like him would not proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to please the people in power.
The risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own.
Accordingly he allowed the writ peti tion, passed some structures against Dr. Rawal and the appellant in CA 4452/86 and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal.
An application made before the Judge for adducing cer tain additional evidence was rejected.
After the judgment the Vice Chancellor and the Chief Minister resigned from their posts.
Three appeals, No. 214/86 by Dr. Rawal No. 215/86 by Dr. Chaodrakala Patil and No. 216/86 by the appellant Shivaji Rao Patil, were heard and disposed of by the Division Bench consisting of the Acting Chief Justice Kania and Shah J. of the Bombay High Court on 16th June, 1986.
So far as appeal No. 216 of 1986 is concerned, according to the Division Bench; (i) there was no direct evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant; (ii) the reasonings of the trial Judge in coming to the conclusion that respondents No. 3 and 4 the original petition were responsible for getting Dr. Rawal to alter the grades was based on certain contingencies and were too tenuous for the conclusion based on such reasoning to amount to a positive finding; (iii) Merely because respond ent No. 3 to the original petition held a position of great power and would have been happy to see that his daughter had passed the M.D. examination, it was difficult to conclude, as a finding of fact that he must have 460 influenced Dr. Rawal to alter the grades of his daughter; (iv) it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure or pursuation, but it cannot be ruled out the possibility of various motives which might have induced Dr. Rawal to take the risk of altering the grades; (v) however in all probability Dr. Rawal would not have acted unless he had made him assured that the appellant Shivaji Rao Patil was behind the person who pur suaded him 'to alter the grades; (vi) that when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded.
Therefore the Bench observed that the remarks made against the appellant.
Nilangekar Patil cannot be supported as conclusions arrived at against him but these can be regarded as adverse comments and not finding of fact and such comments were not wholly unjustified in the facts of this case.
However, the Division Bench refused to enter tain an application to introduce additional evidence as part of the claim of public interest litigation.
Hence the appeal No. CA 4452/86 by Nilangekar Patii against the adverse comments were allowed to remain and there was a cross appeal 4453/86 by Dr; Madhav Gosavi against refusal to accept additional evidence.
Dismissing the appeals by special leave, the Court, HELD: 1.1 The basic principle of admission of addition al evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance.
Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence.
Thirdly that additional evidence was relevant for the determination of the issue.
[474 G] Here, the additional evidence sought to be introduced mainly consist of alleged instances when the appellant on previous occassions had in respect of some criminal proceed ings and other matters pending used his influence to drop those proceedings.
Applying the principle as to admission of "similar fact evidence" it must be held that the allegations of the alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit additional evidence in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced.
[474 H, 476 E] Mood Music Publishing Co. Ltd. vs De Wolfe Ltd., @ 766, quoted with approval.
461 2.
The mere fact that several infirmities were noticed in the affidavit of Dr. Mishra upon which the original petitioner Dr. Gosavi based his own petition could not lead to the argument that the entertainment of the petition itself was wrong.
The allegations made in the petition disclose a lamentable state of affairs in one of the premier universities of India.
The petitioner might have moved in his private interest but enquiry into the conduct of the examiners of the Bombay University in one of the highest medical degrees was a matter of public interest.
Such state of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into.
It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary and private litigation assumed the character of public interest litigation and such an inquiry cannot be avoided if it is necessary and essential for the administra tion of justice.
[477F, 477G 478A] 3.1 It is true that exercise of the power under Article 136 of the Constitution is discretionary.
There is no ques tion in this case of giving any clean chit to the appellant in the first appeal.
It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest.
It is true that there is no direct evidence.
It is also true that there is no evidence to link him up with tampering.
Tampering is established.
The relationship is established.
The reluctance to face a public enquiry is also apparent.
Apparently Shri Patii, though holding a public office does not believe that "ceaser 's wife must be above suspicion".
The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court.
The facts disclose a sorry state of affairs.
Attempt was made to pass the, daughter of the erstwhile chief Minister who had failed thrice before by tampering the record.
The person who did it was an employee of the Corporation.
It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment.
[484A D] 3.2 The court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale.
It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere.
The pollution in the values and standards is an equally grave menace as the pollution of the environment.
Where such situations cry out the Courts should not and cannot remain mute and dumb.
[484 E] 3.3 Where allegations of mala fide were made, the Court must be cautious.
It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased 462 in recent times.
In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their ver sion of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allegations of mala fides on the part of the authorities had been discharged in proving it.
It is true that the basis of the allegations being the affidavit of Dr. Mishra was con sidered to be thoroughly unreliable.
In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest.
Therefore, while the court should be conscious to deal with the allega tions of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances.
[478 B, F G] C.S. Rawjee & Ors.
vs Andhra Pradesh State Road Trans port Corporation, , referred to.
3.4 Where evidence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources.
Here it is true that undoubtedly the affidavit and the petition were defective, but the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the court.
[479A. D] The Barium Chemicals Ltd. & Anr.
vs The Company Law Board & Ors., [1966] Supp.
SCR 311; Padmabati Dasi vs Rasik Lal Dhar, ILR XXXVII Calcutta 259; The State of Bombay vs Purushottam Jog Naik; , ; E.P. Royappa vs State of Tamil Nadu & Anr. ; ; Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198; and Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; ; Seth Gulabchand vs Seth Kudilal & Ors., ; at 629; Jarat Kumari Dassi vs Bissesur, ILR 39 Cal.
245:16 C.W.N. 265; Raja Singh vs Chaichoo Singh, AIR 1940 Patna 281 at 203, referred to.
The State of Uttar Pradesh vs Mohammad Naim, ; Vineet Kumar vs Mangal Sain Wadhera, AIR 1985SC817; The Bank of lndia & Ors., vs Jamesetji A.H. Chiney and Messrs. Chinoy and Co., AIR 1950 PC 90; Sri Harasingh Charan Mohantv vs Sh.
Surendra Mohanty, ; ; Niranjan Patnaik vs Shashibhushan Kar and Anr. , distinguished.
|
s Nos.
630 32 of 1984 Under Article a2 of the Constitution of India.
M.K. Ramamurthy, Shanti Bhushan, U.R. Lalit, M.R. Shar ma, S.K. Mehta, B.R. Agarwala, N.D. Garg, E.M.S. Anam, P.D. Sharma, C.V. Subba Rao, I.S. Goel, Dr. K.S. Tiwari, P.H. Parekh, Sohail Dutt, Uma Datta and V.P. Goel for the appear ing parties.
The Judgment of the Court was delivered by SEN, J.
These petitions upder article 32 of the Constitu tion assail the constitutional validity of a notification issued by the State Government of Haryana in the Public Works Department (Irrigation Branch) dated June 22, 1984 purporting to amend r.6(b) of the Punjab Service of Engi neers, Class I, PUblic Works Department (Irrigation Branch) Rules, 1964 (for short 'the Class I Rules ') with retrospec tive effect from July 10, 1964 as violative of articles 14 and 16(1) of the Constitution and also ultra vires the State Government by reason of the proviso to s.82(6) of the .
The purport and effect of the impugned notification is to nullify the decision of this Court in A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, holding 589 that a degree in Engineering was not essential for such promotion.
By the impugned notification, a degree in Engi neering is made an essential qualification for promotion of Assistant Engineers in the Irrigation Branch, a Class II service under r.6(b) of the Class I Rules and thereby the petitioners have been rendered ineligible for promotion to the post of Executive Engineer in Class I service.
The circumstances which led to the issuance of the impugned notification are these.
A controversy had arisen on the construction of r.6 of the Class I Rules as to whether a degree in Engineering was necessary when the post of Execu tive Engineer, which is a post in Class I service, was to be filled by promotion by members of Class II service and this was settled by the decision of this Court in A.S. Parmar 's case, supra.
The Court on a consideration of the relevant rules came to the conclusion that a member of Class II service, namely, Assistant Engineer or Sub Divisional Offi cer did not require to have a University degree for promo tion to the post of Executive Engineer in Class I service.
On February 24, 1984, the Additional Solicitor General gave an undertaking on behalf of the State Government that it would consider the cases of all eligible persons including the petitioners for regular appointment to the Class I service in accordance with the rules and complete the proc ess within four months from that day.
The Court, according ly, in Civil Appeal No. 149 of 1981 (Ashok Gulati & Ors.
vs State of Haryana) and the connected matters as also in these petitions under article 32 of the Constitution passed an order to the effect: "Mr. K.G. Bhagat, learned Additional Solicitor General says that the State Government will consider the cases of all the eligible persons including the appellants/petitioners and respondents for regular appointments to Class I Service in accordance with the law and complete the process of appointments within 4 months from today.
The Government is permitted to do so.
But all appointments made pursuant to this order will be subject to the final result of these cases.
In the meanwhile the appellants will continue in the posts held by them.
These matters will stand adjourned for a period of 6 months from today.
" 590 Just two days before the expiry of the period within which promotion of eligible persons including the petitioners was to be completed, the State Government purported to effect an amendment of r.6(b) retrospectively w.e.f. July 10, 1964.
The impugned notification was in these terms: "HARYANA GOVERNMENT PUBLIC WORKS DEPARTMENT (IRRIGATION) NOTIFICATION The 22nd June, 1984.
No. G.S.R. 47/Cons./Art. 309/Amend.
(1) 84 Inexercise of the powers conferred by the proviso to Article 309 of the Constitution of India and all other powers enabling him in this behalf, the Governor of Haryana, hereby makes the following rules further to amend the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch) Rules, 1964, namely: 1.
(1) These rules may be called the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch), Haryana, (Second Amend ment) Rules, 1984.
(2) 'These rules shall be deemed to have come into force with effect from the 10th July, 1964.
In the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch) Rules, 1964, in rule 6, in clause (b), after the words "eight years service", the words, "in addition to the qualifications prescribed in clause (a)" shall be inserted.
" Presumably, the State Government adopted this unfortu nate course of action taking cue of the observations made by this Court in the concluding part of the judgment in A.S. Parmar 's case saying that if the Government wish to appoint only persons having a degree in Engineering to Class I service, it was free to do so by promulgating appropriate rules and that the power to frame such a rule was beyond question.
But the Court never laid down that such a rule may be framed under article 309 of the Constitution with retrospec tive effect so as to render ineligible Class II officers like the petitioners who were Diploma holders for further promotion as Executive Engineers in Class I service.
In view of the clear formulation of law interpreting 591 r.6(b) of the Class I Rules holding that a degree in Engi neering was not an essential qualification for promotion of Class II Officers to the cadre of Executive Engineers in Class I service, there was no occasion for the State Govern ment to issue the impugned notification unless it was with the object of nullifying the decision of this Court in A.S. Parmar 's case.
In order to appreciate the points involved, it is neces sary to state a few facts.
The three petitioners T.R. Kapur, Mohinder Singh and V.D. Grover who are Diploma holders hold the posts of Sub Divisional Officers, Public Works Depart ment (Irrigation Branch), Haryana, a Class II service, governed by the Haryana Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1970.
They joined Class III service as Overseers in the Irrigation Branch on Septem ber, 18, 1953, October 6, 1949 and November 8, 1952 respec tively in the erstwhile State of Punjab.
At the time when they were appointed to the Overseers Engineering Service, Punjab, r.3(c) of the Punjab Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1941 enjoined that no person shall be appointed to the service unless he possessed one of the University degrees or other qualifications pre scribed in Appendix 'A ' to the Rules.
Note beneath cl.(c), however, provided that the requirements of cl.(c) could be waived in the case of members of the Overseers Engineering Service (Irrigation Branch) Punjab to be promoted in the service under the proviso to r.5 of the Rules.
The term 'service ' was defined in r. 1(2)(g) to mean the Punjab Service of Engineers, Class II (Irrigation Branch), Proviso to r.5 of Part II Appointments Rules, reads as follows: "Provided that this rule may be relaxed by Government on the recommendations of the Chief Engineers in order to admit the promotion of a member of an Overseer Engineering Service (Irrigation Branch), Punjab of outstanding merit who may not possess the qualifications specified in In due course, the petitioners were promoted as Offg.
Sub Divisional Officers in the Class II service in November 1969, July 1966 and January 1964 respectively.
Subsequent ly, by notification dated October 27, 1985, the petitioners were appointed as Sub Divisional Officers on a regular basis w.e.f. December 25, 1970.
Under the unamended r.6(b) of the Class I Rules, the petitioners were eligible for promotion as Executive Engineers in Class I service despite the fact that they did not possess a degree in Engineering.
Rule 6 of Class I 592 Rules insofar as relevant may be reproduced: "6.
Qualifications: No person shall be ap pointed to the service unless he (a) possesses one of the University Degrees or other qualifications prescribed in Appendix B of these rules; Provided that Government may waive this qualification in the case of a particular officer belonging to the Class II Service.
(b) In case of appointment by promotion from Class II Service, has completed in that Class of Service for a period of ten years from the commencement of these rules, six years service and after that period eight years service." Shri Shanti Bhushan, learned counsel for the petitioners has put forward a three fold contention.
First of these submissions is that the impugned notification which purport ed to amend r.6(b) of the Class I Rules with retrospective effect from July 10, 1964 making a degree in Engineering essential for promotion to the post of Executive Engineer in Class I service constitutes a variation in the conditions of service applicable to officers belonging to Class II service who are diplomaholders like the petitioners prior to the appointed day i.e. November 1, 1966 to their disadvantage as it renders them ineligible for promotion to the post of Executive Engineer in Class I service and was ultra vires the State Government having been made without the previous approval of the Central Government as enjoined by the provi so to s.82(6),of the .
It is urged that any rule which affects the promotion of a person relates to his conditions of service, although mere chances of promotion may not be.
The contention, in our opinion, must prevail.
The second is that it was not permissible for the State Government to amend r.6(b) of the Class I Rules with retrospective effect under the proviso to article 309 of the Constitution so as to render ineligible for promotion to the post of Executive Engineer in Class I service, the members of Class II service who are diploma holders although they satisfy the condition of eligibility of eight years ' experience in that class of service.
It is said that the unamended r.6(b) conferred a vested right on persons like the petitioners which could not be taken away by retrospec tive amendment of r.6(b).
The third and the last submission is that the action of the State Government in issuing the impugned notification making retrospective 593 amendment of r.6(b) of the Class I Rules was wholly arbi trary, irrational and mala fide and thus violative of articles 14 and 16(1) of the Constitution.
It is submitted that the impugned notification was calculated to circumvent the direction given by this Court in its order dated February 24, 1984 on the basis of the undertaking given by the learned Additional Solicitor General that the State Govern ment would consider the cases of all eligible officers belonging to Class II service for promotion to the Class I service.
Sub s.(6) of s.82 of the provides: "82(6).
Nothing in this section shall be deemed to affect on or after the appointed day the operation of the provisions of Chapter I of of the Constitution in relation to the determination of the conditions of service of persons serving in connection with the affairs of the Union or any State: Provided that the conditions of service applicable immediately before the appointed day to the case of any person re ferred to in sub:section (1) or sub section (2) shall not be varied to his disadvantage except with the previous approval of the Central Government.
" It is quite clear that the proviso to section 82(6) of the is in the nature of a fetter on the power of the Governor under the proviso to article 309 of the Constitution to alter the conditions of service applicable to all persons serving in connection with the affairs of the State.
It interdicts that the conditions of service applicable to persons referred to in sub section
(1) or sub section
(2) thereof i.e. members of civil services affected by the reorganisation of the State.
The conditions of serv ice of any persons who immediately before the appointed day were serving in connection with the affairs of the existing State of Punjab and are as from that date allocated for service in connection with the affairs of the successor State i.e. allocated Government servants can not be varied to their disadvantage.
There is a long fine of decisions starting from Mohammad Bhakar vs
Y. Krishan Reddy, down to Mohammed Shujat Ali & Ors.
vs Union of India & Ors.
, ; while construing the analogous provision contained in the proviso to section 115(7) of the laying down that any rule made 594 under the proviso to article 309 of the Constitution which seeks to vary or alter the conditions of service without the previous approval of the Central Government would be void and inoperative being in violation of the proviso to sub section
(7) of section 115 of the Act.
, It is a trite proposition that any rule which affects the right of a person to be consid ered for promotion is a condition of service, although mere chances of promotion may not be.
As laid down by this Court in A.S. Parmar 's case, the petitioners like other members of Class II service who are diploma holders and satisfy the eligibility test of eight years ' service in that class, were eligible for being considered for promotion to the post of Executive Engineer in Class I service without having a degree in Engineering.
Admittedly, the impugned notification which seeks to amend r.6(b) with retrospective effect from July 10, 1964 clearly operates to their disadvantage as its purports to make them ineligible for promotion being diplo ma holders.
In Mohammad Bhakar 's case, the Court speaking through Mitter, J. said: "A rule which affects the promotion of a person relates to his conditions of service".
It was held that a rule which made the passing of certain departmental examinations a pre requisite for promotion having been made without the previous approval of the Central Government was void by reason of sub section
(7) of section 115.
In Mohammad Shujat Ali 's case, a Constitution Bench of this Court speaking through Bhagwati, J. observed: "A rule which confers a right of actual promotion or a right to be considered for promotion is a rule prescribing a condition of service." Under the Class I Rules as they existed immediately prior to the appointed day i.e. before November 1, 1966, a member of the Overseers Engineering Service in the Irrigation Branch, Punjab having a diploma was eligible for being promoted as Sub Divisional Officer in the Class II Service and then in due course to the post of Executive Engineer in the Class I service within the quota prescribed for them without having a degree in Engineering.
It was not necessary to possess a degree in Engineering as held by this Court in A.S. Parmar 's case for purposes of promotion under the unamended r.6(b) of the Class I Rules, as in the case of promotion to the post of Executive Engineer in Class I service under r.6(b) what was essential was eight years ' service in that class and not a degree in Engineering.
The impugned notification which purports to amend r.6(b) with retrospective effect, however, renders members of the Class II service like the 595 petitioners who are diploma holders ineligible for promotion by making a degree in Engineering an essential qualification for such promotion which amounts to alteration of the condi tions of service applicable to them to their disadvantage without the previous approval of the Central Government and is thus void by reason of the proviso to sub s.(6) of s.82 of the .
Faced with the difficulty, learned counsel for the respondents strenuously contends that the proviso to s.82(6) of the Act is not attracted in the present case.
It is argued that on the appointed day i.e. November 1, 1966 the petitioners were not members of Class II service.
It is said that the petitioners on the appointed day being Supervisors belonged to the Class III service and therefore were not governed by the unamended r.6(b).
Reliance is placed on the notification issued by the State Government dated October 27, 1985 constituting the Class II service w.e.f. December 25, 1970 and it is said that the petitioners are not shown as belonging to Class II service.
It was then contended that under r.3(c) of the Punjab Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1941, a degree in Engi neering was essential till the Punjab Service of Engineers, Class II, P.W. D. (Irrigation Branch) Rules, 1970 brought about a change.
Inasmuch as none of the petitioners had the requisite qualifications, they could not become members of the Class II service.
We are unable to accept this line of reasoning.
Undoubtedly, at the time when the petitioners were recruited as Supervisors in the Irrigation Branch, a Class III service, r.3(c) of the Punjab Service of Engineers, Class II, P.W.D. (Irrigation Branch) Rules, 1941 laid down that no person shall be appointed to the service unless he possessed one of the university degrees or other qualifica tions prescribed in Appendix 'A ' to the Rules.
Note beneath r.3(c) however provided that the requirements of cl.
(c) could be waived in the case of members of the Overseers Engineering Service, Irrigation Branch, Punjab for promotion to the service under the proviso to r.5 of the Rules.
The term 'service ' as defined in r. 1(2)(g) meant the Punjab Service of Engineers, Class II (Irrigation Branch).
Proviso to r.5 of the Rules, however, empowered the State Government to relax the condition.
It is clear from the terms of the proviso to r.5 quoted above that the State Government could relax the requirements of r.3(c) on the recommendation of the Chief Engineer in order to admit the promotion of a member of the Overseers Engineering Service, Irrigation Branch, Punjab if he was an officer of outstanding merit although he did not possess the qualifications specified in r.3(c) i.e. a 596 degree in Engineering.
Presumably, the petitioners were officers of outstanding merit and they were promoted as Offg.
Sub Divisional Officers in Class II service in January 1964, July 1966 and November 1969.
Eventually, the State Government by notification dated October 27, 1985 appointed them on a regular basis in that post, w.e.f. December 25, 1970. 'Further, it is wrong to suggest that on the appointed day i.e. on November 1, 1966 they were all Overseers belong ing to the Class III service and were therefore not governed by the unamended r 6(b).
Two of them V.D. Grover and Mohin der Singh had already been ' promoted as Offg.
Sub Divisional Officers prior to the appointed day i.e. in January 1964 and July 1966 and were therefore governed by the unamended r.6(b) of the Class I Rules and the third petitioner T.R. Kapur was also promoted to that post.
subsequently in Novem ber 1969.
Upon such promotion to the post of Offg.
Sub Divisional Officers they had not only the legitimate expec tation that they would in due course be considered for confirmation but also had the right on such confirmation to be considered for promotion.
It is also not quite accurate to say that the petitioners were not shown as belonging to the Class II service.
A bare look at the notification dated October 27, 1985 would show that the petitioners figure at Sr.
Nos. 246, 254 and 369.
It is not suggested that the State Government ever moved the Central Government seeking its prior approval to the proposed amendment of r.6(b) of the Class I Rules.
In that connection, it is necessary to recall that prior to the reorganisation of the States under the , a conference of the Chief Secretaries of the States that were to be affected was held at Delhi on May 18 and 19, 1956 for the purpose of formulation of the princi ples upon which integration of services was to be effected.
The Government of India by its circular dated May 11, 1957 to all the State Governments stated inter alia that it agreed with the views expressed on behalf of the States ' representatives that it would not be appropriate to provide any protection in the matter of departmental promotion.
This circular has been interpreted as a prior approval of the Central Government in terms of the proviso to sub s.(7) of section 115 of the Act in the matter of change of the conditions of service relating to departmental promotions.
These con siderations however do not arise in the present case.
Admit tedly, there was no Chief Secretaries Conference as was held prior to the reorganisation of the States under the .
Nor Was there any communication issued by the Central Government conveying its previous approval of the changes in service conditions which the States of Punjab and Haryana might 597 make in terms of the proviso to s.82(6) of the Punjab Reor ganisation Act, 1966.
Under the so also under the , the power of the Governor to make rules under the proviso to Art.309 of the Constitution had been controlled by the proviso to section 115(7) of the former Act and s.82(6) of the latter.
It follows that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub s.(1) or (2) of s.82 of the Act could not be varied to his disadvantage except with the previous approval of the Central Government.
That being so, the impugned notification issued by the State Government purporting to amend r.6(b) of the Class I Rules w.e.f.
July 10, 1964 which rendered members of Class II Service who are diploma holders like the petitioners ineligible for promo tion to the post of Executive Engineer in Class I Service making a degree in Engineering essential for such promotion, although they satisfied the condition of eligibility of 8 years ' experience in that class of service, must be struck down as ultra vires the State Government being contrary to s.82(6) of the . ' On the view that we take, there is no need for us to deal in detail with the other points raised.
We shall only touch upon them.
One should have thought that the controversy whether a degree in Engineering was an essential qualification for promotion of Sub Divisional Officers in Class II Service to the post of Executive E ngineer in Class I Service under r. 6(b) of the Class I Rules had ended with the decision of this Court in A.S. Parmar 's case.
Curiously enough, learned counsel for the respondents strenuously contends that the decision of this Court in A.S. Parmar 's case was incorrect.
He presses into service for our acceptance the decision of the High Court in o.
P. Bhatia vs State of Punjab, ILR taking a view to the contrary.
It is urged that in the erstwhile State of Punjab a degree in Engineering was essential for recruitment of Assistant Engineers in Class II Service under r. 3(c) of the 1941 Rules as held by the High Court in O.P. Bhatia 's case and that view was in consonance with the departmental instructions of the relevant rules in the State of Punjab and the State of Haryana as also in the erstwhile State of Punjab that r.6(b) required the promotees to have the essential qualification of a degree in Engineer ing.
We do not think that it is open to question the cor rectness of the decision in A.S. Parmar 's case which ex pressly overrules the view taken by the High Court in O.P. Bhatia 's case.
That apart, the proviso to r.5 of the 1941 Rules conferred power on the State Government to relax the requirement of r.3(c) on the recom 598 mendation of the Chief Engineer in order to admit the promo tion of a member of the Overseers Engineering Service (Irrigation Branch), Punjab if he was an officer of out standing merit although he did not possess the qualification prescribed in r.3(c) i.e. the educational qualification of a degree in Engineering.
The requirement of a degree in Engi neering for recruitment to the Class II Service was done away with in the 1970 Rules.
The contention also fails to take note of the fact that the requirement of a degree in Engineering which was an essential educational qualification for purposes of direct recruitment of Assistant Executive Engineers in Class I Service under r. 6(a) of the Class I Rules could not be projected for promotion of Sub Divisional Officers belonging to Class II Service to the posts of Executive Engineers in Class I Service under r. 6(b) as they form two distinct sources from which the appointments to the posts of Executive Engineers could be made.
As laid down in A.S. Parmar 's case, what was of the essence for purposes of promotion of Sub Divisional Officers who were members of Class II Service to the post of Executive Engineer under r.6 (b) of the Class I Rules was not a degree in Engineering, but 8 years ' experience in that class of service i.e. Class II Service.
More fundamental is the contention that the impugned notification issued by the State Government purporting to amend r.6(b) with retrospective effect from July 10, 1964 which rendered members of Class II Service who are diploma holders like the petitioners.
ineligible for promotion to the post of Executive Engineer although they satisfied the condition of eligibility of 8 years ' experience in that class of service was unreasonable, arbitrary and irrational and thus offended against articles 14 and 16(1) of the Consti tution.
It is urged that they were eligible for promotion under the unamended r.6(b) of the Class I Rules and had a fight to be considered for promotion to the post of Execu tive Engineer, and a retrospective amendment of r.6(b) seeking to render them ineligible was constitutionally impermissible.
It is said that the reason for this was obvious inasmuch as immediately prior to the reorganisation of the State of Punjab i.e. prior to November 1, 1966 even a member of the Overseers Engineering Service, a Class III Service, having only a diploma was eligible for being pro moted as Executive Engineer in Class I Service in due course since in the matter of promotion under the unamended r.6(b) it was not necessary to possess a degree in Engineering as held by this Court in A.S. Parmar 's case.
It follows there fore that every member of the Overseers Engineering Service was eligible for promotion first as Assistant Engineer or Sub Divisional Officer in Class II Service and thereafter, 599 in due course, to the post of Executive Engineer in Class I Service even without the educational qualification of a degree in Engineering.
In substance, the submission is that a retrospective amendment of r.6(b) by the impugned notifi cation which seeks to take away the eligibility of members of Class II Service who are diploma holders for purposes of promotion to the posts of Executive Engineers in Class I Service from a back date ranging over 20 years and thereby renders invalid the promotions already made is constitution ally impermissible.
It is well settled that the power to frame rules to regulate the conditions of service under the proviso to article 309 of the Constitution carries with it the power to amend or alter the rules with a retrospective effect: B.S. Vadhera vs Union of India, ; , Raj Kumar vs Union of India, , K. Nagaraj & Ors.
vs Sate of A.P. & Anr.
, ; and State Of J & K vs Triloki Nath Khosla & Ors., ; It is equally well settled that any rule which affects the right of a person to be considered for promotion is a condition of service although mere chances of promotion may not be.
It may further be stated that an authority competent to lay down qualifica tions for promotion, is also competent to change the quali fications.
The rules defining qualifications and suitability for promotion are conditions of service and they can be changed retrospectively.
This rule is however subject to a well recognised principle that the benefits acquired under the existing rules cannot be taken away by an amendment with retrospective effect, that is to say, there is no power to make such a rule under the proviso to article 309 which affects or impairs vested rights.
Therefore, unless it is specifi cally provided in the rules, the employees who are already promoted before the amendment of the rules, cannot be re verted and their promotions cannot be recalled.
In other words, such rules laying down qualifications for promotion made with retrospective effect must necessary satisfy the tests of articles 14 and 16(1) of the Constitution: State of Mysore vs M.N. Krishna Murty & Ors., ; B.S. Yadav & Ors.
vs State of Haryana & Ors.
, ; State of Gujarat & Anr.
vs Ramanlal Keshavlal Soni & Ors., ; and Ex Captain K.C. Arora & Anr.
vs State of Haryana & Ors.
, ; A Constitution Bench of this Court in State of Gujarat & Anr.
vs Ramanlal Keshavlal Soni & Ors.
(supra) had to con sider the constitutional validity of the proviso to section 102 (1)(a) of the Gujarat Panchayat Act, 1961 as introduced by the Gujarat Panchayat (Third Amendment) Act, 1978 with retrospective effect and sought to extinguish the status of secretaries, officers and servants of the Gram and Nagar 600 Panchayats who became members of a service under the State on being allocated to the panchayat service.
The Court speaking through Chinnappa Reddy, J. observed: "Now, in 1978 before the Amending Act was passed, thanks to the provisions of the Prin cipal Act of 1961, the ex municipal employees who had been allocated to the Panchayat Serv ice as Secretaries, Officers and Servants of Gram and Nagar Panchayats, had achieved the status of government servants.
Their status as Government servants could not be extinguished, so long as the posts were not abolished and their services were not terminated in accord ance with the provisions of Art.311 of the Constitution.
Nor was it permissible to single them out for differential treatment.
That would offend article 14 of the Constitution.
" The learned Judge observed that the Amending Act was sought to be given retrospective effect to get over the constitu tional safeguards of articles 311 and 14 by reverting to a situation that existed some 17 years ago.
He said that there was no power to do so and observed: "The legislation is pure and simple, self deceptive, if we may use such an expression with reference to a legislaturemade law.
The legislature is undoubtedly competent to legis late with retrospective effect to take away or impair any vested fight acquired under exist ing laws but since the laws are made under a written Constitution, and have to conform to the do 's and don 'ts of the Constitution nei ther prospective nor retrospective laws can be made so a to contravene Fundamental Rights.
The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today.
The law cannot say, twenty years ago the parties had no fights, therefore, the requirements of the Constitution will be satisfied if the law is dated back by twenty years.
We are concerned with today 's rights and not yesterday 'section A legislature cannot legislate today with reference to a situation that obtained twenty years ago and ignore the march of events and the constitu tional rights accrued in the course of the twenty years.
That would be most arbitrary, unreasonable and a negation of history.
" The learned Judge relied with approval on the following observations 601 of Chandrachud, CJ.
speaking for a Constitution Bench in B.S. Yadav & Ors.
vs State of Haryana & Ors.
(supra): "Since the Governor exercises the legislative power under the proviso to article 309 of the Constitution, it is open to him to give retro spective operation to the rules made under that provision.
But the date from which the rules are made to operate, must be shown to bear either from the face of the rules or by extrinsic evidence, reasonable nexus with the provisions contained in the rules, especially when the retrospective effect extends over a long period as in this case. ' ' and summed up: "Today 's equals cannot be made unequal by saying that they were unequal twenty years ago and we will restore that position by making a law today and making it retrospective.
Consti tutional rights, constitutional obligations and constitutional consequences cannot be tempered with that way.
A law which if made today would be plainly invalid as offending constitutional provisions in the context of the existing situation cannot become valid by being made retrospective.
Past virtue (consti tutional) cannot be made to wipe out present vice (constitutional) by making retrospective laws.
We are, therefore, firmly of the view that the Gujarat Panchayats (Third Amendment) Act, 1978 is unconstitutional, as it offends articles 311 and 14 and is arbitrary and unrea sonable.
" Following the view the Court in K.C. Arora 's case re ferred with approval to the observations of the Punjab & Haryana High Court in Harbhajan Singh vs State of Punjab, to the effect: "Now the rule making authority must have been aware that a competitive examination for appointment to the service had been held under the old rules and appointments were yet in the offing.
Surely, the rule making authority did not intend to exclude from appointment candi dates who were eligible under the old rules but became ineligible by reason of an amend ment of the rules made after the process of selection had almost reached a final stage." 602 And then queried: "Are they to be penalised "by barring their entry into the Punjab Civil Service (Judicial Branch) because they accepted employment at a time when acceptance of such employment was not a bar to appointment to the service? We do not think that we will be justified in at tributing such an unreasonable intention to the rule making authority.
In our view, the only reasonable interpretation of the amended rule, consistent with the prevailing situa tion, is to hold that only those persons who having joined the service of the Union or the State or a post under the Union or the State previously continued to hold the post on the date of the coming into force of the rule, are excluded from appointment to the Punjab Civil Service (Judicial Branch).
The expression 'joined or joins ' must be given a reasonable interpretation in the context of the situation and we think that our interpretation does not strain the language or attributes unreasona bleness to the rule making authority.
In that view, the petitioner cannot be said to be ineligible for appointment.
" The view expressed by the High Court has received the impri matur of the Court in K.C. Arora 's case.
That appears to be the present trend.
In the result, the petitions must succeed and are al lowed with costs.
The impugned notification dated June 22, 1984 issued by the State Government of Haryana purporting to amend r.6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules, 1964 with retrospective effect from July 10, 1964 is declared to be ultra vires the State Government.
P.S.S. Petitions allowed.
|
The proviso to sub s.(6) of s.82 of the Punjab Reorgani sation Act, 1966 mandates that the conditions of service applicable to any person referred to in sub s.(1) or sub s.(2) shall not be varied to his disadvantage except with the previous approval of the Central Government.
Rule 6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules, 1964, as it stood at the relevant time, provided that in case of appointment by promotion from Class II Service no person shall be appointed unless he has completed in that Class of Service for a period of ten years from the commencement of these ,Rules, six years service and after that period eight years service.
The Governor of Haryana by a notification dated 22nd June, 1984 amended the above Rules by inserting the words 'in addition to the qualifications prescribed in clause (a) ' after the words "eight years service" in cl(b) of r.6 with retrospective effect from July 10, 1964 thereby making a degree in Engineering essential for promotion to the post of Executive Engineer in Class I service.
Rule 3(c) of the Punjab Service of Engineers, Class II P.W.D. 585 (Irrigation Branch) Rules, 1941 had enjoined that no person shall be appointed to the service unless he possessed one of the University degrees or other qualifications prescribed.
The proviso to r.5 however, laid down that that rule may be relaxed by Government on the recommendations of the Chief Engineers in order to admit the promotion of a member of the Overseers Engineering Service of outstanding merit who may not possess the qualifications specified in rule 3.
The petitioners, who are Engineering Diploma holders, were appointed to Class 11I Overseers Engineering Service (Irrigation Branch) in the erstwhile State of Punjab in the year 1953, 1949 and 1952 respectively.
In due course they were promoted as Sub Divisional Officers in Class II service and were eligible for promotion to the post of Executive Engineer in Class I service under the unamended rule 6(b) having more than eight years ' service in Class II service.
In A.S. Parmar vs State of Haryana, [1984] 2 SCR 476 this Court interpreting the unamended rule 6(b) had held that a degree in Engineering was not an essential qualification for promotion of Class II Officers to the cadre of Executive Engineer in Class I service.
But just before they were about to be promoted the State of Haryana issued the impugned notification rendering them inelligible.
Aggrieved by the said notification they filed these writ petitions under Art.32 of the Constitution.
It was contended for them that the impugned notification purporting to amend r.6(b) of Class I Rules with retrospective effect was ultra vires the State Government being contrary to the proviso to s.82(6) of the , that the unamended r.6(b) had conferred a vested right of promotion on them which could not be taken away by retrospective amendment under the proviso to article 309 of the Constitution, that a retrospective amendment taking away eligibility for promotion from a back date ranging over 20 years and thereby rendering invalid the promotions already made was constitu tionally impermissible, and that the action of the Govern ment in making such retrospective amendment to nullify the decision in Parmar 's case was wholly arbitrary, irrational and mala fide and thus violative of articles 14 and 16(1) of the Constitution.
For the respondents it was contended that the proviso to section 82(6) was not attracted to the facts of the case since on the appointed day, that is, November 1, 1966 the petitioners were not members of Class II Service.
They were then Super visors belonging to Class 111 Service, and, therefore, were not governed by the unamended r.6(b).
It was further con tended that under r.3(c) of the Punjab Service of Engineers, Class II 586 P.W.D. (Irrigation Branch) Rules, 1941 a degree in Engineer ing was essential till the 1970 Rules brought about a change.
Inasmuch as none of the petitioners had the requi site qualifications, they could not become members of Class II Service.
It wag strenuously contended that the decision in A.S. Parmar vs State of Haryana was incorrect.
Allowing the writ petitions, the Court, HELD: 1.1 The impugned notification dated June 22, 1984 issued by the State Government of Haryana purporting to amend r.6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules 1964, with retrospective effect from July 10, 1964 is declared ultra vires the State Government being contrary to s.82(6) of the .
[602EF, S97CD] 1.2 The proviso to s.82(6) of the is in the nature of a fetter on the power of the Gover nor under the proviso to article 309 of the Constitution not to alter the conditions of service applicable to members of civil services affected by the reorganisation of the State to their disadvantage without the previous approval of the Central Government.
[593E, 597B] In the Instant case, the State Government never moved the Central Government seeking its prior approval to the proposed amendment of r.6(b) of the said Class I Rules.
There was no Chief Secretaries Conference as was held prior to the reorganisation of the States under the States Reor ganisation Act, 1956.
Nor was there any communication issued by the Central Government conveying its previous approval of the changes in the service conditions which the States of Punjab and Haryana might make in terms of the proviso to s.82(6) of the .
The amend ment, therefore, must be struck down.
[596E,G, 597C] Mohammad Bhakar vs
Y. Krishan Reddy, ; Mohammdd Shujat Ali & Ors.
vs Union of India & Ors.
, ; and A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, referred to.
I The decision in Parmar 's case is not open to ques tion.
What was of the essence for purposes of promotion of Sub Divisional Officers who were members of Class II Service to the post of Executive Engineer under r.6(b) of the Class I Rules was not a degree in Engineering, but eight years ' experience in Class II Service.
[597G, 598CD] 587 2.2 The petitioners like other members of Class II Service who are diploma holders and satisfy the eligibility test of eight years ' service in that Class were, therefore, eligible for being considered for promotion to the post of Executive Engineer in Class I service without having a degree in Engineering.
[594B] A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, referred to.
The requirement of a degree in Engineering which was an essential educational qualification for purposes of direct recruitment of Assistant Executive Engineers in Class I Service under r.6(a) of the Class I Rules could not be projected for promotion of Sub,Divisional Officers belonging to Class II Service to the posts of Executive Engineers in Class I. Service under r.6(b) as they form two distinct sources from which appointments to the posts of Executive Engineers could be made.
[598B] 4.
The proviso to r.5 of the 1941 Rules conferred power on the State Government to relax the requirement of r.3(c) on the recommendation of the Chief Engineer in order to admit the promotion of a member of the Overseen Engineering Service (Irrigation Branch), Punjab if he was an officer of outstanding merit although he did not possess the qualifica tion prescribed in r.3(c), i.e. a degree in Engineering.
Presumably, the petitioners were officers off outstanding merit as they were promoted as Offg.
Sub,Divisional Officers in Class II Service in January 1964, July 1966 and November 1969.
[597H 598A, 596A] 5.
It cannot be said that on the appointed day i.e. on November, 1, 1966 the petitioners were Overseers belonging to the Class III Service and were therefore not governed by unamended r.6(b).
Two of them had already been promoted as (Mfg. SUb,Divisional Officers prior to the appointed day, i.e. in January 1964 and July 1966 and were, therefore, governed by the unamended r.6(b).
The third petitioner was also promoted to that post subsequently in November 1969.
Upon such promotion to the post of Offg.
Sub Divisional Officers they had not only the legitimate expectation that they would in due course be considered for confirmation but also had the right on such confirmation to be considered for promotion.
It is also not quite accurate to say that the petitioners were not shown as belonging to the Class 11 Service.
A bare look at the notification dated October 27, 1985 would show that the petitioners figure at Sr.
Nos. 246, 254 and 369.
[596B D] 6.
The power to frame rules to regulate the conditions of service 588 under the proviso to article 309 of the Constitution carries with it the power to amend or alter the rules with a retro spective effect.
This rule is, however, subject to a well recognised principle that the benefits acquired under the existing rules cannot be taken away by an amendment with retrospective effect.
Therefore, unless it is specifically provided in the rules, the employees who were already pro moted before the amendment of the rules, cannot be reverted and their promotions cannot be recalled.
In other words, such rules laying down qualifications for promotion made with retrospective effect must necessarily satisfy the tests of articles 14 and 16(1) of the Constitution.
They do not, in the instant case.
[599B F] B.S. Vadhera vs Union of India, ; , Raj Kumar vs Union of India, ; K. Nagaraj & Ors.
vs State of A.P. & Anr.
, ; ; State of J & K vs Triloki Nath Khosla & Ors., ; ; State of Mysore vs
M.N. Krishna Murtv & Ors., ; ; B.S. Yadav & Ors., vs State of liaryana & Ors.; , ; State of Gujarat & Anr.
vs Ramanlal Keshavlal Soni & Ors., ; and Ex Captain K.C. Arora & Anr.
vs State of Haryana & Ors.
, ; , referred to.
|
ON: Civil Appeal No. 149 of 1981.
From the Judgment and Order dated 6.11.
1980 of the Punjab and Haryana High Court in C.P.A. No. 811 of 1980.
M.K. Ramamurthy, U.R. Lalit, Shanti Bhushan, M.R. Sharma, P.P. Rao, S.K. Mehta, B.R. Agarwala, N.D. Garg, E.M.S. Anam, P.P. Sharma, K.S. Tiwari, C.V. Subba Rao, I.S. Goel, P.H. Parekh, Sohail Dutt, Uma Datta and V.P. Goel for the appear ing parties.
The Judgment of the Court was delivered by SEN, J.
In this appeal by special leave, the short question involved is whether respondents Nos. 1 and 2 were entitled to the benefits of the period of service rendered by them as Temporary Engineers on an ad hoc basis in the Irrigation Branch of the Public Works Department, State of Haryana i.e. prior to their appointment as Assistant Engi neers on regular basis on April 21, 1975 along with the six appellants and respondents Nos.
5 24 for purposes of reckon ing their eligibility for promotion to the post of Executive Engineer under r.6(b) read with the Explanation thereto of the Haryana Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules, 1964, as amended in 1975, ( 'Class I Rules ' for short) as also for purposes of their seniority in the cadre of Assistant Engineers.
Facts bearing on the question are as follows.
In re sponse to an advertisement published in the Daily Tribune of February 6, 1970 inviting applications for appointment as Temporary Engineers on an ad hoc basis, respondent No. 1 B.S. Jain was appointed as a Tem 609 porary Engineer (ad hoc) w.e.f.
January 2, 1971 for a period of six months i.e. after the coming into force of the Har yana Service of Engineers, Class II, Public Works Department (Irrigation Branch) Rules, 1964 ( 'Class II Rules ' for short).
Prior to this, respondents No. 2 S.L. Gupta was also appointed as a Temporary Engineer on an ad hoc basis w.e.f.
May 19, 1969 by calling his name through the Employment Exchange i.e. subsequent to the coming into force of the Class II Rules.
Their appointments were de hors the rules to meet the exigencies of service.
In the letters of appoint ment issued to them, it was specified that their appointment was purely on an ad hoc basis for a period of six months from the date of their joining the post on a fixed salary of Rs.400 plus allowances and their services were terminable without notice.
They were specifically informed that the appointment would not entitle them to any seniority or other benefit under the service rules for the time being in force and would also not count towards increment in their salary.
They were also intimated that the posts of Temporary Engi neers in Class II service would be advertised in due course by the Haryana Public Service Commission and they should apply for such posts through the Commission, and that if they were not selected by the Commission, their services would be liable to be terminated without notice.
Also that their inter se seniority among the Temporary Engineers would be in the order of merit in the list of candidates as set tled by the Commission.
The services of respondents Nos. 1 and 2 were however continued by the State Government from time to time, six months at a time, till the Secretary, Haryana Public Service Commission by his letter dated July 8, 1973 addressed to the Commissioner and Secretary to the State Government of Haryana, Public Works Department (Irri gation Branch) conveyed the approval of the Commission to the ad hoc appointment of 251 Temporary Engineers beyond the period of six months till regular appointments were made to the posts through the Commission.
Accordingly, both these respondents continued to hold the posts of Temporary Engi neers on ad hoc basis till the end of the year 1974 i.e. till they were recruited as Assistant Engineers through the Public Service Commission on April 21, 1975 on regular basis.
It appears that in response to an advertisement issued by the Public Service Commission in October 1973, respond ents Nos. 1 & 2 appeared at a competitive examination along with the appellants and respondents Nos.
5 24 and were selected by the Public Service Commission for appointment as Assistant Engineers under the Haryana Service of Engineers, Class II, Public Works Department (Irrigation Branch) Rules, 1970.
In the letter of appointment issued by 610 the Commissioner and Secretary to Government of Haryana (Irrigation & Power Department) dated January 13, 1975 it was specified that inter se seniority of Assistant Engineers would be determined on the basis of the combined merit list prepared by the Public Service Commission: In the combined merit list prepared by the Commission, respondents Nos. 1 & 2 were placed very much below the appellants and respondents Nos.
5 24 being at serial Nos. 148 and 150 respectively.
It may be stated that the merit list prepared by the Commission has never been questioned before us.
A few more facts.
The State Government of Haryana by order dated December 20, 1978 promoted 62 Assistant Engi neers including the appellants and respondents Nos.
5 24 as Executive Engineers on a purely ad hoc basis for a period of six months subject to certain terms and conditions.
namely: (i) The promotions were subject to the approval of the Public Service Commission as also to the claims of other officers.
(ii) Such promotions were not to give any right to the officers for being appointed on a substantive basis as Executive Engineers.
And (iii) Such of the officers as had not passed the departmental professional and revenue exami nations were required to pass such examinations within a period of one year or otherwise they were liable to be reverted to their original post.
These ad hoc promotions of the appellants and respondents Nos. 5 24 were made in relax ation of the provisions contained in rr.6(b) and 15 of the Haryana Service of Engineers, Class I, Public Works Depart ment (Irrigation Branch) Rules, 1964.
Presumably, the State Government excluded from consideration the case of respond ents Nos. 1 & 2 for promotion because in the combined sen iority list they ranked below the appellants and respondents Nos.
5 24 being placed at serial Nos. 148 and 150 respec tively.
The ad hoc promotion of appellants and respondents Nos. 5 24 was assailed by respondents Nos. 1 & 2 by a petition under article 226 of the Constitution filed before the Punjab & Haryana High Court mainly on the ground that when qualified persons like them i.e. respondents Nos. 1 & 2 were eligible for being considered for promotion to the post of Executive Engineer under r. 6(b), there was no justification whatever for the State Government to grant general relaxation under the proviso thereof to make the ineligible persons eligible for promotion in denial of their claims.
It was further pleaded that the State Government having relaxed the condi tion of eligibility under the proviso to r.6(b) read with the Explanation thereof as regards eight years service in the case of promotion of the appellants and respon 611 dents Nos.
5 24 as Executive Engineer on an ad hoc basis, failed to appreciate that respondents Nos. 1 & 2 who were recruited along with them and had also put in more or less 31/2 years service as Assistant Engineers became entitled to the benefit of such relaxation and the action of the State Government in not considering their cases for such promotion was wholly arbitrary and was tantamount to denial of equal opportunity in the matter of employment in violation of articles 14 and 16(1) of the Constitution.
It was also pleaded that the power conferred on the State Government to grant relaxation under r.22 was not a general power but a power to mitigate hardship in a particular case and thus the general relaxation granted by the State Government to some of the respondents who had not passed their departmental profes sional and revenue examinations was invalid.
It was asserted that the State Government and the Engineer in Chief, Irriga tion Department, Haryana had wrongly treated respondents Nos. 1 & 2 as ineligible for promotion on the ground that the period from January 1971 and May 1969 upto April 21, 1975 i.e. the period during which respondents Nos. 1 & 2 remained employed as Temporary Engineers on ad hoc basis, could not be treated as period in that class of service within the meaning of r.6(b) i.e. in Class II service.
The specific stand taken by the State Government in the return filed before the High Court was that respondents Nos.
1 & 2 were recruited to the post of Assistant Engineer on April 21, 1975 and thus had only about 31/2 years service on December 20, 1978 to their credit when appellants and re spondents Nos.
5 24 were promoted as Executive Engineers on an ad hoc basis.
Prior to their appointment as Assistant Engineers, respondents Nos. 1 & 2 had been appointed as Temporary Engineers on ad hoc basis de hors the rules and under the terms of appointment they were not entitled to any seniority or other benefit under the service rules as a result of such appointment.
Further, it was pleaded that respondents Nos. 1 & 2 in the seniority list prepared by the Public Service Commission were ranked junior to the appel lants and respondents Nos.
5 24 and therefore they were not entitled to be considered for promotion.
A learned Single Judge (R.N. Mittal, J.) by his judgment dated October 8, 1980 quashed the impugned order of the State Government making ad hoc promotions of the appellants and respondents Nos.
5 24 and directed the State Government to reach a decision afresh as regards the ad hoc promotions with advertence to the observations made by him.
In his judgment the learned Single Judge repelled the contention of respondents Nos.
5 24 for being considered for promo 612 tion since none of them had completed eight years ' service as Assistant Engineer on the ground that the State Govern ment was empowered in terms of proviso to r. 6(b) to relax generally, in public interest, the condition regarding eight years ' experience for reasons to be recorded in writing.
He found on perusal of the records placed before him that reasons for the relaxation in public interest of the condi tion of eight years ' service imposed by r.6(b) had in fact been recorded for reducing the period to 31/2 years in consultation with the Finance Department.
He accordingly held that the ad hoc promotion of the appellants and re spondents Nos.
5 24 was not invalid on that account.
The learned Single Judge however accepted the contention of respondents Nos. 1 & 2 that they were entitled to the bene fit of the period of continuous officiation as Temporary Engineers on an ad hoc basis from January 1971 and May 1969 to April 21, 1975 in reckoning eight years ' experience in that class of service within the meaning of r.6(b) i.e. Class II service by reason of Explanation to r. 6(b) and were therefore eligible for promotion to the post of Execu tive Engineer under r. 8(2) in view of the definition of the expression 'Temporary Engineer ' contained in r.2(5), as amended in 1975.
He also upheld their contention that the power conferred on the State Government under r.22 was not a general power of relaxation but a power exercisable only to mitigate any undue hardship in the case of a particular individual and therefore the impugned order of the State Government permitting relaxation in the case of respondents Nos. 9, 10 and 11 Gyan Singh, P.D. Kadian and C.P. Goel as regards the passing of the departmental professional and revenue examinations as required by r. 15 was invalid.
Upon that view, the learned Single Judge allowed the Writ Peti tion and quashed the impugned order of the State Government for the ad hoc promotion of the appellants and respondents Nos.
5 24 as Executive Engineers.
Incidentally, the judgment of the learned Single Judge leaves untouched the impugned order insofar as it relates to the ad hoc promotion of 37 Assistant Engineers to the post of Executive Engineer.
Thereupon, the appellants preferred an appeal under cl. 10 of the letters patent but the appeal was dismissed in limine by a Division Bench (P.C. Jain & C.S. Tiwana, JJ) by its order dated November 6, 1980.
The learned Judges stated that they were in full agreement with the view expressed by the learned Single Judge.
The appellants apparently advanced a contention that the appointment of respondents Nos. 1 & 2 as Temporary Engineers on an ad hoc basis was contrary to Para 8.312 of the Manual of Administration and therefore the period during which they worked as Temporary Engineers (ad hoc) could not 613 be taken into consideration.
The learned Judges repelled the contention on the ground that no such point was taken before the learned Single Judge.
We must at the very outset observe that the judgment of the learned Single Judge quashing the impugned order of the State Government for the promotion of the appellants and respondents Nos. 5 24 as Executive Engineers on an ad hoc basis on the ground that the State Government could not have relaxed the condition of passing the departmental profes sional and revenue examinations prescribed under r. 15 of the Class I Rules by taking recourse to r. 22 which did not confer a general power of relaxation can hardly be sus tained.
We are afraid, the learned Single Judge was com pletely misled in taking the view that he did.
This was not a case of relaxation at all but a question of prescribing the period during which such examination had to be cleared as required under r. 15.
R. 15 in terms provides that the departmental professional and revenue examinations for purposes of promotion to the Class I service have to be passed within such period as may be prescribed.
The word 'prescribed ' in r. 15 clearly empowers the State Government to provide for the period during which the promoted officers had to pass the departmental test.
In terms of that rule, the State Government by the impugned order directed that the officers who had not passed the departmental professional and revenue examinations were required to pass such examina tions within a period of one year otherwise they were liable to be reverted to their original post.
It must be said in all fairness that learned counsel for respondents Nos. 1 & 2 did not support this part of the Judgment.
After having heard learned counselor the parties quite at some length in a heating lasting over several days, we feel that irrespective c f the merits of the contentions advanced, no useful purpose would be served in maintaining the judgment of the High Court insofar as it quashes the impugned order of the State Government dated December 20, 1978 for the promotion of the appellants and respondents Nos.
5 24 as Executive Engineers on an ad hoc basis after a lapse of such a long time as it would create unnecessary administrative complications.
During the heating we ex pressed our doubts about the wisdom of the High Court in entertaining the Writ Petition of respondents Nos. 1 & 2 particularly when the impugned order of the State Government making promotion of the 62 Assistant Engineers including the appellants and respondents Nos.
5 24 as Executive Engineers was purely on an ad hoc basis for a period of six months and expressly made subject to the fights of other officers.
Instead of interfering with the impugned 614 order of the State Government the proper course for the High Court should have been to issue a direction to the State Government to consider the cases of the eligible officers including respondents Nos. 1 & 2 for ad hoc promotion as Executive Engineers if their turn was due for such promotion according to their placement in the seniority list and it should have in the meanwhile allowed the appellants and respondents Nos. 5 24 to continue in their posts as Execu tive Engineers (ad hoc) subject to the condition that while considering their cases for promotion the State Government would not take that circumstance into consideration that they had continued to function as Executive Engineers on an ad hoc basis.
That course commends to us for another reason as well.
Although the High Court by its judgment and order dated October 8, 1980 quashed the impugned order of the State Government dated December 20, 1978 making the ad hoc promo tions and issued a direction that the Government should reach a decision afresh in the matter, the fact remains that neither the judgment of the High Court nor the directions made by it have taken effect.
On the contrary, this Court while granting special leave on January 14, 1981 stayed the operation of the judgment of the High Court.
As a conse quence, the result has been that the appellants and respond ents Nos.
5 24 have continued to function as Executive Engineers on an ad hoc basis for the last about eight years under the interim order of stay.
Incidentally, the judgment of the High Court leaves untouched the promotion of 37 Assistant Engineers and Executive Engineers.
The State Government will also have to give effect to the decision of this Court in A.S. Parmar 's vs State of Haryana, [1984] 2 SCR 476 laying down that a degree in Engineering was 'not an essential qualification for promotion of Assistant Engineers in the Irrigation Branch to the cadre of Executive Engineers in Class I service under r.6(b) of the Class I Rules and therefore the Assistant Engineers who are diploma holders are equally eligible for such promotion.
The State Govern ment in the Public Works Department (Irrigation Branch) by a notification dated June 22, 1984 purported to effect an amendment to r.6(b) of the Class I Rules with a view to nullify the decision of this Court in A.S. Parmar 's case.
By a separate judgment in the connected Writ Petitions Nos. 630 32/84 delivered today, we have struck down the impugned notification as offending against articles 14 and 16(1) of the Constitution and also as ultra vires the State Government by reason of the proviso to s.82(6) of the Punjab Reorganisa tion Act, 1966.
It appears that the State Government has been treating a degree in Engineering referred to in Cl.(a) r.6 as an essential qualification for promotion to the post of 615 Executive Engineer in Class I service in the case of offi cers in Class II service presumably on the view expressed by the Punjab & Haryana High Court in O.P. Bhatia vs State of Haryana, ILR The controversy was settled by the decision of this Court in A.S. Parmar 's case and it overruled the decision of the High Court in O.P. Bhatia 's case and held on a consideration of the relevant rules that the qualification of degree in Engineering was not necessary in the case of officers in Class II service for promotion to the post of Executive Engineer.
That apart, we must deal with the appeal on merits as the judgment of the High Court leaves much to be desired.
Issues raised in this appeal by special leave are of far reaching significance to the civil services.
It involves a claim by persons who had been in employment in the Govern ment service on a purely ad hoc basis de hors the rules, that they were entitled upon their absorption to the post on a regular basis, to the benefit of the period of their continuous officiation as temporary employees on ad hoc basis for determining their eligibility for promotion to the higher grade or post.
The questions presented are whether the principles laid down in N.K. Chauhan & Ors.
vs State of Gujarat & Ors.
, ; and S.B. Patwardhan & Ors.
vs State of Maharashtra & Ors.
, ; reiterated in Baleshwar Das & Ors.
vs State of Uttar Pradesh & Ors.
, [1981] 1 SCR 449 and subsequently followed in several deci sions, that ordinarily in the absence of any specific rule of seniority governing the cadre or service, the length of continuous officiation should be counted in reckoning sen iority as between direct recruits and promotees, should also be extended in determining seniority of such adhoc employees vis a vis direct recruits, and whether the failure on the part of the Government to count the entire period of offici ation as such ad hoc employees would be per se arbitrary and irrational and thus violative of articles 14 and 16(1) of the Constitution inasmuch as the temporary service in the post in question was not for a short period intended to meet some emergent or unforeseen circumstances, but to meet the exi gencies of the service.
It is asserted that the recent pronouncement of this Court in the case of Narendra Chadha & Ors.
vs Union of India & Ors.
, ; supports this view.
The argument at first blush appears to be plausi ble but on deeper consideration is not worthy of acceptance.
We proceed to give reasons therefor.
We are not aware of any principle or rule which lays down that the length of continuous officiation/service is the only relevant criterion in determining seniority in a particular cadre or grade, irrespective of any specific rule of seniority to the contrary.
It is necessary to 616 emphasise that the principles laid down in the two leading cases of N.K. Chauhan and S.B. Patwardhan, reiterated in Baleshwar Das 's case and subsequently followed in several decisions are not an authority for any such proposition.
These decisions particularly that in Baleswar Das 's case clearly lay down that ordinarily and in the absence of any specific rule of seniority governing the cadre or service, the length of continuous officiation should be counted in reckoning seniority as between direct recruits and promo tees.
These authorities nowhere lay down that the same principle i.e. the length of continuous officiation must be the sole guiding factor and the only criterion in determin ing seniority of such ad hoc employees vis a vis direct recruits.
The contention on behalf of the appellants firstly is that the High Court was dearly in error in holding that the entire period of service of respondents Nos. 1 & 2 as Tempo rary Engineers on ad hoc basis i.e. the period from January 1971 and May 1969 to April 21, 1975 had to be counted not only for purposes of their seniority under r.8(2) of the Class I Rules but also for the purpose of their eligibility for promotion to the post of Executive Engineers under r.6(b).
It is said that the High Court failed to appreciate that respondents Nos.
1 & 2 were not recruited as Temporary Engineers under the instructions contained in the Manual of Administration issued under the Punjab Service of Engineers, Class II, Public Works Department, (Irrigation Branch) Rules, 1941 or under the Punjab Service of Engineers, Class II, Public Works Department (Irrigation Branch) Rules, 1970, but their appointment as Temporary Engineers was purely on an ad hoc basis de hors the rules and therefore they did not fail within the ambit of the definition of the expression 'Class II Service ' as defined in r. 2(5), as amended in 1975.
Secondly, the High Court failed to take into account the fact that respondents Nos. 1 & 2 became members of Class II service only on April 21, 1975 when they were recruited as Assistant Engineers on a regular basis through the Public Service Commission.
Till then they did not answer the de scription of 'Temporary Engineers ' as defined in r.2(5).
They did not even figure in the notification dated May 18, 1982 issued by the State Government under r.3 constituting the service of Engineers as Class II service w.e.f. December 25, 1970.
It must therefore logically follow that the serv ice rendered by them as Temporary Engineers on ad hoc basis prior to their recruitment as Assistant Engineers in 1975 could not be treated to be service in that class within the meaning of r.6(b) of the Class I Rules.
Likewise, r.8(2) which speaks of any service rendered as Temporary Engineer must be construed accordingly as meaning service rendered by a Temporary 617 Engineer recruited in the manner provided by the instruc tions contained in Manual of Administration issued under the 1941 Rules or recruited as such under the 1970 Rules.
Last ly, the decision in BaleShwar Das 's case does not lay down any proposition that persons employed on a purely ad hoc or fortuitous basis like respondents Nos.
1 & 2 are entitled as a matter of law to the benefit of their period of ad hoc service and the two later decisions in G.P. Doval & Ors., vs The Chief Secretary, Government of Uttar Pradesh & Ors., ; and Narendra Chadha are of little assist ance.
These submissions, in our opinion, must prevail.
In reply, the main contention of learned counsel for respondents Nos. 1 & 2 is that respondents Nos. 1 & 2 upon their absorption to the post of Assistant Engineer on a regular basis on April 21, 1975 were entitled to the benefit of the entire period of officiation as Temporary Engineers on an ad hoc basis i.e. the period from January 1971 and May 1969 to April 21, 1975 and the failure of the Government to count such period of their ad hoc service was per se arbi trary, irrational and thus violative of articles 14 and 16(1) of the Constitution inasmuch as the service rendered by them as Temporary Engineers (ad hoc) was not for a short period intended to meet some emergent or unforeseen circumstances, but to meet the exigencies of the service and there is no reason why the principles laid down in Baleshwar Das 's case should also not be extended in determining the seniority of such ad hoc employees vis a vis direct recruits.
Secondly, he contends that exercise of the power of relaxation of the condition of eight years ' service for purposes of eligibili ty conferred on the State Government under the proviso to r.6(b) is conditioned by the obligation to record reasons in writing which requirement was mandatory.
There was failure on the part of the Government to record reasons therefor or to indicate any basis to show that such relaxation was in public interest.
Further, the words 'Class II Service ' in r.8(2) must bear the same meaning as the expression 'Class II Service ' as defined in r.2(5).
The artificial definition of 'Class II Service ' introduced by amendment of r. 2(5) in 1975 was obviously to bring persons who were not Assistant Engineers i.e. members of Class II service within the zone of consideration for purposes of promotion to the post of Executive Engineer under r.6(b) of Class I Rules.
Further more, the State Government having relaxed the condition of 8 years ' service by recourse to the proviso to r.6(b), re spondents Nos. 1 & 2 were similarly situate as ' the appel lants and respondents Nos,5 24 as they were all recruited together as Assistant Engineers in Class II service in 1975 and they had all rendered about 31/2 years ' service in that class and therefore failure on the part of the State Govern ment to consider the case of.
respondents Nos. 1 & 2 for 618 purposes of promotion to the post of Executive Engineer was tantamount to the total exclusion of a class within a class and was thus per se discriminatory.
Lastly, the action of the State Government in making ad hoc promotion of the appellants and respondents Nos. 5 24 was wholly mala fide.
Learned counsel wanted us to draw an inference of mala fide from the fact that the Private Secretary to Chief Minister was present at a meeting held in the room of the Irrigation Minister where the list of promotion was settled.
It is suggested that initially the names of respondents Nos. 1 & 2 figured in the list but later on wholly extraneous consider ations their names were deleted.
It would be convenient at this stage to refer to the relevant provisions of the Punjab Service of Engineers Class I, P.W.D. (Irrigation Branch) Rules, 1964, as amended in 1975.
The amendment effected in 1975 substituted a new r.2(5) for the existing r.2(5) and it defines the expression 'Class II Service ' as follows: "2(5). 'Class II Service ' shall, for the purpose of promotion to the service, comprises of members of the Haryana Service of Engi neers, Class II (Irrigation Branch); Temporary Engineers, Officiating Sub Divisional Officers and Officiating Assistant Design Engineers, except those promoted in excess of the quota fixed under rule 6 of the Haryana Service of Engineers, Class II, Public Works Department (Irrigation Branch) Rules, 1970.
" The qualifications of persons eligible for appointment are prescribed in r.6 which is in these terms: "6.
Qualifications: No person shall be ap pointed to the service unless he (a) Possesses one of the University Degrees or other qualifications prescribed in Appendix B of these Rules; Provided that Government may waive this qualification in the case of a particular officer belonging to Class II Service; (b) In case of an appointment by promotion from Class II Service, has completed in that class of service for a period of ten years from the commencement of these rules, six years service and after that period eight years service; 619 Provided that if it appears to be necessary to promote an officer in the public interest, the Government may, for reasons to be recorded in writing either generally or in any individual case reduce the period of six or eight years to such extent as it may deem proper in consultation with the Finance De partment.
Explanation: For the purpose of this clause in computing of the period of six or eight years any service rendered as a Temporary Engineer shall be taken into account".
We may next set out r.8 which deals with the method of promotion: "8.
Appointment by promotion: (1) A Committee consisting of the Chairman of the Public Service Commission and where the Chairman is unable to attend any other member of the Commission representing it, the Secretary, P.W.D. (Irrigation Branch) and the Chief Engineer, Punjab, P.W.D. Irrigation Branch shall be constituted.
The Government shall prepare a list of eligible and suitable persons for promotions in order of their seniority in Class II Serv ice which shall be reckoned: (a) in the case of a member of the Haryana Service of Engineers, Class 11 (Irrigation Branch) from the date of his continuous offi ciation as Sub Divisional Officer or Assistant Design Engineer or appointment as Temporary Engineer, as the case may be: (b) in the case of a Temporary Engineer from the date of his appointment as such.
" As a matter of construction, the words 'Class II serv ice ' in r.8(2) introduced by amendment in 1975 must be construed to have the same meaning as the expression 'Class II service ' as defined in r.2(5).
We find the language employed by the framers of the rules in the definition clause in r.2(5) has been departed from in the definition of the expression 'Class II service ' and it is generally but not always a fair presumption that the alteration in the language used in the new definition in r.2(5) was intention al.
Prior to the amendment in 1975, the expression, 'Class II Service ' as defined in r.2(5) meant the members of Class II service including Temporary Engineers.
As the State stood 620 in need of many more Executive Engineers it became essential to take steps 3 recruit not only persons who strictly belong to Class II Service proper but also to bring within the zone of consideration others who are not members of Clause II Service e.g. Offg.
Sub Divisional Officers and Offg.
Assist ant Design Engineers who would not be so included.
The key to the interpretation of the definition clause in r.2(5) is the words "for the purpose of promotion".
The effect of the enlarged definition of Class II Service in r.2(5) is that these words when found in the Act must, for the purpose of promotion, be understood in that context in a certain sense i.e. to include not only members of Class II Service includ ing Temporary Engineers but also Offg.
Sub Division Officers and Offg.
Assistant Design Engineers who, but for the inter pretation clause, would not be so included.
That would be in consonance with the purpose and object of the amendment.
There is reason why 'the words 'Class II Service ' in r.8(2) introduced in 1975 must bear the same meaning as the expres sion 'Class II Service ' as defined in r.2(5) as both the provisions deal with the same subject i.e. promotion of members of Class II Service to the post of Executive Engi neer in Class I Service.
The mode of promotion to the post of Executive Engineer is as laid down in r.8(2).
Now, r.8(1) remains unaltered.
R.8(1) directs that a committee consist ing of the Chairman of the Public Service Commission or where the Chairman is unable to attend any other member of the Commission representing it, Secretary to the.
Govern ment, P.W.D. (Irrigation Branch), and the Chief Engineer, Punjab, Irrigation Branch shall be constituted.
Under r.8(2) introduced in 1975, the Government has to prepare a list of eligible and suitable persons for promotion in order of their seniority in Class II Service which shall be reckoned (a) in the case of a member of the Haryana Service of Engi neers, Class II, Irrigation Branch, from the date of his continuous officiation as Sub Divisional Officer or Assist ant Design Engineer or appointment as Temporary Engineer, as the case may be.
(b) In the case of a Temporary Engineer from the date of his appointment as such.
These provisions can lead to no other conclusion but that the list of eligi ble and suitable persons for promotion has to be drawn not only comprising of regular members of Class II SerVice including Temporary Engineers in order of their seniority but also of Offg.
Sub Divisional Officers or Offg.
Assistant Design Engineers in that class of service from the date specified therein.
Apparently, the requirements of rr.8(1) and 8(2) have not been complied with.
All that exists is the combined seniority list of Assistant Engineers belonging to Class II Service in order of their seniority prepared by the Public Service Commission which incidentally has never been challenged.
621 The meaning of the word 'as ' in the collocation of the words 'any service rendered as a Temporary Engineer ' in Explanation to r.6(b) of the Class I Rules must obviously mean 'in the capacity of '.
In Dr. Asim Kumar Bose vs Union of India & Ors., ; the question was whether the appellant who was a Radiologist in the Maulana Azad Medical CoLlege which was a post belonging to Specialist Grade II could be appointed to the post of Professor of Radio Therapy in that College by direct recruitment under r.8(2) of the Central Health Service (Amendment) Rules, 1966.
In 1971 there were certain amendments in the Rules prescribing the mode in which the posts of Professor and Associate Professor could be filled in and paragraphs 2(b) and 3 of Annexure I to the Second Schedule and sub r.(2a) to r.8 were inserted which brought about a change.
These amend ments brought about a change inasmuch as they provided for a vertical channel of promotion to the teaching post upto the post of Associate Professor.
At p.363 of the Report this Court referred to the report of the Third Pay Commission where it was observed at p. 173. "While the Specialists on the teaching side can hold posts of hospital specialists, the latter cannot be promoted to teaching posts because of lack of teaching experience." Presumably, the Ministry of Health on that view held that the word 'as ' in paragraphs 2(b) and 3 of Annexure I to the Second Schedule and sub r.
(2a) of r.8 makes holding of a post in the cadre a condition precedent to the post of a Professor or an Associate Professor.
In that context, it was observed: Normally, a Professor or an Additional Profes sor in a medical college or a teaching insti tution can be appointed by direct recruitment from amongst persons holding the post of Associate Professor or Assistant Professor in the concerned speciality in a medical college or a teaching institution having at least six years ' teaching experience out of 12 years; standing in the Grade through the Union Public Service Commission.
An Associate Professor in the medical coLlege or a teaching institution can only be promoted from amongst persons holding the post of Reader or Assistant Pro fessor having at least five years ' teaching experience in ' the concerned special ity by the Departmental Promotion Committee.
We are inclined to the view that the word "as" in the collocation of the words used "at least six years ' experience as Associate Professor/Assistant Profes 622 sor/Reader" in paragraph 2(b) and of the words "at least five years ' experience as Reader/Assistant Professor" in paragraph 3 and sub rule (2 A) of Rule 8 must be interpreted in its ordinary sense as meaning teaching experience gained "in the capacity of".
In Black 's Law Dictionary, 5th Edn., p. 104, the meaning of the word "as" as given is: "Used as an adverb, etc., means like, similar to, of the same kind, in the same manner, in the manner in which." In Shorter Oxford Diction ary, 3rd Edn., p. 111, the word "as" is stated to mean: "The same as, in the character, capacity, role of".
In spite of all this, the contention of respondents Nos. 1 & 2 that they were entitled to the benefit of the period of service rendered by them as Temporary Engineer on an ad hoc basis w.e.f. January 2, 1971 and May 19, 1969 respectively prior to their appointment as Assistant Engineers on regular basis on April 21, 1975 for purposes of reckoning their eligibility under r.6(b) read with the Explanation thereto of the Class I Rules as also for purposes of their seniority in the cadre of Assistant Engineers, cannot prevail.
They were not recruited under paragraphs 8.312 to 8.316 of the Manual of Administration, Public Works Department.
In the erstwhile State of Punjab there was a distinct class of Engineers designated as Temporary Engineers.
All persons appointed as Temporary Engineers had to face the Public Service Commission for selection to the post under rr.4 and 5 of the Punjab Service of Engineers, Class II.
P.W.D (Irrigation Branch) Rules, 1941.
Under the Rules the term 'Temporary Engineer ' was defined in r.2(f) to mean an engi neer in the service of the Public Works Department, Punjab whose appointment was temporary within the meaning of the Fundamental Rules, was pensionable and who was not a member of any regular service.
The word 'service ' as defined in r.2(g) of the Rules meant the Punjab Service of Engineers, Class II, Irrigation Branch.
R.5 provided that no Temporaty Engineer could be taken into service or member of the Over seers Engineering Service, Punjab promoted unless he had been declared by the Commission on the report of the Chief Engineer to be fit for the service, was serving the Depart ment and held an appointment for not less than two years continuously before the date of entry into the service.
Next came the Punjab Service of Engineers, Class II, P.W.D. (Irrigation Branch) Rules, 1970.
The expression 'member of service ' was defined in r.2(12) to mean an offi cer appointed substantively to a cadre post.
The definitions of the word 'service ' and of the term 623 'Temporary Engineer ' in r.2(15) and (16) remained the same except for the difference that the word 'temporary ' carried the meaning as given in the Civil Service Regulations in place of the Fundamental Rules.
R.6 provided for the manner of recruitment of Temporary Engineers from different sources, in the proportions and the order indicated.
Sub r.(3) thereof provided that in case a candidate was not available from sources 1 and 3 i.e. by direct recruitment or by promotion, and a person had to be appointed in public interest, as a stop gap arrangement, the period of service rendered by such person shall not be reckoned for the pur pose of seniority.
Sub r.
(4) provided that the Government could fill a short term vacancy in the exigencies of public service, after recording specific reasons, for the period not exceeding six months from the Overseers Engineering Service, Irrigation Branch.
It is quite apparent under these rules that appointment of respondents Nos. 1 & 2 as Tempo rary Engineers on an ad hoc basis was de hors the rules.
It may seem to be some illogical that though respondents Nos.
1 & 2 were appointed as Temporary Engineers on an ad hoc basis, they should be deprived of the period of their officiation as such till they were absorbed to the post of Assistant Engineer on a regular basis through the Public Service Commission on April 21, 1975.
That is a legal conse quence which cannot be avoided on well settled principles.
In their case the length of continuous officiation cannot be the basis for reckoning their seniority since they never became members of Class II Service prior to their absorp tion.
On the terms of appointment of respondents Nos. 1 & 2, it was specifically provided that their appointment was purely on an ad hoc basis for a period of six months from the date of their joining the post on a fixed salary of Rs.400+ allowances and that their services were liable to be terminated without notice.
It was also specifically men tioned that the appointment as such Temporary Engineers on ad hoc basis would not count towards seniority or increment in their salary.
It was further stated that the posts of Temporary Engineers in Class II Service would be advertised in due course by the Public Service Commission and that if they were not selected by the Commission, their services would be terminated without notice They are also intimated that their inter se seniority among the Temporary Engineers so recruited would be in the order of merit in the list of candidates as settled by the Commission.
It is common ground that respondents Nos. 1 & 2 were not recruited through the Public Service Commission.
It was not till July 8, 1973 that the Secretary to the Commission conveyed to the State Gov ernment the approval of the Commission to the ad hoc ap pointment of 251 624 Temporary Engineers beyond the period of six months till regular appointments were made in the posts of Assistant Engineers through the Commission.
These are the facts on which there is no doubt or difficulty as to the principles applicable.
According to the accepted canons of service jurispru dence, seniority of a person appointed must be reckoned from the date he becomes a member of the service.
The date from which seniority is to be reckoned may be laid down by rules or instructions (a) on the basis of the date of appointment (b) on the basis of confirmation (c) on the basis of regula tion of service (d) on the basis of length of service, or (e) on any other reasonable basis.
It is well settled that an ad hoc or fortuitous appointment on a temporary or stop gap basis cannot be taken into account for the purpose of seniority even if the appointee was qualified to hold the post on a regular basis, as such temporary tenure hardly counts for seniority in any system of service jurisprudence.
In somewhat similar circumstances, in the case of State of Gujarat vs C.G. Desai & Ors., [1974] 2 SCR 255 the question for consideration was whether in the case of Deputy Engi neers directly recruited through the Public Service Commis sion by competitive examination, the service, if any, ren dered by them as officiating Deputy Engineers prior to their appointment to Class II Service i.e. during the pre selec tion period, could be taken into account for purposes of their eligibility for promotion as Executive Engineers under r.7(2) of the Bombay Engineering Service Rules, 1960 which provided for a period of 7 years ' experience in Class II Service.
The Government 's stand was that the service ren dered by the direct recruits prior to their appointment to the Class II Service could not be taken into account in computing their eligibility of 7 years ' experience in that class of service and the Court upheld the stand.
It was contended on behalf of the promotees that if for promotion to the post of Executive 'Engineer in Class I Service the period of eligibility of 7 years ' experience in Class II Service was to start from the date of absorption in that class of service, then, for most of them there would be rare chance of ever getting promotion as officiating Executive Engineers and as many of them had less than 7 years to go before attaining the age of superannuation.
The contention was that r.7(2) of the Rules did not permit discrimination between the promotees and direct recruits in the matter of computing 7 years ' service for further promotion as offici ating Executive Engineers.
The contention was repelled on the ground that direct recruits and promotees in Class II Service constituted two distinct groups or classes and the classification was based on intelligible differentia, and it was observed: 625 "If a person, like any of the respondents, to avoid the long tortuous wait leaves his posi tion in the 'never ending ' queue of Temporary/Officiating Deputy Engineers etc.
looking for promotion, and takes a short cut through the direct channel, to Class II Serv ice, he gives up once for all, the advantages and disadvantages that go with the channel of promotion and accepts all the handicaps and benefits which attach to the group of direct recruits.
He cannot, after his direct recruit ment claim the benefit of his preselection service and thus have the best of both the worlds.
It is well settled that so long as the classification is reasonable and the persons falling in the same class are treated alike, there can be no question of violation of the constitutional guarantee of equal treatment.
" In taking that view, the Court avoided a doctrinaire ap proach and approached the problem from a pragmatic view.
It was said: "If the claim of the respondents to the count ing of their pre selection service is conced ed, it will create serious complications in running the administration; it will result in inequality of treatment rather than in remov ing it.
If the pre selection service as Offi ciating Deputy Engineers of direct recruits having such service, is taken into account for the purpose of promotion, it would create two classes amongst the same group and result in discrimination against those direct recruits who had no such pre selection service to their credit.
" It would be repugnant to all accepted concepts of serv ice jurisprudence if the claim of persons like respondents Nos. 1 & 2 who were employed as Temporary Engineers on ad hoc basis de hors the rules for six months at a time were extended the benefit of their continuous officiation as such ad hoc employees in reckoning their seniority vis a vis direct recruits in considering their eligibility under r.6(b) of the Class I Rules for promotion to a higher grade or post of Executive Engineer.
In A.P.M. Mayakutty etc.
vs Secretary, Public Service Department, the question was whether the period of service rendered by such ad hoc employees appointed under r. 10(a) (i)(1) of the Madras State & Subordinate Services Rules purely on an ad hoc basis and as matter of stop gap arrangement, were enti tled to count for the purpose of seniority, their period of service on ad hoc basis during which they served in a stop gap arrangement.
It was held 626 that such service could not be taken into account for the purpose of seniority from the date of their initial appoint ment.
The Court speaking through Chandrachud, CJ.
after referring to the provision contained in r. 10(a)(i)(1) of the Rules, stated: "This provision contemplates the making of temporary appointments when it is necessary in the public interest to do so* to an emergency *owing which has arisen for filling a vacancy immediately.
Such appointments, in terms, are permitted to made otherwise than in accordance with the rules.
The letters of appointment issued to the appellants mention expressly that they were appointed under rule 10(a)(i)(1), that the appointments were "purely temporary necessitated on account of the non availability of regularly selected candidates conferring no claim for future appointment as Junior Engineers . and that the appointment is liable to be terminat ed at any time without previous notice.
" In face of the provisions of the rule and the terms of the appointment it seems to us clear that the appellants were appointed purely as a matter of stop gap or emergency arrangement.
Since such service cannot be taken into ac count for purposes of seniority, the appel lants cannot contend that the entire service rendered by them from the date of their ini tial appointment must count for purposes of seniority.
" The Court distinguished the case of C.P. Damodaran Nayar vs State of Kerala & Ors., ; on the ground that the temporary service rendered by a District Munsiff re cruited in a regular manner through the Public Service Commission could not, by any stretch of imagination, be considered to be purely as a matter of fortuitous or stop gap arrangement.
The distinguishing features in Mayakutty 's case, in the words of Chandrachud, CJ.
were: "The distinguishing feature of that case, which is highlighted in the judgment of the Court, is that the appellant therein was "appointed in a regular manner through the Public Service Commission" and therefore his appointment could not "by any stretch of imagination" be described as having been made to fill a purely stop gap or fortuitous vacu um.
In our case the initial appointment was not only made without any reference to the Public Service Commission but the various rules and the terms of the appellants ' 627 appointment to which we have drawn attention show that the appellants were appointed purely as a matter of fortuitous or stop gap arrange ment.
The concurrence of the Public Service Commission to the continuance of the appel lants in the posts filled by them first after the expiry of three months and then after the expiry of one year, was obtained not with a view to regularising the appointments since their inception but for the purpose of meeting the requirements of a provision under which such concurrence is necessary to obtain if an appointment made without selection by the Public Service Commission is required for any reason to be continued beyond three months or a year.
" That precisely is the case here.
It must therefore be held that the period of service rendered by persons like respond ents Nos. 1 & 2 who were appointed on ad hoc basis purely as a stop gap arrangement for six months at a time de hors the rules, cannot be considered for purposes of their seniority in Class II Service or in reckoning their eligibility of 8 years ' service in that class of service under r.6(b) of Class I Rules.
We feel it necessary to emphasise that the principles laid down by this Court in the two cases of N.K. Chauhan and S.B. Patwardhan which were reiterated in Baleshwar Das 's case and subsequently followed in several other cases do not lay down any principle to the contrary.
These cases are not an authority for the proposition relied upon.
On the con trary, they clearly proceed on the principle that persons appointed on an ad hoc basis or for fortuitous reasons or by 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 the case of S.B. Patwardhan, Chandrachud, CJ.
observed: "We however hope that the Government will bear in mind the basic principle 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 factors 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, 628 discharge similar functions and bear similar responsibilities.
" In Baleshwar Das 's case, Krishna lyer, J. affirmed the principle in his own charismatic and picturesque language: "We must emphasise 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 func tionally 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 any thing unfair or capricious in clothing him with no fights.
Not so, if the post is, for certain departmental or like purposes, de clared temporary, but it is within the ken of both the government and the appointee that the temporary posts are virtually long lived.
It is irrational to reject the claim of the 'temporary ' appointee on the 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 sen iority 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 categories and do not admit of any ambiguity and cruelly arbi trary 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 reasona ble, fair and not grossly unjust if they are to survive the test of Articles 14 and 16.
" We must also refer to the decision in A. Janardana vs Union of India & Ors., 1 where Desai, J. had occasion to observe: 629 "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 do propose to examine and expose an extremely undesirable, unjust and inequita ble situation emerging in service jurispru dence 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 re quired 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.
" To the same effect are the decisions in O.P. Singla vs Union of India, ; ; G,S. Larnba vs Union of India, ; P.S. Mahal vs Union of India, ; and Pran Krishna Goswami & Ors.
vs State of West Bengal & Ors.
, ; It must now be taken as well established after these decisions that in the absence of any other valid principle of seniority, the inter se seniority between direct recruits and promotees should as far as possible be determined by the length of continuous service whether temporary or permanent in a particular grade or post (this should exclude periods for which an appoint ment is held in a purely stop gap or fortuitous arrangement).
No doubt, there are certain observations in the two cases of G.P. Doral and Narender Chadha which seem to run counter to the view we have taken, but these deci sions turned on their own peculiar facts and are therefore clearly distinguishable and they do not lay down any rule of universal application.
For all these reasons, the appeal succeeds and is al lowed.
The judgment and order of the High Court quashing the impugned notification of the State Government dated December 20, 1978 making 630 ad hoc promotions of the appellants and respondents Nos.
5 24 are set aside.
Instead, we direct that the impugned order of the State Government making ad hoc promotions of 62 Assistant Engineers including the appellants and respondents Nos. 5 24 as officiating Executive Engineers will stand and they shall continue to function as such, subject to the terms and conditions contained in the aforesaid order till the process of making appointments by promotion to these posts is completed.
We hope and trust that the State Govern ment will strike a just balance between the competing claims of these 62 Assistant Engineers promoted as Executive Engi neers on ad hoc basis, and persons like respondents Nos. 1 & 2 appointed as Temporary Engineers on an ad hoc basis who could at the most claim that they should be given the bene fit of the period of service from April 21, 1975 when they were recruited as Assistant Engineers through the Public Service Commission, provided they satisfy the test of eligi bility of 8 years ' experience in that class of service, while considering the cases of all eligible members of Class II Service for promotion to the post of Executive Engineer in Class I Service in accordance with law and will complete the process of appointment within six months from today.
There shall be no order as to costs.
S.R. Appeal allowed.
|
Haryana Service of Engineers, Class II, Public Works Department (Irrigation Branch) Rules relating to recruitment etc.
of Asst.
Engineers and Haryana Service of Engineers Class I, Public Works Department (Irrigation Branch) relat ing to Executive Engineers came into force in 1970 and 1964 respectively.
Respondent No. 2, B.L. Gupta and Respondents Nos.
B.S. Jain were appointed as temporary engineers (ad hoc) with effect from 19.5.1969 and 2.1.1971 respectively, the former sponsored by the Employment Exchange and the latter with reference to an advertisement in the newspapers.
Their appointments were de hors the said Class II Rules to meet the exigencies of service.
In the letters of appoint ment issued to them it was specified (i) that their appoint ment was purely on an ad hoc basis for a period of six months from the date of their joining the post on a fixed salary of Rs.400 plus allowances and their services were terminable without notice; (ii) that the appointment would not entitle them to any seniority or other benefit under the service rules for the time being in force and would also not count towards increment in their salary; (iii) that the posts of Tempor 604 ary Engineers in Class II service would be advertised in the course by the Haryana Public Service Commission and they should apply for such posts through the Commission, and that if they were not selected by the Commission, their services would be liable to be terminated without notice; and (iv) that their inter se seniority among the Temporary Engineers would be in the order of merit in the list of candidates as settled by the Commission.
The services of respondents Nos. 1 and 2 were however continued by the State Government from time to time, six months at a time till the Secretary, Haryana Public Service Commission by his letter dated July 8, 1973 addressed to the Commissioner and Secretary to the State Government of Haryana, Public Works Department (Irri gation Branch) conveyed the approval of the Commission to the ad hoc appointment of 251 Temporary Engineers beyond the period of six months till regular appointments were made to the posts through the Commission.
Accordingly both these respondents continued to hold the posts of Temporary Engi neers on ad hoc basis till the end of the year 1974 i.e. till they were recruited as Asst.
Engineers through the Public Service Commission on April 21, 1975 on regular basis.
In the letter of appointment issued by the Commis sioner and Secretary to Government of Haryana (Irrigation & Power Department) dated January 13, 1975 it was specified again that inter se seniority of Asst.
Engineers would be determined on the basis of the combined merit list prepared by the Public Service Commission.
In the combined merit list prepared by the Commission, respondents Nos. 1 and 2 were placed very much below the appellants and respondents Nos.
5 24 being at serial Nos. 148 and 150 respectively.
The State Government of Haryana by order dated December 20, 1978 promoted 62 Asst.
Engineers including the appel lants and respondent Nos.
5 24 as Executive Engineers on a purely ad hoc basis for a period of six months subject to certain terms and conditions, namely; (i) the promotions were subject to the approval of the Public Service Commis sion as also to the claims of other officers; (ii) such promotions were not to give any right to the officers for being appointed on a substantive basis as Executive Engi neers; and (iii) such of the officers as had not passed the departmental professional and revenue examinations were required to pass such examination within a period of one year or otherwise they were liable to be reverted to their original post.
These ad hoc promotions of the appellants and respondents Nos. 5 24 were made in relaxation of the provi sions contained in rr. 6(b) and 15 of the Haryana Service of Engineers, Class I Public Works Department (irrigation Branch) Rules, 1964.
Presumably, the State Government ex cluded from consideration the case of respondents Nos. 1 and 2 for 605 promotion because in the combined seniority list they ranked below the appellants and respondents Nos.
5 24 being placed at serial Nos.
I48 and 150 respectively.
The said ad hoc promotions to Class I posts were as sailed by respondents I and 2 by a petition under Article 226.
A learned Single Judge by his judgment dated 8.10.1980 quashed the impugned order of the State Government making the said ad hoc promotions and directed the State Government to reach a decision afresh as regards the ad hoc promotions with advertence to the observations made by him.
Thereupon, the appellants preferred an appeal under clause 10 of the Letters Patent but the appeal was dismissed in limine by the Division Bench, by its order dated 6.11.1980.
The appel lants ' contention that the appointment of respondents Nos.
I and 2 as Temporary Engineers on an ad hoc basis was contrary to para 8.312 of the Manual of Administration and therefore the period during which they worked as Temporary Engineers (ad hoc) could not be taken into consideration, was repelled by the Bench on the ground that no such point was taken before the learned Single Judge.
Hence the appeal by special leave.
Allowing the appeal, the Court HELD: 1.
The High Court ought not to have exercised their powers under Article 226 of the Constitution and entertained the writ petition of respondents I and 2 partic ularly when the impugned order of the State Government making promotion of the 62 Asst.
Engineers including the appellants and respondents 5 24 as Executive Engineers was purely on an ad hoc basis for a period of six months and expressly made subject to the rights of other officers.
Instead of interfering with the impugned order of the State Government the proper course for the High Court should have been to issue a direction to the State Government to consid er the cases of the eligible officers including respondents Nos.
I and 2 for ad hoc promotion as Executive Engineer if their turn was due for such promotion according to their placement in the seniority list and it should have in the meanwhile allowed the appellants and respondents Nos.
5 24 to continue in their posts as Executive Engineers (ad hoc) subject to the condition that while considering their cases for promotion the State Government would not take that circumstance into consideration that they had continued to function as Executive Engineers on an ad hoc basis.
[613G H; 614A C] 1.2 Rule 15 of the Punjab/Haryana Service of Engineers Class I P.W.D. (Irrigation Branch) Rules, 1970 in terms provides that the 606 departmental professional and revenue examinations for purposes of promotion to the Class I service have to be passed within such period as may be prescribed.
The word 'prescribed ' in Rule 15 clearly empowers the State Govern ment to provide for the period during which the promoted officers had to pass the departmental test.
In terms of that rule, the State Government by the impugned order directed that the officers who had not passed the departmental pro fessional and revenue examinations were required to pass such examinations within a period of one year otherwise they were liable to be reverted to their original post.
There fore, no question of relaxation under Rule 22 arose.
[613C E] 2.1 The period of service rendered by persons like respondents Nos. 1 and 2 who were appointed on ad hoc basis purely on a stop gap arrangement for six months at a time de hors the rules, cannot be considered for purposes of their seniority in Class II service or in reckoning their eligi bility of 8 years ' service in that class of service under Rule 6(b) of the Class I Rules.
[625F G] 2.2.
As a matter of construction the words "Class II service" in Rule 8(2) introduced by amendment in 1975 must be construed to have the same meaning as the expression "Class II service" as defined in Rule 2(5).
Prior to the amendment in 1975, the expression, "Class II Service" as defined in Rule 2(5) meant the members of Class II service including Temporary Engineers.
The key to the interpretation of the definition clause in Rule 2(5) is the words "for the purpose of promotion.
" The effect of the enlarged definition of Class II service in Rule 2(5) is that these words when found in the Act must, for the purpose of promotion, be understood in that context in a certain sense i.e. to in clude not only members of CIass II Service including Tempo rary Engineers but also Offg.
Sub Division Officers and Offg.
Assistant Design Engineers who, but for the interpre tation clause, would not be so included.
That would be in consonance with the purpose and object of the amendment.
[619G H; 620B C] 2.3 The meaning of the word "as" in the collocation of the words "any service rendered as a Temporary Engineer" in Explanation to Rule 6(b) of the Class I Rules must obviously mean "in the capacity of".
[621A B] Dr. Asim Kumar Bose vs Union of India & Ors.
, ; , applied.
2.4 It is true that though respondents Nos. 1 and 2 were 607 appointed as Temporary Engineers on an ad hoc basis, they should be deprived of the period of their officiation as such till they were absorbed to the post of Assistant Engi neer on a regular basis through the Public Service Commis sion on April 21, 1975.
That is a legal consequence which cannot be avoided on well settled principles.
[623D E] 2.5 According to the accepted cannos of service juris prudence, seniority of a person appointed must be reckoned from the date he becomes a member of the service.
The date from which seniority is to be reckoned may be laid down by rules or instructions (a) on the basis of the date of ap pointment (b) on the basis of confirmation (c) on the basis of regularisation of service (d) on the basis of length of service; or (e) on any other reasonable basis.
It is well settled that an ad hoc or fortuitous appointment on a tempo rary or stop gap basis cannot be taken into account for the purpose of seniority even if the appointee was qualified to hold the post on a regular basis, as such temporary tenure hardly counts for seniority in any system of service juris prudence.
[624B D] 2.6 It must now be well taken as well established that after the Supreme Court decisions from N.K. Chauhan to Baleswar Das in the absence of any other valid principle of seniority, the inter se seniority between direct recruits and promotees should as far as possible be determined by the length of continuous service whether temporary or permanent in a particular grade or post (this should exclude periods for which an appointment is held in a purely stop gap or fortuitous arrangement).
These decisions particularly that in Baleshwar Das 's case clearly lay down that ordinarily and in the absence of any specific rule of seniority governing the cadre or service, the length of continuous officiation should be counted in reckoning seniority as between direct recruits and promotees.
These authorities nowhere lay down that the same principle i.e. the length of continuous offi ciation must be the sole guiding factor and the only crite rion in determining seniority of such adhoc employees vis a vis direct recruits.
On the contrary, they clearly proceed on the principle that persons appointed on an ad hoc basis or for fortuitous reasons or by stop gap arrangement, constitute a class which is separate and distinct from those who are appointed to posts in the service in strict conform ity with the rules of recruitment.
[629E G; 627.E F] N.K. Chauhan & Ors.
vs State of Gujarat & Ors.
, ; ; S.B. Patwardhan & Ors.
vs State of Maharashtra & Ors.
, ; and Baleshwar Das & Ors.
vs State of Uttar Pradesh & Ors.
, [1981] 1 SCR 449, discussed.
608 A.P.M. Mayakutty etc.
vs Secretary, Public Service Department, ; State of Gujarat vs
C.G. Desai Ors.
; , ; O.P. Singla vs Union of India, ; ; G.S. Lamba vs Union of India, ; P.S. Mahal vs Union of India, ; ; and Pran Krishna Goswami & Ors.
vs State of West Bengal & Ors.
, ; , referred to.
Narendra Chadha & Ors.
vs Union of India & Ors.
, ; ; G.P. Doval & Ors.
vs The Chief Secretary, Govern ment of Uttar Pradesh & Ors., ; ; and C.P. Damodaran Nayar vs State of Kerala & Ors., ; , distinguished.
|
Civil Appeal No. 1649 (NT) of 1974 From the Judgment and Order dated 25.1.1974 of the Orissa High Court in S.J.C. No. 111 of 1972.
Govind Das and J.R. Das for the Appellant.
S.C. Manchanda, Miss A. Subhashini and K.C. Dua 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 Orissa disposing of an Income tax Reference and answering the following question in favour of the revenue and against the assessee: "Whether in the facts and circumstances of the case, the loss of Rs.30,045 claimed by the assessee is a capital loss or a revenue loss?" The assessee is a private limited company carrying on business as a contractor.
In April 1964 it entered into a contract with the South Eastern Railway Administration for the execution of earth work, bridge work and other miscellaneous works required for the construction of a new railway yard.
As it was required to supply earth outsidethe railway land the assessee found it expedient to buy two pieces of land from which earth could be excavated and conveniently taken to the work site.
One piece of land was acquired at a cost of Rs.53,196 during the calendar year 1964 corresponding to the assessment year 1965 66, and the other piece of land was acquired for Rs.15,045 during the calendar year pertaining to the assessment year 1966 67, bringing 221 the total cost to Rs.68,241.
Soon after the work was over, the assessee sold both lands for a sum of Rs.23,000, thereby sustaining a loss of Rs.45,241.
The assessee treated this as the value of the excavated earth, and apportioned the amount in its accounts in the following manner, Rs.8,196 as the cost of the earth for the assessment year 1965 66, Rs.30,045 towards the earth excavated in the assessment year 1966 67, and Rs.7,000 towards the earth excavated for the assessment year 1967 68.
The Income tax Officer accepted the claim for the assesment year 1965 66.
The claim of the assessee to a deduction of Rs.30,045 for the assessment year 1966 67 was disallowed on the ground that it represented a capital loss.
The assessee proceeded in first appeal to the Appellate Assistant Commissioner of Income tax but the appeal was dismissed.
A second appeal was allowed by the Income tax Appellate Tribunal on the ground that the land formed a wasting asset and by constant digging of the earth the land had become unserviceable.
On a reference being made to the High Court of Orissa at the instance of the Commissioner of Income tax on the question of law set forth earlier the High Court held that the loss of Rs.30,045 claimed by the assessee was a capital loss and therefore, the assessee was not 'entitled to a deduction.
The question in this appeal before us is a short one.
Can it be said that the loss of Rs.30,045 is a capital loss or a revenue loss? It is not in dispute that the assessee did not deal in land.
It was a contractor and it had acquired the land for the purpose of obtaining a ready supply of earth in order to fulfil the contract with the Railway Administration.
The land was not its stock in trade.
What it needed as raw material for the purpose of the contract was loose earth and this it obtained by the process of excavation from the land.
Moreover, the two pieces of land were shown as fixed assets by the assessee itself in its balance sheet.
Learned counsel for the assessee relies on M.A. Jabbar vs Commissioner of Income tax, Andhra Pradesh, , 497 8 but that is a case where the land was taken on lease for a limited period of 11 months with the right to enter, occupy and use for a quarrying purpose and to render marketable and carry away sand within or on the land.
This Court held that the lease money paid by the assessee was deductible as revenue expenditure.
The Court referred to the short period of the lease, which indicated that the lease was not an asset of an enduring nature, that the only right under the lease was to take away the sand lying on the land, and in fact as the sand lay on the 222 surface no question arose of digging and excavating for the sand, and no operations were to be performed on the land.
The Court laid great emphasis on the circumstance that the assessee did not acquire the land.
Therefore, the Court held that the assessee "did not acquire any fixed or capital asset of an enduring nature.
" The facts in the present case are entirely different.
Here, the assessee was full proprietor of the two pieces of land and for an indefinite period.
The reason for acquiring the land was no doubt to provide a ready supply of earth to the work site nearby, but there was nothing to prevent the assessee from continuing as owner of the land even after the railway contract had been executed and putting it to any other use.
The land was treated by the assessee as its fixed asset.
In all the circumstances of the case, the two pieces of land must be regarded as capital assests, and the loss claimed by the assessee must be regarded as a capital loss.
The High Court is right in the view taken by it, and the appeal is liable to be dismissed.
The appeal is dismissed with costs.
A.P.J. Appeal dismissed.
|
The assessee company while carrying on business as a Contractor entered into a contract with the Railway Administration, inter alia, for the execution of earth work required for the construction of a new railway yard.
For this purpose, the assessee purchased two pieces of land at a total cost of Rs.68,241.
Soon after the work was over, the assessee sold both lands for a sum of Rs.23,000, thereby sustaining a loss of Rs.45,241.
The assessee treated this as the value of the excavated earth, and apportioned the amount in its accounts in assessment years 1965 66, 1966 67 and 1967 68.
The claim of the assessee to a deduction of Rs.30,045 for the assessment year 1966 67 was disallowed by the Income tax Officer on the ground that it represented a capital loss.
The Appellate Assistant Commissioner dismissed the first appeal of the assessee.
The Income Tax Appellate Tribunal allowed the second appeal of the assessee on the ground that the land formed a wasting asset and by constant digging of the earth the land had become unserviceable.
In the Reference, on the question whether the loss of Rs.30,045 claimed by the assessee is a capital loss or a revenue loss, the High Court held that the loss of the said amount claimed by the assessee was a capital loss and, therefore, the assessee was not entitled to a deduction.
Dismissing the appeal of the assessee company to this Court, ^ HELD: The assessee was full proprietor of the two pieces of land and for an indefinite period.
The reason for acquiring the land was no doubt to provide a ready supply of earth to the work site nearby, but there was nothing to prevent the assessee from continuing as owner of 220 the land even after the railway contract had been executed and putting it to any other use.
The land was treated by the assessee as its fixed asset.
In all the circumstances of the case, the two pieces of land must be regarded as capital assets, and the loss claimed by the assessee must be regarded as a capital loss.[222B D] M.A. Jabbar vs Commissioner of Income tax, Andhra Pradesh, , 497 8 distinguished.
|
ivil Appeal No. 1295 of 1973 From the Judgment and Order dated 14.12.
1972 of the Allahabad High Court in Civil Revn.
Petition No. 1572 of 1969.
P.H. Parekh and Suhail Dutt for the Appellant.
Prithvi Raj, Mrs. Shobha Dikshit and Sudhir Kulshreshta for the Respondent.
The Judgment of the Court was delivered by THAKKAR, J.
The proposition canvassed by the appellant, namely, that from the point of time that an order for rate able distribution is passed by the executing court the monies in question cease to be 928 the property of the judgment debtor and 'become the property of the decree holder, regardless of whether or not actual payment pursuant to the said order is made, is supported by the decisions of three High Courts namely, Madras, Calcutta and Bombay.
As early as in 1922 the Madras High Court in Official Receiver of Tanjore vs M.R. Venkatararna lyer, AIR 1922 Madras p. 31 has taken the view canvassed by the appel lant as is evident from the passage quoted hereunder: "It seems to me that from the time of the order of rateable distribution the money must be treated as belong ing, not to the judgment debtor, Nataraja lyer, but to the decreeholder in whose favour the order was passed.
Mr. Devadoss for appellant contended that the effect of a rate able distribution order is merely to allocate the money to the different suits without affecting its ownership.
The latter, he says, still rests in the judgment debtor by the sate of whose property it was allocated.
I do not think this is so.
The section does not speak of distribution among the decree holders.
The latter are entitled to draw it out at will; and the judgment debtor most certainly is not.
I think the money in this case must be treated as the property of the decree holder, the present respondent and that the Official Receiver could no more recover it from the respond ent if it had actually been paid out to him by court.
Mr. Devadoss eventually admitted that he could not recover the money in the circumstances of the present case if it had passed into respondent 's possession.
I would dismiss the appeal with costs.
" A learned Single Judge of the Calcutta High Court has expressed the same view in Murli Tahilram vs T. Asoornal & Co., AIR 1955 Calcutta p. 423, wherein it is observed: "But where a private citizen has sued another to judgment and has in fact got by an order of Court a Receiver appoint ed of his goods and such goods have been sold by the Receiv er under orders of the Court and where there has been a prior direction in the Court 's order to pay the sale pro ceeds to the private judgment creditor, a subsequent claim by the State for arrears of sales tax cannot defeat the judgment creditor or deprive him of the fruits of his decree which is regarded as property.
" 929 And the same view has been reiterated by a Division Bench of the Calcutta High Court in Basanta Kumar Bhattacharjee vs Panchu Gopal Dutta & Ors., AIR 1956 Calcutta p. 23 where in the Court has made recourse to the following reasoning to support the proposition: "This contention, we think, should prevail.
The order allowing the application for rateable distribution that was passed on 2 12 1953 should, we think, be reasonably read as deciding that the decree holders had title to the money.
What remained to be done was the ascertainment of the exact amount which each decree holder was entitled to and payment of the same.
The decision as regards title had already been made and with the decision that 'the money was the decree holder 's money, the position, in our opinion, was that it could no longer be considered in law to be the judgment debtor 's money.
The question of priority of the State 's claim does not, therefore, fail to be decided.
On the date the letter of attachment of the Certificate Officer was received, there was no money belonging to the judgment debtors in the hands of the Court.
" The High Court of Allahabad which has differed from the aforesaid High Courts by the judgment under appeal has proceeded on the assumption that the High Court of Bombay has taken a contrary view in Income tax Officer, Ward C, Sangli & Ant.
vs Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91.
We are afraid, by the High Court of Bombay in the said case the principle enunciated has been misunder stood.
No order for rateable distribution had been passed by the executing court in the said case.
Even, so, while dis cussing the law on the subject in the context of the scheme of the C.P.C., the High Court of Bombay has articulated the principle thus: "The scheme clearly indicates that, until the Court has directed appropriation of the amount to the claim made by the decree holder or of creditors entitled to rateable distribution, the amount received in Court continues to remain as of the judgment debtor.
" (Emphasis added) By necessary implication it means that as soon as an order for rateable distribution is made, the amount ordered to be distributed will cease to 930 be the property of the judgment debtor.
We are of the same opinion as that of the High Courts of Madras, Calcutta and Bombay.
As soon as the question of rateable distribution between the decree holders and the State having statutory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment debtor, the rights of the parties become crystalized.
What then remains is to give effect to the determination made by the court by officials in charge of concerned departments dealing with Accounts and Cash which is a ministerial act.
The rights of the respective decree holders or claimants are governed by the order for rateable distribution passed by the Court as a result of the adjudication and determination made by the Court.
Nothing further remains to be done by the Court in the judicial sphere thereafter.
The order partakes of the character of a judgment and decree passed by the Court.
What the officials of the Accounts and Cash department are re quired to do thereafter is to carry out the command of the Court by implementing or giving effect to the order.
The test which can be usefully applied is to pose the question whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order.
Obviously and undoubtedly they cannot.
Therefore it is evident that nothing turns on whether or not actual payment pursuant to the order of the Court is made.
And when the Court officials make payment to 'the decree holder, they make payment because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court.
What is being paid by the officials of Accounts and Cash Sections will be the decree holder 's money, it having ceased to belong to the judgment debtor the moment the order for distribution was made, eventhough actual disbursement was made later.
If the State lays its claim after the order for distribution is made by the Court, it will be of no avail as the property Would have gone beyond the reach of the State, it having ceased to be the property of the debtor against whom the State had a claim.
No question of priority can arise in that situation the State having missed the bus.
In the present case, the amount had ceased to be the property of the judgment debtor from the point of time that the order forateable distribution was passed by the executing court.
There was no question there fore of the State being entitled to claim priority in re spect of the claims lodged by it subsequent to the order for rateable distribution.
The High Court was thus in error in reversing the order passed by the executing court.
We, therefore, allow the appeal, set aside the order of the High Court in so far as the appellant is concerned, and restore the order of 931 the executing court in so far as the appellant is concerned.
The appeal is disposed of accordingly.
There will be no order as to costs.
A.P.J. Appeal dis posed of.
|
On the question whether from the point of time an order for rateable distribution is passed by the executing Court the monies in question cease to be the property of the judgment debtor and become the property of the decree hold er, regardless of whether or not actual payment pursuant to the said order is made: Allowing the Appeal, HELD: 1. As soon as the question of rateable distribu tion between the decree holders and the State having statu tory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment debtor, the rights of the parties become crystalized and the monies in question cease to be the property of the judgment debtor and becomes the property of the decree holder, regardless of whether or not actual payment pursuant to the said order is made.
[930A B] Official Receiver of Tanjore vs M.R. Venkatarama lyer, AIR 1922 Madras p. 31, Murli Tahilram vs T. Asoomal & Co., AIR 1955 Calcutta p. 423, Basanta Kumar Bhattacharjee vs Panchu Gopal Dutta & Ors., AIR 1956 Calcutta p. 23 and Income tax Officer, Ward C. SangIi & Anr.
vs Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91, approved.
2.1 The rights of the respective decree holders or claimants are governed by the order for rateable distribu tion passed by the Court as a result of the adjudication and determination made by the Court.
Nothing further remains to be done by the Court, in the judicial sphere thereafter.
The order partakes of the character of a judgment and decree passed by the Court.
[930B C] 927 2.2 Thereafter the officials of the Accounts and Cash department are only required to carry out the command of the Court by implementing or giving effect to the order.
[930C D] 2.3 The test which is to be applied is whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order.
Obviously and undoubtedly they cannot.
Therefore, nothing turns on whether or not actual payment pursuant to the order of the Court is made.
The Court officials make payment to the decree holder because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court.
What is being paid by the officials of Accounts and Cash Sections will be the decree holder 's money, it having ceased to belong to the judgmentdebtor the moment the order for distribution was made, even though actual disbursement was made later.
[930D F] 3.
If the State lays its claim after the order for distribution is made by the Court, it will be of no avail, as the property would have gone beyond the reach of the State, it having ceased to be the property of the debtor against whom the State had a claim.
No question of priority can arise in that situation the state having missed the bus.
[930F G] 4.
In the present case, the High Court was in error in reversing the order passed by the executing Court.
The order of the High Court is set aside and that of the executing Court restored in so far as the appellant is concerned.
[930H]
|
Criminal Appeal No. 25 of 1987.
From the Judgment and Order dated 22.7.86 of the Punjab & Haryana High Court in Crl.
Revision No. 615 of 1986 Prem Malhotra for the Appellant.
M.S. Gujral, C.V. Subba Rao and Ms. Kailash Mehta for the Respondent.
The Judgment of the Court was delivered by THAKKAR, J.
Can a sanction to PROSECUTE surrogate for a sanction to take COGNIZANCE? Two safeguards are provided in regard to prosecution of members of the Armed Forces or of the forces charged with the maintenance of public order sought to be prosecuted for use of excessive force in the discharge of purported dis charge of their duty: (1) They cannot be "prosecuted" without obtaining a sanction to prosecute from the appropriate Government (Section 1321 of the Code of Criminal Procedure) (Cr.P.C.) (2) No Court can take "cognizance" of an offence against such an official in the absence of the previous sanction of the 1. "132.
protection against prosecution for acts done under Preceding sections (1)No Prosecution against any person for any act purporting to be done under Section 129, Section 139 or Section 13 1 shall be instituted in any Criminal Court except (a) with the sanction of the Central Government where such person is an officer or member of the armed forces; (b) with the sanction of the State Government in any other case.
. . . . . . . . . . " 994 appropriate Government (see Section 197 2 of Cr.
P.C. ) In the present case the Trial Court has taken cognizance without the previous sanction (of the State Government) as envisioned by Section 197(2) read with Section 197(3) of the Code of Criminal Procedure in respect of a charge that the appellant had in the purported discharge of his duties used force in excess of what was necessary and thereby committed on offence.
Admittedly, there is no such previous sanction authorising any court to take 'cognizance ' of the offence against the appellant.
The High Court has, however, taken the view that inasmuch as the State Government itself had accorded sanction to 'prosecute ' the appellant in exercise of powers under Section 132 of the Cr.
P.C. there was no need for sanction under Section 197 of Cr.
The reasoning runs along these lines: Both sanctions are (1) to be given by the State Government, (2) in respect of the same person, and (3) on the same allegations.
Therefore, the sanction under one provision (Sec. 132) can be treated as a sanction under the other provision (Sec.
197(3) as well).
We are afraid, the High Court has overlooked the scope, purpose and character of sanction under Section 132 of Cr.
P.C. on the one hand and Section 197 Cr.
P.C. on the other.
Six significant points of difference need to be highlighted: (1) The two sanctions are addressed to altogether different persons.
While sanction under Sec.
132 is addressed to the intending complainant, sanction "197.
Prosecution of Judges and public servants (1) xxxx 2.
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 the discharge of his official duty, except with the previous sanction of the Central Government.
The State Government may, by notification, direct that the provisions of subsection (2) shall apply to such class or category of the members of the Forces charged with the maintenance of public order as may be specified therein.
Wherever they may be serving, and thereupon the provisions of that sub section will apply as if for the expression "Central Government~. occurring therein, the expression "State Government" were substituted.
The Central Government or the State Government.
as the case may be, may determine the person by whom, the manner in which, and the offence or offences for which the prosecution of such a Judge, Magistrate or public servant is to be conducted, and may specify the Court before which the trial is to be held.
" 995 under Section 197 is addressed to the Magistrate presiding over a Court.
(2) The two sanctions serve two altogether different pur poses.
While the sanction under Section 132 clothes the intending complainant with authority to institute a com plaint and set the machinary of the criminal court in mo tion, the sanction under Section 197 clothes the court with the jurisdiction to take cognizance of the offence.
Without the former, the intending complainant cannot trigger the proceedings, without the latter the Magistrate cannot have seisin over the matter or act in the matter.
(3) The absence of sanction in each case visits different persons with different consequences.
Absence of the former disables the intending complainant whereas absence of the latter disables the Court.
(4) The disability operates in two different spheres.
Want of sanction under Sec.
132 renders the complaint invalid.
Want of sanction under Sec.
197 vitiates all the proceedings in the Court.
For want of the former, the complainant cannot complain, for want of the latter the court cannot try the case.
(5) The sanctioning authority has to address itself to different questions.
In regard to a sanction under Sec.
132 Cr.
P.C. the question to be answered is whether the intending complainant is a suitable person to be authorized for prose cuting the matter in good faith.
In regard to the sanction under Sec.
197 the question to be answered is which particu lar court should be empowered to try the case '.
So also in granting sanction under Sec.
197 the sanctioning authority has to consider whether or not to exercise the powers under Section 197(4) to specify "the person by whom, the manner in which, and the offence or offences for which" the concerned public servant should be tried and "the court before which the trial is to be held".
The authority seized of the matter in the context of sanction under Sec.
132 does not have to address himself to these questions and in fact has no compe tence in this behalf.
(6) One is an authority to an individual to 'prosecute ' the alleged offender, the other is an authority to 'try ' the alleged offender.
996 Therefore, a sanction under Section 132 is no substitute for a sanction under Section 197.
Under the circumstances, the court could not have taken cognizance of the offence in so far as the appellant was concerned for there was no jurisdiction to do so in the absence of the requisite sanc tion.
The appeal must, therefore, be allowed, the order passed by the High Court must be set aside, and the proceed ings against the appellant must be quashed as lacking in jurisdiction.
No doubt, this order will not operate as an acquittal on merits and the appellant can be proceeded against afresh.
Whether or not to do so is for the competent authority to decide.
So far as the proceedings giving rise to the present appeal are concerned, the same will stand quashed.
The appeal is disposed of accordingly.
M.L.A. Appeal dis posed of.
|
The Trial Court, without any previous sanction of the State Government under s.197 Cr.
P.C. took cognizance in respect of a charge, that the appellant had, in the purport ed discharge of his duties, used force in excess of what was necessary and thereby committed an offence.
The High Court, in appeal by the appellant, however, took the view that inasmuch as the State Government itself had accorded sanction to 'prosecute ' the appellant in exer cise of powers under s.132 of the Cr.
P.C. there was no need for sanction under s.197 of Cr.
Allowing the appeal to this Court, Held: 1.
The proceedings against the appellant must be quashed as lacking in jurisdiction.
The Court could not have taken cognizance of the offence, for there was no jurisdic tion to do so in the absence of the requisite sanction.
This order will not operate as an acquittal an merits, and the appellant can be proceeded again.
it afresh.
Whether or not to do so is for the competent authority to decide.
[996B C] 2.1 Two safeguards are provided in regard to prosecution of members of the Armed Forces or of the forces charged with the maintenance of public order sought to be prosecuted for use of excessive force in the discharge or purported dis charge of their duty.
The first safeguard provided in section 132 Cr.
P.C. is that they cannot be "prosecuted" without obtain ing a sanction to prosecute from the appropriate Government and the second safeguard is the one provided under section 197 that no Court can take "Cognizance" of an offence against such an official in the absence of the previous sanction of the appropriate Government.
[993D F; 994A] 992 2.2 A sanction under s.132 of the Cr.
P.C. is no substi tute for a sanction under section 197 of the Cr.
P.C. Six signifi cant points of difference need to be highlighted.
[994D] 1.
The two sanctions are addressed to altogether different persons.
While sanction under sec.
132 is addressed to the intending complainant, sanction under section 197 is addressed to the Magistrate presiding over a Court.
[994E 995A] 2.
The two sanctions serve two altogether different pur poses.
While the sanction under s.132 clothes the intending complainant with authority to institute a complaint and set the machinary of the criminal court in motion, the sanction under section 197 clothes the court with the jurisdiction to take cognizance of the offence.
Without the former, the intending complainant cannot trigger the proceedings.
Without the latter the Magistrate cannot have seisin over the matter or act in the matter.
[995B] 3.
The absence of sanction in each case visits different persons with different consequences.
Absence of the former disables the intending complainant whereas absence of the latter disables the Court.
[995C] 4.
The disability operates in two different spheres.
Want of sanction under section 132 renders the complaint invalid.
Want of sanction under section 197 vitiates all the proceedings in the Court.
For want of the former, the complainant cannot com plain, for want of the latter the court cannot try the case.
[995D] 5.
The sanctioning authority has to address itself to different questions.
In regard to sanction under sec.
132 Cr.
P.C. the question to be answered is whether the intending complainant is a suitable person to be authorized for prose cuting the matter in good faith.
In regard to the sanction under sec.
197 the question to he answered is which particu lar court should be empowered to try the case.
So also in granting sanction under sec.
197 the sanctioning authority has to consider whether or not to exercise the powers under section 197(4) to specify "the person by whom, the manner in which, and the offence or offences for which" the concerned public servant should be tried and "the court before which the trial is to be held".
The authority seized of the matter in the context of sanction under sec.
132 does not have to address himself to these questions and in fact has no compe tence in this behalf.
[995E 995G] 993 6.
One is an authority to an individual to 'prosecute ' the alleged offender, the other is an authority to 'try ' the alleged offender.
[995H]
|
Appeal No. 168 of 1952.
Appeal from a Judgment and Decree dated 23rd July, 1951, of the Court of the Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 26 of 1951 arising out of the Judgment and Decree dated 14th March, 1951, of the Court of the District Judge, Umaria, in Case No. 32 of 1951.
N. section Bindra (section L. Chhibber, with him) for the appellants.
section P. Sinha (K. B. Asthana, with him) for the respondents.
March 12.
The Judgment of the Court was delivered by MAHAJAN J.
The suit out of which this appeal arises was instituted by the plaintiff respondents in the court of the district judge of Umaria, for recovery of Rs. 34,000 principal, and Rs. 2,626 interest, due on foot of mutual dealings.
The suit was dismissed by the district judge but was decreed on appeal by the Judicial Commissioner of Vindhya Pradesh.
A certificate for leave to appeal to this Court was granted as the case fulfilled all the conditions and requirements in force relating to appeals to the Supreme Court.
The defendants did not admit the claim and it was pleaded that no accounts were explained to them when the signatures of Bhaiyalal and Hiralal were obtained in the plaintiffs ' ledger on 3rd September, 1949, acknowledging the suit amount as due from them.
It was further pleaded that no suit could be based merely on an acknowledgment of the debt.
In para graph 4 of the written statement it was alleged that the plaintiff No. 2 Dipchand having threatened to bring a suit against defendants I and 2 whose financial position was bad and having represented that plaintiff No. 1 Badkulal would be angry and abuse plaintiff No. 2, and having assured on oath by placing his hand on a deity in a temple that no suit shall be 760 brought, and that amount of interest would be reduced asked defendants 1 and 2 to sign the khata, who signed the same without going through the accounts, on the faith of these statements made by Dipchand and that the defendants were not bound by these signatures.
In paragraph 9 of the written statement it was alleged that in fact Rs. 15,000 or 16,000 as principal sum were due to plaintiffs from defendants but the suit had been filed for a much larger sum than due.
Issue I framed by the district judge was in these terms : " Did the defendants Hiralal and Bhaiyala I sign on Bhadon Sudi 11 Samvat 2006 in the capacity of manager and head of the family, on the khata of, the plaintiffs after understanding the debit and credit accounts and accepting Rs. 34,000 as the correct balance due to the plaintiffs.
" It would have been more correct had a separate issue been framed on the two points compositely mentioned in this issue.
Be that as it may, the form in which the issue was framed is not material for the decision of the appeal.
Issue 7 was in these terms : " Did the plaintiff Dipchand obtain the signature of defendants 1 and 2, in their bahi under the threat of instituting a suit and giving the assurance of the suit being not filed and leaving the interest which is incorrect and very much exaggerated, by saying that Badkulal shall be very angry with him. ".
The frame of the issue shows that the learned judge at this stage made no effort to ascertain or apprehend the nature of the plea taken in the written statement.
He seems to have acted more as an automaton than as a judge in the discharge of his responsible duties.
Before framing an issue like this it was his duty to examine the parties and to find out the precise nature of the plea involved within these facts ; in other words, whether the defendants wished to plead in defence fraud, coercion, undue influence or a mistake of fact entitling them to reopen the accounts.
Mr. Bindra for the appellants was unable to tell us 761 what real plea was involved in the facts stated under this issue.
The manner in which the learned judge dealt with this issue lends support to our view that he did not at all apprehend what he had to decide.
It was held that the defendants did not sign the entry after understanding, settling, and adjusting of the accounts, but that plaintiff Dipchand obtained their signatures without explaining the accounts to them.
The fact that the entry was signed by both the defendants who represented their family was not denied.
Hiralal, defendant, in the witness box admitted that the defendants deal in gold, silver and kirana and maintain regular books of account.
It was also admitted that two or three muneems are in their employ for maintaining regular books of the business dealings.
Hiralal was questioned " How much money was due from the defendants firm to the plaintiffs" He couldn 't firm?".
The answer was evasive, viz., say how much was due".
When questioned about his accounts, he replied that he had not filed them as he was ill.
He further deposed that he had looked into his accounts and Rs. 10,000 to Rs. 15,000 as principal and interest were due but he could not say what was the correct amount.
When asked whether on the date of signing the acknowledgment he looked into the books to see what amount was due from him, his answer was in the negative.
He further said that even after receiving notice he did not look into his own accounts to check as to what the correct balance was.
A leading question was put to him Whether on Bhadon Sudi 11 Samvat 2006 there Was an entry of Rs. 34,000 in the defendants ' khata as being the balance due from them to the plaintiffs.
The answer was again evasive.
He said " I could not say whether there was any such entry in his books." In these circumstances there was no justification for throwing out the plaintiffs ' suit on the ground that the accounts were not explained to the defendants by the plaintiffs.
The defendants had written the accounts in their own books from which the true balance could 762 be ascertained.
An inference from the statement of Hiralal can easily be raised that the balance entry of Rs. 34,000 also existed in his own books.
Mr. Bindra tried to get out of this situation by urging that it was no part of the defendants ' duty to produce the books unless they were called upon to do so and the onus rested on the plaintiffs to prove their case.
This argument has to be negatived in view of the observations of their Lordships of the Privy Council in Murugesam Pillai vs Manickavasaka Pandara(1), which appositely apply here.
This is what their Lordships observed: "A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the courts the best material for its decision.
With regard to third parties this may be right enough they have no responsibility for the conduct of the suit; but with regard to the parties to the suit it is, in their Lordships ' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the court the written evidence in their possession which would throw light upon the proposition.
" This rule was again reiterated in Rameshwar Singh vs Rajit Lal Pathak(2).
On the evidence of the parties it is clear that both parties are businessmen and each party has been maintaining accounts of their mutual dealings, and they met on 3rd September and in the plaintiffs ' book the defendants signed an entry on page 58 of the ledger which runs thus: `` Rs. 34,000 balance due to be received up to Bhadon Sudi 11 Samvat 2006 made by check and understanding of accounts with Hiralalji 's books.
" This acknowledgment was made below a number of entries made in this khats, on the credit and debit side and the mutual dealings had continued since (1) (1917) 44 I A. 99.
(2) A.I.R. 1929 P.C. 95, 763 several years.
The acknowledgment is signed by Hiralal and Bhaiyalal, with the following endorsement: "After adjusting the accounts Rs. 34,000 found correct payable.
" In these circumstances we are not able to understand the view of the district judge that it was not proved that the accounts were explained to the defendants by Dipchand.
It was unnecessary to do so because the defendants themselves were keeping accounts and they would not have signed the balance for Rs. 34,000 with the endorsement above cited, without reference to their own books or in the manner suggested in the written statement.
Plaintiff Dipchand in the witness box supported the plaintiffs ' case as laid in the plaint.
He deposed that " This accounting was done by my muneem Puranlal and Ram Prasad, muneem of Hiralal. .
Muneems explained and Hiralal signed after understanding it.
" In cross examination he said that muneems were checking the accounts and when both the muneems said that so much was the balance, Hiralal then signed and that Hiralal and Bhaiyalal themselves did not check any account.
The learned district judge and Mr. Bindra criticized the evidence of this witness and it was urged that he had made false and highly improbable statements with regard to the manner and circumstances in which the entry was signed.
The discrepancies in the statement relate to matters of no consequence.
In our opinion, his evidence along with the entry was sufficient to hold the plaintiffs ' case proved when the best evidence of their own books to disprove the plaintiffs ' case had been withheld by the defendants.
No satisfactory explanation had been given for the non production of the defendants ' books, and the evidence given by Hiralal does not do much credit to him.
Mr. Bindra contended that it should have been held that Bhaiyalal did not sign at the same time when the entry was written but he signed later on.
On this point Hiralal deposed that when be signed Bhaiyalal 99 764 was not present, that he signed afterwards, that Kulai muneem came with, the bahi saying that Badkulal and Dipchand had quarrelled among themselves that there should also be the signature of Bhaiyalal, that Bhaiyalal questioned him as to why the witness had signed, that he replied that Dipchand had told him after pointing his hand towards God that he would take no action so long as he lived, so he did not check, nor any one explained him the accounts, that on this he asked Bhaiyalal to sign and on his asking he signed.
It was for Bhaiyalal to explain his signature by going into the witness box but he did not give evidence in the case and there is no explanation why he did not do so.
Mr. Bindra 's contention therefore that it should be held that Bhaiyalal was not present when the acknowledgment was signed cannot be sustained.
The defendants tried to support their case by the statements of Kulai Prasad, muneem, and the other two muneems Ram Prasad and Puranlal.
So far as Kulai Prasad is concerned, he was in the plaintiffs ' service and was dismissed by Badkulal, plaintiff, on 31st March, 1950.
Much reliance cannot be placed on the statement of a dismissed and disgruntled employee.
He stated that Hiralal was not made to understand any accounts and Dipchand assured him on oath that he would raise no trouble during his life and asked Hiralal to sign and that Bhaiyalal signed on a different date.
This evidence is of a partisan character and no reliance can be placed on it.
Rain Prasad stated that he did not check the accounts of the plaintiffs from Bhadon Samvat 2006 and that Hiralal did not sign in his presence.
In cross examination he admitted that there were mutual dealings between the parties and that Hiralal might have signed after accounting was done.
He pretended ignorance of what happened on Bhadon Samvat 2006.
As regards Puranlal, he stated that after looking into the accounts and after mutual talk, Exhibit P 1 765 was written on Dip Chand 's asking, that accounts might have been told by Dipchand on the basis of the statement which he had with him, that no accounts were explained.
He further stated that Hiralal said to Dipchand "Please see me", on which Dipchand replied after raising his hand towards the temple " I shall not do anything unfair in my lifetime.
" In cross examination he admitted that the words " signed Bhurey Naik Raghunandan Prasad Bakalam Hira Lal ", and the words " after adjusting the accounts Rs. 34,000 found correctly payable signed Hiralal " were written by Hiralal himself.
It was further elicited in cross examination that the witness had forged a receipt and for forging that receipt he was sentenced to one year 's imprisonment in a criminal case started by Badkulal, plaintiffs This evidence therefore is not of much consequence in this case.
In these circumstances we are satisfied that the district judge not only approached the decision of the case from an erroneous point of view but he also incorrectly appreciated the material on the record.
The learned Judicial Commissioner was therefore perfectly justified in reversing his decision and.
in holding that on 3rd September, 1949, there was an adjustment of accounts actually done by the muneems and accepted by the principals and the story of coercion and misrepresentation was false.
Mr. Bindra next urged that the plaintiff 's suit should have been dismissed because it could not be maintained merely on the basis of an acknowledgment of liability, that such an acknowledgment could only save limitation but could not furnish a cause of action on which a suit could be maintained.
The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit.
We are satisfied that no exception can be taken to this conclusion.
It was held by the Privy Council in 766 Maniram vs Seth Rupchand(1), that an unconditional acknowledgment implies a promise to 'pay because that is the natural inference if nothing is said to the contrary.
It is what every honest man would mean to do.
In Fateh Chand vs Ganga Singh(2) the same view was taken.
It was held that a suit on the basis of a balance was competent.
In Kahanchand Dularam vs Dayaram Amritlal(3) the same view was expressed and it Was observed that the three expressions "balance due ", " account adjusted " and "balance struck" must mean that the parties had been through the account.
The defendant there accepted the statement of account contained in the plaintiff 's account book, and made it his own by signing it and it thus amounted to an " accounts stated between them " in the language of article 64 of the Limitation Act.
The same happened in the present case.
The acknowledgment which forms the basis of the suit was made in the ledger of the plaintiffs in which earlier mutual accounts had been entered and truly speaking, the suit was not based merely on this acknowledgment but was based on the mutual dealings and the accounts stated between them and was thus clearly maintainable.
Mr. Bindra drew our attention to a decision of the Allahabad High Court in Ghulam Murtuza vs Fasihunnissa(4) , wherein it was held that even if an acknowledgment implies a promise to pay it cannot be made the basis of suit and treated as giving rise to a fresh cause of action.
We have examined the decision and we are satisfied that it does not lay down good law.
For the reasons stated above this appeal has no merits and we accordingly dismiss it with costs.
Appeal dismissed '.
CO 2,0.3 (i) (1906) 33 I.A. 165.
(2) (1929) I.L.R.
Io Lab 748.
(3) (1929) I.L.R. to Lah.
(4) All 434.
|
Where the defendants who had dealings with the plaintiffs for several years signed the following entry in the plaintiffs ' account book underneath the earlier entries: "After adjusting the accounts Rs. 34,000 found correct payable Held, that this amounted to an unqualified acknowledgment of liability to pay and implied a promise to pay and could be made the basis of the suit and gave rise to a fresh cause of action.
Maniram vs Seth Rup Chand (33 I.A. 165), Fateh Chand vs Ganga Singh (I.L.R. and Kahan Chand Dularam vs Dayalal Amritlal (I.L.R. relied on.
Ghulam Murtuza vs Fasihunnissa (I.L.R. 57 All. 434) overruled.
It is not a sound practice for those desiring to rely upon a certain state of facts to withhold from the court written evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the mere doctrine of onus of proof.
Murugesam Pillai vs Manickavasaka Pandara (44 I.A. 99) referred to.
|
Criminal Appeal No. 222 Of 1986 From the Judgment and Order dated 11.3.
1986 of the Sessions Judge, Karnal in Misc.
Sessions Case (D) No. 1072 of 1985 Harbans Lal and G.K. Bansal for the Appellant.
V.C. Mahajan and C.V. Subba Rao for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
While allowing this appeal and setting aside the conviction of the appellant Balbir Singh under Section 4 of the Terrorist and Disruptive Activities (Pre vention) Act, 1985 (in short the 'Act ') by our order dated 30.10.86 we had stated that the reasons for our judgment will follow.
We now proceed to give the reasons for our judgment.
The appellant who holds the degrees of M.A. and B.T. was originally a Lieutenant in the Armed Forces.
On account of some mental ailment he was discharged from the Army.
There after he joined the Haryana Education Department and was appointed as a Lecturer in the Government Higher Secondary School at Siwah.
After about 7 years of service in that School he was transferred to the Government 1098 Senior Secondary School at Sanauli Khurd.
He, however, continued to reside at Siwah since he could not get accommo dation at Sanauli Khurd.
The circumstances under which the appellant has come to be convicted under Section 4 of the Act are to be found in the evidence of two prosecution witnesses viz. P.W.I Jagdish Chander, a Police Constable and P.W.2, Gian Chand, a Head Constable.
One other witness Ramji Lal (P.W.3), an Assistant Sub Inspector of Police is also a prosecution witness but since he speaks only about the filing of the charge sheet his evidence is not very material.
The evidence of P.Ws. 1 and 2 is to the following ef fect.
Pursuant to a call given by the Bhartiya Kisan Union for a Rail Roko Abhiyan on 2.9.85 a crowd of about 1500 persons had gathered on the forenoon of that day at a place near the railway line in the village Siwah, Tehsil Panipat, district Karnal.
To safeguard the railway line and to main tain the law and order, the authorities had posted a large contingent of police at the place of gathering of the demon strators.
In spite of the presence of the police force the demonstrators became violent and attempted to cause damage to the railway line and also indulged in throwing brickbats at the police force.
To control the situation the police party had to resort to lathi charge on four or five occa sions and also to firing tear gas shells.
At one point of time, as the violence did not abate the police had to resort to shooting also.
One of the demonstrators died on account of gun shot injuries and some others sustained injuries due to the lathi charge.
The appellant, it is stated, came at about 8 or 8.30 P.M. to the place where the lathi charge and shooting had taken place and addressed the demonstrators and incited them to violence.
In his inflammatory speech the appellant is said to have condemned the actions of the Central Government and the State Government in trying to appease the rebel elements and extremists of Punjab by sacrificing the inter ests and welfare of the people of Haryana and further stated that if the people of Haryana want to protect their rights they should also resort to the ways and methods adopted by the Punjab extremists and that for his part he was prepared to lead their struggle since he had an eight chamber revolv er and that he had on earlier occasion attempted to kill Ch.
Bhajan Lal, Chief Minister of Haryana and hence the demon strators may lend him their cooperation so that the Govern ment can be forced to safeguard the interests of the people of Haryana.
1099 P.Ws. 1 and 2, who were on intelligence duty, carefully listened to the speech and on the next morning P.W. 1 pre sented a report (Exhibit P.A.) at the Police Station at Nissing.
Thereupon a case was registered against the appel lant under Section 4 of the Act and after completion of investigation he was charge sheeted in the Court of Shri S.K. Jain, Judge, Karnal, the Designated Court under the Act.
As already stated the prosecution rested its case on the testimony of P.Ws. 1 and 2, they being the material witness es.
The appellant denied the prosecution case and stated in defence that on compassionate grounds he went to the place of congregation of the demonstrators to make enquiries when he came to know in the evening, on his return from School, that the police had resorted to lathi charge and firing to disperse the demonstrators and that one person had died on account of the firing.
In support of his defence the appel lant examined two witnesses besides himself and further sought to contend that about 60 persons who had been arrest ed were let off without being prosecuted while he alone has been unjustly charge sheeted on false avernments.
The learned Judge of the Designated Court has accepted the prosecution evidence and found the appellant guilty and convicted him under Section 4 of the Act.
After hearing the appellant on the question of sentence the Court has awarded him the minimum sentence of three years ' R.I. Arguing the case of the appellant before us Mr. Gopal Kishan Bansal, learned counsel levelled many criticisms against the prosecution case and submitted that the learned Judge of the Designated Court ought not to have acted on the testimony of P.Ws. 1 and 2 and convicted the appellant.
The learned counsel took us through the evidence of P.Ws. 1 and 2 and also the relevant portions of the judgment under appeal and adverted to several infirmities in the evidence of the witnesses and also drew our attention to the lack of credible evidence in the case.
Section 16 of the Act provides for an appeal against a judgment rendered by a Designated Court to the Supreme Court alone and to no other court.
Consequently, this appeal constitutes the first appeal as well as the final appeal against the judgment of the Designated Court.
Such being the case, we have to necessarily scrutinise the evidence in its entirety and re appraise the testimony of witnesses to determine its evidentiary value.
On making such scrutiny and re appraisal of the evidence we find the contentions of the appellant 's counsel to have 1100 merit and substance in them.
We find the prosecution evi dence to be not only lacking in credibility but also to suffer from numerous infirmities.
At the outset we would like to point out that even according to the prosecution a crowd of about 1000 to 1500 persons had gathered near the railway line in the village of Siwah on the morning of 2.9.85 in response to the call given by the Bhartiya Kisan Union for a Rail Roko Abhiyan.
It is the further case of the prosecution that the demonstrators became violent and attempted to cause damage to the raiway line and in order to safeguard the railway property and maintain law and order the police force, assembled in ade quate numbers, had resorted to lathi charge four or five times during the day and in addition the police had also to fire tear gas shells and even to resort to shooting.
One man had died on account of the shooting and several persons had sustained injuries on account of the lathi charge.
Neverth less the crowd had not dispersed but continued to remain at the scene to carry on their agitation.
In such circumstances it is natural to expect the police force to have remained, in strength at the scene to maintain effective control over the demonstrators and to safeguard the railway line.
Curi ously enough, the entire force comprised of a Deputy Super intendent of Police, Inspectors, Sub Inspectors, Assistant Sub Inspectors, Head Constables and Constables is said to have left the place en masse except P.Ws. 1 and 2.
It is significant to note P.Ws. 1 and 2 were not on security duty at that place but were only there to submit intelligence reports.
When a lathi charge had been made even at 4.30 P.M. it is inconceivable that the entire police force would have left the place in the evening and gone away elsewhere.
We are, therefore, led to think that this unnatural version is put forward to cover up the lacuna for not examining any police officer of a higher rank than P.Ws. 1 and 2 regarding the inflammatory speech alleged to have been made by the appellant at about 8.30 P.M. on that day.
Even assuming for argument 's sake that the entire police force had left the scene and only P.Ws. 1 and 2 were left at the place, the prosecution could have certainly examined some independent witnesses to prove what the appellant had spoken on that night.
Surely, it cannot be said that among the 1500 or 2000 persons present there, no one would have come forward to give evidence about what the appellant spoke on that night.
No explanation has been offered as to why no independent witness has been examined.
In fact P.Ws 1 and 2 have not even stated that they tried to find out the names of any of the people assembled there or made any effort to note down their names 1101 so that they can later be summoned to appear as witnesses if a case was to be filed against the appellant.
Admittedly, the appellant was a stranger to P.Ws. 1 and 2 and hence they could not have known who he was and what was his occupation.
P.Ws. 1 and 2 had not made any enquiries to find out who the appellant was and where he was residing.
The strange version given by P.W. 1 is that before the appellant began his speech he introduced himself to the demonstrators by giving out his name, address and occupa tion.
The statement, apart from its artificiality is not corroborated even by P.W. 2.
Another discrepancy noticed is that while P.W. 1 has stated that the appellant addressed the gathering from the Chaubara with a microphone in his hand, P.W. 2 has stated that the appellant stood in the midst of the demonstrators and addressed them and moreover P.W.2 makes no reference to the appellant having any micro phone.
While P.W. 2 has stated that he did not apprehend any violent reaction from the public on account of the speech made by the appellant, P.W.i would say that from the moment the appellant started introducing himself to the demonstra tors he anticipated things and began to take notes of the appellant 's speech.
A noticeable feature in the case ifs that the report Exhibit P.A. is said to have been prepared on the basis of the "rough notes" prepared by P.W. 1 but the "rough notes" is not forthcoming and has not been marked in evidence and it is said to have been destroyed.
Since the "rough notes" constitute the first recorded entry of the speech it is an important document and in the absence of it the fair report cannot be given unreserved acceptance.
Even in the matter of the preparation of the report, one would expect P.W. 2 holding a higher rank than P.W. 1 to have prepared it.
Not only has P.W. 2 not prepared any report but his own admis sion is that he did not sign or even initial the "rough notes" or the fair report Exhibit P.A. Apart from the failings in the evidence of P.Ws. 1 and 2 we also find that virtually no investigation has been done before the appellant was charge sheeted.
The Investigating Officer has not taken any steps to find out the antecedants of the appellant and whether he was a member of any politi cal party.
No investigation has been made to find out wheth er the appellant had an eight chamber revolver as he is alleged to have claimed and whether he had made any attempt on the life of Ch.
Bhajan Lal on an earlier occasion.
With out making any effective investigation the police authori ties have lightly launched a prosecution against the appel lant solely on the basis of the report given by P.W.I. 1102 Having regard to the numerous infirmities which are apparent in the prosecution case, we are clearly of the opinion that the learned Judge of the designated court was not justified in holding the prosecution case proved beyond reasonable doubt and finding the appellant guilty under Section 4 of the Act and convicting him accordingly.
We are constrained to observe that it is highly regret table that the authorities concerned should have launched a prosecution under the Act in a manner which can be easily termed as cavalier.
The Act though intended to effectively deal with terrorists and disruptionists contains drastic provisions for punishing terrorists and disruptionists under Sections 3 and 4 of the Act.
Anyone convicted under Section 3(2)(i) of the Act is liable to be punished with death and whoever is convicted under Section 3(2)(ii) of the Act is liable to be punished with imprisonment for a term which shall not be less than 5 years but which may extend to term of life and shall also be liable to fine.
Whoever is con victed under Section 4 of the Act is liable to be punished with imprisonment for a term which shall not be less than 3 years but which may extend to term of life and shall also be liable to fine.
Furthermore, against any judgment, sentence or order rendered under the Act, an appeal would lie direct ly to the Supreme Court and not to the High Court.
Having regard to all these features the investigation of cases under the Act has not only to be thorough but also of a high order.
In this case we find the investigation to be nowhere near the required standards and likewise the evidence ad duced in the case to be far from satisfactory to justify the conviction of the appellant under Section 4 of the Act.
The appeal has, therefore, to be necessarily allowed and the conviction and sentence awarded to the appellant set aside.
M.L.A. Appeal al lowed.
|
A crowd of about 1500 persons had gathered near the railway line in the village Siwah, District Karnal on the morning of 2.9.85 in response to a call given by the Bhar tiya Kisan Union for a Rail Roko Abhiyan.
To safeguard the railway line and to maintain law and order the authorities posted a large contingent of police.
Since the demonstrators became violent and attempted to cause damage to the railway line, the police force resorted to lathi charge four or five times during the day and in addition fired tear gas and even resorted to shooting.
The appellant, it is alleged, came at about 8 or 8.30 p.m. to the place where lathi charge and shooting had taken place, addressed the demonstrators and incited them to violence.
According to the prosecution, P.Ws.
I and 2, who were on intelligence duty, carefully listened to the speech and on the next morning P.W.I presented a report at he Police Station.
Thereupon a case was registered against the appellant under s.4 of the Terrorists and Disruptive Activi ties (Prevention) Act, 1985 and after investigation he was charge sheeted.
The Designated Court under the Act accepted the prosecution evidence and found the appellant guilty and convicted him under s.4 of the Act.
Allowing the appeal by the appellant, this Court, HELD: 1.
The Judge of the designated court was not justified in holding the prosecution case proved beyond reasonable doubt and finding the appellant guilty under s.4 of the Act and convicting him accordingly.
The prosecution evidence is not only lacking in credibility but also suffers from numerous infirmities.
It is far from satisfactory to justify the conviction of the appellant under s.4.
The conviction and sentence awarded to the appellant are there fore set aside.
1096 2.
Section 16 of the Act provides for an appeal against a judgment rendered by a designated court to the Supreme Court alone and to no other court.
Consequently, this appeal constitutes the first appeal as well as the final appeal.
Such being the case, the Supreme Court has to necessarily scrutinise the evidence in its entirety and re appraise the testimony of witnesses to determine its evidentiary value.
[1099G H] 3.1.
I and 2 were not on security duty at that place but were only there to submit intelligence reports.
When a lathi charge had been made even at 4.30 p.m. it is inconceivable that the entire police force would have left the place in the evening and gone away elsewhere.
Therefore, this unnatural version is put forward to cover up the lacuna for not examining any police officer of a higher rank re garding the inflammatory speech alleged to have been made by the appellant at about 8.30 p.m. on that day.
[1100E F] 3.2 The prosecution could have certainly examined some independent witnesses to prove what the appellant had spoken on that night.
Surely, it cannot be said that among the 1500 or 2000 persons present there, no one would have come for ward to give evidence about what the appellant spoke on that night.
No explanation has been offered as to why no inde pendent witness has been examined.
In fact P.Ws.
I and 2 have not even stated that they tried to find out the names of any of the people assembled there or made any effort to note down their names so that they can later be summoned to appear as witnesses if a case was to be filed against the appellant.
[1100G H; 1101A] 3.3 The appellant was a stranger to P.Ws.1 and 2 and hence they could not have known who he was and what was his occupation.
I and 2 had not made any enquiries to find out who the appellant was and where he was residing.
The strange version given by P.W.I is that before the appellant began his speech he introduced himself to the demonstrators by giving out his name, address and occupation.
The state ment, apart from its artificiality is not corroborated even by P.W .2.
Another discrepancy noticed is that while P.W. I has stated that the appellant addressed the gathering from the Chaubra with a microphone in his hand, P.W.2 has stated that the appellant stood in the midst of the demonstrators and addressed them.
Moreover P.W.2 makes no reference to the appellant having any microphone.
[1101A C] 3.4 The report Exhibit P.A. is said to have been pre pared on the basis of rough notes prepared by P.W.I, but the 'rough notes ' is not forthcoming and has not been marked in evidence and is said to have 1097 been destroyed.
Since the rough notes constitute the first recorded entry of the speech it is an important document and in its absence the fair report cannot be given unreserved acceptance.
Even in the matter of the preparation of the report, one would except P.W.2 holding a higher rank than P.W.I to have prepared it.
Not only has P.W.2 not prepared any report but his own admission is that he did not sign or even initial the rough notes or the fair report Exhibit P.A. [1101D F] [The Court observed that it is highly regrettable that the authorities concerned should have launched a prosecution under the Act in a manner which can be easily termed as cavalier.
The Act though intended to effectively deal with the terrorists and disruptionists contains drastic provi sions for punishing them.
Furthermore, against any judgment, sentence or order rendered under the Act, an appeal would lie, directly to the Supreme Court and not to the High Court.
Therefore, the investigation of the case under the Act has not only to be thorough but also of a high order.]
|
tion (Original) No. 567 of 1986.
(Under Article 32 of the Constitution of India).
Dr. Raxna Swamy and P.H. Parekh for the Petitioner.
B. Datta, Additional Solicitor General, V.J. Rao, Y.P. Rao, Ms. K. Kumaramanglam and Ms. section Relhan for the Respond ents.
The facts: The petitioner is one Hem Lall Bhandari residing in Bombay, practising 'law ' there.
The first re spondent is the State of Sikkim through its Home Secretary, the second respondent, the Delhi Administration, Police Department and the third respondent, the Union of India through the Home Secretary.
The petitioner states that he had a humble beginning and that he by dint of hard labour qualified himself in law and secured significant success academically.
It is alleged that the Chief Minister of Sikkim wanted him to join politics and that he incurred the wrath of the Chief Minister because of his disinclination to accept this suggestion and that the order of detention was passed against him consequently.
On 29.9.1986, at 10.15 P.M. three officers of the Sikkim Police Service accompanied by two officers of the Bombay Police went to the residence of the petitioner and took him to the office of the C.I.D., Bombay where he was served with a copy of the detention order.
He was detained in the police lock up at the C.I.D. office and his request to contact a lawyer was not granted.
He was kept in custody till 5.30 P.M. on 30 9 1986.
At 6 P.M. on that day, he was permitted to go to his office to collect some papers.
There he con tacted Shri T.R. Andhyarugina, Senior Counsel and informed him that he was being 81 taken to the Bombay Airport to be flown by flight IC 183, to Delhi.
The Senior Counsel requested the police officers to permit him to approach the Bombay High Court before taking the petitioner to Delhi.
This request was not granted.
However, he filed a habeas corpus petition for the release of the petitioner in the Bombay High Court on the same day and P.B. Sawant, J. stayed the order of detention as per the following order; at 7.30 P.M. "There are no grounds of detention furnished, nor any documents, along with the order.
The grounds for detention have to be served along with the order.
The order is prima facie illegal.
It is, therefore, stayed till further orders from this Court.
" This order could not be served on the detaining officer as the Plane carrying the petitioner took off to Delhi at 8.30 P.M.
Meanwhile at 11.30 P.M.
Shri Andhyarujina tele phonically informed a Delhi Advocate, Dr. Mrs. Swamy, of the order passed by the Bombay High Court.
On receipt of this information, she informed the officer on duty at the Air port, of the order of Bombay High Court.
Nothing happened.
Therefore, a petition was filed before this Court on 1st October, 1986 at 2.30 P.M. on which this Court passed an order directing that the petitioner be detained in Delhi and should not be removed from Delhi by the respondents and further that he should be produced before the Chief Metro politan Magistrate who might release him on bail if he thought it fit.
On 2 10 1986, the petitioner was brought before the Chief Metropolitan Magistrate who after hearing the parties granted bail to the petitioner.
The petitioner was released the same evening at 4.30 P.M. on furnishing a bond of a sum of Rs. 10,000 with a surety in the like sum.
The petitioner returned to Bombay the next day, The address of the petitioner is well known to the respondents.
No serious attempt was made by them between 2 10 1986, and 14 10 1986 to serve the petitioner with the grounds of detention.
On 6th October, 1986, the petitioner attended the Bombay High Court in connection with the writ petition filed there and has been regularly attending his office and carrying on his professional duties both in the office and in the High Court.
On 14 10 1986, the petitioner was served with the impugned order of detention, the grounds of detention and the supporting documents.
The case put forward by the petitioner 's counsel is that the delay caused in serving the grounds of detention, from 2 10 1986 to 14 10 1986, clearly violates Section 8(1) of the Act 82 and on that ground the order of detention has to be quashed.
To meet the case of the petitioner that the grounds of detention were served on him only 15 days after the order of detention a Counter Affidavit is filed, sworn to by the Home Secretary, Government of Sikkim.
We extract below the rele vant portion of the Counter Affidavit. "On 2 10 1986, the petitioner was produced in the Court of the Chief Metropolitan Magis trate.
The petitioner was released on bail in pursuance of the order of this Hon 'ble Court.
On 3 10 1986, the grounds of deten tion alongwith the materials were handed over to Shri K.P. Subba, for service on the peti tioner.
Shri K.P. Subba, having learnt from Mrs. Swami, who was his surety, that the petitioner left for Bombay on the same day.
On 4 10 1986, the Police Officers could not contact the petitioner in his address.
He waited on 5 10 1986 also but he did not find the petitioner at his house address or in the Court.
He returned to New Delhi on 6 10 1986.
The writ petition No. 1015 of 1986 was heard by Hon 'ble Mr. Justice Sawant and Justice Kolse Patil and by order dated 14 10 1986 discharged the rule.
The grounds of detention could not be served within the period of 5 days or 10 days as per section 8 of the Act, because the petitioner was released on bail, by the Chief Metropolitan Magistrate on 2 10 1986 and the petitioner avoided the police officer.
The petitioner received the grounds alongwith the material on 14 10 1986 at Bombay as per the orders of the High Court.
Shri K.P. Subba, the Police Officer waited till 6th October, 1986 at Bombay and having found that he was not able to contact the petitioner returned to Gangtok.
Thus the grounds could not be served on the petitioner within the stipulated period as the petitioner was not under detention from 2nd October, 86 onwards.
Had the petitioner been in detention it would have been possible for me to get the grounds served on the petitioner on 3rd Octo ber, 1986 itself.
I respectfully submit that it is the petitioner who rendered every effort on my part to serve the grounds futile 83 taking advantage of the various orders of the High Court of Bombay and this Hon 'ble Court.
I did not know that the Writ Petition filed by the petitioner was posted in the Bombay High Court on 6th October, 1986.
No notice was served on me or on the State Government about the posting of the writ petition in the Bombay High Court on 6th October, 1986.
The only communication received was that the said case was posted on 14th October, 1986.
Our Advocate General appeared on the day in the High Court of Bombay.
I respectfully submit that the petitioner cannot be allowed to contend that the provisions of Section 8 of the Act were violated by me in view of the fact that the petitioner was not in detention and was en larged on bail by the Chief Metropolitan Magistrate, New Delhi under the orders of this Court.
Therefore, I respectfully submit that there is no violation on my part of the provi sions of Section 8 of the Act.
" The petitioner has made various allegations of malafides against the Chief Minister of Sikkim.
These allegations are not supported by any acceptable evidence.
Therefore, we do not propose to consider them.
Much was made of the fact that the Chief Minister has not filed a Counter Affidavit himself denying the allegations.
According to us it is not necessary since the allegations are wide in nature and are bereft of details.
We do not think it necessary in all cases to call upon persons placed in high positions to controvert allega tions made against them by filing affidavits unless the allegations are specific, pointed and necessary to be con troverted.
We, therefore, propose to confine ourselves purely to the question whether there has been a violation of the mandatory provisions contained in Section 8 of the Act.
or not.
The order of the Home Secretary directing the petition er 's detention under Section 3 of the Act was made on 25 9 1986 and grounds of detention were prepared on the same date.
The petitioner was served with the detention order on '29 9 1986 at 10.15 P.M.
He was taken to the Bombay Police lock up that day.
On 30 9 1986 at 6 P.M. he was taken to his office in Bombay.
On the same day, the Bombay High Court passed an order at 7.30 P.M. staying the detention order.
The Plane carrying the petitioner leaves Bombay for Delhi on the same day at 8.30 P.M.
The detaining officers were in formed of the order of the Bombay High Court on 1 10 1986 at 5 P.M.
On the same day at 3.30 P.M. the Supreme Court di rects that the petitioner shall not be taken out of Delhi.
On 2 10 1986, the Chief Metropolitan 84 Magistrate directs the petitioner 's release on bail.
On 14 10 1986, the petitioner is served with grounds of detention.
These facts are not disputed.
Let us see how the concerned officer explains the delay caused in servings the grounds of detention on the petition er.
But before doing so we will read Section 8(1) of the Act.
"8(1) When a person is detained in pursuance of a detention order, the authority making the order shall, as soon as may be, but ordinarily not later than five days and in exceptional circumstances and fOr reasons to be recorded in writing, not later than fifteen days from the date of detention, communicate to him the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order to the appropriate Government." A bare reading of the Section shows that it is obligato ry on the detaining officer to communicate to the detenu, the grounds on which the order of detention has been made, promptly.
This has to be done as soon as possible and ordi narily not later than 5 days.
The detaining authority is permitted to exceed this limitation of 5 days in exceptional circumstances.
The grounds of detention, under exceptional circumstances, can be communicated to the detenu within a period not later than 15 days from the date of detention but when the detaining authority takes time longer than 5 days he was to record reasons why the grounds of detention could not be communicated within 5 days.
It is clear in this case that the grounds of detention were communicated to the petitioner long after 10 days.
There is no record evidencing any reason for this long delay.
We have therefore to examine the reasons why the grounds of detention were given only on 14 10 1986.
It is stated in the Counter Affidavit sworn to by the Home Secretary that the grounds of detention were handed over to Shri K.P. Subba for service on the petitioner on 3 10 1986.
This K.P. Subba has not chosen to file an affidavit in this case to inform this Court as to what really happened with the grounds of detention given to him for service on the petitioner.
It is stated in the Counter Affidavit that Shri Subba learnt from the petitioner 's Advocate, Mrs. Swamy, that the petitioner had left for Bombay.
The Counter Affidavit continues to say that on 4 10 1986, the 'police officers ' could not contact the petitioner in his home address.
It is not 85 evident from this statement as to which officer tried to contact the petitioner in his home address on 4 10 1986.
It is further stated that he waited on 5 10 1986 also but he did not find the petitioner at his house address or in the Court.
The Counter Affidavit is not sufficiently communica tive as to who this police officer was.
The Counsel for the petitioner tried to impress upon us the fact that this statement cannot be true because 5 10 1986 happens to be a Sunday and that no police officer would try to contact an Advocate in Court on Sunday.
This police officer is said to have returned to New Delhi on 6 10 1986.
The Counter Affida vit is eloquently silent about what happened after 6 10 1986.
The Counter Affidavit thereafter discloses the fact that Shri K.P. Subba, the police officer, waited till 6th October, 1986 in Bombay and returned to Gangtok since he was not able to contact the petitioner.
The complaint of the officer is that the petitioner made it impossible for him to serve the grounds of detention.
Every attempt on the part of the officer to serve the petitioner with grounds of deten tion were rendered futile by taking advantage of the orders of the High Court and the Supreme Court.
It is further stated in the Counter Affidavit that the grounds of deten tion could not be served since the petitioner was released on bail and was not under detention from 2nd October, 1986 onwards.
We have considered the averments in the Counter Affida vit carefully.
We have no hesitation to hold that there has been a flagrant violation of the mandatory provisions of Section 8 in this case.
It is not permissible, in matters relating to the personal liberty and freedom of a citizen, to take either a liberal or a generous view of the lapses on the part of the officers.
In matters where the liberty of the citizens is involved, it is necessary for the officers to act with utmost expedition and in strict compliance with the mandatory provisions of law.
Expeditious action is insisted upon as a safeguard against the manipulation.
In this case there is no acceptable or satisfactory explanation as to what the officer or the officers did after 6 10 1986.
This inaction after 6 10 1986 till 14 10 1986, by itself is sufficient for us to hold that Section 8(1) has been violated by the officer concerned and on that ground alone the order of detention has to be quashed.
An attempt was made by the counsel for the respondents to contend that the delay in communicating the grounds of detention caused in this case has to be condoned and the rigour of the Section relaxed since the detenu had been released on 2 10 1986, and hence 86 not in detention.
This according to us is a specious plea which cannot stand legal scrutiny.
If this contention is to be extended to its logical conclusion it would be clothing the authorities with powers to delay communication of the ground of detention indefinitely, whenever a detenu secures from a Court of law either bail or parole.
To accept this contention would be to destroy the effect of the mandate of the Section.
As indicated earlier, the mandate enacted in the Section is a safety valve for a citizen who is robbed of his liberty and to disable the authorities from manipulating the grounds of detention.
The Section has to be interpreted literally.
No relaxation is permissible.
If the original time of 5 days has to be extended, such extension must 'be supported by an order recording reasons.
If reasons are not so corded the order of detention will automatically fail.
Even if reasons are recorded they have to inspire confidence in the Court and are subject to legal scrutiny.
If the reasons are unsatisfactory, Courts would still quash the order of detention.
On a consideration of the materials placed before us we hold that the order of detention is bad and we quash the same.
Since the petitioner is not in detention there is no need to pass any order to direct his release.
A.P.J. Petition allowed.
|
The Order of detention of the petitioner under s.3 of the was made on 25.9.
1986 and the grounds of detention were prepared on the same date.
The petitioner was detained and served with the detention order on 29.9.1986 at 10.15 P.M.
In a habeas corpus petition filed on behalf of the petitioner on 30.9.
1986 the High Court passed an order at 7.30 P.M. staying the detention order.
However, the stay order could not be served on the detaining officer as the plane carrying the petitioner left Bombay for Delhi at 8.30 P.M.
The detaining officers were informed of the order of the High Court on 1. 10.1986 at 5 P.M.
On the same day a petition was filed in this Court and at 3.30 P.M. this Court passed an order directing that the petitioner shall not be taken out of Delhi.
On 2.10.
1986 the petition er was released on bail by the Chief Metropolitan Magis trate, Delhi.
On 14.10.
1986 the petitioner was served with grounds of detention.
On behalf of the petitioner it was contended that the delay caused in serving the grounds of detention from 2.10. 196 to 14.10.
1986 clearly violates the mandatory require ments, contained in s.8(1) of the Act and, therefore, the order of detention was liable to be quashed.
On behalf of the respondents it was contended: (1) that the petitioner made all efforts of the police officer to serve the grounds of detention futile by taking advantage of the orders of the High Court and this Court, and (2) that the delay in communicating the grounds of detention caused in this case should be condoned and rigour of the section relaxed since the detenu had been released on 2.10.1986, and hence not in detention.
Allowing the petition, 78 79 HELD: (1) Section 8(1) of the Act shows that it is obligatory on the detaining officer to communicate to the detenu, the grounds on which the order of detention has been made.
This has to be done as soon as possible and ordinarily not later than 5 days.
The limitation of 5 days can be exceeded in exceptional circumstances.
The grounds of deten tion under exceptional circumstances can be communicated to the detenu within a period not later than 15 days from the date of detention but when the detaining authority takes time longer than 5 days he has to record reasons why the grounds of detention could not be communicated within 5 days.
(2) The mandate enacted in the section is a safety valve for a citizen who is robbed of his liberty from manipulating the grounds of detention.
The section has to be interpreted literally.
No relaxation is permissible.
If the original time of 5 days is to be extended, such extension must be supported by an order recording reasons.
If reasons are not so recorded the order of detention will automatically fail.
Even if reasons are recorded they have to inspire confidence in the Court and are subject to legal scrutiny.
If the reasons are unsatisfactory, Courts will still quash the order of detention.
(3) In the instant case, the grounds of detention were communicated to the petitioner long after 10 days.
There is to record evidencing any reason for this long delay.
The contention that the delay in communicating the grounds of detention caused in this case has to be condoned and the rigour of the section relaxed since the detenu had been released on 2.10.
1986, and hence not in detention, is a specious plea which cannot stand legal scrutiny.
If this contention is to be extended to its logical conclusion it would be clothing the authorities with powers to delay communication of the grounds of detention indefinitely, whenever a detenu secures from a Court of law either ball or parole.
To accept this contention would be to destroy the effect of the mandate of the section.
(4) In the case there is no acceptable or satisfactory explanation as to what the officer or the officers did after 6.10. 1986.
This inaction after 6.10.1986 till 14.10.
1986, by itself is sufficient to hold that s.8(1) has been violat ed by the officer concerned.
The order of detention is bad and, therefore, quashed.
(5) It is not necessary in all cases to call upon per sons placed in high positions to controvert allegations made against them by filing 80 affidavits unless the allegations are specific, pointed and necessary to be controverted.
|
ivil Appeal No. 4426 of 1986.
From the Judgment and Order dated 11.9.
1984 of the Delhi High Court in L.P.A. No. 219 of 1981 V.K. Kanth, G.D. Gupta and C.V. Subba Rao for the Appel lants.
Ram Panjwani, Vijay Panjwani and D.N. Goburdhan for the Respondent.
The Judgment of the Court was delivered by SEN, J.
This appeal by special leave directed against the judgment and order of the Delhi High Court dated Septem ber 11, 1985 raises a question of frequent occurrence.
The question is whether where a Government servant retains accommodation allotted to him under SR 317 B 11 beyond the concessional period of two months permissible under sub r.(2) thereof, the liability to pay damages equivalent to the market rent for the period of such unauthorised occupa tion under SR 3 17 B 22 is contingent upon the Directorate of Estates serving a notice upon him that he would be liable to pay market rent for retention of such accommodation as held by the High Court.
Put very briefly, the essential facts are these.
In the year 1968 the respondent who was then a Squadron Leader in the Indian Air Force on being posted at the Headquarters, Western Command, Palam, Cantonment, Delhi, applied on May 9, 1968 for allotment of accommodation in the Curzon Road Hostel, New Delhi.
In the application for allotment he gave a declaration that he had read the Allotment of Government Residences (General Pool in Delhi) Rules, 1963 and the allotment made to him shall be subject to the said Rules, including the amendments made thereto.
The Directorate of Estates by its order dated June 27, 1968 allotted Flat No. 806 B to the respondent in the Curzon Road Hostel on a rent of Rs. 161 per month, exclusive of electricity and water charges.
The respondent was transferred from Delhi to Chand igarh on June 11, 1970 and therefore the allotment of the flat to him stood automatically cancelled under sub r. (3) of SR 317 B 11 after the concessional period of two months from the date of his transfer i.e.w.e.f.
August 11, 1970.
He however did not give any intimation of his transfer to the Directorate of Estates with the result that he contined in unauthorised occupation of the said flat for a 98 period of nearly five years and was being charged the normal rent for that period.
On February 28, 1975 the Estate Offi cer having come to know about the transfer of the respondent from Delhi, the Directorate addressed a letter dated March 18, 1975 cancelling the allotment w.e.f. August 11, 1970 and intimating that he was in unauthorised occupation thereof.
On the next day i.e. the 19th, the Directorate sent another letter asking the respondent to vacate the flat.
On March 25, 1975 the respondent vacated the flat and handed over possession of the same to the Directorate of Estates.
But he addressed a letter of even date by which he repudiated his liability to pay damages alleging that he was in possession of the flat under a valid contract and that at no time was he in unauthorised occupation, and further that under that the said contract he was not liable to pay any damages.
It appears that there was some correspondence between the parties but the respondent disputed his liability to pay damages for the period of his unauthorised occupation.
In consequence whereof, proceedings were initiated by the Estate Officer under s.7 of the to recover Rs.38,811.17p.
as damages.
The Estate Officer duly served notices on the respondent under s.7(3) of the Act from time to time and the respondent appeared in the proceedings and contested the claim.
Apparently, the respondent in the meanwhile made a representation to the Central Government.
On such represen tation being made, the Government on compassionate grounds reduced the amount to Rs.20,482.78p.
and deducted the same on October 30, 1976 from out of the commuted pension payable to the respondent.
On November 25, 1976 the respondent appeared and protested against the recovery of the amount of Rs.20,482.78p.
from the commuted pension payable to him which, according to him, was contrary to section 11 of the Pen sions Act, 1871, by process of seizure and sequestration.
The respondent complained that despite his repeated re quests, he was not given opportunity of a hearing and was informed that the matter was being examined in depth, and that the whole procedure was arbitrary and capricious.
The respondent filed a petition in the High Court under article 226 of the Constitution challenging the action of the Government in making a unilateral deduction of Rs.20,482.78p.
towards recovery of damages from the commuted pension payable to him which, according to him, was contrary to section 11 of the .
The writ petition was allowed by a learned Single Judge by his judgment and order dated September 7, 1981 who held that although the allotment of the 99 fiat to the respondent stood cancelled in terms of sub r.(3) of SR 317 B 11 w.e.f. August 11, 1970 i.e. after the conces sional period of two months from the date of his transfer, the Government was estopped from claiming the amount of Rs.20,482.78p.
as damages equivalent to the market rent under SR 3 17 B 22 for the period from August 11, 1970 to March 25, 1975.
In coming to that conclusion, the learned Single Judge held that the Government not only knowingly allowed the respondent to continue in occupation till March 25, 1975 and charged him the normal rent of Rs. 161 per month presumably under its power of relaxation under SR 317 B 25.
Further, he held that the Government having failed to serve the respondent with a notice that he would be liable to pay market rent for the period of such unautho rised occupation, the doctrine of promissory estoppel pre cluded the Government from claiming damages equivalent to the market rent under SR 317 B 22 for the period in ques tion.
Aggrieved, the appellant preferred an appeal but a Division Bench by its judgment under appeal affirmed the decision of the learned Single Judge.
It based its decision mainly on the terms of SR 317 B 25 which confer the power of relaxation on the Government and held that since the Govern ment had not recovered the rent at the market rate as per missible under SR 317 B 22 w.e.f. August 11, 1970 and having knowingly allowed the respondent to retain the flat for the period in question, it must be presumed that the Government had acted in exercise of its power of relaxation under SR 317 B 25.
In support of the appeal Shri G. Ramaswamy, learned Additional Solicitor General mainly advanced two conten tions.
First of these is that where a Government servant has retained the government accommodation allotted to him under SR 317 B 11(1) beyond the concessional period of two months allowed under sub r.(2) thereof, the liability to pay dam ages equal to the market rent for the period of his unautho rised occupation is not a contingent liability.
It is urged that the High Court was in error in holding that the appel lant was not entitled to deduct Rs.20,482.78p.
from the commuted pension payable to the respondent because of the failure of the Directorate of Estates to serve the respond ent with a notice after the allotment of the flat in ques tion stood automatically cancelled w.e.f. August 11, 1970.
Secondly, he submits that the construction placed by the High Court upon SR 317 B 22 was plainly erroneous.
It is submitted that the High Court was wrong in assuming 'that there was some kind of estoppel operating against the Gov ernment and in proceeding upon the basis that recovery of damages equivalent to the market rent for use and occupation for the period of unauthorised occupation was punitive in nature and 100 therefore the Court had power to grant relief against recov ery of damages at that rate.
These contention must, in our opinion, prevail.
It would be convenient here to set out the relevant statutory provisions.
Sub s.(2) of s.7 of the Public Prem ises (Eviction of Unauthorised Occupants) Act, 1971 invests the Estate Officer with authority to direct the recovery of damages from any person who is, or has at any time been, in unauthorised occupation of any public premises, having regard to such principles of assessment of damages as may be prescribed.
R.8 of the Public Premises (Eviction of Unautho rised Occupants) Rules, 1971 lays down the principles for assessment of such damages.
Among other things, r.8(c) provides that in making assessment of damages for unautho rised us, ' and occupation of any public premises, the Estate Officer shall take into consideration the rent that would have been realised if the premises had been let on rent for the period of unauthorised occupation to a private person.
Allotment of residential premises owned by Government in Delhi is regulated by the Allotment of Government Residences (General Pool in Delhi) Rules, 1963.
Sub r.
(1) of SR 3 17 B 11 provides inter alia that an allotment of such premises to a Government officer shall continue in force until the expiry of the concessional period permissible under sub r.(2) thereof after the officer ceases to be on duty in an eligible office in Delhi.
Sub r.(2) of SR 317 B 11 provides that a residence allotted to an officer may, subject to sub r.(3), be retained on the happening of any of the events specified in Column 1 of the Table underneath for the period specified in the corresponding entry in Column 2 thereunder.
The permissible period for retention of such premises in the event of transfer of the Government officer to a place outside Delhi is a period of two months.
SR 3 17 B 22 insofar as material provides as follows: "Where, after an allotment has been cancelled or is deemed to be cancelled under any provi sion contained in these rules, the residence remains or has remained in occupation of the officer to whom it was allotted or of any person claiming through him, such officer shall be liable to pay damages for use and occupation of the residence, services, furni tures and garden charges, equal to the market licence fee as may be determined by Government from time to time.
" It is difficult to sustain the judgment of the High Court or the reasons therefore.
The construction placed by the High Court on the 101 two provisions contained in SR 317 B 22 and SR 317 B 25 is apparently erroneous.
It is plain upon the terms of SR 3 17 B 22 that the liability to pay damages equal to the market rent beyond the concessional period is an absolute liability and not a contingent one.
Both the learned Single Judge as well as the Division Bench were clearly in error in subjecting the liability of a Government officer to pay market rent for the period of unauthorised occupation to the fulfilment of the condition that the Director of Estates should serve him with a notice that in the event of his continuing in unauthorised occupation he would be liable to pay market rent.
They were also in error in proceeding upon the wrongful assumption that since the Government had not recovered the rent at the market rate as permissible under SR 3 17 B22 and allowed the respondent to continue in unau thorised occupation for a period of nearly five years, it must be presumed that the Government had relaxed the condi tion in favour of the respondent under SR 317 B 25.
The view expressed by the High Court that there was a presumption of relaxation of the condition for payment of market rent under SR 3 17 B 22 due to inaction on the part of the Government, is not at all correct.
For a valid exercise of power of relaxation, the condition pre requisite under SR 317 B 25 is that the Government may relax all or any of the provisions of the Rules in the case of any officer or residence or class of officers or types of residences, for reasons to be recorded in writing.
There was no question of any presump tion arising for the relaxation which had to be by a specif ic order by the Government for reasons to be recorded in writing.
Nor was there a question of any promisory estoppel operating against the Government in a matter of this kind.
In the facts and circumstances of the present case, the respondent had given a declaration in his application for allotment that he had read the Allotment of Government Residences (General Pool in Delhi) Rules, 1963 and that the allotment made to him shall be subject to the said Rules as amended from time to time.
According to sub r.(3) of SR 317 B 11 the allotment was to continue till the expiry of the concessional period of two months under sub r.(2) there of after June 11, 1970, the date of transfer and thereafter it would be deemed to have been cancelled.
It is not disput ed that the respondent continued to remain in occupation of the premises unauthorisedly from August 11, 1970 even after his transfer outside Delhi.
He was not entitled to retain any accommodation either from the general pool or the de fence pool once he was transferred to a place outside Delhi.
The respondent retained the flat in question at his own peril with full knowledge of the consequences.
He was bound by the declaration to abide by the Allot 102 ment Rules and was clearly liable under SR 3 17 B 22 to pay damages equal to the market rent for the period of his unauthorised occupation.
Before an estoppel can arise, there must be first a representation of an existing fact distinct from a mere promise made by one party to the other; secondly that the other party believing it must have been induced to act on the faith of it; and thirdly, that he must have so acted to his detriment.
In this case, there was no represen tation or conduct amounting to representation on the part of the Government intended to induce the respondent to believe that he was permitted to occupy the flat in question on payment of normal rent or that he was induced to change his position on the faith of it.
If there was any omission, it was on the part of the respondent in concealing the fact from the Director of Estates that he had been transferred to a place outside Delhi.
There was clearly a duty on his part to disclose the fact to the authorities.
There is nothing to show that he was misled by the Government against whom he claims the estoppel.
It is somewhat strange that the High Court should have spelled out that the respondent being a Squadron Leader was an employee of the Central Government and therefore the Government of India to whom the Curzon Road Hostel belongs must have had knowledge of the fact of his transfer.
The entire judgment of the High Court proceeds upon this wrongful assumption.
In the premises, it is difficult to sustain the judgment of the High Court and it has to be reversed.
Nonetheless, the writ petition must still succeed for another reason.
It is somewhat strange that the High Court should have failed to apply its mind to the most crucial question involved, namely, that the Government was not competent to recover the amount of Rs.20.482.78p.
alleged to be due and payable towards damages on account of unauthorised use and occupa tion of the flat from the commuted pension payable to the respondent which was clearly against the terms of section 11 of the which reads as follows: "Exemption of pension from attachment: No pension granted or continued by Government on political considerations, or on account of past services or present infirmities or as a compassionate allowance, and no money due or to become due on account of any such pension or allowance, shall be liable to seizure, attachment or sequestration by process of any Court at the instance of a creditor, for, any demand against the pensioner, or in satisfac tion of a decree or order of any such Court.
" 103 According to its plain terms, section 11 protects from attach ment, seizure or sequestration pension or money due or to become due on account of any such pension.
The words "money due or to become due on account of pension" by necessary implication mean money that has not yet been paid on account of pension or has not been received by the pensioner and therefore wide enough to include commuted pension.
The controversy whether on commutation of pension the commuted pension becomes a capital sum or still retains the character of pension so long as it remains unpaid in the hands of the Government, is not a new one till it was settled by the judgment of this Court in Union of India vs Jyoti Chit Fund & Finance & Ors.
, ; We may briefly touch upon the earlier decisions on the question.
In an English case, in Crowe vs Price, it was held that money paid to a retired officer of His Majesty 's force for the commutation of his pension does not retain its character as pension so as to prevent it from being taken in execution.
On p.217 of the Report, Coleridge, CJ.
said: "It is clear to me that commutation money stands on an entirely different ground from pension money, and that if an officer commuted his pension for a capital sum paid down, the rules which apply to pension money and make any assignment of it void, do not apply to this sum.
" Following the dictum of Coleridge, CJ., Besley, CJ. and King, J. in Municipal Council, Salem vs B. Gururaja Rao, ILR held that when pension or portion thereof is commuted, it ceases to be pension and becomes a capital sum.
The question in that case was whether the commuted portion of the pension of a retired Subordinate Judge was income for purposes of assessment of professional tax under s.354 of the Madras District Municipalities Act, 1920.
The learned Judges held that where pension is commuted there is no longer any periodical payment; the pensioner receives once and for all a lump sum in lieu of the periodical pay ments.
The pension is changed into something else and be comes a capital sum.
On that view they held that the sum received by the retired Subordinate Judge in lieu of the portion of his pension when it was commuted was no longer pension and therefore not liable to pay a professional tax under s.354 of the Madras District Municipalities Act.
That is to say, the commuted portion, of the pension was not income for purposes of assessment of professional tax in a municipality.
The question arose in a different form in C. Gopalachariar vs Deep Chand Sowcar, AIR 1941 Mad. 207 and it was whether the commuted portion of the pension was not attachable in 104 execution of a decree obtained by certain creditors in view of section 11 of the .
Pandurang Row, J. interpreting section 11 of the Act was of the opinion that not only the pen sion but any portion of it which is commuted came within the provisions of the section.
He particularly referred to the words "money due or to become due on account of pension" appearing in section 11 of the Act which, according to him, would necessarily include the commuted portion of the pension.
He observed that the phrase "on account of" is a phrase used in ordinary parlance and is certainly not a term of art which has acquired a definite or precise meaning in law.
Accord ingly to its ordinary connotation the phrase "on account of" means "by reason of" and he therefore queried: "Now can it be said that the commuted portion of the pension is not money due on account of the pension? Though the pension has been commuted, still can it be said that money due by reason of such commutation or because of such commutation, is not money due on account of pension?" He referred to section 10 of the Act which provides for the mode of commutation and is part of Chapter III which is headed "Mode of Payment", and observed: "In other words, the commutation of pension is regarded as a mode of payment of pension.
If so, can it be reasonably urged that payment of the commutation amount is not payment on account of the pension, though not of the pension itself, because after commutation it ceases to be pension? I see no good reason why it should be deemed to be otherwise.
No doubt money is due immediately under the commutation order, but the commutation order itself is on account of a pension which was commuted or a portion of the pension which was commuted.
The intention behind the provisions of section 11, , is applicable to 'the commuted portion as well as to the uncommuted portion of the pension and the language of section 11 does not appear to exclude from its protection the money that is due under a commutation order commuting a part of the pension.
" In Hassomal Sangumal vs Diaromal Laloomal, AIR 1942 Sind 19.
Davis, CJ.
speaking for a Division Bench referred to Gopalachariar 's case and pointed out that it does not lay down that once a 105 pension has been commuted and the money paid over to the pensioner, the exemption from attachment still continues.
The learned Chief Justice went on to say that the words "money due or to become due" used in section 11 must by necessary implication mean the money that has not yet been paid to the pensioner.
In Jyoti Chit Fund 's case the Court repelled the conten tion that since the civil servant had already retired, the provident fund amount, pension and other compulsory deposits which were in the hands of the Government and payable to him had ceased to retain their character as such provident fund or pension under ss.3 and 4 of the .
Krishna Iyer, J. speaking for himself and Chandrachud, J. observed: "On first principles and on precedent, we are clear in our minds that these sums, if they are of the character set up by the Union of India, are beyond the reach of the court 's power to attach.
Section 2 (a) of the Provi dent Funds Act has also to be read in this connection to remove possible doubts because this definitional clause is of wide amplitude.
Moreover, s.60(1), provides (g) and (k), leave no doubt on the point of non attachability.
The matter is so plain that discussion is uncalled for.
We may state without fear of contra diction that provident fund amounts, pensions and other compulsory deposits covered by the provisions we have referred to, retain their character until they reach the hands of the employee.
The reality of the protection is reduced to illusory formality if we accept the interpretation sought.
" The learned Additional Solicitor General has very fairly brought to our notice Circular No. F.7(28)E .V/53 dated August 25, 1985 issued by the Government of India, Ministry of Finance to the effect: "When a pensioner refuses to pay Government dues The failure or refusal of a pensioner to pay any amount owed by him to Government cannot be said to be 'misconduct ' within the meaning of Article 351 of the C.S.R. (Rule 8, C.C.S. (Pension) Rules, 1972).
The Possible way of recovering/damanding Government dues from a retiring officer who refuses to agree in writing, to such dues being recovered from his pension is either to delay the final sanc 106 tion of his pension for some time which will have the desired effect for persuading him to agree to recovery being made therefrom or take recourse to Court of law.
" It bears out the construction that the words "money due or to become due on account of pension" occurring in section 11 of the includes the commuted portion of the pension payable to an employee after his retirement.
It must accordingly be held that the Government had no authority or power to unilaterally deduct the amount of Rs.20,482.78p.
from the commuted pension payable to the respondent, con trary to section 11 of the .
For these reasons, the appeal partly succeeds and is allowed.
The judgment and order of the High Court are set aside.
We allow the writ petition filed by the respondent in the High Court and direct that a writ of mandamus be issued ordaining the Central Government to refund the amount of Rs.20,482.78p.
deducted from the commuted pension paid to the respondent.
The Government shall be at liberty to initi ate proceedings under s.7(2) read with section 14 of the for recovery of Rs.20.482.78p.
due on account of damages for unauthorised use and occupation of the fiat in question from the respondent as arrears of land revenue, or have recourse to its remedy by way of a suit for recovery of damages.
Before parting with the case, we wish to add a few words.
The Government should consider the feasibility of dropping the proceedings for recovery of damages, if the respondent were to forego his claim for interest.
In this case, the deduction of the amount of Rs.20,482.78p.
from the commuted pension payable to the respondent was made as far back as October 30, 1976.
Since then, 10 years have gone by.
Even if interest were to be calculated at 9% per annum, the interest alone would aggregate to more than Rs.18,000.
Since the Government had the benefit of the money for all these years, it may not be worthwhile in pursuing the matter any further.
There shall be no order as to costs.
S.R. Appeal allowed.
|
The respondent while he was posted as a Squadron Leader at Delhi was on June 27, 1968 allotted by the Directorate of Estate a residential fiat in the Curzon Road Hostel on a monthly rent of Rs. 161, under sub r.(1) of SR 317 .B 11.
Although he was transferred from Delhi to Chandigarh on June 11, 1970, he did not give any intimation of his transfer to the Directorate of Estates and therefore the said allotment stood automatically cancelled under sub r.
(2) thereof after the concessional period of two months from the date of his transfer i.e. w.e.f. August 11, 1970.
The respondent contin ued in unauthorised occupation of the said fiat for a period of nearly five years and in the meanwhile he was being charged the normal rent for that period.
On February 28, 1975 the Estate Officer having come to know of the transfer of the respondent from Delhi, the Directorate addressed a letter dated March 18, 1975 cancelling the allotment w.e.f.
August 11, 1970.
On the next day i.e. the 19th, the Direc torate sent another letter asking the respondent to vacate the fiat, which he did on March 25, 1975.
The Estate Officer raised a demand for recovery of Rs.38,811.
17 p. under SR 3 17 B 22 and served the respondent with a notice under s.7(3) of the .
The 95 respondent disputed his liability to pay damages for the period of his unauthorised occupation.
Thereupon, the Estate Officer initiated proceedings under s.7 of the Act to recov er the amount of Rs.38,811. 17p.
Subsequentiy, the Central Government on a representation being made by the respondent reduced the amount to Rs.20,482.78p.
On compassionate grounds and deducted the same on October 30, 1976 from out of the commuted pension payable to him.
The respondent filed a petition under Art.226 of the Constitution before the High Court.
The writ petition was allowed by a learned Single Judge holding that although the allotment of the flat stood cancelled in terms of sub r.(3) of SR 317 B 11 w.e.f. August 11, 1970 i.e. after the conces sional period of two months from the date of his transfer, the government was estopped from claiming the amount of Rs.20,482.78p.
as damages equivalent to the market rent under SR 317 B 22 for the period from August 11, 1970 to March 25, 1975 on the ground that the government not only knowingly allowed the respondent to continue in occupation till March 25, 1975 but also charged him the normal rent of Rs. 161 p.m. presumably under its power of relaxation under SR 317 B 25.
Further, he held that the government having failed to serve the respondent with a notice that he would be liable to pay market rent for the period of his unautho rised occupation, the doctrine of promissory estoppel pre cluded the government from claiming damages equivalent to the market rent under SR 317 B 22 for the period in ques tion.
On appeal, a Division Bench upheld the decision of the learned Single Judge mainly on the terms of SR 317 B 23 which conferred the power of relaxation on the government.
Hence the appeal by Special Leave.
Allowing the appeal, in part, the Court, HELD: 1.1 The Government could not unilaterally deduct the amount of Rs.20,482.78p.
from the commuted pension payable to the respondent, contrary to s.11 of the Pension Act, 1871.
[106B C] 1.2 According to its plain terms, section 11 of the protects from attachment seizure or sequestration pension or money due or to become due on account of any such pension.
The words "money due or to become due on account of pension" by necessary implication mean money that has not yet been paid on account of pension or has not been received by the pensioner and therefore wide enough to include commuted pension.
[103A B] 96 Union of India vs Jyoti Chit Fund & Finance & Ors., ; , followed.
Crowe vs Price, 15; Municipal Council, Salem vs
B. Gururaja Rao, ILR ; C. Gopala chariar vs Deep Chand Sowcar, AIR 1941 Mad.
207; and Hasso mal Sangumal vs Diaromal Laloomal, AIR 1942 Sind 19, re ferred to.
2.1 The construction placed by the High Court on the two provisions contained in SR 317 B 22 and SR 3 17 B 25 is apparently erroneous.
It is plain upon the terms of SR 3 17 B 22 that the liability to pay damages equal to the market rent beyond the concessional period is an absolute liability and not a contingent one.
The Court was clearly in error in subjecting the liability of a government officer to pay market rent for period of unauthorised occupation to the fulfilment of the condition that the Director of Estate should serve him with a notice that in the event of his continuing in unauthorised occupation he would be liable to pay market rent.
[101A C] 2.2 Non recovery of the rent at the market rent as permissible under SR 317 B 22 due to inaction of the govern ment and allowing the allottee to continue in authorised occupation for a period of nearly five years, as in this case, does not lead to the presumption that the government had relaxed the condition in his favour under SR 317 B 25.
[101D] 2.3 For a valid exercise of power of relaxation, the condition pre requisite under SR 3 17 B 25 is that the government may relax all or any of the provisions of the Rules in the case of an officer or residence or class of officers or types of residences, for reasons to be recorded in writing.
There was no question of any presumption arising for the relaxation which had to be by a specific order by the government for reasons to be recorded in writing.
[101D E] 3.
There was no question of any promissory estoppel operating against the government in a matter of this kind.
Before an estoppel can arise, there must be first a repre sentation of an existing fact distinct from a mere promise made by one party to the other; secondly that the other party believing it must have been induced to act on the faith of it; and thirdly, that he must have so acted to his detriment.
In this case, there was no representation or conduct amounting to representation on the part of the government intended to induce the respondent to believe that he was permitted to occupy the fiat in question on payment of normal rent or that he was induced to change his position on the faith of it.
[101E;102A C] 97
|
ON: Civil Appeal No. 3726 of 1984.
From the Judgment and Order dated 8.8.1981 of the Guja rat High Court in L.P.A. No. 145 of 1978.
B.K. Mehta and M.V. Goswami for the Appellant.
G.A. Shah and M.N. Shroff for the Respondent.
The Judgment of the Court was delivered by RATNAVEL PANDIAN, J.
This is an appeal by special leave from the judgment of the Gujarat High Court dismissing the appeal made in Letters Patent Appeal No. 145 of 1978 arising from the order passed in Special Civil Application No. 268 of 1978 of the said High Court.
As this case has a chequerred history spreading over decades, we feel that the relevant facts that are necessary for the disposal of this appeal are to be stated in brief.
The appellant was born on 15th January, 1909 and he obtained the Degree of Bachelor of Engineering (Civil).
He joined the service of the erstwhile State of Junagadh in Saurashtra region on 1st August, 1934.
While the appellant was in the service of Junagadh State, he was governed by the Junagadh State Pension & Parwashi Allowances Rules of 1932 (hereinaf ter called as "Junagadh Rules) which had been published in the official Gazette of that State and which were subse quently codified and published in the Jugagadh State Account Code.
Rule 241 A of the aforesaid Junagadh Rules provided for pension and Parwashi Allowances.
The State of Junagadh was integrated into the State of Saurashtra on 20th January, 1949.
Thereafter the appellant was absorbed in the service of the State 219 of Saurashtra.
The supplementary Covenant which brought about the integration read with article 16 of the main Covenant expressly protected the conditions of the service of the absorbed servants and the protection was also statutorily recognised by the Saurashtra Ordinance 3 of the 1949 read with Ordinance 1 of 1948.
A proclamation providing a guaran tee that the conditions of service could not be varied to the disadvantage of the Covenanting State servants was also issued in that behalf on 20th January 1949 which was the date of the merger of the State into the State of Saurash tra.
Based on the decision of this Court in Bholanath J. Thakar vs State of Saurashtra, A.I.R. 1954 S.C. 680 wherein it was held that the rules as regards the age of superannua tion which prevailed in the covenanting State which in that case was the State of Wadhwan, continued to cover those Government servants who had come from that State and had been absorbed in the services of the State of Saurashtra.
The State of Saurashtra made the Saurashtra Covenanting State Servants (Superannuation Age) Rules 1955 (hereinafter called as "Saurashtra Rules") in exercise of the powers conferred by article 309 of the Constitution of India.
Rule 3(i) provided: "A Govt.
servant shall, unless for special reasons otherwise directed by Government retire from service on his completing 55 years of age." After the integration of the Saurashtra State into the State of Bombay a resolution was passed by the Government on 7th January 1957 applying the old Bombay Civil Service Rules to Saurashtra area.
On 1st July 1959 the Bombay Civil Serv ices Rules 1959, (hereinafter called the "Bombay Rules") were promulgated under article 309 of the Constitution.
Clause (c)(2)(ii)(1) of Rule 161 is as follows: "Except as otherwise provided in this Sub clause, Government servants in the Bombay Service of Engineers, Class 1, must retire on reaching the age of 55 years, and may be required by the Government to retire on reach ing the age of 50 years, if they have attained to the rank of Superintending Engineer.
" The appellant was compulsorily retired from service under the above rule by an order passed by the State of Gujarat on 12.10.1961 with effect from 12.1.1962 when he had completed the age of 53 years.
This order of retirement was unsuccess fully challenged by the appellant 220 before the Gujarat High Court by a writ petition under article 226 of the Constitution.
Not being satisfied, the appellant took up the matter before this Court which by its judgment dated 9.4.1969 allowed the appeal and declared "that the appellant was entitled to remain in service until he at tained the age of 55 years and that the impugned order directing his retirement was invalid and ineffective." This judgment is reported in , Takhatray Shivdatray Mankad vs State of Gujarat,.
As per this decision, the appellant had the right to continue in service till he attained the age of 55 years.
It may be noted that the appellant had already completed the age of 55 years by the time the judgment was pronounced by the Supreme Court.
In due compliance of the above judgment of this court, the Government of Gujarat by its order dated 4.8.1969 intimated the appellant that he should be deemed to have remained in service upto the date on which he attained the age of 55 years, that its upto 14.1.1964.
In other words, by this order the appellant was retired on his attaining the age of 55 years on 14.1.1964.
Prior to this decision of the Supreme Court, the age of superannuation for Government servants of the Government of Gujarat was raised to 58 years with reservation of power to the State Government to compul sorily retire a Government servant at 55 years by serving a notice.
The appellant in order to avail of this benefit of the changed circumstances filed a Special Civil Application No. 70 of 1970 before the High Court of Gujarat, but became unsuccessful.
Being dissatisfied with that judgment of the High Court, he filed a Special Leave Petition No. 977 of 1975 before this court which by its order dated 21.7.1975 declined to interfere with the decision of the High Court under article 136 of the Constitution of India.
The resultant effect is that the matter came to a finality to the effect that the appellant was not entitled to continue in service beyond the age of 55 years.
Even before he was compulsorily retired by the Govern ment 's Order dated 12.10.1961, a departmental enquiry on the ground of slackness of supervision had been initiated on 6.2.1961.
Thereafter, a second departmental enquiry was ordered against the appellant on charges of over payment to contractors and consequent loss to the Government on 11.4.1963.
A third enquiry was ordered against him on 17.8.1963 on charges Of payment in advance before the re ceipt of goods.
Thus there were three departmental enquiries before his retirement on attaining the age of 55 years, that is on 14.1.1964.
These enquiries were pending against the appellant till 1971.
Be that as it may, the appellant filed a Special Civil Application 221 No. 504 of 197 1 before the High Court of Gujarat seeking issue of a writ of mandamus against the State of Gujarat to direct the State to pay the appellant all the outstanding salary, allowances as well as the revised.
pay and allow ances including increment subsequent to the stage of effi ciency bar falling due from 12.1.1962 to 14.1.1964 together with interest @ 6% per annum from the date of payment with held till the date of actual payment thereof to him.
The State defended this action of withholding the pension on the ground that the departmental enquiries initiated against him were pending.
The appellant, therefore, filed a Civil Appli cation No. 2304 of 1972 in the above said Special Civil Application No. 504 of 1971 for interim relief, which appli cation he withdrew subsequently.
According to the appellant, he withdrew the application on the representation made on behalf of the respondent therein that the departmental enquiries had become infructuous consequent upon the retire ment of the appellant.
In the meanwhile, the State of Gujarat issued a show cause notice dated 17.7.1971 to the appellant informing him that the Government had considered that his service had not been found thoroughly satisfactory on account of the reasons mentioned in the said show cause notice, and therefore, the Government had proposed to make reduction of 50 per cent both in the amount of pension and death cum retirement gratuity admissible to him.
We shall now reproduce the relevant portion of the show cause notice (Annexure 'C '): "Government therefore proposes, in exercise of the powers vested in it under: (i) Para 241(E)(3) and (3) of the Junagadh Account Code or (ii) Rule 76 of the Ex Saurashtra Pension Rules, as contained in Saurashtra Government Resolution, Finance Department No. 121/40 dated 19.10.1949 or (iii) Rule 188 of Bombay Civil Services Rules, as may be applicable to you, to make a reduction of 50% (fifty per cent) both in the amount of pension and Death cum Retirement Gratuity admissible to you.
" The appellant submitted his reply and the proceedings went on before the Government for a considerable length of time.
Ultimately, the final order was passed on 15.11.1977 reducing the pension and gratuity by 50 per cent.
Being aggrieved by the said order, the appellant filed Special Civil Application No. 268 of 1978 before the High Court of Gujarat for quashing the order reducing his pension and gratuity.
The learned single Judge of Gujarat High Court rejected the said civil application in limine by his order dated 8.3.1978 concluding 222 "In the present case the Government recorded reasons why it came to the conclusion that the petitioner 's service were unsatisfactory and, therefore, put a proportionate cut on the petitioner 's right to pension.
No case of discrimination is made out.
" As against this order, the appellant filed the Letters Patent Appeal No. 145 of 1978 before a Division Bench of the High Court contending that he was governed by the Junagadh Rules and he continued to be governed by those rules in spite of the fact that the Bombay Rules were sought to be made applicable to him.
In the alternative it was submitted that even if the Bombay Rules were to be made applicable, so far as the question of payment was concerned, inasmuch as they were not less advantageous on compulsory retirement, proportionate pension was payable to the appellant under the Bombay Rules of 1959.
The Division Bench examined both the alternative contentions with reference to the concerned rules and ultimately concluded thus: "Under either set of rules, therefore, it was open to the State Government to reduce the amount of pension payable to the petitioner since his service had not been found satisfac tory by the State Government under the Juna gadh State Rules or, in the alternative, under the Bombay Civil Services Rules, his service has not been found thoroughly satisfactory.
In view of these conclusions, we agree with the conclusion reached by A.D. Desai, 3.
though he did not examine the alternative case from the point of view of the Bombay Civil Services Rules.
" On the basis of the above findings, the appeal was dismissed.
Hence the present appeal.
Shri B.K. Mehta, learned counsel appearing on behalf of the, appellant assailed the impugned judgment of the Divi sion Bench of the High Court inter alia contending (1) that the High Court had clearly gone wrong in upholding the impugned order of reduction in pension made in the purported exercise of power under Rules 188 and 189 of the Bombay Rules in view of the finding of this Court in C.A. No. 409 of 1966, Takhatray Shivdatray Mankad 's, case (supra), where in it was held that the Bombay Rules could not be made applicable to the appellant; (2) that the appellant is not governed by the Saurashtra Rules because the said rules do not provide for compulsory retirement as pointed out by the Supreme Court in C.A. No. 409 of 1966 and (3) 223 that the State Government has not specifically stated in the show cause notice dated 17.7.1971 (Annexure C) as well as in the impugned order for reducing the pension (Annexure A) as to under what set of rules, namely, whether under the Juna gadh Rules or the Saurashtra Rules or the Bombay Rules they were exercising the power for reducing the pension and gratuity.
It has been further urged that clauses 3, 13 and 15 of Rule 241 A of Junagadh Rules operate in different fields in that while Rule 3 applies to cases of normal superannuation, Rule 13 applies to cases of compulsory retirement and, therefore, the observation of the Division Bench of the High Court in the Letters Patent Appeal approving the view taken by the learned single judge that Rule 3 controls Rule 13, would practically render Rule 13 as ultra vires article 311 of the Constitution of India, since compulsory retirement together with reduction of pension would amount to penalty in the absence of procedural safeguards.
Further it is urged that during the pendency of the appeal (C.A. No. 409/66) before this court, the Bombay Rules were extended to the Saurashtra State Covenanting servants and the superannuation age was raised to 58 years and therefore the appellant in any case was entitled to continue upto 60 years of age under the Junagadh Rules or upto 58 years of age under the Bombay Rules.
When it was so, the retirement of the appellant on attaining the age of 55 years should be construed as a case of compulsory retirement before the normal age of superannu ation which coupled with the order of reduction in pension would amount to penalty which could not have been imposed without following the prescribed procedure under the Con duct.
Discipline and Appeal Rules.
In support of this last submission, reliance was placed on the decision of this Court in Dalip Singh vs State of Punjab, [1961] I SCR 88 and Moti Ram Deka Etc.
vs General Manager, N.E.F. Railways, Maligaon, Pandu, Etc., ; In the alternative, he submitted assuming that the Bombay Rules apply to the case of the appellant, the enquiry as prescribed under Rule 189 of the Bombay Rules was not followed.
further if the case of the appellant is to be governed by the Saurashtra Rules, there was no provision for compulsory retirement as pointed out by the Supreme Court in C.A, No. 409 of 1966.
Finally he submitted that the impugned order for reduction of pension is bad in law and void be cause (1) no enquiry for the reasons as contemplated under Rule 189 of the Bombay Rules had been conducted and (2) admittedly the State had stated before the High Court in the course of hearing of the Civil Application on 24.10.1972 that the departmental enquiry had become 224 infructuous and was dropped as the appellant had already retired.
In any case, no enquiry could be held in pursuance to the show cause notice dated 17.7.1971 after a lapse of 4 years in view of the prohibition under proviso (b)(ii) of Rule 189 A of the Bombay Rules.
Therefore, the reduction of pension and gratuity by 50% is wholly unreasonable, unwar ranted and arbitrary.
Mr. C.A. Shah, learned counsel appearing on behalf of the respondent, stoutly opposed the submissions made on behalf of the appellant stating that the appellant was directed to retire on attaining the age of 55 years as per the judicial pronouncement of this court in C.A. No. 409/66 fixing his age of retirement at 55 years and hence the appellant cannot be permitted to be heard that his retire ment at the age of 55 should be construed as compulsory retirement, in view of the fact that the age of retirement was increased to 60 years under the Junagadh Rules and 58 years under the Bombay Rules.
According to Mr. Shah after the dismissal of the Special Civil Application No. 70 of 1970 by the Gujarat High Court holding that the right of the appellant to continue in service was judicially determined by this court and so it cannot be said that the State Gov ernment had discriminated the appellant, which decision of the High Court was upheld by this court by the order of dismissal of the Special Leave Petition on 21.1.1979.
It is urged by the learned counsel for the respondent that the appellant 's retirement having been a normal one, he was entitled to pension under Rule 241 A of the Junagadh Rules and as such the State Government in exercise of the powers under the said rules had passed the order dated 15.11.1977 reducing the pension and gratuity to 50% after affording an opportunity to him by issuing a show cause notice alleging several acts of misconduct to which notice the appellant did not give any explanation in spite of several opportunities afforded for over 6 years.
Hence the order of the Government reducing the pension and gratuity to 50% on the finding that the allegations of misconduct are proved is justified.
According to him Rules 188 and 189 of the Bombay Rules are inapplicable to the case of the appellant.
Moreover, these rules are in pari materia to Rule 241 A of the Junagadh Rules and therefore as held by the Division Bench of the High Court under either of the Rules, the Government is competent to reduce the pension for misconduct.
Coming to Rule 189 A which was introduced on 29.10.1971 after the issue of show cause notice in this case, it is said that this Rule provides that the proceedings already initiated shall be deemed to be a proceeding under this rule and continued and concluded by the authority.
In the present case, the proceedings were initiated even while the appel lant was in service and they were 225 dropped after his retirement.
Therefore, the appellant is not justified in contending that those proceedings relate to misconduct which had occurred 4 years prior to the institu tion and therefore they are not sustainable as per proviso (b)(ii) of Sec.
189 A of the Bombay Rules.
We shall scrutinize the respective contentions of the learned counsel with reference to the facts of this case and the position of law with reference to the relevant rules and the various judicial pronouncements of this court in a series of decisions dealing with powers vested in the ap pointing authority to reduce the pension and gratuity on proof of allegations of misconduct or negligence committed by the employee or on the proof of inefficiency and unsatis factory service.
The appellant who was retired compulsory on 12.1.1962 in pursuance of the order of the Public Works Department, State of Gujarat dated 12.10.1961 under the Bombay Rules when he had completed the age of 53 years, successfully contested that matter and obtained the order in his favour from this court in C.A. No. 409 of 1966 by the judgment dated 9.4.69 quashing the order of compulsory retirement and declaring "that the appellant was entitled to remain in service until he attained the age of 55 years" In pursuance of the above judgment of this court, the Government passed the following order on 4.8.1969, the relevant portion of which reads as under: "Shri T.S. Mankad should be deemed to have remained in service as Executive Engineer upto the date on which he had attained the age of 55 years i.e. upto 14.1.64 (A.N.) The orders issued in Government Order, Public Works Department No. DPA 1861 E dated 12.10.61 should be treated to have been cancelled.
" The aforesaid order was challenged by the appellant in Special Civil Application No. 70 of 1970 before the Gujarat High Court with a prayer to declare this order dated 4.8.1969 as illegal, void, ultra vires, bad in law and inoperative and the same was not binding on the appellant, besides challenging the constitutional validity of the latter part of the amended Rules 161(ii)(1) of the Bombay Rules.
But this Special Civil Application No. 70 of 1970 was rejected holding that the right of the appellant to continue in service was judicially determined by this court and that judicial determination was given effect to by the State Government by its order dated 4.8.1969.
As against this judg 226 ment, the appellant preferred Special Leave Petition before this court which was dismissed on 21.1.1979.
Thus the con troversy was put to an end and the result was that the appellant was not entitled to continue in service beyond 55 years of age.
Hence the contention of the learned counsel for the appellant that the appellant is entitled to avail the benefit of the increase of age of superannuation fixing it at 60 years under the Junagadh Rules or at 58 years under the Bombay Rules cannot be accepted.
The further submission made on behalf of the appellant that his retirement should be construed only as compulsory retirement coupled with the order of reduction in pension and gratuity amounting to penalty without following the procedures prescribed under the Conduct, Discipline and Appeal Rules, is also equally to be dismissed as devoid of any merit since the appellant was retired only in accordance with the pronouncement of this court.
We have now to examine whether the propositions of law expatiated in the decisions cited by Mr. B.K. Mehta can be made applicable to the facts of this instant case.
In Dalip Singh vs State of Punjab, the appellant therein namely, Dalip Singh was retired from service for 'administrative reasons '.
He brought a suit on a plea that the order of his retirement amounted to removal from service within the meaning of article 311(2) of the Constitution.
The Trial Court decreed the suit in his favour.
On appeal by the State, the High Court dismissed the suit holding that the order of compulsory retirement in that case did not amount to removal from service within the meaning of article 3 11 of the Constitution.
As against this, Dalip Singh approached this court.
This Court held that there were no basis for saying that the order of retirement contained any imputation or charge against the officer and that he had been allowed full pension as provided in Rule 278 of the Patiala State Regulations, on the strength of which Dalip Singh was re tired and that the order of retirement was hardly by way of punishment.
In that view, this court agreed with the view taken by the High Court and dismissed the appeal.
In Moti Ram Deka Etc.
General Manager, N.E.F. Rail ways, Maligaon, Pandu, Etc.
; , the only question for consideration was whether the termination of services of a permanent Railway servant (Civil) under Rule 148(3) and 149(3) of the Indian Railway Establishment Code amounted to removal under article 311(2) of the Constitution of India.
Majority of the seven judges Bench having regard to the facts therein held that the termination of services of a permanent servant otherwise than on ground of superannuation or compulsory retirement, must per se amount to his removed and if by 227 Rule 148(3) or Rule 149(3), such a termination is brought about, the Rule clearly contravenes article 311(2) and so it must be held to be invalid.
On carefully going through both the decisions, we are of the firm view that these two deci sions cannot be of any assistance to the case of the appel lant since in the present case, the appellant 's retirement on attaining the age of 55 years, pursuant to the declara tion of this Court was a normal retirement on reaching the age of superannuation and not a compulsory retirement by way of punishment for misconduct as contended by the appellant.
Next we shall deal with the respective contentions of both the parties with reference to the Junagadh Rules and the Bombay Rules.
It may be mentioned here that the appel lant himself under the ground (h) of his Special Leave Petition had stated that his services were to be governed by the Junagadh Rules.
It was also urged on behalf of the respondent that the appellant 's retirement being a normal one, he is entitled to pension under Junagadh Rules and the State Government in exercise of the power vested in it had passed the order dated 15.11.
1977 reducing the pension and gratuity to 50%.
As pointed out by the Division Bench of the High Court, under the scheme of the Junagadh Rules as per clause 10 of Rule 241~A, the pensions are admissible for superior service of not less than 10 years and they are divided into 4 classes, namely, (1) compensation pension; (2) invalid pension; (3) superannuation pension; and (4) retiring pension.
As we are concerned only with the superan nuation pension in the present ' case, we would refer to the relevant clause which reads as follows: "(13) Superannuation pension is admissi ble only on attaining the age of 60 years, except in cases in which the authorities consider it desirable in the interest of the State an officer should retire on attaining the age of 55 years or at any time thereafter on such superannuation pension as he may have earned at the time of retirement.
" A bare perusal of the above clause shows that superannu ation pension is admissible to the State Government servant on his attaining the age of 60 years, save in cases in which the authorities consider in the interest of the State to retire an officer on attaining the age of 55 years or at any time thereafter on such superannuation pension as he may have earned at the time of his retirement.
Clause 15 of Rule 24 '1 A deals with the proportionate pension.
As clause 3 of Rule 241 A is material for our purpose, that clause is reproduced hereunder: 228 "The full amount of pension or gratuity admissible under the rules will not be granted unless the service is proved from State records on receipt of an application for pension or gratuity from the retired officer in Form No. 53 and will be liable to reduction in the absence of such proof or if the service is not reported by the Head of the Department to have been satisfactory." As per this clause, the Government servant will be entitled to full amount of pension or gratuity only if his service is proved from the records satisfactory lest the pension will be liable to reduction.
A combined reading of clauses 3, 13 and 15 shows that clause 3 is an exception to the general scheme laid down in clauses 13 and 15.
On careful considera tion of this rule, we see no merit in the submissions made by the learned counsel that these clauses operate in differ ent fields and therefore observations of the High Court that Rule 3 controls Rule 13 would render Rule 13 as ultra vires article 311 of the Constitution of India, since compulsory retirement together with reduction of pension would amount to penalty in the absence of the procedural safeguards.
The Government in its detailed order dated 15.11.1977 has set out the reasons for reducing the amount of pension and gratuity.
The relevant portion of the order reads thus: "Government is satisfied that the services of Shri T.S. Mankad, Executive Engineer have not been found to be thoroughly satisfactory.
Accordingly Government hereby orders that the pension and Death cum Retirement Gratuity, which may be accepted by the Accountant Gener al, Ahmedabad as admissible under the rules shall be reduced by the specified extents aS under: (i) Amount of reduction in pension = 50% (Fifty percent) (ii) Amount of reduction in gratuity = 50% (Fifty percent)." According to the respondent, the appellant instead of giving a proper explanation to the show cause notice dated 17.7.1971 entered into long correspondence with respondent raising all sorts of irrelevant questions and seeking sever al adjournments thereby adopting delayed tactics and further the appellant though informed the authorities that he would inspect certain documents in the Department for making his 229 reply, he would not do so and therefore according to the learned counsel it was in those circumstances, the Govern ment was constrained to pass this order dated 15.11.1977 after a lapse of more than 6 years taking into consideration that his service had not been found thoroughly satisfactory for the reasons mentioned in the show cause notice to which he had not given any reply.
We see much force in the above submission, made by Mr. Shah the learned counsel appearing for the respondent.
In view of the above position, we are of the view that the impugned order dated 15.11.1977 cannot ' be said to contravene the Junagadh Rules.
Now we shall pass on to the alternative contention on the assumption that Bombay Rules would apply to the case of the appellant.
The relevant Rules are Rules 188 and 189 which are reproduced below: "188.
Government may make such reduction as it may think fit in the amount of the pension of a Government servant whose service has not been thoroughly satisfactory." "189.
Good conduct is an implied condition of every grant of pension.
Government may with hold or withdraw a pension or any part of it if the pensioner be convicted of serious crime or be found to have been guilty of grave misconduct either during or after the comple tion of his service, provided that before any order to this effect is issued, the procedure referred to in Note 1 to Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules shall be followed.
" An examination of Rule 188 shows that the Government may reduce the amount of pension of a Government servant as it may think fit if the service of the Government servant has not been thoroughly satisfactory.
As per Rule 189 the Gov ernment may withhold or withdraw a pension or part of it if the petitioner is convicted of severe crime or found to have been guilty of misconduct during or after the completion of service provided that before any order to this effect is issued, the procedure referred to the Bombay Civil Services Conduct, Discipline and Appeal Rules are followed.
These Rules thus, have expressly preserved the State Government 's power to reduce or withhold pen 230 sion by taking proceedings against a Government servant even after his retirement.
The validity of these rules have not been challenged.
These two rules came for interpretation before this court in State of Maharashtra vs M.H. Mazumdar, ; and this Court expressed its view with reference to these rules as follows: "The aforesaid two rules empower Government to reduce or withdraw a pension.
Rule 189 contem plates withholding or withdrawing of a pension or any part of it if the pensioner is found guilty of grave misconduct while he was in service or after the completion of his serv ice.
Grant of pension and its continuance to a Government servant depend upon the good con duct of the Government servant.
Rendering satisfactory service maintaining good conduct is a necessary condition for the grant and continuance of pension.
Rule 189 expressly confers power on the Government to withhold or withdraw any part of the pension payable to a Government servant for misconduct which he may have committed while in service.
This rule further provides that before any order reduc ing or withdrawing any part of the pension is made by the competent authority the pensioner must be given opportunity of defence in ac cordance with the procedure specified in Note I to Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules.
The State Government 's power to reduce or withhold pension by taking proceedings against a Gov ernment servant even after his retirement is expressly preserved by the aforesaid rules.
The validity of the rules was not challenged either before the High Court or before this Court.
In this view, the Government has power to reduce the amount of pension payable to the respondent.
In M. Narasimhachar vs State of Mysore, [1960] 1 SCR 981: AIR 1960 SC 247 and State of Uttar Pradesh vs Brahm Datt Sharma, [1987] 2 SCC 179 similar rules authorising the Government to withhold or reduce the pension granted to Government servant were interpreted and this Court held that merely because a Gov ernment servant retired from service on at taining the age of superannuation he could not escape the liability for misconduct and negli gence or financial irregularities which he may have committed during the period of his serv ice and the Government was entitled to with hold or reduce the pension granted to a Gov ernment servant.
" 231 In compliance with the principle of natural justice requir ing an opportunity of hearing to be afforded to a Government servant before an order affecting his fight is passed and in accordance with the procedure specified in Note I to Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules a show cause notice as pointed out earlier had been issued to the appellant on 17.7.197 1 calling upon him to show cause within 30 days from the date of the receipt of the notice as to why the proposed reduction should not be made in the pension and death cum retirement gratuity.
But the appellant failed avail that opportunity to disprove the allegations and satisfy appointing authority that he ren dered satisfactory service throughout.
It was in those circumstances the appointing authority taking into consider ation of the serious allegations levelled against him in the disciplinary proceedings had thought it fit to impose reduc tion in the pension and gratuity in accordance with Rules 188 and 189 of the Bombay Rules on the ground that the appellant had not rendered satisfactory service.
The appel lant is not entitled to take advantage of clause (b)(ii) of the proviso to Section 189 A of the Bombay Rules since the proceedings had been instituted long before his retirement.
Further as per clause (a) of the said proviso, the proceed ings already instituted while the Government servant was in service could be continued and concluded even after his retirement.
Hence for the reasons stated above the impugned order dated 15.11.1977 reducing the pension and gratuity cannot be said to contravene the Bombay Rules.
At the risk of repetition, we may point out that three departmental proceedings containing serious allegations of misconduct were instituted against the appellant of which one was instituted even before he was compulsorily retired on 12.1.1961 and other two proceedings were instituted in the year 1963 that is much earlier the appellant attaining the age of superannuation on 14.1.1964.
These departmental proceedings are stated to have become infructuous consequent upon the retirement of the appellant on attaining the age of superannuation.
To the show cause notice dated 17.7.1971 proposing to inflict reduction in pension and gratuity the appellant, instead of giving a proper reply, disproving the charges and satisfying the appointing authority that he rendered satisfactory service throughout had delayed the matter for over a period of six years.
It was in that situa tion that the impugned order dated 15.11.1977 happened to be passed.
The learned counsel for the appellant strenuously contended that after the disciplinary inquiries had been dropped on the ground that they had become infructuous, the Government was not right and 232 justified in reducing the pension and gratuity on the same charges which were the subject matter of the enquiries.
This argument of the learned counsel, in our opinion, does not merit consideration because the charges against the appel lant were not made use of for awarding any punishment after his retirement from service but only for determining the quantum of the appellant 's pension in accordance with the rules relating to the payment of pension and gratuity.
In this connection it would be apposite to refer the observa tion of the Supreme Court in State of Uttar Pradesh vs Brahm Datt Sharma & Anr., [1987] 2 SCC 179 which we quote below: "If disciplinary proceedings against an em ployee of the Government are initiated in respect of misconduct committed by him and if he retires from service on attaining the age of superannuation, before the completion of the proceedings, it is open to the State Government to direct deduction in his pension on the proof of the allegations made against him.
If the charges are not established during the disciplinary proceedings or if the disci plinary proceedings are quashed it is not permissible to the State Government to direct reduction in the pension on the same allega tions but if the disciplinary proceedings could not be completed and if the charges of serious allegations are established, which may have bearing on the question of rendering efficient and satisfactory service, it would be open to the Government to take proceedings against the Government servant in accordance with rules for the deduction of pension and gratuity.
" The above principle laid down in that case squarely applies to the facts of the present case.
For all the reasons hereinbefore stated we hold that the order of State Government dated 15 11 1977 reducing the amount of pension and the gratuity on the ground that the service of the appellant had not been found thoroughly satisfactory by the appointing authority cannot be assailed.
In that view of the matter we see no reason to interfere with the impugned judgment of the High Court.
In the result, the appeal is dismissed but without any order as to costs.
Y.L. Appeal dis missed.
|
This appeal is directed against the order of the Gujarat High Court upholding the order dated the 15th November, 1977 passed by the State of Gujarat whereby the amounts of gratu ity and pension payable to the appellant on superannuation were reduced by 50 per cent.
The appellant was born on January 15, 1909 and after obtaining a Degree in Bachelor of Engineering (Civil) joined the service in the former State of Junagarh and as such was governed by the Junagadh State Pension and Parwashi Allow ances Rules of 1932 which were duly codified and published in the Junagadh State Account Code, State of Junagadh was integrated into the State of Saurashtra on 20.1.1949 and the services of the appellant were absorbed in the State of Saurashtra.
The conditions of service of the absorbed serv ants were duly protected and a proclamation providing a guarantee that the service conditions of absorbed servants could not be varied to their disadvantage was issued on 20.1.49 that being the date of merger of the State.
The State of Saurashtra made the Saurashtra Covenanting State Servants (Superannuation Age) Rules, 1955.
Rule 3(i) thereof provided that a Government servant shall, unless for special reasons otherwise directed by Government retire from service on his completing 55 years of age.
After the merger of the State of Saurashtra with State of Bombay the old Bombay Civil Service Rules, 1959 were made applicable to Saurashtra area and on 1.7.59 the Bombay Civil Service Rules, 1959 were promulgated.
As per clause (c)(2)(ii)(1) of Rule 161, Government servants in the Bombay Service of Engineers Class I were to retire on reaching the age of 55 years.
215 The appellant was compulsorily retired by the State on 12.10.1961 with effect from 12.1.1962 when he had completed the age of 53 years.
The appellant challenged that order by means of writ before the High Court and having remained unsuccessful he took up the matter before this Court and this Court by its judgment dated 9.4.69 allowed the appeal and declared that the appellant was entitled to remain in service until he attained the age of 55 years and that the impugned order compulsorily retiring him at the age of 53 years was invalid and ineffective.
In order to give effect to this Court 's order mentioned above, the Government of Gujarat on 4.8.69 intimated the appellant that he will be deemed to have remained in service uptil 14.1.64, when he attained the age of 55 years.
as he had attained that age prior to the decision of this Court.
In the meantime the age of superannuation of the employ ees of the State of Gujarat had been raised from 55 years to 58 years.
The appellant in order to take benefit of the change moved a writ petition before the High Court of Guja rat but remained unsuccessful.
Thereupon he filed a special leave petition before this Court.
This Court by its order dated 21.7.1975 declined to interfere.
Thus the appellant was not entitled to continue in service beyond 55 years of age.
It may be mentioned that prior to his compulsory retire ment there were three departmental inquiries pending against the appellant, on grounds of slackness in supervision.
overpayment to contractors and loss to the Government and payment in advance of the receipt of goods.
The first in quiry was initiated on 6.2.61.
second on 11.4.1963 and the third on 17.8.63.
These inquiries remained pending against the appellant till 1971.
The appellant filed yet another Special Civil Applica tion No. 504 of 1971 before the High Court praying for issue of a writ of mandamus directing the State to pay to the appellant all his outstanding salary.
allowances.
including due increments after the efficiency bar from 12.1.
1902 to 14.1.
1964 together with 6% interest.
An application for interim relief was also filed but was withdrawn later on the representation perhaps made by the State that the enquiries had become infructuous consequent to appellant 's retirement.
In the meanwhile the State of Gujarat issued a show cause notice dated 17.7.1971 to the appellant intimating him that the Government 216 considered his service record and did not find the same thoroughly satisfactory for the reasons mentioned in the said notice and accordingly the Government proposed to make 50% reduction both in the payment of Gratuity and Pension admissible to him.
The appellant submitted his reply and these proceedings due to laches on the part of the appellant went on for a considerable time and the Government passed the final order on 15.11.1977 reducing the Pension and Gratuity by 50 per cent.
To challenge this Order the appellant again filed Spe cial Civil Application before the High Court for quashing the order reducing his Pension and gratuity.
The High Court dismissed the application in limine on 8.3.1978 observing that in the present case the Government recorded reasons why it came to the conclusion that the petitioner 's Service was unsatisfactory and therefore, put a proportionate cut in the Pension.
as no case of discrimination was made out.
The appellant, preferred Letters Patent Appeal.
against the order passed by the Single Judge.
His contention before the Division Bench was that he continued to be governed by the Junagadh Rules in spite of the fact that the Bombay Rules were sought to be made applicable to him.
His alternative contention was that even if the Bombay Rules were to be made applicable, so far as the question of payment was concerned, inasmuch as they were not less advantageous on compulsory retirement.
proportionate pension was payable to the appel lant under the Bombay Rules of 1959.
The Division Bench held that under either set of Rules, it was open to the State Government to reduce the amount of pension payable to the petitioner as his service had not been found satisfactory by the State under Junagadh Rules as also under Bombay Civil Service Rules.
The High Court accordingly dismissed the Letter Patent Appeal.
Hence this appeal.
It was contended on behalf of the appellant that the High Court went wrong in upholding the impugned order reduc ing the amounts of pension & gratuity in exercise of its power under Rules 188 and 189 of the Bombay Rules, as it had already been ruled by this Court in its judgment in Civil Appeal No. 409 of 1966, that Bombay Rules could not be made applicable to the appellant.
It was urged that the appellant was not governed by Saurashtra Rules either, and it was asserted that either in the show cause notice or in the impugned order.
it Is nowhere specifically stated as to under what set of Rules, the impugned order Imposing a cut in the Pension or Gratuity has been passed.
A contention was also raised based on clauses 3, 13 & 15 of Rule 241 A of Junagadh Rules stating that they operate in different fields.
It was added that no inquiry as contemplated under Rule 189 had been made and admittedly the State had stated before the High Court that 217 the departmental inquiries had become infructuous consequent upon the retirement of the appellant.
According to the counsel for the State the appellant having been retired in pursuance of a judicial order passed by this Court, he cannot now be heard that his retirement at the age of 55 years should be construed as compulsory re tirement the superannuation age having been increased to 60 years under Junagadh Rules, that the retirement of the appellant is normal one; he was entitled to pension under Rule 241 of the Junagadh Rules and the State has passed the impugned order after complying with the provisions of Rules or gratuity be not reduced.
Dismissing the appeal.
this Court, HELD: Rules 188 and 189 have expressly preserved the State Government 's power to reduce or withhold pension by taking proceedings against a Government Servant even after his retirement.
[229H; 230A] In the instant case, in accordance with the procedure specified in Note I to Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules a show cause notice had been issued to the appellant on 17.7.71 calling upon him to show cause within 30 days from the date of the receipt of the notice as to why the proposed reduction should not be made in the Pension and death cum retirement gratuity.
The appellant failed to avail that opportunity to disprove the allegations and satisfy his appointing authority that he rendered satisfactory service throughout.
It was in those circumstances the appointing authority thought fit to impose reduction on the Pension and gratuity in accordance with Rules 188 and 189 of the Bombay Rules on the ground that the appellant had not rendered satisfactory service.
The appel lant is not entitled to take advantage of clause (b)(ii) of the proviso to Rule 189 A since the proceedings had been instituted long before his retirement.
Further as per clause (a) of the said proviso the proceedings were already insti tuted long before his retirement.
Further as per clause (a) of the said proviso, the proceedings already instituted while the Government servant was in service could be contin ued and concluded even after his retirement.
Therefore the order dated 15.11.1977 reducing the pension and gratuity cannot be said to contravene the Bombay Rules.
[231A E] A combined reading of clauses 3, 13 and 15 of Rule 241 A of 218 Junagadh Rules shows that clause 3 is an exception to the general scheme laid down in clauses 13 and 15.
[228C] Bholanath J. Thakar vs State of Saurashtra, AIR 1954 SC 680; Dalip Singh vs State of Punjab, ; Moti Ram Deka etc.
vs General Manager NEF Railways, Maligaon, Pandu etc.
; , ; State of Maharashtra vs M.H. Mazumdar; , and M. Narasimhachar vs State of Mysore, [1960] 1 SCR 981, referred to.
State of U.P.v.
Brahm Datt Sharma, [1987] 2 SCC 179, fol lowed.
|
Appeal No. 625 of 1986.
From the Judgment and Order dated 20.11.1985 of the Allahabad High Court in Sales Tax Revision No. 3 18 of 1985.
Shanti Bhushan, Prashant Bhushan and Madan Lokur for the Appellant.
Gopal Subramanium.
R.S. Rana and Ashok K. Srivastava for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question which arises for consideration in this appeal relates to the period of limi tation within which an application for rectification of an order of reassessment passed under section 21 of the Uttar Pradesh Sales Tax Act, 1948 (Uttar Pradesh Act No. XV of 1948) (hereinafter referred to as 'the Act ') can be pre ferred under section 22 of the Act.
The brief facts which are necessary for deciding this case are these.
The appellant firm is a dealer carrying on business in Mathura in the State of Uttar Pradesh.
An order of assessment was passed in respect of the turnover of the appellant for the year 1975 76 by the Sales Tax Officer, Sector 2, Mathura under the Act on 7.2.1979.
Thereafter on January 8, 1980 the Sales Tax Officer issued a notice to the appellant under section 21 of the Act proposing to make a reassessment in respect of the said assessment year, i.e., 1975 76 on the 144 ground that the mandi cases and arhat (commission) which should have been included in the turnover had escaped as sessment and directed the appellant to appear before him along with its account books on 18.1.
After looking into the books of accounts and hearing the advocate who appeared on behalf of the appellant, the Sales Tax Officer passed the order under section 21 of the Act on the same date holding that the appellant was not liable to pay any more tax under the Act.
The order passed by the Sales Tax Officer reads thus: "Office of the Sales Tax Officer Sector 2, Mathura S/Shri Kundan Lal Srikishan Lala Gan j, Mathu ra Year: 75 76 Section 21 ORDER UNDER SECTION 21 The original tax assessment order in respect of you was passed on 7.2.79.
The audit, however, had objected that the busi nessman 's arhat (commission) and mandi cess amount was left out from taxation.
On this basis the businessman was called by issuing him notice under the said section.
On the appointed day, his advocate appeared and submitted the accounts books.
On examination it was found that the businessman had already included the arhat and mandi cess amount in the taxable income and he had already been assessed.
Therefore, no tax is to be levied now and the businessman is declared as free from paying any more tax under section 21.
Sd/B. Lal Sales Tax Officer Sector 2, Mathura Dated: 18.1.80" In the year 1982, the appellant realised that it was not liable to pay sales tax on purchases made on behalf of Ex U.P. principals as such purchases had occasioned inter State movement of the commodities in question and were as such exempt from the purview of the Act.
The appellant, there fore, filed four applications under section 22 of 145 the Act for rectification of the mistakes in the assessment orders for assessment years 1975 76, 1976 77, 1977 78 and 1978 79 on the ground that the turnover in respect of pur chases made on behalf of Ex U.P. principles had been wrongly assessed to sales tax in the aforementioned four years.
The applications for rectification made in respect of assessment years 1976 77, 1977 78 and 1978 79 were all within three years of the assessment orders but the application made in respect of the assessment order in respect of the assessment year 1975 76 was beyond three years from the date of the original order of assessment which had been made on 7.2.
1979 but within three years from the date of the order passed by the Sales Tax Officer under section 21 of the Act.
All the four applications made by the appellant were reject ed by the Sales Tax Officer on merits on 3.1.
There upon the appellant preferred appeals against the orders rejecting the applications before the Appellate Authority.
The said Appellate Authority by its order dated 21.1.
1983 allowed the appeals relating to the assessment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits but dismissed the appellant 's appeal in respect of the assessment order for the assessment year 1975 76 on the ground that the appellant 's application for rectification filed under section 22 of the Act had been filed beyond three years from the date of the original order of assess ment and was thus barred by limitation.
Aggrieved by the order of the Appellate Authority dismissing the appellant 's appeal arising out of the application for rectification of the assessment order passed in respect of the assessment year 1975 76, the appellant preferred a second appeal before the Sales Tax Tribunal, Uttar Pradesh.
The Department also preferred second appeals against the orders of rectification passed by the Appellate Authority in respect of the orders of assessment for assessment years ' 1976 77, 1977 78 and 1978 79.
The Tribunal disposed of all the appeals by a common order dated 26.2.
1985 by which it allowed the appeal of the appellant and dismissed the appeals filed by the Department.
The Tribunal held that the appellant was enti tled to succeed on merits in each of the appeals and further held that the rectification application made in respect of the assessment order for the assessment year 1975 76 was within limitation as the original order dated 7.2.
1979 passed in respect of the said assessment year had ceased to exist on the re opening of the assessment by the notice issued under section 21 of the Act and the final order under that section had been passed on 18.1.
1980 within three years from the date of the application for rectification which had been filed on 4.11.
Aggrieved by the orders of the Tribunal the Department filed four revision applica tions before the High Court of Allahabad.
The High Court by its order dated 15.11.
1985 dismissed three of the 146 Department 's revision applications pertaining to the appel lant 's rectification applications in respect of the assess ment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits holding that the orders of the Tribunal were correct and no ground had been made out to interfere with them.
It, however, allowed the revision application filed by the Department in respect of the application for rectification of the assessment order for the assessment year 1975 76 on the ground that the application for rectifi cation had been filed beyond three years from the date of the original order dated 7.2. 1979 and that the order dated 18.1.1980 passed under section 21 of the Act had no effect on the question of limitation.
Aggrieved by the said order of the High Court the appellant has filed this appeal by special leave.
The material part of section 21 of the Act, which is relevant for the purposes of this case, reads thus: "21.
Assessment of tax on the turnover not assessed during the year (1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemp tions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary assess or re assess the dealer or tax according to law . . " Section 22 of the Act provides that the assessing, appellate or revising authority or the Tribunal may, on its own motion or on the application of the dealer or any other interested person rectify any mistake in its order, apparent on the record within three years from the date of the order sought to be rectified.
The question for consideration is whether for purposes of limitation the date of the order of assessment for the year 1975 76 in the instant case should be the date of the original assessment order, i.e., 7.2.
1979 of whether it should be the date of the order passed under section 21 of the Act, i.e., 18.1.
On behalf of the appellant it is contended before us that on the issue of the notice under section 21 of the Act the original assessment ceased to be in force and that the only order of assessment in respect of assessment year 1975 76 which should be taken into consideration for 147 all purposes including the application for rectification of mistake is the order dated 18.1.1980.
In support of the above plea the appellant has relied upon the decision of this Court in Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu; , which was a case arising under the Mysore (Karnataka) Sale Tax Act, 1957.
In that case the original assessment order had been passed on March 21, 1963.
Thereafter there was an order of reassessment made under section 12A of the Mysore (Karnataka) Sales Tax Act, 1957 on June 8, 1966 because certain amounts had escaped assessment under the original assessment order.
Thereafter on June 28, 1967 the Deputy Commissioner of Commercial Taxes passed an order revising the order dated June 8, 1966 as a consequence of the decision of this Court in Shinde Brothers etc.
vs Deputy Commissioner, Raichur, A.I.R. 1967 S.C. 15 12.
Thereafter the assessee filed an application for recti fication of the order passed by the Deputy Commissioner of Commercial Taxes requesting him to set aside the order passed on revision under section 21 of that Act on the ground that the revision of assessment was barred by limita tion under section 21(3) of that Act and as such there was a mistake apparent on the record.
The Deputy Commissioner of Commercial Taxes rejected the said application.
The assessee questioned the order of the Deputy Commissioner of Commer cial Taxes before the Mysore (Karnataka) Sales Tax Appellate Tribunal.
The Tribunal too rejected that appeal.
The asses see thereafter filed a petition before the High Court under Article 226 of the Constitution of India.
The High Court allowed the appeal and quashed the order passed by the Deputy Commissioner of Commercial Taxes on June 28, 1967 on the ground that the said order had been passed without jurisdiction as the power of revision had been exercised beyond the prescribed period of four years from the date of the original assessment order dated March 21, 1963.
The Deputy Commissioner of Commercial Taxes filed an appeal against the order of the High Court before this Court.
Allowing the said appeal this Court observed thus at page 596: "The short question which arises for determi nation in these appeals is that in the event of an order having been made under section 12A of the Act, what is the starting point for computing the period of four years, mentioned in section 21(3), for the exercise of the powers under section 21(2).
Is it the initial assessment order or is it the order made under section 12A? In the context of the present case, the question to be answered is as to whether the period of four years,is to be calculated from March 21,1963 when the initial assessment oders were made, or from June 8, 1966 when 148 the orders under section 12A of the Act were made.
So far as this question is concerned, we are of the opinion that the period of four years should be calculated from June 8, 1966 i.e., the date on which orders under section 12A of the Act were made.
The reason for that is that once an assessment is reopened, the initial order for assessment ceases to be operative.
The effect of reopening the assess ment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment.
The initial order for reassessment cannot be said to survive, even partially, although the justification for reassessment arises because of turnover escaping assessment in a limited field or only with respect to a part of the matter covered by the initial assessment order.
The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment.
As it is we find that in the present case the assessment orders made under section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier.
In the circumstances, the only orders which could be the subject matter of revision by the appel lant were the orders made under section 12A of the Act and not the initial assessment orders." In reaching the above conclusion the Court relied upon three decisions of this Court, namely, Commissioner of Income tax, Excess Profits Tax, Hyderabad, Andhra Pradesh
V. Jagan Mohan Rao & Others, ; Commis sioner of Sales Tax, Madhya Pradesh vs M/s. H.M. Esufali, H.M. Abdulali, Siyaganj, Indore, ; and International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, HubIi & Ors., [1975] 2 S.C.R. 345.
The third of the above three cases, namely, International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, Hubli & Ors., (supra) was a case arising out of rectification proceedings.
In that case this Court held that once an assessment order had been rectified and it was sought to make a further rectification of that order the period of limitation for making such further rectification would commence not from the date of the original assessment order but from the date of the earlier rectification order.
In Deputy Commissioner of Commercial Taxes vs H.R. Sri Ramulu (supra) this Court has clearly laid down that when once a notice is issued for purposes of making reassessment the assessment proceedings become re opened and the initial order of assessment 149 ceases to be operative.
The Court has further held that the effect of the re opening of the assessment is to vacate or set aside the initial order of assessment and to substitute in its place the order made on reassessment and that the result of re opening of the assessment is that a fresh order for reassessment would have to be made in respect of all matters including those matters in respect of which there is no allegation of the turnover escaping assessment.
The same principle should apply even tO a Case like the present one where an 'application for rectification is filed after the completion of the reassessment proceedings.
In order to overcome the observation made by this Court in Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu (supra) it was argued on behalf of the State Government that since no order of re assessment had actually been passed in the instant case on 18.1.
1980 but only an order discharging the notice issued under section 21 of the Act had been passed the original order of assessment passed on 7.2.1979 continue to remain in force.
It is true that after going through the books of accounts produced by the appellant and hearing the advocate who appeared on its behalf the Sales Tax Officer was of the view that the assessee had already included in its taxable turnover the arhat (commission) and mandi cess amounts and therefore, no extra tax was leviable under section 21 Of the Act.
Even so it has to be held that the order dated 18.1.1980 is an order of reassessment not withstanding the fact that a regular order of reassessment has not been passed.
The order passed on 18.1, 1980 should be construed as a fresh order of assessment passed under section 21 of the Act and the initial order of assessment dated 7.2.1979 should be deemed to be the order passed again on 18.1.1980.
If the assessee is able to show any error apparent on the record from the order of assessment dated 7.2.1979 which as we have observed earlier should be deemed to have been passed again on 18.1.1980, the appellant is entitled to succeed in its application for rectification provided it is made within the prescribed time, i.e., three years from the date of the order passed under section 21 of the Act.
We do not find any merit in the submission made on behalf of the Department that the order passed on 18.1.1980 should be understood as an order discharging the notice issued under section 21 of the Act and not an order of reassessment as such.
This is obvious from the language of section 21, itself.
Section 21 authorises the assessing authority to.
make an order of assessment or reassessment.
It says that if the assessing authority has reason to be lieve that the whole or any part of the turnover of a deal er, for any assessment year or part 150 thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act, or any deduc tions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary assess or re assess the dealer or tax according to law.
The assessing authority gets jurisdiction to make the reassessment by issuing a notice to the dealer as provided by section 21 of the Act.
When once the notice is issued under that section the original order of assessment gets re opened and thereafter any order made under section 21 of the Act alone would be the order of assessment in respect of the period in question.
Section 21 of the Act does not require the assessing authority to pass an order deciding whether it is necessary to proceed with the inquiry under that section or not before passing an order of assessment or reassessment under that section.
The only order which the assessing authority is required to make under section 21 after a notice is issued to the dealer under that section is an order of assessment or reassessment.
It is not required to pass first an order whether it should proceed with the reassessment proceedings or not.
Such a preliminary order is not contemplated under section 21 of the Act.
Hence the order dated 18.1.1980 has to be treated as an order of assessment even though it is not in the form in which an order of assessment has to be passed and not as an order merely on the question whether the reasessment proceedings under section 21 of the Act should be proceeded with or not.
In other words it should be held that the assessing authori ty had adopted the earlier order as the order of assessment passed at the conclusion of the proceedings under section 21 of the Act.
The period of limitation for the application for rectification should, therefore, be calculated from the date of the order under section 21 of the Act.
We cannot, there fore, subscribe to the view of the High Court expressed in its observation that since no fresh order of assessment had been passed after examining the accounts of the assessee the 'original assessment order should be considered to remain intact a nothing is added or altered in pursuance of the order under section 21 of the Act '.
No other contention is urged before us.
In the result we set aside the judgment of the High Court and restore the decision of the Tribunal.
The appeal is accordingly allowed.
There shall, however, be no order as to Costs.
A.P J. Appeal allowed.
|
An assessment order was passed in respect of the turn over of the appellant firm for the year 1975 76 by the Sales Tax Officer on 7.2.1979.
Thereafter, the Sales Tax Officer issued a notice under s.21 of the Uttar Pradesh Sales Tax Act, 1948, proposing to make a reassessment on the ground that the mandi cess and arhat (commission) had escaped assessment and directed the appellant to appear along with its account books on 18.1.
The Sales Tax Officer passed the order under s.21 on the same date holding that the appellant was not liable to pay any more tax.
In the year 1982 the appellant filed four applications under s.22 for rectification of the mistakes in the assess ment orders for assessment years 1975 76, 1976 77, 1977 78 and 1978 79 on the ground that the turnover in respect of purchases made on behalf of Ex U.P. principals had been wrongly assessed to sales tax.
All the four applications were rejected by the Sales Tax Officer on merits.
The appellant preferred appeals and the Appellate Au thority allowed the appeals relating to the assessment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits but dismissed the appeal in respect of the assess ment order for the assessment year 1975 76 on the ground that the application for rectification had been filed beyond three years from the date of the original order of assess ment and was thus barred by limitation.
The appellant filed second appeal before the Sales Tax Tribunal in respect of the assessment year 1975 76.
The Department also preferred second appeals in respect of the orders of assessment for assessment years 1976 77, 1977 78 and 1978 79.
The Tribunal allowed the appeal 141 of the appellant holding that the rectification application made in respect of the assessment order for the assessment year 1975 76 was within limitation as the original order dated 7.2.1979 had ceased to exist on the re opening of the assessment and the final order had been passed on 18.1.
1980 within three years from the date of the application for rectification which had been filed on 4.11.1982.
However, the appeals of the Department were dismissed.
Out of the four revision applications filed by the Department, the High Court dismissed three applications and allowed the revision application in respect of the applica tion for rectification of the assessment order for the assessment year 1975 76 holding that the application for rectification had been filed beyond three years from the date of the original order dated 7.2.
1979 and that the order dated 18.
1. 1980 had no effect on the question of limitation.
In the appeal to this Court, on behalf of the appellant it was contended that on the issue of the notice under s.21 of the Act original assessment order ceased to be in force and that the only order of assessment in respect of assess ment year 1975 76 which should be taken into consideration for all purposes including the application for rectification of mistake is the order dated 18.1.
On behalf of the State it was contended that since no order of reassessment had actually been passed in the in stant case on 18.1.
1980 but only an order discharging the notice issued under s.21 of the Act had been passed the original order of assessment passed on 7.2.
1979 continued to remain in force.
Allowing the appeal, HELD: 1.
The judgment of the High Court is set aside and the decision of the Tribunal restored.
[150G] 2.
Section 21 of the Uttar Pradesh Sales Tax Act, 1948, authorises the assessing authority to make an order of assessment or reassessment.
It says that if the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act, or any deduc tions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider neces 142 sary assess or reassess the dealer or tax according to law.
[149G H;150A B] 3.
Section 21 of the Act does not require the assessing authority to pass an order deciding whether it is necessary to proceed with the inquiry under that section or not before passing an order of assessment or reassessment under that section.
The only order which the assessing authority is required to make under s.21 after a notice is issued to the dealer under that section is an order of assessment or reassessment.
[150C D] 4.
Once a notice is issued for ,purposes of making reassessment the earlier proceedings become re opened and the initial order of assessment ceases to be operative.
The effect of the re opening of the assessment is to vacate or set aside the initial order of assessment and to substitute in its place the order mode on reassessment and that the result of the re opening of the assessment is that a fresh order for reassessment would have to he made in respect of all matters including those matters in respect of which there is no allegation of the turnover escaping assessment.
[148H;149A B] 5.
Once an assessment order hod been rectified and it was sought to make a further rectification of that order the period of limitation for making such further rectification would commence not from the date of the original assessment order but from the date of the earlier rectification order.
[148G H] Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu; , ; Shinde Brothers etc.
vs Deputy Commissioner, Raichur, A.I.R. 1967 S.C. 15 12; Commissioner of Income tax, Excess Profits Tax, Hyderabad, Andhra Pradesh
V. Jagan Mohan Rao & Others, ; Commis sioner of Sales Tax, Madhya Pradesh vs M/s. H.M. Esufali, H.M. Abdulali, Siyaganj, Indore, ; and International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, HubIi & Ors., [1975] 2 S.C.R. 345, followed.
The order dated 18.1.
1980 is an order of reassess ment notwithstanding the fact that a regular order of reas sessment has not been passed.
The order passed on 18.1.
1980 should be construed as a fresh order of assessment passed under s.21 of the Act and the initial order of assessment dated 7.2.1979 should be deemed to be the order passed again on 18.1.1980.
[149E F] 7.
If the assessee is able to show any error apparent on the record from the order of assessment dated 7.2.
1979 the appellant is entitled to 143 succeed in its application for rectification provided it is made within the prescribed time, i.e., three years from the date of the order passed under s.21 of the Act.
[149E F] Deputy Commissioner of Commercial Taxes vs H.R. Sri Ramulu, ; , referred to.
It should be held that the assessing authority had adopted the earlier order dated 7.2.1979 as the order of assessment passed at the conclusion of the proceedings under s.21 of the Act.
The period of limitation for the applica tion for rectification should, therefore, be calculated from the date of the order under s.21 of the Act, i.e. 18.1.1980.
[150F]
|
Appeal No. 1713(NT) of 1973.
From the.
Judgment and Order dated 6.1.1971 of the Allahabad High Court in Wealth Tax Reference No. 285 of 1965 124 S.C. Manchanda and Ms. A. Subhashini for the Appellant.
Respondent in person.
(Not present ) The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
The appeal under section 29(1) of the (hereinafter called the Act) is directed against the judgment and order of the High Court of Allahabad dated 6th of January 1971.
The questions involved before the Allahabad High Court in the reference under section 27(1) of the Act were as follows: (1) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not make valid gifts aggregating Rs. 1,50,000 on 1.1.
1957? (2) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not validly assign Rs. 1,50,000 in favour of his sons and grand sons by his letter dated 1.1.
1957? (3) Whether, on the facts and in the circumstances of the case, the Tribunal tight ly held that the sum of Rs. 1,50,000 was properly included in the assessee 's net wealth? (4) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not make valid gifts aggregating Rs.67,560/ (5) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the sum of Rs.67,560/12/ was rightly included in the net wealth of the assessee? The case relates to the assessment year 1957 58 and the relevant date of valuation was 31st March, 1957.
The asses see, Dr. R.S. Gupta had maintained an account in the books of Messrs. Tika Ram and Sons Pvt.
On 1st January, 1957, the account showed a credit of Rs. 1,50,740.
On that day, the assessee had addressed a letter to the Company stating that he had decided to gift away for love and affection various sums to the following persons: 125 Ved Prakash Gupta .
Rs.25,000 Om Prakash Gupta .
Rs.25,000 Hari Prakash Gupta .
Rs.50,000 Pravin Kumar Gupta .
Rs. 50,000 By that letter the assessee had directed the Company to debit his account to the extent of Rs. 1,50,000 and credit the respective amounts in the names of the aforesaid per sons.
It appears further that copies of this letter were sent to one Om Prakash Gupta and Ved Prakash Gupta.
There was no dispute that instructions of the assessee were car ried out by the Company and relevant debit and credit en tries were made in the respective accounts.
On the same day i.e. on ist January, 1957, Om Parkash Gupta wrote to the assessee, his father, thanking him for the gift of Rs.25,000 made in his favour and the gift of Rs.50,000 in favour of his son Pravin.
A similar letter was written by Ved Prakesh thanking the assessee, his father, for the gift of Rs.25,000 made to him and Rs.50,000 gifted to his son.
It must be mentioned, however, that the company i.e. Messrs Tika Ram and Sons.
Ltd. was stated to be running an oil mill and carrying on business as grain tillers.
contractors and brick kiln owners.
It was also stated to be carrying on business of advancing money and taking money on loan when necessary.
But it appears that it was admitted position that Tika Ram & Sons had a cash balance of Rs.4000 only on 1.1.1957 and it did not have any overdraft facilities with any bank.
The respective donees were stated to have later on withdrawn amounts from the amounts so transferred to their accounts.
The assessee contended that a total sum of Rs. 1,50,000 was validly gifted by him to his sons and grand sons and hence the amounts had been wrongly included in his net wealth by the Income Tax Officer and the Appellate Assistant Commissioner.
It was his contention that Tika Ram & Sons carried on the business of banking and hence the gifts were valid.
But there was no evidence that Tika Ram and Sons were carrying on any banking business.
The Tribunal held that they were not carrying on banking business.
The main question therefore that falls for consid eration is whether gifts in question made by transfer en tries in the books of debtor company were valid gifts even though the debtor company was not carrying on business of banking and had no cash in hand for the amount in question on that date.
Gift is defined in section 122 of the as transfer of certain existing mova ble or immovable property made voluntarily and without consideration by 126 one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.
Section 123 of the said Act deals with how transfers are effected and stipulates, inter alia, that for the purpose of making a gift of movable property as in this case, the transfer must be effected either by a registered instrument signed by the donor and attested or by delivery.
Such delivery may be made in the same way as goods sold may be delivered.
The next contention was regarding the inclusion of net wealth a sum of Rs.67,560/12/ standing to the credit of the assessee in the books of M/s Pearls & Beads.
The assessee claimed to have gifted the said amounts by transfer entries in the books of M/s Pearls & Beads on 30th March, 1957.
No letter as in the previous case was addressed by the assessee but only oral instructions were said to have been given.
The Tribunal held that there was no valid gifts.
There was no evidence, it appears, that the said sum was available with the said firm of M/s Pearls & Beads.
The High Court in view of the decision of the Division Bench of the Allahabad High Court in the case of Gopal Raj Swarup vs Commissioner of Wealth tax, Lucknow, answered the first question in the negative and so far as the second question is concerned, it declined to answer as it did not arise in view of the answer given to the first question and the questions Nos.
3,4 and 5 were answered in the negative.
Aggrieved by the said decision, the revenue has come up in appeal.
In order to constitute a valid gift there must be an existing property.
In case of entries in the books of ac count by credit and debit, the sums should be available on the date of gift in the account of the firm whose accounts are said to be credited or debited.
In the case of banking companies or other firms and companies who have overdraft facilities, even if the sums are not in credit of the donor and are not with such companies or firms, gifts might be possible by adjustment of the book entries.
But in the cases of non banking companies or firms, if these companies or firms do not have overdraft facilities, it is not possible to make valid gift if sums or funds are not available.
This question has been examined by the various High Courts.
It is possible in certain circumstances for a donor to make a valid gift by instructing a firm or a company or a H.U.F. in which the donor has an account to give effect to the gift by debiting his account and crediting the account in the name of the donee.
But in such cases 127 merely books entries would not suffice.
The circumstances must be such as to make it clear that there were sufficient funds at the disposal of the donor by reason of which he could make the gift by such book entries.
The firm in which the donor may have account may or may not have sufficient cash balance but it must have sufficient provision for overdraft with the bank on the basis it could honour in structions given by the assessee.
This position of law has been referred to and reiterated by the Bench decision of the Delhi High Court in the case of India Glass Agency vs Com missioner of Income Tax, New Delhi, Justice Ranganathan of the Delhi High Court after referring to several authorities has observed that book entries may be sufficient only when circumstances make it clear that the gift was genuine and the firms where accounts transfer are effected must have sufficient cash in hand or sufficient provision for overdraft facility upon the basis of which it would honour the instructions given by the assessee.
The assessee must also have sufficient credit balance to enable him to make the gift.
Reference may also be made for this proposition to the decision of the Delhi High Court in New India Colour Co. vs Commissioner of Income:Tax, New Delhi, The effect of the two aforesaid decisions of the learned fudges of the Delhi High Court indicates that in case there was not sufficient cash balance from out of which the amount gifted could be physically given to the donee, more entries in the books of account in the form would not constitute delivery of possession over the gifted property to the donee and gift in such case will not be valid.
The position, however, might be different if such firms or companies or H.U.F. in whose accounts gifts are effected have overdraft facilities.
The Calcutta High Court had occasion to discuss this aspect in the case of Commissioner of Income Tax, West Bengal 111 vs Ashok Glass Works, There it was held on facts that the entries had been made contemporane ously showed that the transaction was genuine and there was no suggestion that the interests which were credited in the accounts of the minor donees by the firm which carried on money lending business also were fictitious.
The Tribunal therefore, it was found, tightly held that the gifts were valid and the interest paid in respect of the accounts standing in the name of the donees was allowable as a deduc tion in the hands of the assessee firm.
The Calcutta High Court had to consider this in the case of Commissioner of Gift Tax, West Bengal 111 vs Tara chand Maghraj, There the High Court after discussing various decisions 128 including certain decisions of the Allahabad High Court which we shall presently note and the provisions of section 122 of the , and the Sale of Goods Act.
held that under section 123 of the , in case of gift of movable property, the transfer may be effected by delivery.
Such delivery may be in the same way as goods sold may be delivered.
Section 33 of the Sale of goods Act permitted the parties to deliver by any manner or method which the parties agreed would be treated as delivery or which had the effect of putting the goods in the possession of the buyer.
In that case, it was found that the effect of the transaction in that case was to put the amounts in the possession of the assessee who was authorised to hold the amounts on behalf of the donees which resulted in a delivery of the amounts within the meaning of the Sale of Goods Act.
The Court, however, pointed out that it was held that there was no valid gift on the date of the entries, then it could not be held that, subsequently, when the money was transferred by further entries in the same books, it resulted in a valid gift.
In the instant case before us and we have noted and we reiterate only a sum which could be taken by the donees was Rs.4000 in Messrs Tika Ram & Sons Pvt. Ltd. and there was no overdraft facility of Tika Ram & Sons with any bank.
In that view of the matter, there was no existing goods to be part ed.
Before the Bombay High Court, in the case of Chimanbhai Lalbhai vs Commissioner of Income Tax (Contral), Bombay, there were entries in the books of a Banking Company and gifts were held to be valid.
In the case of Commissioner of IncomeTax, Ahmedabad vs Digvijaysinghji Tin Factory, , on the contrary it was held that the gifts were valid though not sufficient cash with firm avail able but proper book entries were made.
See also the cases of Commissioner of Income Tax, Bombay City H vs Popatlal Mulji, and also in the case of Addl.
Commis sioner of Income Tax, Poona vs Dharsey Keshavji, 143 I.T.R. 509 and Commissioner of Income Tax, Poona vs Devichand Uttamchand, In the background of facts of those cases the Bombay High Court held that the gifts were valid.
In the case of Baliram Mathuradas (By his legal Heir, Madanlal Paliram) vs Commissioner of Income Tax, Bombay City II, the Bombay High Court had occasion to consider this question and held that there was no evidence of acceptance.
It was held by the Bombay High Court that there was no valid gift.
Similarly, in the case of Virji Devshi vs Commissioner of Income Tax, Bombay, the Bombay High Court held 129 "Just as the entries in his own account book by a person would not constitute a valid transfer even the entries in the accounts of the firm would not be sufficient." The Madras High Court had also taken divergent views.
It may be noted that in E.M.V. Muthappa Chettiar vs Commission er of Income Tax, Madras, the Madras High Court held that mere entries were not enough to constitute valid gifts particularly when gift of fund continued to be used in the donors ' business.
The Madras High Court in the case of Mrs. Ida L. Cham bers and Three Others vs Kelland Huxford Chambers, was dealing with a case where C, proprietor of a business who had invested a large amount of capital in it, caused entries to be made in his account books crediting his wife and certain other members of his family with sums which were debited to his capital account.
Separate accounts in their names were opened in the books and in their accounts the credits were entered.
The entries were followed up by letters to the effect, inter alia, that the sums were en tirely in the nature of personal gifts from C and would bear interest payable half yearly.
C was not in a position to make gifts in cash of the amounts credited in favour of his wife and relatives.
He had large assets but these were represented by land, buildings, plant, machinery and stock in trade.
Interest on the amounts was also credited in the accounts regularly for some time, until a bank from which C had obtained an overdraft objected to such crediting of interest.
C 's wife withdrew various sums of money from time to time from the interest account and whenever C desired to retransfer amounts to his capital account he obtained let ters of consent from her.
The principal amounts credited were shown as 'deposits" in the balance sheets of the busi ness for some years and were thereafter referred to as "unsecured loans".
On a question arising whether there was a valid gift or trust in respect of the said amounts, it was held by the Division Bench of the Madras High Court that there was no completed gift of the principal amounts as there was no registered deed and as there was no delivery of the property.
Though C had the intention of making gifts, the entries in the books did not complete the gift.
It was further held that there was no trust either and that there was nothing in the acts or conduct of C to show that he intended to create a trust or to constitute himself a trus tee.
Where moneys were actually paid by way of interest on the alleged gifts, those became completed gifts.
This deci sion went up to the Privy Council but on the aspect of gift, no opinion was expressed by the Judicial Committee.
The decision of the Privy Council is reported in ILR 1944 at page 617. 130 The Punjab and Haryana High Court in Balireal Nawal Kishore vs Commissioner of Income Tax, Punjab, held that the credit cash balance of the donor was Rs.81,000 and cash balance with firm was only Rs.4,299 but the unuti lised overdraft of the firm was Rs. 1,27,088.
The gift was held to be valid.
In Sukhlal Sheo Narain vs Commissioner of Wealth Tax, Haryana, the Punjab & Haryana High Court had dealt with a case where the father had gifted Rs.84,000 i.e. Rs.28,000 to each of his sons.
Father had complete control and dominion over that amount.
There was no evidence that gifts were accepted on behalf of minors.
It was held by the High Court that gifts were invalid.
Rangoon High Court in Abba Dada and Company vs Commis sioner of Income Tax, Burma, held that the mere book entries were not sufficient in that case to constitute valid gift.
The Rajasthan High Court in K.P. Brothers vs Commission er of Income Tax, New Delhi, held that there was a valid gift but in that case it was a banking company.
The Allahabad High Court in the case of Commissioner of Income Tax, U.P.v. Smt.
Shyamo Bibi, had to deal with a case where the credit balance of 2 1/2 lakhs was with the firm.
Balance of the firm was only Rs. 15.
Memo of gift recorded on stamp paper.
It was held that the gift was not valid.
In Commissioner of Wealth Tax vs Gulab Rai Govind Pra sad, there was an alleged gift of Rs.2 lakhs to minor son by book entries.
Cash Balance was only Rs.7626.
No interest was credited to donee 's account.
No acceptance was produced.
Property purchased out of gift and income was used by the family.
It was ' held that there was no valid gift.
But the Allahabad High Court in the case of Gopal Raj Swarup vs Commissioner of Wealth Tax, Lucknow (supra) had to deal with the wealth tax.
There the assessee was the karta of a Hindu undivided family.
On 20th November, 1956, the assessee purported to transfer Rs.50,000 from his account to the account of his son.
The transfer was effected by debit ing the assessee 's personal account in the books of the Hindu undivided family with Rs.50,000 and crediting the same in the personal account of his son.
On 20th November, 1956, the assessee had a substantial credit balance exceeding the sum of Rs.50,000 which he purported to give to his son.
The adjustment of entries made in the books of account was in pursuance of a letter 131 written by the assessee to the said Hindu undivided family on the same date.
The Wealth Tax Officer and the Income Tax Officer rejected the contention that he made a gift of Rs.50,000 to his son and this amount should be excluded from his taxable net wealth.
The Tribunal never doubted that the transaction in question was bona fide but dismissed the appeal of the assessee on the sole ground that the transfer evidenced by the entries in the books of account and by the declaration, did not operate to bring into existence a valid gift.
It was held on the facts of that case that the asses see had made a valid gift of the value of Rs.50,000.
In the impugned judgment, the Allahabad High Court had followed the said decision.
The said decision was also followed in Bhau Ram Jawaharmal vs Commissioner of Income Tax, U.P., in Gopal Jalan vs Commissioner of Income Tax, U.P., and in Phool Chand Gajanand vs Commis sioner of Income Tax, U.P., We are of the opinion that each case must be decided on the facts of that case.
Where the assessee has a credit amount with firm or with family or with a banking company and that sum is available to that firm or the company or H.U.F. on the date of the gift, then a valid gift by book entries might be possible but where a sum was not available with the firm or the family or a company which was not a banking company or which had no overdraft facility, by mere book entries even though there was acceptance of that gift by the donee would not effectuate a valid gift.
The Court in Controller of Estate Duty, Punjab, Haryana, J. & K., H.P., and Chandigarh vs Kamlavati, had to deal with gift by way of transfer in the account books.
There this Court held that when the property was gifted by a donor the possession and enjoyment of which was allowed to a partnership firm in which the donor was a partner, then the mere fact of the donor sharing the enjoy ment or the benefit in the property was not sufficient for the application of section 10 of the , until and unless such enjoyment or benefit was clearly referable to the gift, i.e. to the parting with such enjoy ment or benefit by the donee or permitting the doner to share them out of the bundle or rights gifted in the proper ty.
If the possession, enjoyment or benefit of the donor in the property was consistent with the facts and circumstances of the case other than those of the factum of gift, it could not be said that the donee had not retained the possession and enjoyment of the property to the entire exclusion of the donor, or, to the entire exclusion of the donor in any benefit to him by contract or otherwise.
There, M, the deceased, was a 132 partner in a firm having a half share in the partnership.
On 27th March, 1957, M made a gift of Rs. 1 lakh to his son, L, and of Rs.50,000 to his wife, K, by making debit entries in his account in the firm and corresponding credits to the accounts of L and K. With effect from 28th March, 1957, L was taken as a partner in the firm by giving L one forth share out of the half share of M. M died on 9th January, 1962.
The Tribunal held that section 10 of the was not attracted and the sum of Rs. 1,50,000 could not be included in the property passing on the death of M; and the High Court, on a reference, affirmed the viewes of the Tribunal.
This Court held affirming the decision of the High Court that section 10 did not apply to the gifts of Rs. 1 lakh and Rs.50,000 made by the deceased to his son and to his wife respectively.
But in that case, the question in the present form in which it arises before us in the instant case did not arise.
This Court in the case of Badri Prasad Jagan Prasad vs Commissioner of Income Tax, U.P., (judgment by one of us) had occasion to refer to the effect of book entries but this question which is present before us in the present appeal was not before this Court in that case.
No useful purpose, therefore, will be served by reference to that case.
In that view of the matter, except to the extent indi cated above, the entries in the books of account could not effectuate gifts.
As we have discussed the facts on the principles, we are of the opinion that the High Court was in error in answering the question in the manner it did.
The order and judgment of the High Court are therefore set aside.
All the questions are answered in favour of the revenue.
As the respondent is not appearing, there will be no order as to costs.
N.P.V. Appeal allowed.
|
The Income Tax Officer included in the net wealth of the respondent assessee for the assessement year 1957 58, two sums, viz., Rs. 1,50,000 and Rs.67,560/12/ which the asses see claimed to have gifted.
It is stated that on January 1, 1957 the respondent assessee, by a letter directed a company in which he maintained an account, to debit his account to the extent of Rs. 1,50,000 and credit in the names of his two sons and grandsons various sums, as he had decided to give away these amounts to them out of love and affection.
The company carried out the instructions and relevant debit and credit entries were made in the respective accounts.
On the same day, by two separate letters, the gifts were ac cepted by the sons and later on these amounts were withdrawn by the respective donees.
In the case of second gift, oral instructions were given for transferring the amounts stand ing to his credit.
The respondent assessee having failed before the Income Tax Officer and the Appellate Assistant Commissioner, ap pealed to the Income Tax Appellate Tribunal and contended that the first company was carrying on the business of banking and hence the gifts in question were valid, and that the Income Tax Officer and the Appellate Assistant Commis sioner had wrongly included these amounts in his net wealth and in the case of second gift, the assessee claimed that the amounts were gifted by him by transfer entries.
The Tribunal found that there was no evidence that the first company was carrying on any banking business, and in the case of second gift, the sum was available with the company.
It, therefore, held that the first company was not carrying on banking business, and in the 122 second case, there was no valid gift.
It, however, referred the matter to the High Court.
The High Court held that the Tribunal was not right in holding that the assessee did not make valid gifts and in holding that the amounts were rightly included in the net wealth of the assessee.
Allowing the appeal by the Revenue, this Court, HELD: 1.
In order to constitute a valid gift there must be an existing property.
In case of entries in the books of account by credit and debit, the sums should be available on the date of gift in the account of the firm whose accounts are said to be credited or debited.
In the case of banking companies or other firms and companies who have overdraft facilities, even if the sums are not in credit of the donor and are not with such companies or firms, gifts might be possible by adjustment of book entries.
But in the cases of non banking companies or firms, if these companies or firms do not have overdraft facilities, it is not possible to make valid gift if sums or funds are not available.
[126E G] 2.
It is possible in certain circumstances for a donor to make a valid gift by instructing a firm or a company or H.U.F., in which the donor has an account to give effect to the gift by debiting his account and crediting the account in the name of the donee.
But in such cases merely book entries would not suffice.
The circumstances must be such as to make it clear that there were sufficient funds at the disposal of the donor by reason of which he could make the gift by such book entries.
The firm in which the donor may have account may or may not have sufficient cash balance but it must have sufficient provision for overdraft with the bank on the basis of which it could honour instructions given by the assessee.
[126H;127A B] 3.
Each case must be decided on the facts of that case.
Where the assessee has a credit account with a firm or with a family or with a banking company and that sum is available to that firm or the company or H.U.F. on the date of the gift, then a valid gift by book entries might be possible.
But where a sum was not available with the firm or the H.U.F. or a company which was not a banking company or which had no overdraft facility, by mere book entries, even though there was acceptance of that gift by the donee a valid gift would not be effectuated.
[131D E] 4.
In the instant case, the entries in the books of account could not effectuate valid gifts.
The only sum which could be taken by the donee was Rs.4,000 in the case of the first company, which had no 123 overdraft facility with the bank.
Thus, there was no exist ing goods to be parted.
The High Court was, therefore, in error in answering the questions against the Revenue.
[132E F] [Appeal allowed.
Order and Judgment of the High Court set aside.] Gopal Raj Swarup v, Commissioner of Wealth tax, Lucknow, 12; Indian Glass Agency vs Commissioner of Income Tax, New Delhi, ; New India Colour Co. vs Commissioner of Income Tax, New Delhi, ; Commissioner of Income Tax, West Bengal 111 vs Ashok Glass Works, ; Commissioner of Gift Tax, West Bengal 111 vs Tarachand Meghraj, ; Chimanbhai Lalbhai vs Commissioner of Income Tax (Central), Bombay, 34 I.T.R. 259; Commissioner of Income Tax, Ahmedabad vs Digvijay singhji Tin Factory, ; Commissioner of Income Tax, Bombay City I1 vs Popatlal Mulji, ; Addl.
Commissioner of Income Tax, Poona vs Dharsev Keshavji, ; Commissioner of Income Tax, Poona vs Devinchand Uttamchand, ; Baliram Mathuradas (By his Legal Heir, Madanlal Paliram) vs Commissioner of Income Tax, Bombay City H, ; Virji Devshi vs Commissioner of Income Tax, Bombay, ; E.M.V. Muthappa Chet tiar vs Commisioner of Income Tax, Madras, ; Mrs. Ida L. Chambers and Three Others vs Kelland Huxford Chambers, ; Balimal Nawal Kishore vs Commis sioner of Income Tax, Punjab, ; Sukhlal Sheo Narain vs Commissioner of Wealth Tax, Haryana, 89 I.T.R. 157; Abba Dada and Company vs Commissioner of Income Tax, Burma, ; K.P. Brothers vs Commissioner of In come tax, New Delhi, ; Commissioner of Income Tax, U.P.v. Smt. 'Shyamo Bibi, ; Commissioner of Wealth Tax vs Gulab Rai Govind Prasad, ; Bhau Ram Jawaharmal vs Commissioner of Income Tax, ' U.P., ; Gopal Jalan vs Commissioner of Income Tax, U.P., ; Phool Chand Gajanand vs Commissioner of Income Tax, U.P., ; Controller of Estate Duty, Punjab, Haryana, J. & K., H.P. and Chandigarh vs Kamlavati, , referred to.
|
ivil Appeal No. 314 of 1987.
From the judgment and Order dated 16.5.
1986 of the Delhi High Court in Suit No. 234 A of 1977 154 S.K. Dholkia and P.C. Kapur for the Appellant.
Manoj Swarup, Ms. Lalitha Kohli and Pramod Dayal for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave is granted.
The appeal arises from the judgment and order of the High Court of Delhi dated 16th May, 1986 whereby the award of the Arbitrator was adjudged incapable of being made rule of the court and no decree in terms thereof was passed under sec tion 17 of the , (hereinafter called the 'Act ').
The High Court, however, held that the award was not liable to be set aside but only that it could not be made a rule of the court.
In order to appreciate the contentions urged, it is necessary to note few facts.
The father of the parties involved in the matter, Shri section Lal, died; on 13th November, 1975 leaving behind him his two daughters, Mrs. Sudha Va sisht and Miss Shail and Capt.
(now Major) Ashok Kshyap, the son.
The wife of the said deceased Shri section Lal predeceased him.
Mrs. Sudha Vasisht is the eldest child and Major Kshyap is the youngest, who is the son.
Mrs. Sudha Vasisht is married, Miss Shail is a spinster and Major Kshyap is also married.
The said section Lal left only one immovable property, namely, premises No.
F 4, Green Park, New Delhi and some movables including about Rs.8,000 in the Punjab National Bank, Green Park, New Delhi.
It was claimed that Miss Shail was not capable of managing her affairs.
Indeed one of the objections against the award was that Miss Shail who was the unmarried sister of Major Kshyap and Mrs. Sudha Vasisht was of unsound mind and due to her mental incapacity the arbi tration agreement, arbitration proceedings and the resultant award were all bad in the eye of law.
The arbitration agree ment was, however, signed by all the three parties.
It may be noted that disputes and differences arose between the parties and arbitration agreement as entered into by the three parties to settle these on 9th June, 1976, soon after the death of their father, Shri section Lal.
The arbitration agreement recited that their father died intestate leaving behind him premises No. F 4, Green Park , New Delhi and the sum of Rs.8,000 in the Punjab National Bank.
Further it was recited that disputes and differences had arisen in between them with regard to the immovable as well as movable proper ty left by their father and Shri section Lal died without making any will and the parties were desirous ' to get their dis putes and differences 155 settled through arbitration to maintain family peace, harmo ny and goodwill amongst themselves and to avoid unnecessary litigation by arriving at a "family settlement" through arbitration.
The agreement, thereafter nominated and ap pointed one Shri D.C. Singhania, Advocate, as the arbitrator and to enter upon reference and to decide all the disputes and differences existing between them "pertaining to or relating to or in any manner touching upon the matter of inheritance and/or division of all movable and immovable property left behind by their late father, Shri section Lal.
The agreement, further recited that the parties undertook that the decision given by the arbitrator would be accepted as ' final.
The arbitration proceedings have been filed before this Court.
The son, the appellant gave evidence and stated that two houses, one at Meerut and one at Hapur were inher ited by him from his mother Smt.
Sarla Devi, which she got from her parents without leaving any male issue behind them.
These houses were sold for Rs.21,000 which sum according to Major Kshyap was invested by the father in the construction of the house in question.
Major Kshyap further claimed that he had invested a further amount of Rs. 10,000 out of his savings of his service as a Commissioned Officer.
This amount, according to him; was spent on wood work, painting of two rooms etc.
The father, Shri.
section Lal was a teacher in a school and in order to realise his pension, according to Major Kshyap, he paid to his father a sum of Rs.4440.93 which the father had drawn to build the house.
Major Kshyap further claimed that he had purchased a geyser for Rs.887 and he had spent certain amount of money for certain other expenses.
Mrs. Sudha Vasisht gave evidence stating that her father died without making any will and she was entitled to 1/3rd share in the house left behind him.
Miss Shail deposed before the arbitrator that during her life time, she was not to be financially dependent upon anybody but after her death, her share in the house should go to her brother.
She further asserted that she always wanted that the complete house should go to her brother.
It is not necessary to give the break up of the expenses of the houses as appearing from the evidence.
All the parties agreed, the arbitrator noted that there could be no exact and feasible division of the house.
Mrs. Sudha expressed her desire that if she was given a fair share in money, she would not insist for the division of the house, according to the arbitrator.
Her other alter native suggestion was that the house has got 10 rooms or nine rooms in the sense that one big room on Barsati floor has been divided in two and as such each person could be given three rooms each.
According to Miss Shail, the divi sion of the house was not at all feasible, since there was a lot of bad blood and differences between the parties.
Ac cording to her, the deposition states, it is not at all in the interest of anybody that all should live in one house.
156 The other important thing to note in the arbitration proceedings was that Capt.
Kshyap stated that the house could not possibly be divided into three parts.
It did not have three kitchens.
Miss Shail stated that if the house was divided into three parts, there would aIways be quarrels and disputes among them.
She could not say whether the house could be divided into three parts or not.
Miss Shail further stated that she would like to live with her brother Capt.
Kshyap or whatever arrangement he made for her, that would be acceptable to her.
Mrs. Sudha Vasisht stated that she would not like to live or associate with Miss Shail in any manner.
Miss Shail further stated that her share of the property, if any, might be allotted to her brother or what ever otherwise considered proper.
It is further noted that according to Major Kshyap, the house could not be divided in three parts.
He would not like to share it with his sister, Mrs. Sudha Vasisht who is now married.
He further stated, at that time in the deposition that he still had to serve in the army for about another 21 years.
He was prepared to have his share in the property in cash also.
He further asserted that he wanted to keep and maintain his sister Miss Shail.
He further asserted that he was also prepared to pay his sister Mrs. Sudha Vasisht in cash whatever share was considered to be due and payable to her.
According to him, he was not in a position to pay both of his sisters in cash for their shares in the property.
But he could pay her sister Shail, her share in cash gradually.
Mrs. Sudha Vasisht stated that she was not in a position to pay the share either of her brother or her sister Miss Shail in cash.
She further stated, she had no money nor any arrangement for the same.
All this narration is necessary in order to judge wheth er the award was just and fair because a contention was advanced about the mental capacity of the unmarried sister Miss Shail.
The award made on 12th February, 1977, stated that the appellant should pay Rs.40,800 to Mrs. Sudha Va sisht and upon payment Mrs. Sudha Vasisht would vacate the house.
In view of the contentions raised, it is necessary to set out the relevant part of the award which is as follows: "NOW, THEREFORE, I hereby make and publish my award as follows: 1.
A. Kshyap, shall pay an amount of Rs.40,800 to Mrs. Sudha Vasisht by way of her share in the said property No. F.4, Green Park and other assets left behind 157 by late Shri section Lal and on payment of this full amount she shall vacate the house.
Mrs. Sudha Vasisht shall be entitled to live in the portion of the house already in her occupation till the full amount of Rs.40,800 has been paid to her and she will also not be liable to pay any rent for occupa tion of the portion of the house so far occu pied by her and further until the total amount of Rs.40,800 is paid to her by Capt.
A.Kshyap.
On payment of this amount she will have no right to live in the house and also have no other interests left in the said property as legal heir of Shri section Lal.
Miss Shail shall have a right of residence in the said house, i.e. F 4, Green Park throughout her life or till she iS mar ried and in addition to her right in residence in the house, Capt.
Kshyap shall also pay her an amount of Rs.350 per month for her mainte nance till she is married.
In case Miss Shail is married, Capt.
Kshyap shall pay her a lumpsum amount of Rs.40,800 and thereafter she will also have no right to live in the house or get any mainte nance from Capt.
Kshyap on full payment of said amount.
A. Kshyap shall be liable to pay all the outstanding amount of loan along with interest due thereon taken by late Shri section Lal from L.I.C. and also bear Estate Duty, if any, already paid or to be payable with regard to the movable and immovable assets left behind by Shri section Lal.
He shall also be entitled to have all other movable and immovable assets including withdrawal of an amount of about Rs.8500 or so, along with interest if any due thereon, lying deposited to the credit of late Shri Lal in Punjab National Bank, Green Park.
" The award was filed by the Arbitrator on th March, 1977.
The respondent No. 1 filed objections to the same on 11th October, 1977.
Major Kshyap and Miss Shail accepted the award before the Deputy Registrar, Delhi High Court on 11th May, 1977.
This position is stated in the petition for special leave and this is not denied in the affidavit 158 filed on ' behalf of Mrs. Sudha Vasisht.
Mrs. Sudha Vasisht filed an objection on two grounds, namely, that the award being ' unregistered could not be made a rule of the court and the other Miss Shail being mentally retarded could not be ' a party to the arbitration proceedings.
The ' High Court rejected the contention about the invalidity of the Award on ' the ground of mental capacity of Miss Shail but held that the award could not be made rule of the court because it was an unregistered Award.
In view of the submission made on behalf of the respond ent that Miss Shail was of unsound mind and as this conten tion was advanced before us in support of the order of the High ' COurt, we may briefly deal with it.
We have gone through the evidence considered by the learned judge about the mental capacity of Miss Shail.
It is an unfortunatecase of border line intellectual retardation which ' was one part of the diagnosis in respect of her and on the other hand the arbitrator had noted that Major Kshyap had come into the witness box and he had also examined one ' Brig.
Dr. Sangat Singh Syalee who is a medical practitioner.
The testimony of Capt.
Kshyap showed that the arbitration agreement was executed in the office of the arbitrator and that the arbi tration proceedings used to be attended by himself, Miss Shail, Mrs. Sudha Vasisht and her husband, and the proceedings used to be signed by all the parties.
He had further stated that Miss Shail 's case was of border line mental retardation but she could perform her duties satis factorily, intelligently and socially and she knew what was good and what was bad for her.
She had been living all alone in house F 4, Green, Park from 1977 to 1980 and had been doing everything for herself.
It is true that story of this spinster living alone in Green Park house in Delhi belonging to her late father, does not make pleasant read ing, yet from the evidence which the learned judge has exhaustively examined, he found that the medical record obtained from the All India Institute of Medical sciences indicated that Miss Shail was suffering from schizophrenia and even in the year 1974 1981 she was suffering from mental retardation.
But the arbitrator noted that Miss Shail was never given any ECT treatment.
She was never hospitalised and Mrs. Vasisht did not at any point of time objected to the arbitration because of Miss Shail 's mental capacities.
The arbitrator expressed his opinion that the objection against the mental capacity of Miss Shail during the period from 9th June, 1976 to 12th February, 1977 could not be accepted.
We may note that before us all the parties were present.
We had asked counsel for Miss Shail to ascertain from her whether she 159 accepted the award with a free will? We did so not because we found any defect in the evidence or in the order of the learned judge of the High Court but being an appeal under ' article 136 of the Constitution even if there was no legal material in these aspects, the court was entitled to be Satisfied.
Though it is difficult to hazard an opinion on the mental Capacity of a lady by her looks, it appeared to Us that though she was not of a very cheerful disposition, it would perhaps be unfair to conclude that she was mental ly incapable.
We watched her manner during the time the proceedings were going on in the court and observed that she Was understanding what was happening in the court.
We have not any material to disagree with the views of the learned judge on this aspect.
Therefore, we cannot accept this submission urged on behalf of respondent No. 1, Mrs. Vasisht about the mental capacity of Miss Shail.
The High Court noted that apart from the question of registration and the question of mental Capacity, no other contentions Were raised.
Therefore the only other question is, was this award bad having not been registered under the law under section 17 of the ? Before we deal with that point, we might record that a submission was made that even if the award was not properly registered as required under section 17 of the , in view of the ' facts and cir cumstances of the case and further in view of the facts that the award was filed within a period of one month of making of the award and further in view of the 'fact that four months ' time was there to have the award registered by the arbitrator when the award came to the court from the date of making of the award the court should have exercised its powers under section 15(b) and under section 16(1).(c), of the Act.
We are unable to accept the submission urged on behalf of the appellant in this behalf.
Section 16 of the Act, we are of the opinion, does not apply to the facts of this case, There is no objection to the legality of the award apparantly, We are in agreement with the views ex pressed by the learned judge on this aspect.
The factum of registration of the award does not pertain to the decision of the arbitrator on its merits and is de bors the award and for this purpose the award can not be remitted to the arbi trator under section 16 of the Act.
The principles enunciat ed by this Court in Rikhabdass vs Ballabhdas and others, [1962] Suppl.
1 SCR 475 are applicable to the. facts of this case The purpose of remitting the award is to enable the arbitrator to reconsider the decision where the legality was connected with the decision as contained in the award.
It must not relate to a matter which has 160 no connection with the decision or decree.
See in this connection the observations of the Calcutta High Court in the case of Nani Bain Saha vs Ram Gopal Saha and another, AIR 32 1945 Calcutta 19.
The award is also not imperfect in terms of section 15(b) of the Act as rightly held by the High Court.
Therefore, in our opinion, there was no scope, in the facts and circumstances of the case, of exercising its powers by the High Court under section 15 of the Act and powers under section 15 1 of the Code of Civil Procedure could also not be exercised in this case.
The objection against the award was filed by Mrs. Sudha Vasisht on 11th October, 1977 after that more than eight months have expired and there was no prayer to the court to extend the time for registration.
The main contention, however, that requires considera tion is whether the award could not be made a rule of the court because it affects the partition of immovable property and affects rights in immovable property.
We are of the opinion that the High Court was not right in the view it took on this aspect of the matter.
The document in question did not effect the partition if read properly.
Section 17(1)(b) of the enjoins that any nontestamentary instrument which purports or operates to create, declare, assign, 'limit or extinguish, whether in present or in future, any fight, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property should be registered.
Therefore, the question is, does the document itself extin guish or purports to create or declare any right in immova ble property.
It certainly declares the share of the parties in the property but.
it enjoins that only upon payment of Rs.40,800 Mrs. Vasisht would vacate the house.
It further enjoins that "she will be entitled to live in the house in the portion occupied by her till the full payment of Rs.40,800 is made to her and she will not be liable to pay any rent for the occupation of the portion and on the said payment, she will not have any right and also no interest left in the said property".
So her right in the said proper ty and her interest in the property ceases on payment of the amount of Rs.40,800 and not otherwise not by the operation of document itself.
The document itself creates a right by itself to get Rs.40,800 and right to obtain the payment and on payment the obligation or relinquishment of her right or interest in the property.
It does nothing more.
A similar position arose before the Judicial Committee in the case of Rajangara Ayyar vs Rajangam Ayyar, AIR 1922 Privy Council 161 p. 266 where dealing with the document of similar nature the Judicial Committee observed that that document was not a document by itself creating, declaring, assigning, limiting or extinguishing any fight, title or interest in the immova ble property.
It merely creates a right to obtain another document which will, when executed, create a right in the person claiming the relief.
There was a memorandum of agree ment which specified the shares and provided for a further deed effectuating the partition.
It was held that it did not require to be registered.
In our opinion, the entitlement of the members namely Miss Shail as well as Mrs. Vasisht in the property and the cessor of interest in the properties on payment of the money in case of Mrs. Vasisht and other conditions in case of Miss Shail were indicated in the Award.
This position was again reiterated by the Judicial Committee in Upendra Nath Bose vs Lall and Others, AIR 1940, Privy Council p. 222.
There the document recited that the ownership of the second party in one half of the Raitar would not come till after the payment of a sum of Rupees sixty one thousand and four hundred as well as the amounts mentioned in the statement exhibit B together with interest specified in respect of both be fully paid up.
The question before the Judicial Committee was whether the last sentence of para 2 of the Award purported to confer upon "the second party" a right, title or interest which commenced with the Award and came to an end when the sum of Rs.61,400 with interest was paid or whether it intended merely to provide that the interest which arose from the exercise of the option should remain unaltered until Rs.61,400 and interest had been paid or whether they intended merely to provide that the status quo should remain unaltered (i.e. the con tractual interest which arose from the exercise of the option) would remain unaltered until Rs.61,400 and interest had been paid.
The Judicial Committee was of the view that the latter was the true view.
The sentence was not framed as one which purports to create or confer any interest.
This Court in the unreported judgment which is in the Supreme Court judgments 1962, in the case of Sheonarain Lal vs Ratneshwari Devi and another (Civil Appeal No. 296 of 1960) had also to deal with a similar situation.
There fifth clause of the Award was as follows: "Shri Sheo Narain Lal and his heirs should execute as early as possible a registered document in respect of the shop let out on rent to Beli Sao Sukhdeo Prasad, in favour of Shri Prabhu Chand for which Shri Prabhu Chand will have to pay nothing as consideration.
He will pay only costs of stamp etc.
" 162 This Court had to deal with this clause and to consider the question whether this clause purported or created or de clared or assigned, limited or extinguished any right.
This Court held that the award merely provided that some right could be created in future by means of a document to be executed.
Therefore, this Court was of the view that it did not require registration.
We are of the opinion that the same principle should be applicable here, Two decisions upon which reliance was placed by the High Court to which our attention was drawn by the learned coun sel, firstly, Satish Kurnar & Ors.
vs Surinder Kumar & Ors., [1969] 2 SCR p. 244 and the second one was Ratan Lal Sharma vs Purshottam Harit, [1974] 3 SCR p. 109 do not help the respondent.
1n the first case Hegde, J. observed that for the purpose of section 17(1)(b) of the , it was necessary to determine whether the Award purported to create rights in the immovable property.
If it did, it was necessary to have it registered.
As it was found by the court that it did, it needed compulsory registration.
But the facts of this case are entirely different.
Here the award did not create right to get the money, the award only declared that the rights to get the immovable property was dependent upon the payment of the amount.
A right to the property was not created by the award itself, a right to certain property was declared.
A right to get the property was declared on the payment of the money.
The award did not create any right to the property to extinguish any right to the property, which was not there.
It quantified in terms of money the value of that right and declared the method of working out those rights.
In the second case, the question was whether assignment of the share in the partnership required registration? The share of partner in the partnership which has also immovable property is movable property and assignment of that share did not require registration under section 17 of the Regis tration Act.
But the award in that case expressly made an exclusive allottment of the partnership assets including factory and liabilities over Rs., 100 to the appellant in that case.
It went further and made the appellant absolutely entitled to the same.
That is not the position in the in stant case.
In that view of the matter, though there is no dispute about the propositions, these two decisions would be applicable to the facts of the instant case, we are of the opinion on an analysis of award that it did not create any right in any immovable property and as such it was not compulsory to register it.
Though the ,above should be sufficient to dispose of the order as 163 it iS an appeal under Article 136 of the Constitution, we should see in the interest of justice to the interest of all the parties and we must protect as far as practicable the interests of all the parties.
A submission was made on behalf of Miss Shail that Rs.350 per month which has been fixed for the maintenance to be paid by Major Kshyap was inadequate.
It was further submitted that Rs.40,800 which was the share of the money to be allotted to either Mrs. Vasisht and also to Miss Shail for getting their relinqhish ment of their property in the event mentioned in the award is also not proper.
In view of the present position of inflation and rise in price of life and living, we are of the opinion that so far as Miss Shail is concerned, we would dismiss this appeal with the directions that she will be titled to a monthly maintenance of Rs.500 instead of Rs.350 and that this sum should form a charge on the share allotted to Major Kshyap.
Furthermore we direct that in the contingencies mentioned in clauses (1) and (2) of the Award, Mrs. Vasisht should be paid Rs.75.000 instead of Rs.40,800.
Similarly in the con tingency mentioned in clause (4) of the Award, Miss Shail should be paid Rs.75,000 instead of Rs.40,800.
The appeal is allowed and the award as modified with the aforesaid direc tion is made a rule of the court.
In the facts and circumstances of the case, the parties will pay and bear their own costs except that the cost on behalf of Miss Shail should be paid by Major Kshyap.
P.S.S. Appeal al lowed.
|
A family dispute between the parties pertaining tO movable and immovable property left intestate by their father was referred by them to arbitration.
The award made on February 12, 1977 stated: (i) that the appellant should pay to the 1st respondent a specified sum, on payment of which she will have no right to live in the house and also have no other interests in the said property as a legal heir; (ii) that till the full amount was paid she would be entitled to live in the portion of the house in her occupa tion and not be liable to pay any rent; (iii) that the 2nd respondent shall have right of residence in the said house.
plus right to receive from the appellant a specified sum per month as maintenance for life or till she is married; and (iv) that in case of her marriage the appellant should pay her the specified sum upon which she will have no right to live in the house or get any maintenance.
The aforesaid award was filed in court on March 10, 1977 and accepted by the appellant and the 2nd respondent on May 11, 1977.
The first respondent filed her objection to the award on October 1977 on two grounds: (i) that being unregistered it was incapable of being made the rule of the court in terms of section 17 of the , and (ii) that the second respondent being mentally retarded could not be a party to the arbitration proceedings.
The High Court upheld the first objection but not the second.
152 In this appeal by special leave it was contended for the appellant that even if the award was not properly registered as required under section 17 of the , in view of the fact that it was filed within a period of one month of its making and since four months time was there to have the award registered by the arbitrator the court should have exercised its powers under section 15(b) and section 16(1)(c) of the .
For the first respondent it was contended that the award effected partition of immovable property and having not been registered it could not be made a rule of the court.
Allowing the appeal, HELD: 1.1 The award did not create any right in any immovable property,.
nor did it effect partition in any immovable property.
It was, therefore, not compulsory to register the award.
[162G] 1.2 The award merely indicated the entitlement of the respondent in the property and the cessor of their interest in the property on receipt of money.
Their right and inter est was to cease only on the payment of the amount and not otherwise, not even by the operation of the document itself.
[161B C] 1.3 The award only declared that the right of the appel lant to get the immovable property was dependent upon the payment of the amount by him.
A right to the property was not created by the award itself, a right to certain property was declared.
A right to get the property was declared on the payment of the money.
The award did not create any right to the property, extinguish any right to the property, which was not there.
It quantified in terms of money the value of that right and declared the method of working out those rights.
[162D E] Rajangam Ayyar vs Rajangam Ayyar, AIR 1922 Privy Council p. 266; Upendra Nath Bose vs Lall and Others, AIR 1940, Privy Council p. 222; Sheonarain Lal vs Rameshwari Devi and another, Civil Appeal No. 296 of 1960 decided on 6.12.1962; Satish Kumar & Ors.
vs Surinder Kumar & Ors., [1969] 2 SCR p. 244 and Ratan Lal Sharma vs Purshottam Harit, [1974] 3 SCR p. 109, referred to.
The purpose of remitting the award under section 16(D(c) of the is to enable the arbitrator to recon sider his decision where legality was connected with the decision as contained in the award.
It must not relate to a matter which has no connection with the decision or decree.
[159H; 160A] 153 In the instant case, there was no objection to the legality of the award.
The factum of registration of the award did not pertain to the decision of the arbitration on its merits and was de hors the award and for this purpose the award could not be remitted to the arbitrator under section 16 of the Act.
[159F G] Rikhabdass vs Ballabhdas and others.
, [1962] suppl.
1 SCR 475 and Nani Bala Saha vs Ram Gopal Saha and another, AIR (32) 1945 Calcutta 19, referred to.
The award was not imperfect in terms of section 15(b) of the .
There was, therefore, no scope in the facts and circumstances of the case, of exercising its powers by the High Court under section 15 of the Act.
Powers under section 151 of the Code of Civil Procedure could also not be exercised in this case.
[160A B] 4.
It could not be said that the 2nd respondent was mentally incapable.
Though she was not of a very cheerful disposition, she was understanding what was happening in this court.
She knew what was good and what was bad for her, and had accepted the award with a free will.
She could perform her duties satisfactorily, intelligently and social ly.
She had consciously participated in the award proceed ings.
She was never given any ECT treatment.
She was never hospitalised.
[159B C] 5.
In an appeal under Article 136 of the Constitution the Court must in the interests of justice protect as far as practicable the interests of all the parties.
[163A] [Having regard to the present position of inflation and rise in price of life and living, the 2nd respondent will be entitled to a monthly maintenance of Rs.500 instead of Rs.350 and this sum would form a charge on the share allot ted to the appellant.
In the contingencies mentioned in cls.(1) and (2) of the award the first respondent would be paid Rs.75,000 instead of Rs.40,800.
Similarly, in the contingency mentioned in d.(4) the 2nd respondent would be paid Rs.75,000 instead of Rs.40,800.
The award as modified is made a rule of the Court.] [163C D]
|
iminal Appeal No. 50 of 1962.
Appeal by special leave from the judgment and order dated September 12, 1961, of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Appeal No. 494 of 1961.
Nuruddin Ahmed, for the appellant.
G.C. Mathur and 0.
P. Lal, for the respondent.
May 3.
The Judgment of the Court was delivered by S.R. DAS, J.
The learned Sessions Judge of Rae Bareli tried the appellant Prabhu on a charge of murdering his own uncle and found him guilty of the offence and sentenced him to death.
There were an appeal to the High Court and the usual reference for confirmation of the sentence of death.
The High Court dealt with the appeal and reference by one judgment.
It accepted the reference,, dismissed the appeal and confirmed the conviction and sentence.
The appellant then asked for and obtained special leave of this Court to appeal from the judgment and order of the High Court.
The present appeal has come to us in pursuance of the leave granted by this Court.
Shortly stated the case against the appellant was this.
Bhagwan Ahir, step brother of the appellants father Budhai, was a resident of 883 village Bandi in the district of Rae Bareli, The appellant and his father Budhai lived in another village called Gulariya at a distance of about two or three miles from Bandi.
Bhagwan had about four bighas of pasture land and seven bighas of cultivated land.
He had no male issue, He had several daughters who were all married and resided at the places of their respective husbands.
Bhagwan was old, near about 80 years of age according to the evidence of Marka, and had no male member in the family to help him with his cultivation.
Budhai, it appears, did not reside in village Gulariya all the year round, but was engaged in some job at Burdwan in Bengal.
Some four years before the date on, which Bhagwan was said to have been murdered the appellant and his mother came to reside with Bhagwan.
The idea was that the appellant would be able to help Bhagwan with his cultivation.
The appellant did not, however, render much assistance to Bhagwan and the prosecution case, was that after about a year of their stay, Bhagwan turned them out of the house.
The appellant and his mother then went back to village Gulariya.
The prosecution case further was that about a month and a half before the murder of Bhagwan the appellant and his father came to Bhagwan and the appellants father asked Bhagwan to transfer some of his land to the appellant.
Bhagwan said that he had already kept the appellant with him for a year and had found that he was of no assistance.
He, therefore, refused to give any land to the appellant.
Bhagwan, it appears, had some granddaughters and one of them called Kumari Sarju aged about five years was staying with him.
Bhagwan said that he would give his lands to his grand daughter Sarju.
On the night between March 19 and 20 , 1961, Bhagwan was sleeping in front of his house on 884 cot with his grand daughter.
One Naiku (P.W. 1) was sleeping at a short distance from Bhagwan 's house.
Naiku was a neighbour of Bhagwan.
At about midnight Naiku 'heard some noise and called out to Bhagwan.
There was no response.
Naiku then heard the sound of shoes as though somebody was running away from the place.
Naiku called out certain other persons and went near the place where Bhagwan was lying on his cot.
It was found that Bhagwan bad a large number of injuries on the head and neck, most of the injuries being of 'an incised nature.
Bhagwan was already dead.
The little girl Sarju though stained with blood which flowed from the body of Bhagwan was not herself injured.
She was soundly sleeping on the cot and was not awake when Bhagwan was killed.
Naiku gave an information to the police station of what he had heard and seen, the distance of the police station being about eight miles from village Bandi.
The information which Naiku gave did not disclose the name of any accused person because Naiku had not seen who had killed Bhagwan.
On the information given by Naiku the local police started investigation and when the dead body of Bhagwan was brought back to the village after the postmortem examination for cremation, the appellant, it is stated, came to one Brij lal (P. W. 2) of village Bandi.
This was on the third day after the murder.
The appellant made certain enquiries from Brij lal which roused the latter 's suspicion.
The Sub Inspector of Police was then in the village and he was informed of the presence of the appellant.
The appellant was then interrogated and the case of the prosecution was that the appellant made certain statements and produced from his house a kulhari, a shirt and a dhoti.
These were found to be blood stained and subsequent examination by the Chemical 885 Analyst and the Serologist disclosed that they were stained with human blood, This recovery of the blood stained kulhari (axe) and the blood stained shirt and dhoti was made, according to the prosecution case, on March 22, 1961, in the presence of two witnesses, Lal Bahadur Singh and Wali Mohammad, It would appear from what we have stated above that the case against the appellant rested on the evidence relating to motive furnished by what happened, about a month and half before the occurrence when the appellant and his father asked for some land from the deceased, and the recovery of the.
blood stained.
axe and blood stained shirt and dhoti from the house of 'the appellant.
The appellant denied that he and his father had asked for any lands from the deceased a month and a half prior to the occurrence.
The appellant also denied that he had produced any blood stained axe or blood stained shirt and dhoti from his house, or had handed them over to the Sub Inspector of Police.
He denied that the clothes or the axe belonged to him.
His defence was that be was living with his father in Burdwan and came back to the village on March 21,1961.
He said that the case against him was brought out of enmity.
Learned counsel for the appellant has taken us through the evidence in the case and has submitted that apart from raising some suspicion against the appellant and his father, the evidence given by the prosecution does not establish beyond any reasonable doubt that the appellant was the murderer.
He has further submitted that certain statements alleged to have been made by appellant to the Sub Inspector of Police in connection with the recovery of the blood stained axe and blood stained shirt and dhoti were inadmissible and the courts below were wrong in relying on 886 them.
He has contended that if those statements are excluded from consideration, than the evidence which remains is insufficient to support the conviction of the appellant, We think that these contentions are correct and must be upheld.
There can be no doubt that Bhagwan was murdered on the night in question.
The postmortem examination disclosed that he had sustained as many as thirteen injuries, eleven of which were incised on different parts of the body.
The injuries inflicted on the head and face had out through skull bones and the doctor who held the postmortem examination was of the opinion that Bhagwan had died as a result of fractures of the skull bones and hemorrhage and shock.
There can, therefore, be no doubt that Bhagan was murdered.
It is equally clear that nobody saw who ' killed Bhagwan.
The evidence of Naiku (P.W.1) shows clearly enough that neither he nor other persons whom he called saw the appellant.
The grand child who was sleeping with Bhagwan was also fast asleep and did not even awake when the injuries were inflicted on Bhagwan.
Bhagwan might or might not have raised shouts when the injuries were caused to him.
The evidence of Naiku does not disclose that he heard any other sound excepting the sound of movement of steps of a person wearing shoes.
We are satisfied that the evidence as to motive is satisfactory, Both Naiku (P.W.1) and Brij Lal (P.W.2) have stated about the motive.
The appellant and his mother stayed with Bhagwan about four years ago in order to render assistance to Bhagwan in his cultivation.
The appellant did not, however, do any work and was turned out.
This is proved by the evidence of Naiku and Brij Lal.
The evidence of the aforesaid two witnesses also establishes that the appellant and his father came to Bhagwan about a month and a half before the occurrence and asked for some land.
Bhagwan refused to give any land to the appellant.
We 887 think that this motive has been established even though it would influence both the appellant and his father.
The main difficulty in the case is that the evidence regarding the recovery of blood stained axe and blood stained.
shirt and dhoti is not very satisfactory and the courts below were wrong in admitting certain statements alleged to have been made by the appellant in connection with that recovery.
According to the recovery memo the two witnesses who were present when the aforesaid articles were produced by the appellant were Lal Bahadur Singh and Wali Mohamad.
Lal Bahadur Singh was examined as prosecution witness No. 4.
He did give evidence about the production of blood stained articles from his house by the appellant.
The witness said that the appellant produced the articles from a tub on the eastern side of the house.
The witness did not however, say that the appellant made any statements relating to the recovery.
Wali Mohammad was not examined at all.
One other witness Dodi Baksh Singh was examined as prosecution witness No. 3.
This witness said that a little before the recovery the Sub Inspector of Police took the appellant into custody and interrogated him ; then the a appellant gave out that the axe with which the murder had been committed and his blood stained shirt and dhoti were in the house and the appellant was prepared to produce them.
These statements to which Dobi Baksh (P.W.3) deposed were not admissible in evidence.
They were incriminating statements made to a police officer and were hit by ss.25 and 26 of the Indian Evidence Act.
The statement that the axe was one with which the murder had been committed was not a statement which led to any discovery within the meaning of s.27 of the Evidence Act.
Nor was the alleged statement of the appellant that the blood stained shirt and dhoti belonged to him was 888 a statement which led to any discovery within the meaning of s.27.
Section 27 provides that when any fact is deposed to and discovered in consequence of information received from a person accused of any offence, in the custody of a police officer, so much of such information,.whether it amounts to a confession or not, as, relates distinctly to the fact thereby discovery may be proved.
In Pulukuri Kotayya vs King Emperor (1) the Privy Council considered the true interpretation of s.27 and said : "It is fallacious to treat the 'fact discove red ' within the section as equivalent to the object produced ; the fact discovered embraces the place from which the object is produced and the knowledge of the accused as to this, and the information given must relate distinc tly to this fact.
Information as to past user, or the past history, of the object produced is not related to its discovery in the setting in which it is discovered.
Information supplied by a person in custody that 'I will produce a knife concealed in the roof of my house ' does not lead to the discovery of a knife ; knives were discovered many years ago.
It leads to the discovery of the fact that a knife is concealed in the house of the informant to his knowledge, and if the knife is proved to have been used in the commission of the offence, the fact discovered is very relevant.
But if to the statement the words be added 'with which I stabbed A. ', these words are inadmissible since they do not relate to the discovery of the knife in the house of the informant." (p.77) We are, therefore, of the opinion that the courts below were wrong in admitting in evidence the alleged statement of the appellant that the axe had been used to commit murder or the statement that the blood (1) (1947) L.R. 74 I.A 65. 889 stained shirt and dhoti were his.
If these statements are excluded and we think that they must be excluded, then the only evidence which remains is that the appellant produced from the house a blood stained axe and some blood stained clothes.
The prosecution gave no evidence to establish whether the axe belonged to the appellant or the blood stained clothes were his.
Therefore, the question before us is this.
Is the production of the blood stained axe and clothes read in the light of the evidence regarding motive sufficient to lead to the conclusion that the appellant must be the murderer ? It is well settled that circumstantial evidence must be much as to lead to a conclusion which on any reasonable hypothesis in consistent only with the guilt of the accused person and not with his innocence.
The motive alleged in this case would operate not only on the appellant but on his father as well.
From the mere production of the blood stained articles by the appellant one cannot come to the conclusion that the appellant committed the murder.
Even if somebody else had committed the murder and the blood stained articles had been kept in the house, the appellant might produce the blood stained articles when interrogated by the Sub Inspector of Police.
It cannot be said that the fact of production is consistent only with the guilt of the appellant and inconstant with his innocence.
We are of the opinion that the chain of circumstantial evidence is not complete in this case and the prosecution has unfortunately left missing links, probably because the prosecution adopted the shortout of ascribing certain statements to the appellant which were clearly inadmissible.
Learned counsel for the respondent has submitted to us that in State of U. P. vs Deoman Upadhyaya (1) this Court accepted as sufficient evidence (i) ; 890 the production of a blood stained weapon.
We are unable to agree.
The circumstantial chain in that case did not depend merely on the production of the gandasa, but on other circumstance as well.
The Court held in that case that the circumstantial chain was complete and the decision did not proceed merely on the production of a blood stained weapon.
For the reasons given above we would allow the appeal and set aside the conviction and sentence passed against the appellant.
The appellant must now be released forthwith.
Appeal allowed.
|
The appellant was tried and convicted for the murder of one B.
The evidence against him was circumstantial and consisted of (1) a motive to kill B which he had in common with his father, (II) the recovery at his instance of an axe, shirt and dhoti stained with human blood and (III) his statements made to a Sub Inspector of Police before the recovery that the axe was one with which he had killed B and that the shirt and Dhoti belonged to him.
No independent evidence was led to prove that the axe, shirt and dhoti belonged to the appellant.
Held, that the statements made by the appellant were inadmissible and the remaining evidence was ' not sufficient to bring home the guilt to the appellant.
The statements were incriminating ones made to a police officer and were bit by sections 25 and 26 of the Evidence Act.
Statements were not admissible under section 27 as they did not lead to any discovery within the meaning of that section.
Pulukuri Kotayya vs King Emperor, (1947) L. R. 74 I. A. 65, relied on.
State of U. P. vs Deoman Upadhya, ; , distinguished.
|
Criminal Appeal No. 823 Of 1981 Etc.
From the Judgment and Order dated 27.7.1981 of the Karnataka High Court in Crl.
A.NO. 215 of 1981.
M. Veerappa for the Appellant.
M.B. Lal (Amicus Curiae) K.R. Nagaraja for the Respondents.
The Judgment of the Court was delivered by, OZA, J.
These appeals have been preferred by the State of Karnataka against the judgment of the High Court of Karnataka setting aside conviction of the respondents and remanding the cases before the Sessions Court for retrial.
The respondents were committed for trial to the Sessions Judge, Metropolitan Area, Bangalore City in number of Ses sions cases including Sessions Case No. 35 of 1980 in re spect of an offence under Sec. 302 for which after trial the respondent Kuppuswamy was sentenced to death and also for offence under Sec.
332 of the Indian Penal Code and sentence of rigorous imprisonment of one year.
Against the conviction and sentences appeal were preferred before Hon 'ble the High Court.
Kuppuswamy 's matter also came before the High Court apart from his appeal also by reference.
The facts which gave rise to these appeals were that about 2 A.M. on 9th April 1980 it was alleged that Kuppuswa my the present respondent stabbed Narayanaswamy who expired at 11 P.M., and also Ramu who expired at 8.05 P.M. and Sunil Kumar, Sub Inspector of Police, who expired at 2.30 A.M. on the next day.
Sunil Kumar and his police party happened to go there in a van on hearing galata in the railway platform of the Cantonment railway station, Bangalore, and when Sunil Kumar caught hold of the wrist of the accused respondent.
298 he somehow managed to slip out and stabbed him.
PW 1 Ulaga nathan, who was the Senior Trains Clerk, went and lodged the First Information Report exhibit
Investigation was taken up and after investigation chargesheet was filed.
It is not necessary for us to go into these question as question involved in these appeals is merely a technical question pertaining to procedure and does not pertain to the merits of the matter.
The accused persons were committed to the Sessions Court, Metropolitan Area, Bangalore City and it appears that the Principal Sessions Judge Metropolitan Area, made over the Sessions case in exercise of his powers under Section 194 of the Code of Criminal Procedure to II Additional Sessions Judge, Metropolitan Area, Bangalore City who framed charges on 21.8.80 and recorded to plea of the accused persons.
On 17th November 1980 City Civil Courts Act came into force.
,Monthly statements of cases wherein the accused persons were in custody were prepared and it appears that these statements also reached the High Court and have been made use of by the learned Judges in disposing of these appeals.
It has been observed by the learned High Court that in the monthly statement of October 1980 Sessions Case No. 35 of 1980 (with which we are concerned) is shown having been pending on the board of II Additional Sessions Judge, Metropolitan Area, Bangalore City and was posted for evi dence.
It is further observed by the learned Judges of the High Court that the statement of November 1980 which was prepared after the Bangalore City Civil Courts Act was brought into force and powers of Sessions were conferred on all the City Civil Judges under Sec.
9(3) Cr.
P.C. by the High Court, this case has been shown as pending before the IV Additional City Civil and Sessions Judge, Metropolitan Area, Bangalore City.
The High Court has also referred to a Notification issued on 30th January 1981 by the Registrar of Bangalore City Civil Courts saying that Sessions cases and other matters pending before the II, III and VI Additional City Civil and Sessions Judges are to be tried by them and on 12th Jan. 1981 the III Additional City Civil and Sessions Judge, Bangalore City recorded the evidence in the case.
It is also observed by the High Court in its judgment that the Office informed the learned Judges that there was no order of transfer under Sec.
407 Cr.
P.C. transferring this case viz. Sessions Case No. 35 of 1980 from the file of the IV Additional City Civil and Sessions Judge to the file of III Additional City Civil and Sessions Judge.
299 Under Sec.
194 Cr.
P.C. the Principal City Civil and Sessions Judge, Metropolitan Area, Bangalore has the power to make over a Sessions case for trial and disposal in accordance with law.
The High Court, it appears, has pro ceeded on the basis that as the plea was recorded when the case was pending before the II Additional City Civil and Sessions Judge, the Sessions Judge could not transfer the case to the board of III Additional City Civil and Sessions Judge under the provisions contained in Sec.
409 clause 2.
The High Court also proceeded on the assumption that there is no order of the Sessions Judge presiding over the Princi pal City Civil Court for allotment of this case to the Court of III Additional City Civil and Sessions Judge.
The learned High Court also came to the conclusion that provisions contained in Sec.
465 also will not remedy the defect.
Consequently the High Court allowed the appeals, quashed the convictions and directed remand for retrial of the cases.
What appears from the judgment of the High Court is that after commitment this case i.e. Sessions Case No. 35 of 1980 was shown in the list of October 1980 as pending in the Court of II Additional Sessions Judge as it was made over to that Court in exercise of powers conferred under Sec. 194 by the Principal Sessions Judge and this also was inferred by the High Court from the fact that the II Additional Sessions Judge framed charges on 21.8.80 in this case and recorded the plea of the accused on the same day.
After the coming into force of the City Civil Courts Act in November 1980, in the list this case was shown to be pending before the IV Additional City Civil and Sessions Judge and what further has been observed by the High Court is that on 12th January 1981 the evidence in the case com menced on the board of III Additional City Civil and Ses sions Judge.
It appears that the learned Judges of the High Court looked into the Notification issued by the Registrar of the City Civil Court and also the list of pending cases pertaining to accused in custody which probably was sent to the High Court every month and also made enquiries from the Office of the High Court as to whether any sessions trial was transferred by orders of the High Court under Sec.
407 but it appears that the learned Judges did not direct to get the orders passed by the Principal Sessions Judge of the Sessions Division under Sec.
194 Cr.
As the Principal Sessions Judge of the Division under Sec.
194 had power to allot any Sessions case to any one of the Additional Ses sions Judges of the Division.
At the same time such orders under Sec. 194 could be passed by the Principal Sessions Judge either for individual cases or by general orders allotting particular 300 areas to particular Additional Judge of the Division.
In fact Sec.
194 contemplates that all the Sessions Judges (Principal and Additionals) who are the Sessions Judges in the Division, have been notified as Sessions Judges in the Division and therefore each one of them has jurisdiction to try the case arising out of an incident in that Division.
What has been observed by the learned Judges of the High Court that this case from IV Additional City Civil and Sessions Judge went to the III Additional City Civil and Sessions Judge for which they could not find any order of transfer passed under Sec.
407 by the High Court but it appears that if enquiries were made it might have been discovered that the case might have been transferred in exercise of powers under Sec. 194 by the Principal Sessions Judge.
The usual practice in big places (Sessions Divisions) where a number of cases are committed and there are number of courts exercising the same jurisdiction in respect of the whole Division, distribution memos are prepared by the Principal Sessions Judge so that cases are so distributed to all the Additional Judges so that they are disposed of expeditiously.
It appears that this aspect of the matter was not brought to the notice of the learned Judges of the High Court even by the counsel appearing for the State.
It is not disputed that the Metropolitan Area, Bangalore City has a Sessions Division and is presided over by a Principal Sessions Judge and has a number of Additional Sessions Judges.
It is also not disputed that all the Ses sions Judges sitting in this Division are notified as Ses sions Judges for the Division and therefore it is also not disputed that all of them have jurisdiction to try a case arising out of the Sessions Division.
Even the judgment of the High Court does not indicate any lack of inherent juris diction.
What has weighed with the High Court is that as the charge was framed by the II Additional Sessions Judge the case could not be transferred to the board of III Additional City Civil and Sessions Judge without an order of transfer by the High Court as it was observed that under Sec. 194 the case could not be withdrawn by the Principal Sessions Judge after commencement of the trial and this was inferred from the provisions contained in Sec.
409 clause reads as under: "Additional and Assistant Sessions Judges to try cases made over to them: An Additional Sessions Judge or Assistant Sessions Judge shall try such cases as the Sessions Judge of the Division may, by general or special order, make over to 301 him for trial or as the High Court may, by special order, direct him to try.
" Sec. 194 authorises an Additional Sessions Judge or an Assistant Sessions Judge to try a Sessions case arising in the Sessions Division when such a case is allotted to him either by a special or general order or a case which has been allotted to him by the High Court.
Apparently therefore the III Additional City Civil and Sessions Judge who tried the case, tried it as it must have been allotted to him.
It is not disputed that it must have been allotted to him as the distribution orders have not been sent for by the High Court nor have been produced nor it is disputed but what is observed by the High Court is that as the charge was framed by the II Additional City Civil and Sessions Judge it could not have been withdrawn under Sec. 409 clause 2 and allotted to any other Additional Sessions Judge: "Section 409 reads: "Withdrawal of cases and appeal by Sessions Judge: (1) A Sessions Judge may withdraw any case or appeal from, or recall any case or appeal which he has made over to any Assistant Sessions Judge; or Chief Judicial Magistrate subordinate to him.
(2) At any time before the trial of the case or the hearing of the appeal has commenced before the Additional Sessions Judge, a Ses sions Judge may recall any case or appeal which he has made over to any Additional Sessions Judge.
(3) Where a Sessions Judge withdraws or re calls a case or appeal under sub section (1) or sub section (2), he may either try the case in his own Court or hear the appeal himself, or make it over in accordance with the provi sions of this Code to another Court for trial or hearing, as the case may be." Clause 2 talks of "before the trial of the case . commenced.
" In fact the scheme of Sec. 409 indicates that the Sessions Judge had powers to withdraw any case and to allot to any one of the Additional Sessions Judges.
In a Sessions trial recording of plea whether will amount to commencement of the trial or not has not been discussed by the High 302 Court and it is not necessary for us also to go into this question.
So far as the trial of the case is concerned it is not found by the High Court that the Sessions Judge who tried the case had no jurisdiction.
On the contrary it is not disputed before us that he had the jurisdiction to try the case arising out of the Sessions Division, the only objection which has prevailed with the High Court is that as charge was framed and plea was recorded by the II Additional City Civil and Sessions Judge it could not have been with drawn by the Principal Sessions Judge and made over to III Additional City Civil and Sessions Judge.
It is not disputed that it was withdrawn and made over.
In this view of the matter therefore the provisions contained it Sec.
465 are of some importance.
The High Court, however, observed that provisions of Sec.
465 Cr.
P.C. can not be made use of to regularise this trial.
No reasons have been stated for this conclusion.
465 Cr.
P.C. reads as under: "Finding or sentence when reversible by reason of error, omission or irregularity: (1) Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered by a Court of appeal, confirmation or revision on account of any error, omission or irregularity in the complaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other pro ceedings under this Code, or any error, or irregularity in any sanction for the prosecu tion, unless in the opinion of that Court, a failure of justice has in fact been occasioned thereby.
(2) In determining whether any error, omission or irregularity in any proceeding under this Code, or any error, or irregularity in any sanction for the prosecution has occasioned a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings.
" It is provided that a finding or sentence passed by a Court of competent jurisdiction could not be set aside merely on the ground of irregularity if no projudice is caused to the accused.
It is not disputed that this question was neither raised by the accused at the trial nor any prejudice was pleaded either at the trial or at the appellate stage and 303 therefore in absence of any prejudice such a technical objection will not affect the order or sentence passed by competent court.
Apart from Sec.
provides for remedy in cases of trial in wrong places.
462 reads as under: "Proceedings in wrong place: No finding, sentence or order of any Criminal Court shall be set aside merely on the ground that the inquiry trial or other proceedings in the course of which it was arrived at or passed, took place in a wrong sessions divi sion, district, sub division or other local are unless it appears that such error has in fact occasioned a failure of justice.
" This provision even saves a decision if the trial has taken place in a wrong Session Division or Sub Division or a district or other local area and such an error could only be of some consequence if it results in failure of justice otherwise no finding or sentence could be set aside only on the basis of such an error.
It is therefore clear that even if the trial before the III Additional City Civil and Sessions Judge would have been in a Division other than the Bangalore Metropolitan Area for which III Additional City Civil and Sessions Judge is also notified to be a Sessions Judge still the trial could not have been quashed in view of Sec. 462.
This goes a long way to show that even if a trial takes place in a wrong place where the Court has no territorial jurisdiction to try the case still unless failure of justice is pleaded and proved, the trial can not be quashed.
In this view of the matter therefore reading Sec.
462 alongwith Sec.
465 clearly goes to show that the scheme of the Code of Criminal Procedure is that where there is no inherent lack of jurisdiction merely either on the ground of lack of territorial jurisdiction or on the ground of any irregularity of procedure an order or sentence awarded by a competent court could not be set aside unless a prejudice is pleaded and proved which will mean failure of justice.
But in absence of such a plea merely on such technical ground the order or sentence passed by a competent court could not be quashed.
It is not disputed that the plea of prejudice or failure of justice is neither pleaded nor proved.
Not only that even the judgment of the High Court does not indicate any possi bility of prejudice or failure of justice.
Learned counsel appearing for the respondent also did not suggest.
any possibility of projudice or failure of justice.
Under these 304 circumstances therefore the view taken by the High Court does not appear to be correct in view of the language of Sec.
462 read with Sec. 465.
The judgment of the High Court is therefore set aside.
The direction of remand made by the High Court is also quashed.
It is unfortunate that these matters pertaining to incidents of 1980 should not have been disposed of till today and that the matter should have remained pending on such technical grounds for all these years.
We therefore direct that the appeals be remitted back to the High Court so that they are heard and disposed of on merits as expeditiously as possible.
P.S.S. Appeal allowed.
|
The case of the respondent accused was committed to the Sessions Court, Metropolitan Area, Bangalore City and made over under section 194 Cr.
P.C. by the Principle Sessions Judge for trial to the II Additional Sessions Judge who framed charges on August 21, 1980 and recorded the plea of the accused persons.
In the monthly statement of October, 1980 the case was shown pending on the board of II Additional Sessions Judge and listed for evidence.
On November 17, 1980 the Bangalore City Civil Courts Act came into force and powers of Sessions were conferred on all the City Civil Judges under s.9(3) Cr.
In the monthly statement prepared thereafter for November, 1980 the case was shown pending before the IV Additional City Civil and Sessions Judge.
However, the evidence in the case was recorded and the respondent accused convicted under s.302 and 332 IPC by the III Additional City Civil and Sessions Judge.
In appeal and reference the High Court looked into the monthly statements of pending cases and observing that there was no order under s.407 Cr.
P.C. transferring the case from the file of the IV Additional City Civil and Sessions Judge to the file of III Additional City Civil and Sessions Judge, that as the charge was framed and plea recorded when the case was pending before the II additional Sessions Judge the case could not be withdrawn by the Principle Sessions Judge under s.409(2) after the commencement of the trial and allotted to any other Additional Sesssion Judge that there was no order of the Principal Session Judge under section 194 transferring the case to the board of III Additional City Civil and Sessions Judge and that the defect could not be remedied under s.465 Cr.P.C., quashed the conviction and directed remand for retrial.
The State came in appeal to this Court.
Allowing the appeal, the Court, 296 HELD: 1.1 The view taken by the High Court was contrary to the language of ss.462 and 465 of the Code of Criminal Procedure.
The judgment of the High Court could not, there fore, be sustained.
[304A] 1.2 Reading section 462 alongwith s.465 goes to show that the scheme of the Code of Criminal Procedure is that where there is no inherent lack of jurisdiction, merely either on the ground of lack of territorial jurisdiction or on the ground of any irregularity of procedure an order of sentence award ed by a competent court could not be set aside unless preju dice is pleaded and proved, which will mean failure of justice.
[303F G] In the instant case, it is not found by the High Court that the Sessions Judge who tried the case arising out of the Sessions Division had no jurisdiction.
The Metropolitan Area, Bangalore City has a Sessions Division and is presided over by a Principal Sessions Judge and has a number of Additional Sessions Judges.
All the Sessions Judges sitting in this Division are notified as Sessions Judges for the Division and, therefore, all of them have jurisdiction to try a case arising out of the Sessions Division.
the plea of prejudice of failure of justice is neither pleaded nor proved.
Not only that, even the judgment of the High Court does not indicate any possibility of prejudice or failure of justice.
There was no suggestion either of any possibility of prejudice or failure of justice.
The order passed by the 1II Additional City Civil and Sessions Judge could not, therefore, be quashed.
[302A C] 2.
Section 462 Cr.
P.C. even saves a decision if the trial has taken place in a wrong Sessions Division or Sub Division or a district or other local area where the court has no territorial jurisdiction, and such an error could only be of some consequence if it results in failure of justice, otherwise no finding or sentence could be set aside only on the basis of such an error.
Therefore, even if the trial before the III Additional City Civil and Sessions Judge would have taken place in a Division other than the Bangalore Metropolitan Area for which III Additional City Civil and Sessions Judge is also notified to be a Sessions Judge, still the trial could not have been quashed in view of s.462.
[303C E] 3.1 The scheme of s.409 indicates that the Sessions Judge had powers to withdraw any case and to allot it to any one of the Additional Sessions Judges.
The Principal Ses sions Judge of the Division under section 194 had power to allot any Sessions case to any one of the Additional Sessions Judges of the Division.
He could pass such orders either for individual cases or allot particular areas to particular Additional Judge of the Division.
[299H; 300A] 297 3.2 The III Additional City Civil and Sessions Judge who tried the instant case apparently tried it as it must have been allotted to him.
The Case must have been allotted to him as the distribution orders have not been sent for by the High Court nor have they been produced.
If enquiries were made it might have been discovered that the case had been transferred in exercise of the powers under section 194 by the Principal Sessions Judge.
[300B C]
|
ivil Appeal No. 161 Of 1986.
From the Judgment and Order dated 17.9.85 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB) (T) 463/84 D. Soli J. Sorabjee, Ravinder Narain, Harish Salve, section Ganesh and P.K. Ram for the Appellant.
B. Datta, Additional Solicitor General, Mrs. Indra Sawhney and Ms. section Relan for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The fate of this appeal under sec tion 35(L) of the , de pends upon the meaning and scope of the Explanation appear ing in section 11A of the Act.
The High Court of Karnataka by its order dated 4.6.1976 in Writ Petition No. 2632 of 1976 gave the following direc tion: 311 "Pending disposal of the aforesaid writ Peti tion, it is ordered by this Court that collec tion of excise duty as a fabric be and the same is hereby stayed.
It is further ordered that the petitioner shall however continue to pay exercise duty as yarn and shall further maintain an account in square metres for future clearance." The said Writ Petition was ultimately dismissed by the High Court on 16.2.
The operative part of the Court 's final order ran thus: "For the reasons aforesaid, we make the fol lowing order: (i) Rule discharged; (ii) We decline to interfere at this stage leaving open to the petitioner to urge all the contentions in reply to the show cause notices.
" On 20th May, 1982, a notice to show cause was issued to the appellant by the Assistant Collector, being Notice No. 913, and with this the Collector sought to raise a demand for the period from 20th June, 1976 to 28th February, 1981 apart from for the period between 1.4. 1975 to 18.8.1975 in respect of which an earlier show cause notice dated 29.1.
1976 had already been issued.
It is not disputed by the Revenue that the appropriate period of limitation to apply to the facts of the case is six months as provided in section 11A of the Act and that the Notice issued on 20th of May, 1982 was beyond that period.
Reliance was placed on the Explanation for obtaining extension of that period.
The Explanation reads thus: "Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be." The provision in the Explanation incorporates a well known principle of law.
Section 15 of the Limitation Act of 1908 (also of Section 15 of the Limitation Act of 1963) incorpo rates the same principle.
This Court in Sirajul Haq Khan & others vs The Sunni Central Board of Waqf, U.P. & others, dealt with the effect of an order of injuc tion in the matter of computation of limitation.
At page 1302 of the Reports, Gajendragadkar, J. as he then was, spoke for the Court thus.
312 "It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order; in other words, the section requires an order or an injunction which stays the institution of the suit.
And so in cases falling under Section 15, the party instituting the suit would by such institution be in contempt of court.
But in our opinion, there would be no justifi cation for extending the application of section 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation . . " In the instant case, the order of stay passed by the Karna taka High Court had only stayed the collection of the excise duty, which is a stage following levy under the scheme of the Act.
Obviously there was no interim direction of the High Court in the matter of issue of notice for the purpose of levy of duty.
The relevant portion of Section 11A provid ed. "(1) When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erro neously been made, requiring him to show cause why he should not pay the amount specified in the notice: (2) The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is served under sub section (1), determine the amount of duty of.excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. ' ' Reference to Section 3 of the Act which contains the charg ing provision clearly shows that levy and collection are two distinct and separate 313 steps.
This Court in N.B. Sanjana, Assistant Collector of Central Excise, Bombay & Ors.
vs Elphinstone Spinning & Weaving Mills Co. Ltd., ; , at page 514 stat ed: " .
The charging provision section 3(i) specifically says "there shall be levied and collected in such a manner as may be pre scribed the duty of excise . . "It is to be noted that sub section (i) uses both the expressions "levied and collected" and that clearly shows that the expression "levy" has not been used in the Act or the Rules as meaning actual collection." The High Court having directed stay of collection had, therefore, not given any interim direction in the matter of issue of notice or levy of the duty.
The Explanation in clear terms refers to stay of service of notice.
The order of the High Court did not at all refer to service of notice.
Therefore, there is force in the submission of the appellant that the benefit of the Explanation is not available in the facts of the case.
No notice seems to have been issued in this case in regard to the period in question.
Instead thereof an out right demand had been served.
The provisions of Section 11A (1) and (2) make it clear that the statutory scheme is that in the situations covered by the sub section (1), a notice of show cause has to be issued and sub section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the mount has to be determined.
The scheme is in consonance with the rules of natural justice.
An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof.
Notice is thus a condition precedent to demand under sub section (2).
In the instant case, compliance with this statutory requirement has not been made, and, there fore, the demand is in contravention of the statutory provi sion.
Certain other authorities have been cited at the hearing by counsel for both sides.
Reference to them, we consider, is not necessary.
The appeal has to be allowed and the demand raised for the period 19.8.1975 to 23.2.1981 has to be set aside.
There shall be no order for costs.
The tax paid, if any, shall be refunded to the appellant.
S.R. Appeal al lowed.
|
A show cause notice dated 29.1.1976 issued by the re spondent to the appellant calling upon him to explain as to why excise duty treating his product as "fabric" and not as "yarn" may not be levied, was challenged in the High Court of Karnataka in Writ Petition No. 2632/ 1976.
Pending final disposal of the writ petition, an interim order staying the collection of excise duty as a "fabric" for the period 1.4.1975 to 18.8.75 alone was passed with a specific direc tion that the appellant should continue to pay excise duty as "yarn".
Finally the writ petition was dismissed on 16.2.1981.
On 20th May, 1982, another notice No. 913 to show cause was issued to the appellant simultaneously seeking to raise a demand for the period from 20.6.1976 to 28.2.1981 apart from for the period between 1.4.1975 to 18.8.1975 challenged in the earlier writ petition.
The Karnataka High Court having rejected the plea of bar of limitation under section 11A of the raised in the writ petition challenging the said second show cause notice and demand, the appellant has come in appeal by way of special leave.
Allowing the appeal, the Court, HELD: 1.1 Section 3 of the Act which contains the charg ing provision clearly shows that levy and collection are two distinct and separate steps.
[312H] 1.2 The provision of section 11A(1) and (2) of the make it clear that the statutory scheme is that in the situations covered by the sub section(1), a notice of show cause has to be issued and sub section(2) requires that the cause shown by way of representation has to be considered by the prescribed au thority and then 310 only the amount has to be determined.
The scheme is in consonance with the rules of natural justice.
An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof.
Notice is thus a condition prece dent to a demand under sub section(2).
In the instant case, compliance with this statutory requirement has not been made, and, therefore, the demand is In contravention of the statutory provision.
[313E G] 2.
Explanation to section 11A of the , which incorporates a well known principle of law, in clear terms refers to 'stay of service of notice '.
The High Court order did not at all refer to service of notice.
The High Court having directed stay of collection of duty as 'fabric ' has not issued any interim direction in the matter of issue of notice of levy of the duty.
Therefore, the benefit of Explanation to section 11A of the Act is not available to the Respondent.
[313C D] Sirajul Haq Khan & Ors.
vs The Sunni Central Board of Waqf, U.P. & Ors.
, ; and N.B. San jane As sistant Collector of Central Excise, Bombay & Ors.
vs El phinstone Spinning & Weaving Mills Co. Ltd., ; , 514 referred to.
|
ivil Appeal No. 1758 of 1986.
From the Judgment and Order dated 22.11.
1985 of the Madras High Court in C.R.P. No. 3117 of 1984.
Dr. Y.S. Chitale, A.V. Rangam, T.V. Ratnam and M. Palani for the Appellant.
K.K. Venugopal, A.T.M. Sampath and section Srinivasan for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant is one of the State Transport Undertakings established in the State of Tamil Nadu.
It has questioned in this appeal by special leave the decision of the High Court of Madras in CRP No. 3117 of 1984 affirming an order granting variation of a permit issued under the provisions of the (here inafter referred to as 'the Act ') by virtue of which the respondent is permitted to run a stage carriage on the route between Checkanurani and Madurai which is a part of a noti fied route Madurai to Kumuli via Checkanurani, Valandur, Usilampatti, and Theni.
Before the High Court the State Transport Appellate Tribunal and the Regional Transport Authority the appellant had pleaded the publication of a draft scheme under section 68 C of the Act on June 4, 1976 in respect of the route Madurai to Kumuli as a bar to the grant of a variation of the permit prayed for by the re spondent.
In this Court the appellant has relied upon the existence of an approved scheme published on June 30, 1976 in respect of the very same route Madurai to Kumuli also as a bar to the order of variation of permit granted in favour of the respondent.
The route is common to both the draft scheme dated June 4, 1976 and the approved scheme dated June 30, 1976.
We shall, however, consider the effect of the approved scheme on the order granting variation of the permit first.
The facts of the case are these.
On June 30, 1976, as stated earlier, the approved scheme was published under section 68 D of the Act in the Tamil Nadu Government Gazette in respect of the route Madurai to Kumuli authorising the appellant to run its stage carriages on that route.
By that approved scheme it was proposed to exclude completely all other persons from operating their stage carriage services under permits covering the entire route, referred to above 394 except those persons mentioned in Annexure II to the said scheme without prejudice to any future modifications, varia tions etc.
of their permits.
The operators whose names had been mentioned in Annexure II to the scheme were persons who were existing operators on the different sectors of the notified route on the date of the publication of the scheme.
The respondent was not one of the those persons who was running a stage carriage service on any part or sector of the route in question on the date of its publication.
Hence, his name was not mentioned in Annexure II to the scheme.
He was then operating a stage carriage service under a permit issued under the Act on the route Batlagundu to Usilampatti which was non scheme route.
On February 28, 1981 he was able to secure the variation of the said permit from the Regional Transport Authority which enabled him tO operate on the route measuring 21.4 Kms.
from Usilampatti to Checkanurani, which formed a sector of the notified route.
The appeal filed against the said order was dismissed and no revision petition was filed against the order dismissing the said appeal.
On 23.12.1982 he obtained from the Regional Trans port Authority a second variation of his permit under which he was authorised to operate his stage carriage service over a distance of 16.6.
from Checkanurani to Madurai which was also a part of the notified route.
An appeal filed against that or& was dismissed by the State Transport Appel late Tribunal.
A revision petition was filed under section 64 B of the Act (as in force in the State of Tamil Nadu) before the High Court.
The High Court dismissed the revision petition.
This appeal by special leave is filed against the above order of the High Court.
As mentioned earlier the appellant pleaded before the High Court that a draft scheme published on June 4, 1976 which was still in force was a bar to the grant of variation of the permit authorising the respondent to operate his stage carriage on a sector of the route in respect of which the scheme had been published.
The High Court was of the view that section 68 F(I D) could not be considered as a bar for entertaining an application for the variation of a permit since such an application was neither an application for a permit nor for its renewal.
In arriving at the said decision it relied upon section 68 F(1 D) of the Act which read as follows: "68 F(1 D).
save as otherwise provided in sub section (lA) or sub section (1 C), no permit shall be granted or renewed during the period intervening between the date of publi cation, under section 68 C of any scheme and the date of publication of the approved or modified scheme, in 395 favour of any person for any class of road transport service in relation to an area or route or portion thereof covered by such scheme . . " It further relied upon a decision of this Court in Karnataka State Road Transport Corporation, Bangalore vs B.A. Jayaram and Others, [1984] 2 S.C.R. 768.
In that case this Court observed at page 789 thus: "Assuming, therefore, that an application for variation of the conditions of a permit re ferred to in sub section (8) of section 57 is to be deemed by a fiction of law to be an application for the grant of a new permit the question to which we must address ourselves is for what purpose is such an application for variation deemed to be an application for grant of a new permit.
Reading sub sections (3) to (8) of section 57 as a whole, it is clear that the only purpose is to apply to such an application for variation the proce dure prescribed by sub sections (3) to (7) of section 57 and not for the purpose of provid ing that when the application for variation is granted, the permit so varied would be deemed to be a new permit.
If a permit so varied were to be deemed to be a new permit, the result would be anomalous.
" From the above observation the High Court deduced that an application for the variation of a permit held by the re spondent was not in fact an application for a permit and did not fall within the mischief of section 68 F(1 D) of the Act.
In the context in which section 68 F(1 D) appears we find it difficult to agree that the application for varia tion of a permit by including the whole or any part of route in respect of which a scheme is published under section 68 C of the Act can be treated as falling outside the mischief of section 68 F(1 D) of the Act.
There is no justification to limit the application of section 68 F(1 D) of the Act to only applications for fresh permits or their renewal and to leave out applications for variation of a permit by the inclusion of the route or a portion of the route in respect of which a scheme is published.
The fact that the applicant is the holder of a permit to operate a stage carriage on another route whose variation he is seeking by the inclusion of a route or a part thereof in respect of which a scheme is published under section 68 C of the Act ought not to make any difference.
The principle underlying section 68 F(1 D) of the Act is that the number of services on such a route should be frozen on the publication of a scheme under sec tion 68 C of the Act.
It is not, however, necessary for us to pursue the applicability of section 68 F(1 D) 396 of the Act to the present case any further since it is brought to our notice that the very same route is the sub ject matter of the approved scheme published under section 68 D of the Act on June 30, 1976 to which we have already adverted.
The approved scheme, as mentioned earlier, ex cludes the operation by others of stage carriage services on the above mentioned route Madurai to Kumuli except those whose names are mentioned in Annexure II attached thereto.
The respondent is not protected by any provision in the approved scheme itself.
He cannot be permitted to operate on any sector of the notified route in question in view of the provisions contained in sections 68 C, 68 D and 68 FF of the Act.
The effect of these provisions has been summarised by a Constitution Bench of this Court in Adarsh Travels Bus Service and Another vs State of U.P. and Others, ; Chinnappa Reddy, J. speaking for the Constitu tion Bench observed at page 566 thus: "7.
A carefully and diligent perusal of Sec tion 68 C, Section 68 D(3) and Section 68 FF in the light of the definition of the expres sion 'route ' in Section 2(28 A) appears to make it manifestly clear that once a scheme is published under Section 68 D in relation to any area or route or portion thereof, whether to the exclusion, complete or partial of other persons or otherwise, no person other than the State Transport Undertaking may operate on the notified area or notified route except as provided in the scheme itself.
A necessary consequence of these provisions is that no private operator can operate his vehicle on any part or portion of a notified area or notified route unless authorised so to do by the terms of the scheme itself.
He may not operate on any part or portion of the notified route or area on the mere ground that the permit as originally granted to him covered the notified route or area.
" In view of the above observation we have to hold that in the instant case the respondent is not entitled to operate his stage carriage on the notified route or a portion there of even though he may have been granted variation of his permit to operate on a sector of the notified route.
We do not agree with the contention urged on behalf of the respondent that on a true construction of the scheme only persons who are operating their stage carriages under permits issued in respect of the entire route from Madurai to Kumuli alone have been excluded 397 under the approved scheme and not those Who are operating between any two places on the notified route or between any place lying outside the notified route and a place on the notified route even though they may be operating on a por tion of the notified route.
We are firmly of the view that on the entire notified route between Madurai and Kumuli or any part thereof apart from the State Transport Undertaking no person other than those mentioned in Annexure II to the approved scheme can operate a state carriage service.
We, therefore, direct the respondent not to operate his stage carriage on the sector in respect of which he has obtained the variation of his permit.
We are informed that the draft scheme published on June 4, 1976 is being considered by the authority concerned under section 68 D of the Act.
It is open to the respondent to make any representation which he is advised to make before the said authority regarding the inconvenience caused to him by reason of the approved scheme referred to above.
The above appeal is, therefore, allowed accordingly.
There is no order as to costs.
A.P.J. Appeal allowed.
|
The appellant is one of the State Transport Undertak ings.
On June 30, 1976 an approved scheme was published under s.68 D of the in respect of the route Madurai to Kumuli authorising the appellant to run its stage carriages and proposing to exclude completely all other persons from operating their stage carriage services under permits covering the entire route except those persons mentioned in Annexure 11 to the scheme, who were existing operators on the different sectors of the notified route on the date of the publication of the scheme.
The respondent 's name was not mentioned in Annexure I1 as he was operating on a non scheme route.
On February 28, 1981 the respondent secured the variation of his permit from the Regional Transport Authority enabling him to operate on a sector of the notified routes.
The appeal against the said order was dismissed and no revision petition was filed against that order.
On December 23, 1982 the respondent obtained from the Regional Transport Authority a second variation of his permit which authorised him to operate his stage carriage service on the route which was also a part of the notified route.
An appeal filed against that order was dismissed by the State Transport Appellate Tribunal.
The High Court dismissed the revision petition taking the view that s.68 F(I D) of the Act could not be considered as a bar for entertaining an application for the variation of a permit since such an application was neither an appli cation for a permit nor for its renewal.
In the appeal to this Court on behalf of the appellant it was 392 contended that a draft scheme published under s.68 C of the Act on June 4, 1976, which was still in force was a bar to the grant of variation of the permit authorising the re spondent to operate his stage carriage on a sector of the route in respect of which the scheme had been published.
On behalf of the respondent it was contended that on a true construction of the scheme only persons who were oper ating their stage carriages under permits issued in respect of the entire route from Madurai to Kumuli alone have been excluded under the approved scheme and not those who were operating between any two $aces on the notified route or between any place lying outside the notified route and a place on the notified route even though they might be oper ating on a portion of the notified route.
Allowing the appeal, HELD: 1.
In the context in which s.68 F(I D) of the appears it is difficult to hold that the application for variation of a permit by including the whole or any part of route in respect of which a scheme is published under s.68 C of the Act can be treated as failing outside the mischief of s.68 F(I D) of the Act.
There is no justification to limit the application of s.68 F(I D) to only applications for fresh permits or their renewal and to leave out their application for variation of a permit by the exclusion of the route or a portion of the route in respect of which a scheme is published.
The fact that the applicant is the holder of a permit to operate a stage carriage on another route whose variation he is seek ing by the inclusion of a route or a part whereof in respect of which a scheme is published under s.68 C ought not to make any difference.
The principle underlying s.68 F(I D) is that the number of services on such a route should be frozen on the publication of a scheme under s.68 C. [395E H] 2.
The approved scheme excludes the operation by others of stage carriage service on the said route except those whose names are mentioned in Annexure II attached thereto.
The respondent is not protected by any provision under the approved scheme itself.
He cannot be permitted to operate on any sector of the notified route in question in view of the provisions contained in s.68 C, 68 D and 68 FF.
[396B C] Karnataka State Road Transport Corporation, Bangalore vs
B.A. Jayaram and Others, [1984] 2 S.C.R. 768 & Adarsh Travels Bus Service and Another vs State of U.P. and Others, ; , referred to. 393
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N: Criminal Appeal No. 516 of 1986 From the Judgment and Order dated 13.6.1986 of the Bombay High Court in Crl.
A.No.90 of 1983.
M.C. Bhandare and Miss C.K. Sucharita for the Appellants.
A.S. Bhasme and A.M. Khamwilka for the Respondent.
The Judgment of the Court was delivered by THAKKAR, J.
'Right ', or 'wrong ', 'guilty ' or 'not guilty ', is not the question.
Whether the learned Single Judge had the 'right ' to hear and decide the appeal and hold that the appellants were guility whilst setting aside their acquittal by the Judgment under appeal 1 is the question which has surfaced in the context of a judgment rendered by a learned Single Judge which according to the relevant rules of the High Court was required to be heard and decided by a Division Bench.
The State of Maharashtra (respondent herein) preferred an appeal to the High Court of Bombay in order to challenge the order of acquittal rendered by the lower Court in favour of the present appellants.
The acquittal was in respect of an offence under Section 7(1) read with Sections 16 and 17 of the Prevention of Food Adulteration _________________________ 1.
Criminal Appeal No. 90 of 1983 decided by the High Court of Bombay (Aurangabad Bench) on June 13, 1986 resulting in the present appeal by special leave.
The offence was punishable with a sentence of imprisonment exceeding two years.2 The appeal was, therefore, required to be heard by a Division Bench of the High Court and not by a learned Single Judge.
Such is the problem that has arisen in the context of Rule 1 read with Rule 2 II(e) of the Bombay High Court Appellate Side Rules, 1960.3 What then is the consequence? Is the order of conviction and sentence recorded by the learned Single Judge who allowed the appeal merely irregular or void? When a matter required to be decided by a Division Bench of the High Court is decided by a learned Single Judge, the judgment would be a nullity, the matter having been heard by a Court which had no competence to hear the matter, it being a matter of total lack of juris _______________________ of the : 16.
PENALTIES: "Subject to the provisions. . he shall, in addition to the penalty to which he may be liable under the provisions of Section 6, be punish able with imprisonment for a term which shall not be less than six months but which may extend to three years, and with fine which shall not be less than one thousand rupees:. . . . " 3.
Rule 1: "The Civil and Criminal jurisdiction of the Court, on the Appellate Side, shall, except in cases where it is otherwise provided for by these rules, be exercised by Division Bench consisting of two or more Judges.
" Rule 2 II(e): "Save as otherwise expressly provided by these 2 rules, a Single Judge may dispose of the following matters: II "Appeals against convictions in which only a sentence of fine has been awarded or in which the sentence of imprisonment awarded does not exceed five years with or without fine, appeals against acquittals wherein the offence with which the accused was charged is one punishable on conviction with a sentence of fine only or with a sentence of imprisonment not exceeding two years or with such imprisonment and fine, and appeals under Section 377 of the Code of Criminal Procedure, revision applications and Court notices for enhancement of sentence for offences punishable on conviction with sentence of imprisonment not exceeding two years or with such imprisonment and fine.
(e) Applications for leave to appeal under Section 378(4) of the Code of Criminal Procedure against acquittals wherein the offence with which the accused was charged is one punishable on conviction with a sentence of fine only or with a sentence of imprisonment not exceeding two years or with such imprisonment and fine." 1007 diction.
The accused was entitled to be heard by at least two learned Judges constituting a Division Bench and had a right to claim a verdict as regards his guilt or innocence at the hands of the two learned Judges.
This right cannot be taken away except by amending the rules.
So long as the rules are in operation it would be arbitrary and discriminatory to deny him this right regardless of whether it is done by reason of negligence or otherwise.
Deliberately, it cannot be done.
Negligence can neither be invoked as an alibi, nor can cure the infirmity or illegality, so as to rob the accused of his right under the rules.
What can be done only by atleast two learned Judges cannot be done by one learned Judge.
Even if the decision is right on merits, it is by a forum which is lacking in competence with regard to the subject matter.
Even a 'right ' decision by a 'wrong ' forum is no decision.
It is non existent in the eye of law.
And hence a nullity.
The Judgment under appeal is therefore no judgment in the eye of law.
This Court in 1982(3) S.C.R. page 81 (State of Madhya Pradesh vs Dewadas & Ors.) has taken a view which reinforces our view.
We, therefore, allow the appeal, set aside the order passed by the learned Single Judge, and send the matter back to the High Court for being placed before a Division Bench of the High Court, which will afford reasonable opportunity of hearing to both the sides and dispose it of in accordance with law, expeditiously.
We wish to add that the Registry of the High Court was expected to have realized the true position and ought not to have created a situation which resulted in waste of court time, once for hearing the appeal, and next time, to consider the effect of the rules.
No Court can afford this luxury with the mountain of arrears which every Court is carrying these days.
M.L.A. Appeal Allowed.
|
The appeal of the State against the order of acquittal of the appellants of an offence under section 7(1) read with sections 16 and 17 of the , punishable with a sentence of imprisonment exceeding two years, was heard and decided by a Single Judge, though under Rule 1 read with Rule 2 H (e) of the Bombay High Court Appellate Side Rules 1960 such an appeal was required to be heard by a Division Bench.
The Single Judge allowed the appeal, held the appellants guilty and set aside the order of acquittal.
Allowing the appeal of the accused appellants, on the question "whether the decision of a Single Judge in a matter required to be decided by a Division Bench was a nullity," ^ HELD: 1.1 When a matter required to be decided by a Division Bench of the High Court is decided by a Single Judge, the judgment would be a nullity, the matter having been heard by a Court which had no competence to hear the matter, it being a matter of total lack of jurisdiction.
[1006C D] 1.2 In the instant case, the accused appellants were entitled to be heard under Rule 1 read with Rule 2 II(e) of the Bombay High Court Appellate Side Rules 1960, by at least two Judges constituting a Division Bench and had a right to claim a verdict as regards their guilt or innocence at the hands of two Judges.
This right cannot be taken away except by amending the rules.
So long as, the rules are in operation it 1005 would be arbitrary and discriminatory to deny them this right regardless of whether it is done by reason of negligence or otherwise.
Negligence can neither be invoked as an alibi nor can cure the infirmity or illegality, so as to rob the accused of his right under the rules.
What can be done only by at least two Judges cannot be done by one Judge.
[1007A C] 2.
Even a 'right ' decision by a 'wrong ' forum is no decision.
It is non existent in the eye of law.
And hence a nullity.
The impugned judgment is no judgment in the eye of law.
It is set aside and appeal remanded to High Court for hearing by a Division Bench.
[1007C D] State of Madhya Pradesh vs Dewadas & Ors.
, [1982] 3 S.C.R. page 81 relied upon.
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: Criminal Appeal Nos.
423 425 of 1986.
From the Judgment and Order dated 4.4.1986 of the Patna High Court in Death Reference No. 3 of 1984 and in Crl.
Appeal No. 676, 647 and 627 of 1984.
R.L. Kohli and S.P. Singh for the Appellants.
Jaya Narayan and D. Goburdhan for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
These appeals by special leave are directed against a common judgment of the Patna High Court rendered in Death Reference 3 of 1984 and Criminal Appeal No. 627,647 and 676 of 1984.
Each of the appellants in the two appeals has been sentenced to death under section 302 read with section 120 B of the Indian Penal Code.
Appellant Yadav has independently been convicted under section 302 of the Code and has been sentenced to death.
He has also been convicted under section 3 of the Explosive Substance Act and has been sentenced to ten years ' rigorous imprisonment.
Two other accused persons who had been put on trial along with the appellants were 408 acquitted by the trial court and their acquittal has become final.
Mahesh Narain Prasad Sharma, the victim, was a Member of the Indian Administrative Service and was posted as Collec tor and District Magistrate of Gopalganj District in the State of Bihar on the 11th of April, 1983 Mahesh Narain went to his court to work in the morning and after he finished his work, both he and his brother, P.W.62, who was waiting in the chamber of the victim started going down from the first floor of the Collectorate to reach the portico where the Collector 's car was parked.
Mahesh Prasad was followed by his Orderly Peon, P.W. 19, and his brother one after the other.
When the deceased came on the landing, Yadav who was following them suddenly took out a bomb from the bag which he held and threw it at the Collector.
The bomb exploded with a loud noise and as a result of the burst Mahesh Prasad fell rolling on the ground and part of his body was blown off.
Yadav jumped off from the stairs through the side railing but was chased by P.W.62 and others and was appre hended near a fruit stall.
He readily confessed to his guilt but gave out that he had committed the ghastly murder at the behest of appellant Tripathi.
According to Yadav, Tripathi had prevailed upon him to kill the Collector by way of retaliation for demolishing the Ashram after getting Tripa thi detained in jail.
Yadav further maintained that Sadiq, one of the accused persons, had supplied the bomb to him.
P.W.14, the Inspector of Police, who was attracted to the scene by the sound of the bomb burst recorded the first information given by P.W.62, arrested Yadav and sent him to Gopalganj Police Station.
At the trial, 75 witnesses were examined for the prose cution.
Out of them, the evidence of 14 had been tendered.
So far as Yadav is concerned, there was direct evidence of his involvement and he had also confessed to his guilt.
Special leave, so far as he is concerned, is limited to the question of sentence.
We have, therefore, heard learned counsel for Yadav on the question of sentence and see no justification to take a view different from what has been said about him by the High Court.
His appeal, therefore, is dismissed and his conviction as also sentence as awarded by the trial court and confirmed by the High Court shall stand.
We shall now deal with the appeal filed by Sadanand Tripathi.
Sadanand came from a poor family and started his career as a Bus Conductor.
While in employment, he obtained the Degree in Law and started practice as a lawyer in Uttar Pradesh for some time.
Thereafter, he started giving reli gious discourses and styled himself as Sant 409 Gyaneshwar Maharaj.
He tried to make his followers believe that he had seen God and if they followed him and his preachings, they too could see God.
Soon he picked up con siderable following.
He used to tell his followers that they should surrender their body, wealth and mind so that the prospect of seeing God would be bright.
He encroached upon a plot of Government land and built his Ashram thereon.
As he had easy access to resources, the Ashram got fitted with all modern amenities.
Soon his followers, however, started realizing that they had been duped and tricked and began to withdraw from him.
Sadanand had employed a band of muscle men to carry out his nefarious designs.
His followers often became apprehensive of their own security and approached the local authorities for protection.
The Ashram, as the prose cution has tried to show, turned into a den of criminals.
Ultimately the authorities raided the Ashram, recovered bombs and several other objectionable articles therefrom.
Sadanand and many others were taken into custody on 10.7.1982.
The deceased, Mahesh Prasad, who was Collector of Gopalganj made an order under the Crime Control Act detain ing Sadanand in jail.
Eviction proceedings from the en croached land had already been undertaken.
On 14.7.1982 the Commissioner dismissed the appeal filed on behalf of the Ashram and on 15th July, 1982, the entire structure of the Ashram was demolished under the direct supervision of the Collector.
It is not disputed that from th July, 1982 Sadanand had continuously been detained in jail till the Collector 's murder on 11.4.1983.
In view of this fact, the prosecution has relied upon the allegation of conspiracy, confession and other features to establish the complicity of Sadanand in the murder of the Collector.
There are two confessions a judicial confession before a Magistrate, being Exhibit 44 and the other is extra judi cial confession.
Dealing with Exhibit 44, the High Court has observed: "So far as the confession before the Magis trate, Exhibit 44, is concerned, the trial court has itself, hesitatingly, accepted the same.
From the confession I find that it was in the nature of the cross examination which is not permissible under the law and has been depricated by the Supreme Court and different courts of the country.
Mr. Pandey, learned counsel appearing on behalf of the State, has fairly submitted that Exhibit 44 cannot be used in this case.
Therefore, it has to be excluded from consideration.
" 410 Before us Mr. Jai Narain for the State initially placed reliance on the confession but later conceded that apart from what the High Court has observed with regard to the confession, it appeared to be exculpatory in nature and, therefore, would not be admissible against the co accused.
In these circumstances, the judicial confession has to be kept out of considerations.
Coming to the extra judicial confession it has to be remembered that the same related to the point of time con temporaneous to the incident.
There is evidence that Yadav was beaten up badly after being apprehended by the mob soon after the bomb burst.
Several prosecution witnesses have spoken about Yadav confession before them.
There is clear material that Yadav was man handled.
P.W.3 has stated: "He was held by me and other persons chasing him.
We began to assault him and make en quiries from him.
Then the said person himself said, 'why you people are assaulting me.
I have killed the Collector by bomb at the orders of Guru Sant Gyaneshwar and one bomb has been left in the Jhola".
P.W. 10 stated: "The people who caught of him began to assault him and began to ask him why has he killed the Collector.
On being asked, he replied that he had killed the Collector under the orders of Baba . . . " P.W. 11 stated: "On being caught hold of, he was assaulted with slaps, fists and asked as to why he did so.
On being asked, the said person replied that he had hit the Collector by bomb at the orders of Guru.
" Several other witnesses have also spoken in the same trend about Yadav being assaulted by the angry mob soon after his apprehension.
It is a fact that a set of witnesses who, according to the prosecution, were present when Yadav was taken into custody following the incident, have not spoken about any confession.
They are P.Ws. 5, 12, 15, 40 and 57.
In his own statement recorded under section 164 of the Code on 13.4.1983, Yadav denied to have made any statement fol low 411 ing his apprehension.
Even accepting the prosecution story that Yadav made this statement, he appears to have made the statement following assault on him.
Even if it is accepted that Yadav has made the statements as alleged, can the same be utilised against Sadanand is the next aspect for consid eration.
Obviously, when Yadav was beaten up, he must have been anxious to ensure that the assault stopped.
His plea in such a situation would neither be voluntary nor natural.
It would not be proper to rely upon the same for any purpose.
It is well settled that the confession of a co accused is not substantive evidence against other co accused persons in the same trial.
As this Court pointed out in Kashmira Singh vs State of Madhya Pradesh, ; the confes sion of a co accused is not substantive evidence against the other accused persons at the trial but could only be used for lending reassurance if there by any other substantive evidence to be utilised or acted upon.
In Hari Charan Kurmi & Anr.
vs State of Bihar, ; this Court observed: "Thus, the confession may be regarded as evidence in that generic sense because of the provisions of section 30, the fact remains that it is not evidence as defined by section 3 of the Act.
The result, therefore, is that in dealing with a case against an accused person, the Court cannot start with the con fession of a co accused person; it must begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence." ". . . that the confession of a co accused person cannot be treated as substantive evidence and can be pressed into service only when the court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of its conclusion deducible from the said evidence .
" It is now to be found out if apart from the confession there is any substantive evidence from which the prosecution can have support for its case.
According to the prosecution, Yadav was staying with 412 Sadanand in the Ashram.
Learned counsel for Sadanand has argued that the prosecution evidence on this score should be rejected as when on 10th July, 1982 Sadanand was taken into custody following the raid on the Ashram, Yadav was not found there.
Again on the 15th when the Ashram was demol ished and most of the inmates were taken into custody, Yadav was not arrested.
Several other witnesses were examined to show that Yadav was very close to Sadanand.
But as has been rightly pointed out the source of their knowledge appeared to be statement of Yadav and independently they had no personal knowledge of the fact.
Prosecution sought to place reliance upon motive.
Un doubtedly, Sadanand must have had grudge against the Collec tor for his detention as also for the demolition of the Ashram.
As a matter of fact, that must have been the common reaction of all the ashramites including Yadav and Sadiq.
Thus, this could not be a feature to supply the link for establishing conspiracy.
Prosecution also relied upon a feature, which if accept ed, could provide some link between the two for the commis sion of the offence.
According to the prosecution, Yadav was regularly visiting Sadanand at the jail.
The jail records do not support such visits.
According to the prosecution case, Yadav was bribing the jail officials for meeting Sadanand.
The prosecution has further led evidence to show that after the arrival of Sadanand at the jail, enforcement of rules became slack and there was a regular flow of food from outside.
Jail officials were also entertained by Sadanand.
This type of evidence, even if accepted, does not establish conspiracy because Yadav, being a follower, was likely in the usual course to meet Sadanand and the fact that they were meeting at regular intervals by itself would not estab lish conspiracy.
Prosecution relied on an event of 11th April, 1983 by examining P.W.4.
This witness who was a convict staying in the same jail stated that his wife had an interview with him in the jail by paying bribe of Rs.2 or Rs.3 on 11.4.1983.
While he was talking to his wife, he saw accused Yadav talking to Sadanand.
He over heard Yadav telling Tripathi that his work would be done within an hour or so.
Sadanand appeared to be happy on being told so.
P.W.4 has admitted that he has been convicted in three cases of murder and several dacoities.
It appears that by then he had some pending cases against him where final reports were later given by the police.
His wife who was a material witness has not been examined in the case.
413 Obviously, as the jail records did not show that P.W.4 had an interview with his wife that day, the story of brib ing the jail officials has been introduced.
We are prepared to accept the criticism of counsel for the appellant that if the wife had been called she would not have supported the version that she met her husband P.W.4 on that day.
Adverse inference for not examining the wife has to be drawn against the prosecution.
This would thus be the net position.
It is true as argued by Mr. Jai Narain for the State that it is difficult to support the charge of conspiracy with direct evidence in every case but if the prosecution relies upon circumstantial evidence, a clear link has to be established and the chain has to be completed, otherwise it would indeed be hazardous to accept a part of the link as a complete one and on the basis of such incomplete evidence, the allegation of conspiracy cannot be accepted.
Keeping the nature of the offence in view and the conclusions drawn by the High Court, we have not been able to agree with the High Court that the prosecution has established by circumstantial evidence the complicity of Sadanand in the conspiracy to kill the Collector through Yadav.
In these circumstances, Sadanand has become entitled to the benefit of our doubts and his conviction is not sustainable.
His appeal has to be allowed.
He is acquitted and is directed to be set at liber ty forthwith.
Before we part with the case, we must point out that in a case involving the killing of the District Magistrate in his office, better investigation was expected and the State should have taken great care to ensure that every loophole in the investigation was plugged at the fight time in ac cordance with law.
It is unfortunate that lapses have oc curred.
P.S.S. Appeals dis posed of.
|
The appellants were alleged to have conspired to kill the Collector cure District Magistrate.
The latter died in a bomb attack by the first accused appellant.
He was caught red handed and when given a beating by eye witnesses he readily confessed to his guilt, but gave out that he had committed the ghastly murder at the behest of the second appellant, who was at that material time detained in jail.
He made a similar confession before the Magistrate.
They were both convicted under s.302 read with section 120B of the Indian Penal Code and sentenced to death.
Their sentence was confirmed by the High Court.
Disposing of the appeals, this Court, HELD: 1.
There was direct evidence of first appellant 's involvement in the crime and he had also confessed to his guilt.
There was, therefore, no justification to take a view different from what has been said about him by the High Court.
His conviction as also sentence shall stand.
[408F G] 2.1 The prosecution has failed to establish by circum stantial evidence the complicity of the second appellant in the conspiracy to kill the Collector through the first accused.
He was, therefore, entitled to the benefit of doubt and his conviction was not sustainable.
[413D] 406 2.2 Where the prosecution relies upon circumstantial evidence to support the charge of conspiracy, a clear link has to be established and the chain has to be complete, otherwise it would indeed be hazardous to accept a part of the link as the complete one.
On the basis of such incom plete circumstantial evidence, the allegation of conspiracy cannot be accepted.
[413C] 3.1 The confession of a co accused is not substantive evidence against other co accused persons in the same trial but could only be used for lending reassurance if there be any other substantive evidence to be utilised or acted upon.
[411C] Kashmira Singh vs State of Madhya Pradesh, ; and Hari Chand Kurmi & Anr.
vs State of Bihar, ; , referred to. 3.2 The judicial confession of the main accused in the instant case was exculpatory in nature and, therefore, would not be admissible against the co accused.
It has, to be kept out of consideration.
[410A B] 3.3 The extra judicial confession of the main accused relates to the point of time contemporaneous to the inci dent.
There was evidence that he was beaten up badly after being apprehended by the mob soon after the bomb burst.
Several prosecution witnesses have spoken about his confes sion before them.
There was clear material that he was manhandled.
[410B C] 3.4 In his statement recorded under s.164 of the Code on 13.4.1983, the main accused denied to have made any state ment following his apprehension.
Even accepting the prosecu tion story that he made this statement, he appears to have made the statement following assault on him.
Even if it is accepted that he has made the statements as alleged, the same cannot be utilised against the co accused.
Obviously when the accused was beaten up, he must have been anxious to ensure that the assault stopped.
His plea in such a situa tion would neither be voluntary nor natural.
It would not be proper to rely upon the same for any purpose.
[410H; 411A B] 4.
The 2nd appellant might have had grudge against the Collector for his detention as also for the demolition of his Ashram.
That must have been the common reaction of all the ashramites, including the co accused.
This could not, therefore, be a feature to supply motive for establishing conspiracy.
[412C D] 407 5.1 Several witnesses were examined to show that the main accused was very close to the co accused.
But the source of their knowledge appeared to be statement of the main accused and independently they had no personal knowl edge of the fact.
[412B C] 5.2 P.W.4, who testified that during his interview with his wife in the same jail, he had overheard the alleged conversation between the accused and the 2nd appellant, was himself a convict in three cases of murder.
His wife, who was a material witness has not been examined in the case.
Adverse inference, has to be drawn against the prosecution for not doing so.
[413A B] 5.3 This type of evidence, even if accepted, does not establish conspiracy because the accused being a follower of the 2nd appellant, a religious preacher, he was likely in the usual course to meet the latter and the fact that they were meeting at regular intervals by itself would not estab lish conspiracy.
[412F]
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Appeal No. 328 of 1960.
Appeal from the order dated March 4, 1958, of the Punjab High Court, Chandigarh, in Civil Reference No. 29 of 1952.
A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant.
Hardyal Hardy and D. Gupta, for the respondent.
December 6.
The Judgment of the Court was delivered by SHAH, J.
The Income Tax Appellate Tribunal, Delhi Bench, stated under section 66(1) of the Indian Income Tax Act the following question for decision of the High Court of Judicature at Chandigarh: "Whether the assessee 's receipts from consumers for laying service lines, (that is, not distributing mains) were trading receipts and whether the profit element therein, viz., service connection receipts minus service connection cost was taxable income in the assessee 's hands?" The High Court answered the question as follows: ". the company 's receipts from the consumers for laying the service lines are trading receipts and 958 the profit element therein being the difference bet ween the service connection receipts and the service connection costs is taxable income in the hands of the company." With certificate granted under section 66A(2) of the Income Tax Act, this appeal is preferred by the Hoshiarpur Electric Supply Company hereinafter referred to as the assessee.
The assessee is a licensee of an electricity undertaking.
In the year of account, April 1, 1947March 31, 1948, the assessee received Rs. 12,530 for new service connections granted to its customers.
Out of this amount, Rs. 5,929 were spent for laying the service lines, and Rs. 1,338 were spent for laying certain mains.
The Income Tax Officer treated the entire amount of Rs. 12,530 as trading receipt.
In appeal to the Appellate Assistant Commissioner, the cost incurred for laying service lines and mains was excluded and the balance was treated as taxable income.
In appeal, the Appellate Tribunal agreed with the Appellate Assistant Commissioner and held that the service connection receipts were trading receipts and that the "profit element" therein was taxable income in the hands of the assessee.
In a reference under section 66(1) of the Income Tax Act, the High Court substantially agreed with the view of the Tribunal.
The assessee has installed machinery for producing electrical energy and has also laid mains and distributing lines for supplying it to its customers.
The assessee makes no charge to the consumers for laying service lines not exceeding 100 ft.
in length from its distributing main to the point of connection on the consumer 's property in accordance with cl.
6(1)(b) of the Schedule to the .
But where the length of a service line to be installed exceeds 100 ft., the cost is charged at certain rates by the assessee.
The charge consists usually of cost of wiring copper as well as galvanised iron, service and other brackets, insulators, meter wiring, poles and appropriate labour and supervision charges.
In the year of account, the assessee gave 229 new connections 959 and received Rs. 12,530 out of which Rs. 5,929 have been regarded as taxable income.
In the forms of account prescribed under the Indian Electricity Rules framed under section 37 read with section 11 of the , the assessee credited service connection receipts to the revenue account and debited the Inc, corresponding cost of laying service lines to the capital account.
But the classification of the receipts in the form of accounts is not of any importance in considering whether the receipt is taxable as revenue.
The assessee contended that the service lines when installed became the property of the assessee, because they were in the nature of an extension of the assessee 's distributing mains.
On behalf of the Revenue, it was urged relying upon the judgment of the High Court that the service lines which are paid for by the consumers do not become the property of the assessee.
We do not think that it is open to us in an appeal from an order under section 66 of the Indian Income Tax Act to enter upon this question.
The Tribunal did not record a finding on the question whether the assessee was the owner of the service lines.
Undoubtedly, contributions were made by the consumers towards the cost of the service lines installed by the assessee which exceeded 100 ft. in length.
Normally, a person who pays for installation of property may be presumed to be the owner thereof; but such a presumption cannot necessarily be made in respect of a service line, which so long as it is used for supplying electrical energy remains an integral part of the distri buting mains of an electrical undertaking.
The High Court was exercising advisory jurisdiction, and the question as to who was the owner of the service lines after they were installed could be adjudicated upon only by the Tribunal.
It was for the Tribunal to record its conclusion on that question, but the Tribunal has recorded none.
In our judgment, the High Court was in error in assuming to itself jurisdiction substantially appellate in character and in proceeding to decide the question as to ownership of the service lines which is a mixed question of law and fact, on which the Tribunal has given no finding.
960 The assessee contended that the amount paid by the consumers for new connections is capital receipt and not liable to tax, because the amount is paid by the consumers towards expenditure to be incurred by the assessee in laying new service lines an asset of a lasting character.
This question falls to be determined in the light of the nature of the receipt irrespective of who remained owner of the materials of the service lines installed for granting electrical connections to new customers.
The assessee only spends a part of the amount received by it from the consumers.
It is not clear from the statement of the case whether amongst the 229 new connections given, there were any which were of a length less than 100 ft. Payments received by the assessee must of course be for service lines installed of length more than 100 ft., but it is not clear on the, record whether the expenditure of Rs. 5,929 incurred by the assessee is only in respect of service lines which exceeded 100 ft.
in length or it is expenditure incurred in respect of all service lines.
It is however not disputed that a part of the amount received from the consumers remains with the assessee after meeting the expenses incidental to the construction of the service lines.
But an electric service line requires constant inspection and occasional repairs and replacement and expenses in this behalf have to be undertaken by the assessee.
The amount contributed by the consumer for obtaining a new connection would of necessity cover all those services.
The amount contributed by the consumer is in direct recoupment of the expenditure for bringing into existence an asset of a lasting character enabling the assessee to conduct its business of supplying electrical energy.
By the installation of the service lines, a capital asset is brought into existence.
The contribution made by the consumers is substantially as consideration for a joint adventure; the service line when installed becomes an appanage of the mains of the assessee, and by the provisions of the Electricity Act, the assessee is obliged to maintain it in proper repairs for ensuring efficient supply of energy.
The assumption made by the 961 Department that the excess remaining in the hands of the assessee, after defraying the immediate cost of installation of a service line must be regarded as a trading profit of the company is not correct.
The assessee is undoubtedly carrying on the business of distributing electrical energy to the consumers.
Installation of service lines is not an isolated or casual act; it is an incident of the business of the assessee.
But if the amount contributed by the consumers for installation of what is essentially reimbursement of capital expenditure, the excess remaining after expending the cost of installation out of the amount contributed is not converted into a trading receipt.
This excess which is called by the Tribunal "profit element" was not received in the form of profit of the business; it was part of a capital receipt in the hands of the assessee, and it was not converted into a trading profit because the assessee was engaged in the business of distribution of electrical energy, with which the receipt was connected.
In Commissioner of Income tax vs Poona Electric Supply Co. Ltd. (1), it was held by a Division Bench of the Bombay High Court that the amount received from the Government of Bombay by the Poona Electric Company in reimbursement of expenses incurred for constructing new supply lines for supplying energy to new areas not previously served, was a capital receipt and not a trade receipt.
The question of the taxability of the "profit element" in the contribution received from the Government was not expressly determined; but the court in that case held that the entire amount received by the Poona Electric Company from the Government as contribution was a capital receipt.
In Monghyr Electric Supply Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa (2), it was held that the amount paid by consumers of electricity for meeting the cost of service connections was a capital receipt in the hands of the electricity undertaking and not revenue receipt and the difference between the amount received on account of service connection charges and (1) (2) 962 the amount immediately not expended was not taxable as revenue.
The receipts though related to the business of the assessee as distributors of electricity were not inciden t nor in the course of the carrying on of the assessee 's business; they were receipts for bringing into existence capital of lasting value.
Contributions were not made merely for services rendered and to be rendered, but for installation of capital equipment under an agreement for a joint venture.
The total receipts being capital receipts, the fact that in the installation of capital, only a certain amount was immediately expended, the balance remaining in hand, could not be regarded as profit in the nature of a trading receipt.
On that view of the case, in our judgment, the High Court was in error in holding that the excess of the, receipts over the amount expended for installation of service lines by the assessee was a trading receipt.
The appeal is allowed and the question submitted to the High Court is answered in the negative.
The assessee is entitled to its costs in this court as well as in the High Court.
Appeal allowed.
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The assessee, an electricity supply undertaking, received certain sum of money for new service connections granted to its customers.
Part of this amount was spent for laying mains and service lines.
The Income tax Officer treated the entire amount as trading receipt.
In appeal the Appellate Assistant Commissioners excluded the cost of laying service lines and the mains and treated the balance as taxable income.
The Appellate Tribunal agreed with the Appellate Assistant Commissioner and held that the service connection receipts were trading receipts and the "profit element" therein was taxable income in the hands (1)[1929] A.C. 386; 957 of the assessee.
In a reference under section 66(1) of the Income tax Act, the High Court substantially agreed with the view of the Tribunal.
On appeal by the assessee, Held, that the High Court erred in holding that the excess of the receipts over the amount spent by the assessee for installation of service lines was a trading receipt.
The receipts though related to the business of the assessee as distributors of electricity were not incidental to nor in the course of the carrying on of the assessee 's business.
They were receipts for bringing into existence capital of lasting value.
The total receipts being capital receipts the balance remaining after a part thereof was expended for laying service lines and mains, could not be regarded as 'profit ' in the nature of a trading receipt.
Commissioner of Income tax vs Poona Electric Supply Co. Ltd., and Monghyr Electric Supply Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa, , discussed and applied.
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Appeals Nos.
34 to 36 of 1962.
Appeals from the judgment and order dated March 25, 1958, of the Madras High Court in Case Referred No. 12 of 1954.
K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant.
R. Gopalakrishnan, for the respondent.
March 26.
The judgment of the Court was delivered by HIDAYATULLAH J.
The High Court of Madras in a Reference under s.66 (1) of the Indian Income Tax Act, answered in the negative the following question: "Whether there was material for the Appellate Tribunal to hold that the income arising to Mrs. C.M. Kothari and Mrs. D. C. Kothari from the property arose indirectly out of the 533 assests transferred indirectly by their husbands so as to attract the provisions of s.16 (3)(a)(iii).
" In our opinion, these appeals by the Commissioner of Income tax.
, Madras, must be allowed.
Messrs Kothari and Sons is a firm of stock brokers.
In 1947, the firm consisted of C.M. Kothari and his two sons, D. C. Kothari and H. C. Kothari Their respective shares were 6 : 5 : 5.
On October 7, 1947, the firm entered into an agreement for the purchase of a house in Sterling Road, Madras, for Rs.90,000, and the same day paid an advance of s.5,000.
This sum was debited in the books of the firm to the accountsof the three partners as follows: C. M. Kothari Rs.1,800 D. C. Kothari Rs.1,600 H. C. Kothari Rs.1,600 Total.
Rs.5,000 The transaction was completed on October 24, 1947.
The sale deed, however, was taken in the names of Mrs. C.M. Kothari Mrs. D.C. Kothari and H.C. Kothari.
The balance of the consideration was paid to the vendors by the firm.
Each of the two ladies paid to the firm a cheque of Rs.28,333 5 4.
Mrs. C.M. Kothari further paid a cheque of Rs. 1,800, and Mrs. D.C. Kothari paid another cheque of Rs. 1600 Thus the two ladies paid one third share of Rs.85,000 and the amounts which were respectively paid by their husbands as part of the earnest money.
H.C. Kothari was debited with a further sum of Rs.28,333.5 4.
In this way, Mrs. C. M. Kothari pad Rs.200 more than the other two, because her husband had previously paid Rs.200 more than his sons.
The share of the three vendees was however, Shown to be one third each.
534 The ladies issued the cheques on their accounts into which were paid by the firm, certain amounts by cheques.
Into Mrs. C.M. Kothari 's account was paid an amount of Rs.27,000 which was debited on October 24, 1947 to D.C. Kothari.
It was stated to be a birthday gift by him to his mother.
On November 13, 1947, another amount of Rs. 3,000 was paid into Mrs. C. M. Kothari 's account which was debited to the account of D. C. Kothari as a gift by him to his mother for Dewali.
Similarly, on November 13, 1947 Mrs. D. C. Kothari 's account with the bank was credited with a sum of Rs.30,000 by a cheque issued by the firm.
This was debited to the account of C, M. Kothari and was shown as a gift by him to his daughter in law.
In this way both the ladies received from the firm Rs. 30,000 which was the exact one third share of the consideration of Rs.90,000, but the amount was not paid by their respective husbands, but by the son in one case, and the father in law,, in the other.
In the assessment years 1948 49, 1950 51 and 1951 1952, the Income Tax Officer assessed the incomefrom the one third share of the house received by Mrs. C.M.Kothari as the income of her husband.
Similarlyin the four assessment years 1948 49 to 1951 52, the income of Mrs. D. C. Kothari from this house was assessed as the income of her husband.
This was on the ground that because of the interchange of the money in the family, either the purchases were made by the donors benami in the names of the donees, or alternatively, from assets transferred indirectly by the husband to the wife in each case.
The Income Tax Officer pointed out that the birthday of Mrs. C. M. Kothari had taken place earlier in the year and there was no occasion to give a birthday present to her several months later and on a date coinciding with the purchase of this property.
The Income Tax Officer also found that in the past, the father in law bad never given 535 such a big present to his daughter in law on Dewali and this time there was no special circumstance to justify it.
The appeals of the assessee to the appellate Assistant Commissioner failed as also those filed before the Tribunal.
The Tribunal, however, did not hold that the transaction was benami, but confirmed the other finding that the two ladies bad acquired their share in the house out of assets of the husbands indirectly transferred to them.
The Tribunal, how ever, stated a case for the opinion of the High Court, and the High Court answered the question in the negative.
As the question whether the two transactions were benami does not fall to be considered, the only question that survives is whether this case is covered Sy s.16 (3) (a) (iii).
This section reads as follows: "16(3).
In computing the total income of any individual for the purpose of assessment, there shall be included (a)So much of the income of a wife. of such individual as arises directly or indirectly (iii)From assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart;" The section takes into account not only transference of assets made directly but also made indirectly.
It is impossible to state here what sorts are covered by the word indirectly ', because such transfers may, be made in different ways.
It is argued that the first requisite of the section is that the assets must be those of the husband and 536 that is not the case here.
It is true that the section says that the assets must be those of the husband, but it does not mean that the same assets should reach the wife.
It may be that the assets in the course of being transferred, may be changed deliberately into assets of a like value of another person, as has happened in the present case.
A chain of transfers, if not comprehended by the word "Indirectly ' would easily defeat the object of the law which is to tax the income of the wife in the hands of the husband, if the income of the wife arises to her from assets transferred by the husband.
The present case is an admirable instance of how indirect transfers can be made by substituting the assets of another person who has benefited to the same or nearly the same extent from assests transferred to him by the husband.
It is next contended that even if chain transactions be included, then, unless there is consideration for the transfer by the husband, each transfer must be regarded as independent, and in the present case, the Department has not proved that the transfers by the son to the mother and by the father in law to his daughter in law were made as consideration for each other.
We do not agree.
It is not necessary that there should be consideration in the technical sense.
If the two transfers are inter connected and are parts of the same transaction in such a way that it can be said that the circuitous method has been adopted as a device to evade implications of this section, the case will fall within the section.
In this case, the device is palpable and the two transfers are so intimately connected that they cannot but be regarded as parts of single transaction.
It has not been successfully explained why the father in law made such a big, gift to his daughter in law on the occasion of Diwali and why the son made a belated gift, equally big, to his mother on the occasion of her birthday which took place several months before.
These two gifts match each other as regards the amount, The 537 High Court overlooked the clear implication of these fact as also the Implication of the fact that though the three purchasers were to get one third share each, Mrs. C. M. Kothari paid Rs. 200 more than the other two and that each of the ladies re paid the share of earnest money borne by their respective husbands.
An intimate connection between the two transactions, which were primafacie separate, is thus clearly established and they attract the words of the section, namely, "transferred directly or indirectly to the wife".
In our opinion, the High Court was in error in ignoring these pertinent matters.
The High Court also overlooked the fact that the purchase of the house at first was intended to be in the names of three partners of the firm.
No evidence was tendered why there was a sudden change.
It is difficult to see why the ladies were named as the vendees if they did not have sufficient funds of their own.
They could only buy the property if some one gave them the money.
It is reasonable to infer from the facts that before the respective husbands paid the amounts, they looked up the law and found that the income of the property would still be regarded as their own income if they transferred any assets to their wives.
They hit upon the expedient that the son should transfer the assets to his mother, and the father in law, to the daughterin law, obviously failing to appreciate that the word "indirectly ' is meant to cover such tricks.
The appeals must, therefore, succeed.
The answer of the High Court is vacated, and the question, answered in the affirmative.
The respondent shall bear the costs of these appeals as also the costs in the High Court.
One hearing fee.
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Messrs Kotbari and Sons is a firm of stock brokers.
The firm consisted of Shri C. M. Kothari and his two sons, Shri D. C. Kothari and Shri H. C. Kothari.
The firm entered into an agreement for the purchase of a house and the earnest money was paid by it.
Later on, the house was bought in the name of Mrs. C. M. Kothari, Mrs. D. C. Kothari and Shri H. C. Kotliari.
The house was bought for Rs. 90,000/ and both Mrs. C. M Kothari and Mrs. D. C. Kothari received Rs. 30,000 each from the firm.
In the case of Mrs. C. M. Kothari, she got that amount in the form of birthday gift and Diwali gift from her son, D. C. Kothari.
Mrs. D. C. Kothari also received Rs. 30,000 from the firm as a gift from Shri C. M. Kothari, her father in law.
The Income tax Officer assessed the income of Mrs. C. M. Kothari and Mrs. 1).
C. Kotliari from the said house as the income of their husbands.
The appeals of the assessees were dismissed by the Appellate Assistant Commissioner and the Tribunal.
The Tribunal confirmed the finding of the Income Tax Officer that the two ladies had acquired their shares in the house out of the assets of their husbands indirectly transferred to them.
However, the Tribunal did not hold that the transaction was benami.
The Tribunal referred the case to the High Court for opinion whether the income arising to Mrs. C. M. Kotbari and Mrs. D. C. Kothari from the property arose out of the assets transferred indirectly by their husbands so as to attract the provisions of section 16 (3) (a) (iii) of the Income tax Act, 1922.The High Court answered the reference in the negative.
The Commissioner of Income tax, Madras, came to this Court in appeal.
532 Held that the answer given by the High Court must be set aside and the reference made by the Tribunal must be answered in the affirmative.
The object of law is to tax the income of the wife in the hands of the husband if the income of the wife arises to her from assets transferred to her by her husband.
In the present case, the son transferred the assets to his mother and the father in law transferred his assets to his daughter in law.
The term "indirectly" is intended to cover such tricks.
If two transfers are inter connected and are parts of the same transaction in such a way that it can be said that a circuitous method has been adopted as a device to evade the implications of section 16 (3) (a) (iii), the case will fall within this section.
In the present case, the device is palpable and the two transferrers are so intimately connected that they cannot but be regarded as a part of a single transaction.
It was not successfully explained why the father in law made a big gift to his daughter in law and the son made an equally big gift to his mother.
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Criminal Appeal No. 152/59.
, xi Appeal by Special leave from the judgment and Order dated May 12, 1959 of the Allahabad High Court in Criminal Revision No. 1182 of 1957.
Nur ud din Ahmed, J.,B. Dadachanji, O. C. Mathur, and Ravindar Narain for the Appellants.
852 G. C. Mathur and C.A. Lal for the Respondent.
May 3.
The Judgment of the Court was delivered by KAPUR, J.
The appellants are father and son carring on business in vegetable ghee at Aligarh.
They along with Romesh, the second son of appellant Jagannath Prasad were prosecuted under section 14 (d) of the U. P. Sales Tax Act, 1948 (U.P. 15 of 1948) hereinafter called the 'Act ' and under section 471 read with section 468 and section 417 of the Indian Penal Code.
They were all acquitted of the charge under section 468.
Jagannath Prasad was convicted under section 471 and 417 of the Indian Penal Code and a. 14 (d) of the Act and was sentenced to two years ' rigorous imprisonment under a. 471, to one years ' rigorous imprisonment and a fine of Rs. 1,000/ under section 417 and to a fine of Rs. 1,000 under section 14 (d) of the Act.
Bhagwan Das was convicted under section 14 (d) of the Act and sentenced to a fine of Rs. 1, 000/ .
Romesh was acquitted.
The sentences passed on Jagannath Prasad were.
concurrent.
Their 'appeal to the Sessions Judge was dismissed and in revision to the High Court Jagannath Prasad was acquitted of the offence under a. 417 of the Indian Penal Code but the other convictions and sentences were upheld.
Against this judgment and order of the High Court of Allahabad the appellants have come to this court by special leave.
The facts leading to the appeal are these: In 1950 51, the firm of the appellants purchased vegetable ghee valued at about Rs. 3 lacs from places outside the State of U. P. in the name of four fictitious firm.
The firm made its return for that year to the Sales Tax Officer Aligarh and did not include the sale proceeds of these transactions on the ground that they had purchased them from these four firms who were supposed to be carrying 853 on business in Hathras, Aligarh, and other places in U. P. By thus not including the proceeds of the sales of these transactions the firm evaded payment of sales tax for that year on those transactions.
The return of sales tax made by the firm was accepted by the Sales Tax Officer with the consequence that the sale of goods covered by those transactions was not taxed.
A complaint was made against the Sales Tax Officer in regard to these transactions; an enquiry was held with the result that the appellants and Romesh were prosecuted and convicted as above stated.
In the High Court there was no controversy about the facts i. e. the finding of the courts below that the appellants ' firm purchased vegetable ghee from outside U. P. and did not show the sale proceeds of the sale of those goods on the ground that they had been purchased from inside the State of ' (J. P. when in reality they had been purchased from outside the State, that the statements made by the appellant Jagannath Prasad before the Sales Tax Officer were false and that the bills produced by him before the Sales Tax officer were forged.
The conviction was challenged on grounds of law alone.
Before us five points were raised: (1) that no sales tax was exigible on these transactions under a. 3A of the Act in 1950 51 and liability arose by the amendment of the Act in 1952 which gave retroactive operation to the section and became applicable to sales in dispute and therefore there could be no prosecution under an ex post facto amendment; (2) the trial of the appellants was illegal because of ' want of complaint by the Sales Tax Officer under a. 195 of the Criminal Procedure Code; (3) there was no offence under section 14 (d) of the Act; (4) forged invoices were produced by appellant Jagannath Prasad because they were called for by the Sales Tax Officer and therefore it cannot be said.
that they were used by the appellant and (5) the Sales Tax Officer having accepted 854 he invoices as genuine no prosecution could be Entertained in regard to those invoices.
Now the appellants cannot be prosecuted on the basis of any amendment subsequent to the date of the alleged offence committed by them.
Both parties are agreed on that and therefore we have to see the Act as it stood on the date when the offence is alleged to have been committed.
According to the charge the offence was committed on or about July 16, 1951, when forged invoices produced by the appellants before the Sales Tax Officer.
So what we have to see is the law as it stood on that day.
Section 3 of the Act deals with liability to tax under the Act and section 3A with single point taxation.
Under section 3 every dealer was required to pay on his turnover of each assessment year a tax at the rate of three pies a rupee.
Thus the tax was payable in regard to all sales but under section 3A (1) the tax was leviable only at a single point.
That section provided.
section 3A (1) "Notwithstanding anything contained in section 3, the State Government may, by notification in the official Gazette, declare that the turnover in respect of any goods or class of goods shall not be liable to tax except at such single point in the series of sales by successive dealers as may be prescribed".
The Government could declare the tax to be payable at a single point but there were two requirements; there had to be a notification in the Official Gazette declaring the point at which the tax was payable and in the series of sales by successive dealers it had to be "as may be prescribed" i. e. as may be prescribed by rules.
Section 3A was amended in 1952 with retrospective effect but retroactive provision is not applicable to the present proceedings.
Under section 3A a notification No. 1 (3) was issued on 855 June 8, 1948, declaring that the proceeds of sales of vegetable ghee imported from outside shall not be included in the turnover of the dealer other than the importer himself.
The effect of the notification thus was that if a dealer imported vegetable ghee from outside U. P. and sold it he was required to include the sale proceeds in his turnover but the other dealers who bought vegetable ghee from the importer in U. P. and sold it were not so required.
The appellants having thus imported the vegetable ghee from outside U. P. were required by the notification to include the proceeds in their turnover and it was to avoid this that they falsely produced forged invoices that they had purchased the vegetable ghee from those fictitious dealers within the State of U. P. and thus if the notification was an effective notification the appellants successfully evaded the payment of sales tax which under the law they were required to pay.
But it was agreed that the notification was ineffective in view of the words "as may be prescribed" because that could only be done by rules and no rules bad been made under section 3A which made every dealer liable to sales tax if he was an importer from outside U. P.
To this, extent the contention of the appellants is well founded and therefore under a. 3A merely by notification the Government could not prescribe a single point taxation as was done by the notification but that does not help the appellants very much.
Under section 3 every dealer was liable to pay sales tax on every transaction and section 3A only gave relief in regard to sales at every point and thus prevented multi point taxation.
If the notification under section 3A was ineffective, as indeed it was, the appellants were required to pay tax on all their sales and in order to escape multi point taxation they took advantage of an ineffective notification and tried the false plea of the goods having been imported by fictitious persons and their having purchased those goods from those 856 fictitious dealers and in this manner the appellants escapes payment of sales tax under section 3.
In other words they tried to take advantage of section 3A by producing false documents and thereby evaded payment of tax under section 3 which every dealer was required to pay on his turnover.
In trying to get the benefit under the ineffective notification issued under section 3A the appellants evaded payment of tax under section 3 which they were in any case liable to pay.
It cannot be said therefore that no offence was committed under section 14 (d) of the Act which provides: Section 14. ,Offences and penalties.
Any person who (a). . . (b). . . (c). . . (d) fraudulently evades the payment of any tax due under this Act, shall, without prejudice to this liability under any other law for the time being in force, on conviction by a Magistrate of the first class, be liable to a fine which may extend to one thousand rupees, and where the breach is a continuing breach, to a further fine which may extend to fifty rupees for every day after the first during which the breach continues".
It is no defence to say that the appellants were asked by the Sale,% Tax Officer to produce invoices.
The appellants were trying to get exclusion from their turnover of the sale of goods worth about 3 lacs and had made statements before the Sales Tax Officer in regard to it on July 9, 1951, and in order to prove that the goods 857 were not required to be included .,in the turnover the invoices were produced by appellant Jagannath Prasad.
When a fact has to be proved before a court or a tribunal and the court or the tribunal calls upon the person who is relying upon a fact to prove it by best evidence it can not be a defence as to the offence of forgery if that best evidence which, in this case, was the invoices turn out to be forged documents.
A person who produced those documents cannot be heard to say that he was required to prove his case by the best evidence and because be was so required be produced forged documents.
It was then submitted that the Sales Tax Officer was a court within a. 195 of the Criminal Procedure Code and in the absence of a complaint in writing by such an officer no cognizance could be taken of any offence punishable under section 471 of the Indian Penal Code.
This, in our opinion, is an equally erroneous submission.
The Sales Tax Officers are the instrumentalities of the State for collection of certain taxes.
Under the Act and the Rules made thereunder certain officers are appointed as Sales Tax Officers who have certain duties assigned to them for the imposition and collection of taxes land ID the process they have to perform many duties which are of a quasijudicial nature and certain other duties, which are administrative duties.
Merely because certain instrumentalities of state employed for the purpose of taxation have, in the discharge of their duties, to perform certain quasi judicial functions they are not converted into courts thereby.
In a recent judgment of this Court in Shrimati Ujjam Bai vs The State of U.P. (1), all the opinions were unanimous on this point that taxing authorities are not courts even though they perform quasi judicial functions.
The following observation of Lord (1) (1963) 1 S.C.R. 778. 858 Sankey L. C. in Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation (1)was quoted with approval : The authorities are clear to show that there "The authorities are clear to show that there are tribunals with many of the trappings of a court which, nevertheless are not courts in the strict sense of exercising judicial power".
Lord Sankey also enumerated some negative propositions as to when a tribunal is not a court.
At p. 297 his lordship said : "In that connection it may be useful to enumerate some negative propositions on this subject : 1.
A tribunal is not necessarily a Court in this strict sense because it gives a final decision.
Nor because it hears witnesses on oath.
Nor because two or more contending parties appear before it between whom it has to decide.
Nor because it gives decisions which affect the rights of subjects.
Nor because there is an appeal to a Court.
Nor because it is a body to which a matter is referred by another body.
See Rex vs Electricity Commissioners Hidayatullah J., 'in Shrimati Ujjam Bhai(2) case described Sales tax authorities thus : "The taxing authorities are instrumentalities of the State.
They are not a part of the legislature, nor are they a part of the judiciary.
Their functions are the assessment and collection of taxes and in the process of assessing taxes, they follow a pattern of action which is considered Judicial.
They are not thereby converted into Courts of Civil judicature.
They still (1) , 283.
(2) (1963) 1 S.C R. 778. 859 remain the instrumentalities of the State and are within, the definition of State" in article 12".
No doubt the Sales Tax officers have certain powers which, are similar to the powers exercised by courts. but still they are not courts as understood 'in section 195 of the Criminal Procedure Code.
In sub section 2 of B. 195 it is provided: section 195(2) "In clauses (b) and (e) of sub section.
(1) the term "Court" includes a Civil Revenue or Criminal Court, but does not include a Registrar or Sub Registrar under the Indian Registration Act, 1877".
It cannot be, mid that a Sales Tax Officer, is a I Revenue Court.
Under section 2(a) of the Act an assessing authority is defined to mean any person authorised by the State Government to make assessment under the Act and under R. 2(h) 'a Sales, Tax Officer means : "Sales Tax Officer" means a Sales Tax Officer of a circle appointed by the State Government to perform the duties and exercise the powers of an assessing authority in such circle".
Thus under the Act a Sales Tax Officer is only an amassing authority.
Under section 7 of the Act, if the Sale*. Tax Officer, after making such enquiries,as he thinks necessary is, satisfied that a return made is correct and, complete, he shall assess the tax on the basis thereof ' and it no return is submitted he, can make such enquiries as he considers necessary and then determine the turnover of a dealer, Thus his determination depends upon enquiries he may make and which he may, consider necessary.
Sections 9, 10 and 11 of the Act deal with Appeals, Revisions and Statement of the Case to the High court.
Under a. 13 power.
is given 860 to a Sales Tax Officer to require the production of all accounts, documents and other information relating to business and accounts and registers ,shall be open to inspection of the Sales Tax Officer at all reasonable times.
He has the power to enter any office, shop, godown, vehicle or any other place in which business is done which is a power destructive of the Sales Tax Officer being a Court which is a place where justice is administered as between the parties whether the parties are private persons or one of the parties is the State.
Under section 23 certain secrecy is attached to documents filed before the Sales Tax officer and information received by him.
Similarly under R. 43 certain power is given to the Sales Tax Officer to calculate turnover when goods are sold for consideration other than money and this is after such enquiry as he considers necessary.
All these provisions show that the Sales Tax Officer cannot be equated with a Court.
In our opinion therefore the Sales Tax Officer is not a Court.
In Krishna vs Goverdhansiah(1), it was held that the Income Tax Officer is not law court within the meaning of section 195 of the Criminal 's Procedure Code and this view was accepted by this court in Shrimati Ujjam Bai 's(2) case.
In Brajnandan Sinha vs Jyoti Narain(3), a Commissioner appointed under the Public Enquiries Act 1950 was held not to be a court.
Shell Co. of Australia vs Federal Commissioner of Taxation (4) was referred to in that case.
At p. 967 the following passage from Halsbury 's Laws of England, Hailisham Edition, Vol. 8, p. 526 was approved: "Many bodies are not courts, although they have to decide questions, and in so doing have to act judicially, in the sense that the proceedings must be conducted with fairness (1) A.I.R. (1954) Mad.
(2) (1963) 1 S.C.R. 778.
(3) ; (4) (1931) A.C. 275,2B3. 861 and impartiality, such as assessment committees, guardian committees, the Court of referee constituted under the Unemployment Insurance Acts to decide claims made on the Insurance funds the benchers of the Inns of Courts when considering the conduct of one of their members, the General Medical Council when considering questions affecting the position of a medical man" That passage is now contained in Vol. 9 of the 3rd Edition at p. 343.
But it was submitted that the Sales Tax officer while acting as an assessing authority is a court within the meaning of section 195 (2) of the Procedure Code because by the amendment of 1923 the definition of the word "court" was enlarged substituting the word "includes" in place of the word "means" and the section now reads as has been set out above.
Undoubtedly by this change the legislature did mean to make the definition of the word "court" wider but that does not enlarge the definition of the words "Revenue Court".
The track of decision which was pressed on our attention is based primarily on a full bench judgment of the Bombay High Court in In re Punemchand Maneklal(1).
In that case an Income tax Collector was held to be a Revenue Court within the meaning of the word as used in section 195.
The learned Chief Justice who gave the judgment of the court proceeded on the basis that inquiries conducted according to the Forms of judicial procedure under Chapter IV of the Incometax Act were proceedings in a Revenue Court.
This was on the ground that under the law as it then stood revenue questions were generally removed from the cognizance of civil courts and the officers charged with the duty of deciding disputed question relating to revenue between an individual and the (1) , Bom.
862 Government would be invested with the functions of &,,Revenue Court".
This view was followed by the Bombay High Court in State vs Nemchand Pashvir Patel After referring to the various powers which were given to the Sales Tax Officers under the B " bay Sales Tax Act that Court proceeded to say that the Sales Tax Officers under the Bombay Sales Tax Act were Revenue Courts because ' they had jurisdiction to decide Questions relating to revenue, are exclusively empowered with the powers which are normally attributes of a court or a tribunal land are authorised to adjudicate upon a disputed question of law or fact relating to the rights of the citizens.
The Madras High Court in In re B. Nataraja Iyer held that a Divisional Officer hearing appeals; under the Income tax Act was a court within the meaning of a. 476 of the Criminal Procedure Code but a Tehsildar who was the original assessing authority was not because there was no lis before him.
There is one passage in the judgment of Sundara Ayyar J., which is of significance.
It was said: "I may observe that I am prepared agree with Dr. Swaminathan that more.
authority to receive evidence would not make the officer recording it a Court".
At page 84, it was said that the determination of the assessment in the first instance may not be of a court although the assessing officer may have the power to record statements.
But an appeal against the assessment is dealt with by the Collector in the manner in which an appeal is ' disposed of by ' a Civil Court.
In this connection reference may be; made to the statement of the law contained in the judgment of Venkatarama Ayyar J., in Shri Virinder Kumar Satyawadi vs The State of Punjab (2).
There, (1) (1956)7 S.C.R. 404.
(2) , 1018.
863 the, distinction between a quasi judicial tribunal and a court,was given as follows "It may be stated broadly that what disti nguished a Court from a quasi judicial tribu nal is that it is charged with a duty to decide disputes in a judicial manner and declare, the rights of parties in a definitive judgment.
,To decide in a judicial manner involves that the parties are entitled as a matter of right to be heard in support of their claim and to adduce evidence in proof of it.
And it also imports an obligation on the part of the authority to decide the matter on a consideration of the evidence adduced and in accordance with law.
When a question therefore arisen as to whether an authority created by an Act is a Court as, distinguished from a quasi judicial tribunal, what has to: be decided.is whether having regard to the provisions of the Act it possesses all the attributes of a Court".
Dealing with quasi judicial tribunals it was observed in Gullapelli Negeswara Rao vs The State of Andhra Pradesh(1) : ",The concept of a quasi judicial act, implies that the act is not wholly judicial, it describes only a duty cast on the executive body or authority to,conform to the norms.
of judicial procedure in performing some act in the, 'exercise of its executive power".
It is not necessary to refer to other cases because they were decided on their own facts and related to different tribunals.
In our opinion a Sales Tax Officer is not a Court within the meaning of.s.
195 of,the criminal Procedure Code and there.
fore it was not necessary for a Sales Tax Officer to (1) (1959) Supp.
1 S.C.R. 319, 353 4. 864 make a complaint and the proceedings without such a complaint are not without jurisdiction.
In our opinion the appellants were rightly convicted and we therefore dismiss this appeal.
The appellant Jagannath Prasad must surrender to his bail bonds.
Appeal dismissed.
|
The appellants who carry on the business in vegetable ghee purchased vegetable ghee from outside U. P. in the name of four fictitious firms.
In their return of sales tax they did not include the sale proceeds of these transactions on the ground that they had purchased from the four firms and that under a notification made under section 3A of the U. P. Sales Tax Act, tax was leviable only at a single point on the sale by the outside suppliers to these four firms.
In support of this the appellant No. 1 made a false statement before the Sales tax Officer and also filed forged bill,.
before him.
The return was accepted by the Sales Tax Officer with the result that the sales covered by these transactions were not taxed.
The appellants were tried and convicted for offence under section 471 Indian Penal Code for using forged documents and under section 14(d) of the Act for fraudulently evading payment of tax due under the Act.
The appellants contended that the trial for the offence under section 471 was illegal as no complaint had been made by the Sales Fax Officer as required by section 14 (d) of the Act was not made out as no tax was payable under 'section 3A because the notification issued thereunder was invalid.
Held, that the Sales Tax Officer was not a Court within the meaning of section 195 Code of Criminal Procedure and it was not necessary for him to make a complaint for the prosecution of the Appellants under section 471 Indian Penal Code.
A Sales Tax Officer was merely an instrumentality of the State for purposes of assessment and collection of tax and even if he was required to perform certain quasi judicial functions, he was not a part of the judiciary.
The nature of the functions, of a Sales Tax Officer and the manner prescribed for their 851 performance showed that he could not be equated with a Court.
Nor could he be said to be a Revenue Court.
Though the definition of Court in section 195 of the Code Was enlarged by the substitution of the word "include" for the word "means" by the amendment of 1923, it did not change the definition of "Revenue Court.
" Smt.
Ujjam Bai vs The State of U. P. (1963) 1 S.C.R. 778), Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation and Brajnandan Sinha vs Jyoti Narain ' ; , applied.
Krishna vs Gocerdhanaiah, A. I. R. , approved.
In re: Punamchand Maneklal (1914) 1. L. R. and State vs Nemchand Pashvir Patel, (1956) 7 section T. C. 404 not approved.
In re : R. Nataraja Iyer (1914) 1. L. R. and Shri Virender, Kumar Satyawadi vs The Sate of Punjab,[1955] 2 section C. R. 1013 referred to.
Held, further that the appellants were rightly convicted under section 14 (d) of the Act.
Sales tax was payable under s.3 of the Act in respect of all sales.
But under s.3A it was leviable only at a single point if the Government issued a notification declaring the point at which tax was payable and it was so prescribed by the rules.
Under the notification issued by the Government tax was payable only by the dealer who imported the goods and sold them.
The appellants having imported the ghee were liable to pay the tax on the sales of this ghee which they fraudulently evaded.
Though the notification was ineffective as no rules were made under the Act prescribing the single point, it did not help the appellants, as the only effect of this was that section 3A did not come into play.
In trying to get the benefit of the ineffective notification under section 3 A the appellants evaded payment of tax under section 3 which they were liable to pay.
|
Criminal Appeal No. 662 of 1986.
From the Judgment and Order dated 24.10.1986 of the Bombay High Court in W.P. No. 743 of 1986.
Dr. V. Gauri Shanker, Ms. Halida Khatun and Ms. A. Subhashini for the Appellants.
Ram Jethmalani and Herjinder Singh for the Respondent.
The Judgment of the Court was delivered by KHALID, J.
The Union of India has brought this appeal by special leave against the Judgment of a full Bench of the Bombay High Court quashing the notice under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, hereinafter referred to as SAFEMA.
It is necessary to set out the brief facts to appreciate the questions involved in this appeal.
Manoharlal Narang, the respondent in this appeal and Ramlal Narang are brothers.
An order of detention was passed on 19th December 1974, under Section 3(1) of the COFEPOSA Act against Ramlal Narang.
This order was challenged before the Delhi High Court, in Writ Petition No. 10/75 and the High Court quashed the order of detention by its order dated 30th April, 1975.
An appeal was filed against that order before this Court by the Union of India.
Though an applica tion for stay was moved, this Court declined to grant stay but passed an order on the 1st May, 1975 imposing certain condi 457 tions on the movement of Ramlal Narang.
On 25th June, 1975, Emergency was declared.
On 1st July, 1975, a fresh order of detention was passed against Ramlal on the same facts and grounds.
In the meantime the appeal filed by the Union of India against the order of 'the Delhi High Court relating to the earlier order of detention, was dismissed by this Court in 1977, for want of prosecution.
Ramlal was detained under the second order.
A relative of his, filed Writ Petition No. 115 of 1975, in the Delhi High Court, challenging this detention.
That petition was dismissed on 25th November, 1975.
An appeal was filed by Certificate, against that order before this Court as Appeal No. 399 of 1975.
In the mean while, notices under Section 6 & 7 of the SAFEMA were issued against Ramlal.
These notices were challenged by him by filing Writ Petition No. 720 of 1975, in the Delhi High Court.
Subsequently, this Court took up appeal No. 399/75 and disposed it of saying that it would be open to the petitioner to raise all contentions available to him in Writ Petition No. 720 of 1975 notwithstanding what is contained in the Judgment in Writ Petition No. 115/75.
The Delhi High Court heard Writ Petition No. 720 of 1975 and dismissed it.
Against that dismissal order Ramlal filed special leave petition No. 9361/82 before this Court.
In this special leave petition, notice was issued limited only to the ques tion of the competency of the authorities to issue the second detention order on the same facts and grounds.
That petition was thereafter admitted and the criminal appeal arising therefrom is criminal Appeal No. 2790 of 1985, which has been referred to a Constitution Bench and is pending disposal at present.
That learned Counsel for the appellants made a fervent plea before us that since the question of competency of the authorities to issue the second detention order is pending consideration before a Constitution Bench of this Court, this appeal also should be directed to be posted along with that appeal.
The respondent 's counsel met this plea stating that for the purpose of this appeal, this question is cov ered by a three Judge Bench decision of this Court in Ibra him Bachu Bafan vs State of Gujarat and Ors., and that it was not necessary to direct this appeal to be tagged with Civil Appeal No. 2790/85.
After hearing the counsel for some time, we indicated to the learned counsel for the respondent, that we were inclined to direct this appeal to be posted along with the appeal pending before the Constitution Bench but were still willing to hear the matter if he could sustain the Judgment under appeal, on grounds other than the one referred to the Constitution Bench.
He was willing to do so and he argued the case 458 on the other grounds raised by him.
We will now proceed to consider those other grounds and see whether the Judgment could be sustained or whether it has to be reversed.
The facts and the relevant dates have been stated above.
A few more facts are necessary.
An order of detention under COFEPOSA was issued against the present respondent on 31st January, 1975.
At that time he was in England.
He was brought to India on some express understanding given to the Government of the United Kingdom.
His order of detention was challenged before the Bombay High Court being Writ Petition No. 2752/75, and the High Court quashed that order of deten tion as per order dated 8th July, 1980.
The appeal filed against that order before this Court was dismissed on 4th November, 1980.
The notice under challenge in this appeal was issued to the respondent under Section 6 of the SAFEMA with the aid of Section 2 of the Act.
Section 2 reads as follows: "2.
Application. (1) The provisions of this Act shall apply only to the persons specified in sub section (2).
" Sub section (2), relevant for our purpose, reads as follows: "(2) The persons referred to in sub section (1) are the following, namely: (a) . . . . . . . . (b). . . . . . . . (c) every person who is a relative of a person referred to in clause (a) or clause (b) (d) . . . . . . . . . (e) . . . . . . . . .
Explanation 2.
states "For the purpose of clause (c) rela tive" in relation to a person, means . . . . . . . . . . . (ii) brother or sister of the person; . . . . . . . . . . . 459 The learned counsel for the respondent contended that the respondent could challenge the order of detention against his brother, to get the notice issued against him under SAFEMA quashed on all the grounds available to him, though they were raised by his brother or not.
He was not seeking to get the order of detention against his brother quashed for his brother 's benefit nor was he doing it on his behalf, but he was invoking the jurisdiction of the Court only for his own benefit.
While doing so he is not lettered by what happened to his brother 's petition or to the grounds raised by him.
Nothing held against his brother would, according to the learned counsel, operate as res judicata against the respondent.
The provisions of SAFEMA were being pressed into service because a relative answering the de scription given in Explanation 2 to Sub section (2) of Section 2 of the Act was available.
He cannot be prevented from urging all the grounds available to him to get out of the mischief of the notice issued to him under Section 6 of the SAFEMA.
We find that this submission is well founded.
We hold that in such cases, the person against whom action is taken by invoking the Explanation to Sub section (2) re ferred to above, is at liberty to raise all grounds avail able to him though such grounds were raised and found against in a proceedings initiated by the relative.
The ground that found favour with the Bombay High Court in this case is that the detaining authority did not apply its mind to the order passed by this Court on 1st May, 1975, in the special leave petition against the decision of the Delhi High Court which quashed the detention of Ramlal.
The appellants before us sought a stay of the order passed by the Delhi High Court.
This Court declined the request but passed the following order: "We grant Special Leave on usual terms.
The petitioner appellant should have gone to the High Court first for a certificate.
In view of the arguments heard, we give special leave in this matter as a very special case, and this is not to be treated as precedent in future.
We are unable to grant any stay.
We impose a condition on Ram Lal Narang, Detenu pending the disposal of the appeal in this Court that he will report to the police station in whose jurisdiction he reside either at Bombay or at Delhi, once every day at 10 A.M. or at 5 P.M. and whenever he will leave for Delhi, he will inform the police as to when he is leaving and when he will arrive at Delhi, similarly when he will leave for Bombay, he will inform the police as to when he is leaving 460 for Bombay and when he will arrive at Bombay.
Certified copy of the judgment impugned shall be filed as soon as possible.
" It is not disputed that the detenu Ramlal was reporting to the officer in charge of the Bandra Police station, Bombay regularly, in due compliance with the above order passed by the Supreme Court.
We have already adverted to the fact that proceedings against the respondent taken under SAFEMA were abandoned after the order of this Court on 4th November, 1980.
It is nearly 3 years later, on 29th October, 1983, that the pro ceedings, from which this appeal arises, were initiated under Section 6 of SAFEMA on the basis of the detention order dated 1st July, 1975, issued against Ramlal.
It is necessary to bear in mind that on 1st July, 1975, when the order of detention against Ramlal was passed, the authori ties had before them the order of this Court, extracted above, dated 1st May, 1975.
By this order Ramlal was permit ted to be at large on condition that he will report to the Police Station as mentioned therein.
It cannot be disputed that this order of the Supreme Court is a relevant material for the detaining authority to consider when the detention order was passed.
From the records it is not seen that the Union of India had specifically put forward a case at any time that this order was not a relevant material or that this order was considered by the detaining authority.
The first respondent had specifically raised this contention in paragraph 'Q ' of the grounds of the Writ Petition, by an amendment which was allowed by the order of the Division Bench of the Bombay High Court on 29th April, 1986.
The specific contention raised in ground 'Q ' was "that vital and material facts which would have weighed the mind of the detaining authority one way or the other, have been sup pressed from him, thus vitiating the order of detention dated 1st July, 1975, and consequent declaration made under Section 12(a) of the COFEPOSA".
After that, reference was made to the order of this Court extracted above, accompanied by an assertion that Ramlal was complying meticulously with the orders of the Supreme Court.
This specific assertion is met by the appellants in paragraph 53 of the Counter Affida vit filed by Under secretary.
Ministry of Finance ' which reads as follows: "With reference to para 24 Q, additional ground it is not admitted that any detaining authority as alleged or other wise.
461 In paragraph 54, this ground is met more elaborately with the following observations: " . .
At any rate it is submitted that the contents pertain to the proceedings in the High Court and the Supreme Court and the detention law does not contemplate that the detaining authority is required to take into account the different court proceedings wheth er independent proceedings, under the law not initiated, conducted, managed or looked after by the detaining authority It is well known that the different Ministries of the Govern ment carry out different types of work in different ways and the detaining is not re quired under the law to take notice of work of the Ministries or Court proceedings.
The Court proceedings and adjudication proceedings are initiated and conducted by different authori ties which are not required under the law to submit their reports or communicate their actions to the detaining authority.
The de taining authority, in turn, is not required under the law to carry out the process of collection of any material about any Court proceeding or proceedings before other author ities for the purpose of issuance of a deten tion order.
The contents of the paragraph refers to such proceedings which are not required to be collected by the detaining authority from such authorities or courts. ]" We are not very happy with the manner in which this important contention has been met in the Counter Affidavit.
An order of this Court is not an inconsequential matter.
It cannot be assumed for a moment that the detaining authority or the sponsoring authority did not know, at the time the detention order was passed, that this Court had refused stay of the Judgment of the Delhi High Court and that Ramlal was allowed freedom of movement subject to certain conditions.
It is to be regretted that the portion extracted above from the Counter Affidavit (shown in bracket) betrays an atti tude, to put it mildly, that lacks grace.
Be it understood that the braketted portion was made to meet a case that there existed an order of this Court which was a relevant and vital material.
We can use stronger language to express our displeasure at the manner in which reference was made indirectly to this Court 's order but we desist from doing so.
If the sponsoring authority and the detaining authority are to adopt such cavalier attitude towards orders of courts and of this Court in particular, their orders will meet with the same fate as the one under review.
462 If the detaining authority had considered the order of this Court, one cannot state with definiteness which way his subjective satisfaction would have reacted.
This order could have persuaded the detaining authority to desist from pass ing the order of detention since this Court had allowed freedom of movement.
Detention is only a preventive Act.
This Court did not find it necessary to restrict the liberty of Ramlal when the order on the stay application was passed.
It may also be that the detaining authority after consider ing the order of this Court carefully could still feel, that an order of detention is necessary with reference to other materials which outweigh the effect of this Court 's order.
In all these cases, non application of mind on a vital and relevant material need not necessarily lead to the conclu sion that application of mind on such materials would, always be in favour of the detenu.
Application of mind in such cases is insisted upon to enable the detaining authori ty to consider one way or the other, as to what effect a relevant material could have, on the authority that decides the detention.
In our view the absence of consideration of this important document amounts to non application of mind on the part of the detaining authority rendering the deten tion order invalid.
In Ashadevi vs K. Shivraj, ; this Court had occasion to consider the plea whether an order of deten tion would be vitiated if relevant or vital facts, essential to the formation of subjective satisfaction, were kept away from the consideration of the detaining authority.
This is how this Court dealt with this aspect: "It is well settled that the subjective satis faction requisite on the part of the detaining authority, the formation of which is a condi tion precedent to the passing of the detention order will get vitiated if material or vital facts which would have a bearing on the issue and would influence the mind of the detaining authority one way or the other are ignored or not considered by the detaining authority before issuing the detention order.
in Sk.
Nizamuddin vs State of West Bengal, the order of detention was made on September 10, 1973 under Section 3(2)(a) of MISA based on the subjective satisfaction of the District Magis trate that it was necessary to detain the petitioner with a view to preventing him from acting in a manner prejudicial to the mainte nance of supplies and services essential to the community and this subjective satisfac tion, according to the grounds of detention furnished to the petitioner, was founded on a solitary incident of theft of aluminium wire 463 alleged to have been committed by the peti tioner on April 14, 1973.
In respect of this incident of theft a criminal case was filed inter alia against the petitioner in the Court of the Sub Divisional Magistrate, Asansol, but the criminal case was ultimately dropped as witnesses were not willing to come forward to give evidence for fear of danger to their life and the petitioner was discharged.
It appeared clear on record that the history sheet of the petitioner which was before the District Magistrate when he made the order of detention did not make any reference to the criminal case launched against the petitioner, much less to the fact that the prosecution had been dropped or the date when the petitioner was discharged from that case.
" Then this Court, referred to a decision reported in and extracted the following in support of their view: "We should have thought that the fact that a criminal case is pending against the person who is sought to be proceeded against by way of preventive detention is a very material circumstance which ought to be placed before the District Magistrate.
That circumstance might quite possibly have an impact on his decision whether or not to make an order of detention.
It is not altogether unlikely that the District Magistrate may in a given case take the view that since a criminal case is pending against the person sought to be de tained, no order of detention should be made for the present, but the criminal case should be allowed to run its full course and only if it fails to result in conviction, then preven tive detention should be resorted to.
It would be most unfair to the person sought to be detained not to disclose the pendency of a criminal case against him to the District Magistrate.
" The material not placed before the detaining authority is mentioned in paragraph 7 of the Judgment which reads as follows: "7.
In the instant case admittedly three facts were not communicated to or placed before the detaining authority before it passed the impugned order against the detenu, namely, (i) that during interrogation of the detenu, in spite of request, neither the presence nor the consultation of the Advocate was permitted; (ii) that in spite of intimation to 464 the Advocate in that behalf the detenu was not produced before the Magistrate on December 14, 1977, and (iii) that the confessional state ments were squarely retracted by the detenu on December 22, 1977 at the first available opportunity while he was in judicial custody; the first two had a beating on the question whether the confessional statements had been extorted under duress from detenu or not, while the third obviously was in relation to the confessional statements which formed the main foundation of the impugned order and as such were vital facts having a bearing on the main issue before the detaining authority.
" Ultimately the order of detention was quashed because the retracted confessional statement of the detenu was not placed before the detaining authority who passed the deten tion order on the detenu 's confessional statements.
This Court observed: "it cannot be disputed that the fact of retraction would have its own impact one way or the other on the detaining authority before making up its mind whether or not to issue the impugned order of detention and also to see whether the confessional statements recorded were voluntary statements or were statements obtained from the detenu under duress and also whether the retracted confession was in the nature of an after thought." On the facts of this case, by way of reiteration, we wish to state that the facts that Ramlal was detained, that he had undergone substantive period of detention did not weigh with this Court when the above order was passed, which clearly indicated that this Court felt that there was no need to detain him further pending appeal.
In Mohd. Shakeel Wahid Ahmed vs State of Maharashtra and Ors., a Constitution Bench of this Court had to deal with a somewhat similar situation.
There, one of the grounds of detention on which the appellant before this Court was detained was the same as the one on which one Shamsi was detained.
The Advisory Board had reported that there was no sufficient cause for Shamsi 's detention.
A case was pleaded before this Court that the report of the Adviso ry Board to the above effect ought to have been placed before the detaining authority which passed the order of detention against the petitioner before this court in that case.
It was contended that if this material had been placed before the detaining authority it may not have passed an order of detention against the petitioner in that case.
This court accepted this plea and observed as follows: "This submission is well founded and must be accepted.
It 465 is clear that Shamsi was detained for engaging in a smuggling activity arising out of the same incident and transaction which forms the subject matter of ground 1 in the instant case.
The opinion of the Advisory Board that there was no sufficient cause for Shamsi 's detention may not have been binding on the detaining authority which ordered the deten tion of the petitioner but, it cannot be gainsaid that the fact that the Advisory Board had recorded such an opinion on identical facts involving a common ground was at least relevant circumstance which ought to have been placed before the detaining authority in this case.
Since three out of the four grounds on which the petitioner was detained have been held to be bad by the High Court, we have to proceed on the basis that the petitioner was detained and could validly be detained on the remaining ground only.
That ground is similar to one of the grounds on which Shamsi was detained, the transaction being one and the same, as also the incident on which the two orders of detention are based.
That is why the opinion of the Advisory Board in Shamsi 's case becomes relevant in the petitioner 's case.
The failure of the State Government to place before the detaining authority in the instant case, the opinion which the Advisory Board had recorded in favour of a detenu who was de tained partly on a ground relating to the same incident deprived the detaining authority of an opportunity to apply its mind to a piece of evidence which was relevant, if not binding.
In other words, the detaining authority did not, because it could not, apply its mind to a circumstance which, reasonably, could have affected its decision whether or not to pass an order of detention against the petitioner.
" This Court observed further the scope of the consideration of the relevant materials in the following words: ". .
But the question for considera tion is not whether the detaining authority would have been justified in passing the order of detention against the petitioner, even after being apprised of the opinion of the Advisory Board in Shamsi 's case.
The question is whether the order of detention was passed in this case after applying the mind to the relevant facts which bear upon the detention of the petitioner.
It seems to us plain that the opinion of the Advisory Board in 466 Shamsi 's case was, at any rate, an important consideration which would and ought to have been taken into account by the detaining authority in the instant case.
That opportuni ty was denied to it.
" The Constitution Bench has in unambiguous terms out lined the scope of the doctrine of the application of mind and the purpose being it, in the above observation.
In a recent case, Sita Ram Somani vs State of Rajasthan and Ors., to which one of us was a party, it was held that non application of mind about the bail appli cations of the detenu in pending criminal case and his applications to the Collector of Customs, informing him that he had retracted his earlier confessional statements not having been placed before the detaining authority, the order of detention was held to be vitiated.
In another case, Criminal Writ Petition No. 397 of 1986, in a Judgment given by one of us along with Pathak J. (as he then was), the detention order which was based on three separate incidents, was quashed on the ground that the detaining authority did not apply its mind while passing the detention order, that the detenu had moved an application for bail, in the three pending cases and that he was enlarged on bail on 13 1 1986, 14 1 1986 and 15 1 1986.
Since the order of detention did not mention that the detenu in these cases was an under trial prisoner, that he was arrested in connection with the three cases, that applications for bail were pending and that he was released on three successive days in the three cases, this Court had to observe that there was a total absence of application of mind on the part of the detaining authority while passing the detention order and quashed the order of detention.
Appellants ' counsel in this case found it difficult to get over this plea made by the respondent, supported by weighty authorities.
He could not put forward any persuasive submissions to compel us to disagree with the consistent view taken by this Court in such matters.
He acted with propriety in not adopting the argument put forward in the Counter Affidavit that it was not the function of the authorities to go after all proceedings that take place in Courts of Law, relating to a detenu.
In view of the above conclusions we do not think it necessary to consider the question whether the authorities acted rightly in not considering the representation made by the respondent.
It cannot be disputed that provisions of SAFEMA cannot be invoked in cases where 467 there is no valid order of detention.
We agree with the High Court that the order of detention is bad on the ground discussed above.
Consequently we hold that the High Court was justified in quashing the notice issued under Section 6 and the proceeding initiated under Section 7 of the SAFEMA.
We accordingly dismiss the appeal.
S.R. Appeal dis missed.
|
Respondent and Ramlal Narang are brothers.
An order of detention passed on 19.12.1974 under section 3(1) of the COFEPOSA against Ramlal Narang was successfully challenged by W.P. 10/75 before the Delhi High Court.
An appeal was filed against that order before the Supreme Court by the Union of India.
Refusing a stay application, the Supreme Court passed an order imposing certain conditions on the movement of Ramlal Narang.
On 25.6.1975 Emergency was de clared.
On 1.7.1975 a fresh order of detention was passed against Ramlal on the same facts and grounds.
The earlier appeal filed by Union of India against W.P. 10/75 was dis missed in 1977.
Ramlal was detained under the second order of detention.
A writ petition No. 115/75 flied by his rela tive before the Delhi High Court challenging the second detention was dismissed on 25.11.1975.
An appeal was filed by certificate against that order before the Supreme Court as Crl.
Appeal No. 399/75.
In the meanwhile, notices under sections 6 and 7 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 were issued against Ramlal.
These notices were challenged by him by filing W.P. No. 720/75 in the Delhi High Court.
Subsequently Crl.
Appeal No. 399/75 was disposed of observing that it would be open to raise all contentions available to him in W.P. 720/75 notwithstanding what is contained in W.P. 115/75.
The Delhi High Court having dismissed W.P. NO.
720/75, Crl.
Appeal No. 2790/85 was preferred to the Supreme 455 Court and is now pending before the Constitution Bench on the question of competency of the authorities to issue second detention order on the name grounds and facts.
While Respondents Manoharlal was in England an order of detention under COFEPOSA was issued against him on 31.1.1975.
He was brought to India on some express under standing given to the Government of the United Kingdom.
His order of detention was quashed by the Bombay High Court, wile allowing his writ petition No. 2752/75 on 8.7.1980.
The Union appeal against the same was dismissed on 4.11.1980 by the Supreme Court.
A further notice under section 6 of the SAFEMA read with section 2 was issued to the Respondent on 29.10.83 on the basis of the detention order dated 1.7.1975 issued against Ramlal.
A full Bench of the Bombay High Court quashed the said notice resulting in the present Crl.
Appeal No. 662/86 by Union of India.
The appellants plea to have the case tagged on to Crl.
Appeal No. 2790/85 pending before the Constitution Bench was opposed by respondent since he could succeed on merits.
Dismissing the appeal, the Court, HELD: 1.
In this case, the provisions of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 were being pressed into service because he is a rela tive answering the description given in Explanation 2 to sub section (2) of section 2 was available.
Therefore, in such cases, the person against whom action is taken by invoking the Explanation to Sub section 2 referred to above, is at liberty to raise all grounds available to him though such grounds were raised and found against in a proceedings initiated by the relative.
[459C D] 2.
An order of the Supreme Court is not an inconsequen tial order.
If the detaining authority has considered the order of Supreme Court, one cannot state with definiteness which way is subjective satisfaction would have reacted.
This order could have persuaded the detaining authority to desist from passing the order of detention since Supreme Court had allowed freedom of movement.
Detention is only a preventive Act.
The Supreme Court did not find it necessary to restrict the liberty of Ramlal when the order on the stay application was passed.
It may also be that the detaining authority after considering the order of the Supreme Court carefully could still feel, that an order of detention is necessary with reference to other materials which outweigh the effect of Supreme Court 's order.
In all these cases, non application of mind 456 on a vital and relevant material need not necessarily lead to the conclusion that application of mind on such materials would, always be in favour of the detenu.
Application of mind in such cases is insisted upon to enable the detaining authority to consider one way or the other, as to what effect a relevant material could have, on the authority that decides the detention.
The absence of consideration of this important document amounts to non application of mind on the part of the detaining authority rendering the detention order invalid.
[462A D] Ibrahim Bachu Bafen vs State of Gujarat & Ors., ; Ashadevi vs K. Shivraj, ; ; Mohd. Shakeel Wahid Ahmed vs State of Maharashtra & Ors.
,[1983] 2 SCC 392 and Sita Ram Somani vs State of Rajasthan & Ors., , referred to.
|
ivil Appeal No. 4110 of 1985.
From the Judgment and Order dated 22.5.1985 of the, Patna High Court in Appeal from Appellate Decree No. 51 of 1982.
S.S. Javali, B .P.
Singh and Ranjit Kumar for the Appel lants.
S.N. Kacker, M.S. Singh and K.K. Gupta for the Respondent.
The Judgment of the Court was delivered by, NATARAJAN, J.
This appeal by special leave by the ten ants is directed against the judgment of a Full Bench of the Patna High Court in a Second Appeal against Appellate Decree No. 51 of 1982.
By the impugned judgment the High Court allowed the appeal preferred by the landlord (respondent herein) and restored the order of eviction passed by the Trial Court against the appellants herein on grounds of default in payment of rent and bona fide requirement of the leased premises for the business needs of the landlord.
The circumstances under which the suit came to be filed and the contentions of the parties may be summarised as below.
One Babu Lal who died on 14.11.73 and the respondent were 536 brothers and were members of a Joint Hindu Family governed by the Mitakshra Law.
The joint family was the owner of a non residential building in the G.B. Road, Gaya.
One room in the said building was given on rent in the year 1932 to one Dr. Ramachandra, the husband of the first appellant and father of the second appellant for running a medical shop known as Punjab Dental and Opticals Works.
The joint family has been running its business in the other portions of the building.
The rent was fixed at Rs. 16 per month.
Over the years the rent came to be increased from Rs. 16 to Rs.60 per month.
It would appear that the rent was increased to Rs.20 in 1943, to Rs.25 in 1946, to Rs.30 in 1947, to Rs.32 in 1951, to Rs.35 in 1963, to Rs.40 in 1967, to Rs.50 in 1970 and finally to Rs.60 in 1971.
Dr. Ramachandra, the tenant died in or about 1960 and therefore his wife, the first appellant came to be recognised as the tenant and rent receipts were issued in her name.
Before the Trial Court it was sought to be contended that the second appellant had become the tenant after the demise of his father and as such the notice of termination of tenancy issued to the first appellant was not an effective and valid notice.
The conten tion was repelled by the Trial Court and that finding has not been challenged before the Appellate Court and the High Court.
As already stated Babu Lal the Karta of the family died on 14.11.73.
Consequent on his death the respondent herein became the Karta of the family as the senior most male member of the joint family.
The respondent issued notice on 12.6.74 terminating the tenancy with effect from 30.6.74 and called upon the first appellant to surrender possession of the leased shop from 1.7.74.
It was the case of the respond ent that the first appellant had committed default in pay ment of rent from November 1973 onwards and furthermore the leased portion was required for expansion of the joint family business carried on in the other portion of the building.
As the appellants failed to deliver possession a suit for eviction was filed under the Bihar Buildings (Lease, Rent and Eviction) Control Act (hereinafter referred to as the 'Act ') for a decree for eviction against the appellants.
A sum of Rs.540 was also claimed in the suit as arrears of rent.
The appellants contested the suit raising various de fences.
The principal defences were that the respondent was not the Karta of the family and one Ram Prakash Gupta, the eldest son of deceased Babu Lal was the Karta, that rent was tendered to him after the death of Babu Lal but the said Ram Prakash Gupta demanded rent at Rs. 150 per month refused to receive the rent that was tendered, that thereupon the rent was sent by money order but it was refused and as such 537 there was to default in payment of rent.
It was alternative ly contended that even if there had been default in payment of rent it would not afford a cause of action for seeking eviction because the original rent of Rs. 16 had been ille gally raised to Rs.60 per month in contravention of the terms of the Act, that as such the appellants were entitled to seek adjustment of the excess payments made by them towards the alleged arrears of rent and consequently there can be no arrears of rent under law.
In so far as the re quirement of the shop for the business needs of the respond ent is concerned it was contended that it was not a bona fide claim but only a make believe story in order to get the appellants evicted.
The Trial Court, after a detailed consideration of the oral and documentary evidence adduced by the parties, held that the appellants had neither tendered the rent to Ram Prakash Gupta nor had the latter refused to receive it, that in the absence of a refusal to receive rent the appellants were not entitled under the Act to make remittances of the rent by money order, that in any event the payment of rent to a junior member of the family instead of to the Karta was not a valid payment and that as such the appellants had committed default in payment of rent and were, therefore, liable to be evicted.
On the other ground also the Trial Court held that the leased portion was bona fide required by the Karta for the gainful engagement of two members of the joint family who were unemployed and that was a second ground for ordering eviction.
Accordingly the Trial Court decreed the suit for eviction.
On the appellants preferring an appeal, the Appellate Court reversed the findings of the Trial Court and dismissed the suit for eviction.
The Appellate Court held that even if the appellants had failed to pay the rent from, November 1973 onwards the appellants cannot be deemed to have commit ted default in payment of rent because the enhancement of rent from Rs. 16 to Rs.60 was in contravention of the provi sions of the Act and as such the appellants were entitled to have the excess payments adjusted towards arrears of rent as well as future payments of rent.
The ground of bona fide requirement was also not accepted by the Appellate Court.
Against the judgment of the Appellate Court the respond ent herein preferred a second appeal to the High Court.
As there was a conflict of decisions of different Benches of the High Court on the question whether tenants paying rent in excess of the agreed rent would be affected by the rule of "in pari delicto" and cannot, there 538 fore, seek adjustment of the excess payments towards arrears of rent to resist a suit for eviction for default in payment of rent, the second appeal was referred to a Full Bench.
The Full Bench, after elaborately considering the matter held that the rule of "in pari delicto" would squarely apply to tenants who pay enhanced rents in contravention of the terms of the Rent Restriction Acts and hence the appellants are guilty of pari delicto and cannot, therefore, seek adjust ment of the excess payments made by them and seek avoidance of their eviction for default in paying the rent.
The Full Bench further held that the finding of the Appellate Court on the question of the landlord 's bona fide requirement of the leased premises was vitiated on account of misreading of facts and misapplication of law and hence the Trial Court 's finding warranted restoration.
The Full Bench, therefore, allowed the appeal and restored the decree of eviction passed by the Trial Court on both the grounds set out in the plaint.
Mr. Javali, learned counsel for the appellants strenu ously contended that the High Court was not justified in allowing the second appeal since the appellants had not committed any default in payment of rent and furthermore even if there was any default, due to their erroneous ten der, they were entitled to seek adjustment of the excess payments made by them and avoid eviction.
It was also sub mitted that the appellants, being in the disadvantageous position of tenants, cannot be placed on par with the land lord and held that they are "in pan delicto" and cannot seek adjustment of the excess payments towards arrears of rent.
The further submission was that the respondent 's requirement of the shop for the business needs of the members of the joint family was not established either by the pleadings or the evidence and as such the Appellate Court was perfectly in order in rejecting the second ground on which eviction was sought for and the High Court had erred in interfering with a finding of fact in a second appeal.
In the view we propose taking of the matter we do not think it necessary to go into the question whether the appellants had committed default in payment of rent and secondly even if they had committed default, they are enti tled to adjust the excess rent paid by them over a span of 30 years without reference to the rule of "in pari delicto".
The reason for our refraining to go into these questions is because we find the decree for eviction passed against the appellants can be sustained on the second ground viz. bona fide requirement of the shop for the business requirements of the members of the joint family.
Even so we think it necessary to point out an error contained in the argument of Mr. Javali.
The learned counsel submitted that the 539 decision of the High Court on the question of "in pari delicto" may not be good law in view of recent decision of this Court in Mohd. Salimuddin vs Misri Lal & Anr., ; It is true that the case related to a dispute regarding default in payment of rent between a landlord and a tenant and this Court held that it will be a judicial sin to treat the landlord and tenant on a par and apply the doctrine of pari delicto because the parties were placed in the position of "oppressor" and "oppressed".
The learned counsel has failed to notice that the facts in that case were entirely different.
It was a case where a tenant was obliged to advance a loan of Rs.2,000 to the landlord in order to secure the lease of a premises.
The agreement between the parties specifically provided that the loan amount was to be adjusted against the rent which accrued.
In spite of it the landlord sought the tenant 's eviction on the ground of arrears of rent and set up a plea of "in pari delicto" against the tenant.
It was in such circumstances this Court held that the doctrine of pari delicto cannot be applied since the tenant was perforce compelled to advance a loan to secure the lease even though such advancement of loan was against the terms of the Rent Act.
The learned Judges have taken care to set out that the doctrine will not be attracted when there is no element of compulsion or exploitation and both parties have by consensus contravened the provisions of law for their mutual advantage.
They, however, found that the tenant concerned in that case was a victim of exploitation and hence he was not "in pari delic to".
The relevant portion of the judgment reads as follows: "The doctrine is attracted only when none of the parties is a victim of such exploitation and both parties have voluntarily and by their free will joined hands to flout the law for their mutual gain.
Such being the position the said doctrine embodying the rule that a party to a transaction prohibited by law cannot enforce his claim in a court of law is not attracted in a situation like the present." Coming now to the ground of eviction based on the bona fide requirement of the respondent, Mr. Javali argued that the bona fides of the claim is not established either by the pleadings or the evidence and hence the Trial Court and the High Court were in error in sustaining the said ground of eviction.
It was pointed out by the counsel that in the plaint there is only a casual statement about the require ment of the shop by the landlord and in the evidence it was not made clear whether the shop was required for expansion of the existing business or for starting a new business venture for the benefit of the younger members 540 of the joint family.
The Trial Court has discussed the case of bona fide requirement in para 14 of its judgment and has held that the landlord is bonafide in need of the shop to engage two members of the joint family in business.
The Appellate Judge has reversed the finding of the Trial Court on four grounds viz. that the tenants were refugees from West Pakistan and had no shop of their own in the town of Gaya, that from the point of comparative hardship it would be the tenants who would suffer more than the landlord by an adverse decision, that the shop occupied by the appellants is only a small portion in a massive building in the occupa tion of the landlord and that the landlord 's requirement of the building was more attributable to a desire to recover possession rather than on account of any genuine need for it.
The High Court has pointed out that the Appellate Judge had completely misdirected himself in his approach to the question because of erroneous assumptions of facts as well as law.
Admittedly, the tenancy had commenced in 1932 which was long prior to the partition in 1947 and hence there can be no question of the tenant being a refugee from West Pakistan.
Likewise, the application of the test of compara tive hardship between the landlord and the tenant was an extraneous test because no such test has been prescribed by the Act for going into the reckoning.
Then again it was noticed that without any evidence or materials the Appellate Judge has assumed that the main building in the occupation of the joint family is a massive building and that the leased portion constitutes only a negligible area.
Likewise the Appellate Judge had no materials to hold that the land lord 's requirement of the building was only borne out of desire and not on account of any genuine need.
Since the Appellate Judge had rendered his findings on the question of bona fide requirement of the shop by the landlord on base less assumptions and wrong principles of law, the High Court was justified in setting aside the finding of the Appellate Judge even though it was factual in character.
It is true that in a second appeal a finding on fact even if erroneous will generally not be disturbed but where it is found that the finding is vitiated by application of wrong tests or on the basis of conjectures and assumptions then a High Court will be well within its rights in setting aside in a second appeal a patently erroneous finding in order to render justice to the party affected by the erroneous finding.
Mr. Javali tried to canvass that the Appellate Judge had ren dered his finding mainly with reference to the pleadings and the evidence and his incidental references to other factors and circumstances were only to reinforce his conclusion and as such his finding does not suffer from any infirmity or error.
We are not persuaded by this argument because it cannot be predicated as to how far the Appellate Judge 's conclusion 541 was influenced by the mistaken tests applied by him to determine the issue.
We are, therefore, of the view that the finding of the Trial Court which has been confirmed by the High Court regarding the respondent being bona fide in need of the shop for the business needs of the joint family does not call for any interference by this Court in this appeal under Article 136 of the Constitution.
In the result, the appeal fails and will stand dis missed.
There will be no order as to costs.
To enable the appellants to find alternate accommodation to shift their business they are given time till 30.6.87 to vacate the premises.
S.R. Appeal dis missed.
|
The first appellant, widow of one Dr. Ramachandra, a tenant since 1932 of one room used as a medical shop was recognised as tenant on the death of her husband in or about 1960 by Babu Lal, the original landlord.
The rent was fixed at Rs.416 per month.
Over the years the rent came to be increased from Rs.16 to 60 per month, i.e. both when Dr. Ramachandra was alive and also later.
Babulal died on 14.11.1973 and the respondent became the Karta of the family as the senior most male member of the joint family.
The respondent issued a notice on 12.6.1974 terminating the tenancy with effect from 30.6.1974 and called upon the first appellant wife to surrender possesssion of the leased shop from 1.7.74.
As the appellants (wife and son of Dr. Rama chandra) failed tO deliver possession a salt for eviction was filed under the Bihar Buildings (Lease, Rent and Evic tion) Control Act on two grounds: (a) default of rent and (b) bonafide requirements of the junior members of the Joint family.
The trial court allowed the eviction petition.
In appeal, the appellate court reversed the findings of the Trial Court and applying the principle of unjust enrichment contrary to statutory law, held that the appellants were entitled to have the excess payment adjusted towards arrears of rent as well as future payments of rent since 1943.
However, in the Second Appeal, the Full Bench of the Patna High Court held that the rule of "in pari delicto" would squarely apply to tenants who pay enhanced rents in contra vention of the terms of the Rent Restriction Acts and there fore the appellants cannot claim adjustment of excess rent paid and seek avoidance of their eviction.
The High Court also reversed the finding of the appellate court on the question of bona 535 fide requirement as being vitiated by misreading of facts and misapplication of law.
Hence the tenant 's appeal by special leave.
Dismissing the appeal, the Court, HELD: 1.
In Mohd Salimuddin vs Misrilal & Anr.
, ; , the Supreme Court have taken care to set out that the doctrine of "in pari delicto" will not be attracted when there is no element of compulsion or exploitation and both parties have by consensus contravened the provisions of law for their mutual advantage.
[539D E] 2.
It is true that in a second appeal a finding on fact even if erroneous will generally not be disturbed but where it is found that the finding is vitiated by application of wrong tests or on the basis of conjectures and assumptions then a High Court will be well within its rights in setting aside in a second appeal a patently erroneous finding in order to render justice to the party affected by the errone ous finding.
[540F G]
|
ivil Appeal Nos.
437448 Of 1978 Etc.
From the Judgment and Order dated 18.1.
1977 of the Andhra Pradesh High Court in Writ Petition No. 4485, 3399, 4979, 5819 of 1974.
Y.S. Chitale, Soli J. Sorabjee, P.P. Rao, A.S. Nambiar, A. Chitale, T.V.S.N. Chari, N. Mathur, W. Quadri, Ms. V. Grover, Ms. Sunita Mudigouda, T.D. Ramayya, A. Mariarputham, T.C. Gupta, K.V.G. Rama Rao and G. Narayana Rao for the appearing parties.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
The primary question involved in these appeals and petitions is whether under the 'Excise Law ' prevailing in the State of Andhra Pradesh, the Govern ment is entitled to claim from the Excise Contractors who have failed to lift the 'Minimum Guaranteed Quantity ' of liquor the amount said to represent the 'excise duty compo nent ' in the issue price of liquor relating to such unlifted quantity of liquor.
A full bench of three judges of the High Court of Andhra Pradesh, in V. Narasimha Rao vs Superintend ent of Excise, AIR 1974 AP 157 held that the Government could but this view was overruled by a Full Bench of Five Judges of the same High Court in Atluri Brahmanandam vs Tahsildar of Gannavaram AIR 1977 AP 196 where it was held that the Government could not.
It is the judgment of the Full Bench of Five Judges which is in question in the ap peals and petitions filed by the Government.
With a view to cure the defects pointed out by the Full Bench of Five Judges and to validate the demands raised by the Government, the Andhra Pradesh Legislature enacted the Andhra Pradesh Excise Amendment Act X of 1984.
Demands raised pursuant to the Amending Act were upheld by the High Court by a later judgment.
The aggrieved Excise Contractors have filed ap peals and they are also before us.
In some cases the con tractors who had originally succeeded because of the deci sion of the Five Judge Full Bench were again called upon to make good the deficit after the Amending Act was passed.
They questioned the fresh demands but failed in the High Court.
Their petitions for Special Leave to Appeal are also before us.
517 Entry 51 of List II of the seventh schedule to the Constitution empowers the State to levy duties of Excise on alcoholic liquors for human consumption (not including medicinal and toilet preparations containing alcohol) manu factured or produced in the State ' and counter availing duties on such alcoholic liquors manufactured or produced elsewhere in India.
An Excise duty levied by the State on alcoholic liquors is therefore.
primarily a duty on the manufacture or production of such alcoholic liquors.
Section 2(10) of the Andhra Pradesh Excise Act.
1%8 defines "Excise Duty" or "Countervailing duty" to mean "the duty of Excise or countervailing duty, as the case may be mentioned in Entry 51 is List II of the Seventh Schedule to the Constitu tion." 'Excise Revenue ' is defined by s.2(12) to mean 'Rev enue derived or derivable from any duty, fee, tax, rent, fine, penalty or confiscation levied, imposed or ordered under the provisions of this Act or other law for time being in force elating to intoxicating drugs '.
Section 17 of the Act, before and after the amendment was and is as follows: "Section 17 before amendment Section 17 as amended by Act No.10 of 1984.
Power to grant lease: Sec. 17: Grant of exclusive (i) The Government may, sub privilege of manufacture etc: ject to such conditions as (1) subject to the provisions they may deem fit to impose, of s.28 and any rules made grant for a fixed period to in this, the Govt.
may, subject any person, at any place a to such conditions as they lease jointly or severally may deem fit to impose, grant for the supply, manufacture for a fixed period to any or sale of any intoxicant.
person at any place a lease or licence or both either Explanation: A lease shall jointly or severally for the not take effect until the exclusive privilege collector or any other comp etent officer has issued (i) of manufacturing or of a licence under this Act.
supplying by wholesale or of both, or (2) The Government may (ii) or selling by wholesale confer on any officer the or by retail, or power mentioned in sub 519 section(1).
(iii) of manufacturing Or Of supplying by wholesale, or of both, and of selling by retail, any liquor or other intoxicant within any such area in the State as may be specified in the said order.
Explanation: A lease shall not take effect until the Collector or any other competent officer has issued a licence under this Act.
(2) The Government may confer on any officer the power mentioned in sub section( 1).
" Sections 21 and 22 which remained unchanged are as follows: "Section 21: Excise duty or Countervailing duty on excisable articles: (1) The Govt.
may, by notification levy an excise duty on any excisable article manufactured or produced in the State at such rate, not exceeding the rates mentioned in the Schedule, as may be specified in the notification.
(2) The Govt.
may by notification, levy a countervailing duty on any excisable article manufactured or produced elsewhere in India and imported into the State at such rate as may be specified in the notification which may not exceed the rates on excise duty on similar excisable articles levied under sub section(1).
(3) Different rates may be specified in sub section(1) and (2) for different kinds of excisable articles and different modes of levying duties under s.22.
Section 22: Modes of levying duties: The excise duty and the countervailing duty under s.21 shall be levied in one or more of the following modes: (a) rateably, on the quantity of any excisable article produced or manufactured in or issued from a distillery, brewery or manufactory or warehouse or imported into the State; 520 (b) in the case of spirits or other liquors produced in any distillery, brewery or manu factory in according with its quality or strength or in accordance with such scale of equivalents calculated on the quantity of materials used, or by the degree or attenua tion of the wash or wort as the case may be, prescribed; (c) In the case of today, in the form of a tax on each variety of excise tree from which teddy is drawn having due regard to the period during which such tree is capable of yielding today; (d) by fees on licences for the manufacture supply or sale of any excisable article.
" Section 23 before and after amendment was as follows: "Section 23 before amend Section 23 as substituted by ment Act 10 of 1984 Excise duty in respect of Sec. 23: Payment for exclu lease: Notwithstanding any sive privilege: Instead of or thing in Sections 21 and in addition to any excise 22, the sum accepted in con duty or fees leviable under sideration of the grant sections 21 and 22, the of any release relating to Commissioner or any any other any excisable article under competent officer may accept section 17, shall be the excise payment of a sum in consi duty or countervailing deration of the grant of duty payable in respect of lease or licence or both the excisable article, in for the exclusive privilege addition to any duty or in respect of the liquor or fees paid under s.21 & 22.
any other intoxicant under sec.
Validation: Where before the commencement of this Act.
, any issue price (which includes excise duty also) has been collected or recovered from the licensee in respect of short drawn 521 or undrawn minimum guaranteed quantity of arrack in pursu ance of rule 15 of the A.P. Excise (Arrack Retail, Vend and Special conditions of Licences) Rules, 1969, by deducting such price from the advance money paid by the licensee, then, notwith standing anything contained in any judgment, decree or order of any court, tribunal or other authority to the contrary, the price so col lected or recovered shall be deemed to be and shall be deemed always to have been validly collected or recov ered as consideration for the grant of lease or licensee or both to the lessee or licen see for the exclusive privi lege in respect of sale of liquor in accordance with the provisions of the principal Act as amended by this Act as if the amendments made to the principal Act by a sections 2 and 3 of this Act had been in force at all material times and accordingly (a) all acts, proceedings or things done or taken by the State Govt.or by any officer of the State Govt.
or by any other authority in connection with the collection of such price shall for all purposes, be deemed to be and to have always been done or taken in accordance with law; (b) no suit or other proceeding shall be maintained or contained in any Court or before any authority 522 for the refund of and no enforcement Shall be made by any Court of other authority of any decree or order directing the refund of any such price which has been collected as if the provisions of the principal Act as amended by this Act had been in force at all material times.
" The first entry in the Schedule to the Act is as follows: "No. Description of Mode of levying Maximum rate excisable article duty of duty 1.
Arrack on the quantity Rupees eight per issued from the litre of the distillery of ware strength of house.
proof spirit.
" We mentioned earlier that the Andhra Pradesh Legislature amended the Andhra Pradesh Excise Act to nullify the effect of the Full Bench judgment in Atluri Brahmanandam vs Tahsil dar of Gannavaram (supra).
We may refer to the provisions of the amending Act.
Section 2 of the Amending Act provides for the substitution of a new section 17 for the old.
section 17.
We have already extracted both the old and the new sections.
Sec tions 3 of the amending Act provides for the substitution of old s.23 by a new s.23.
We have already extracted both the old and the new sections.
Section 4 of the amending Act provides for the Validation of earlier demands made in respect of issue price of short drawn minimum guaranteed quantity of liquor.
It is necessary to set out the whole of this provision.
It is as follows: "4.
Validation Where, before the commence ment of this Act, any issue price (which includes excise duty also) has been collected or recovered from the licensee in respect of short drawn or undrawn minimum guaranteed quantity of arrack in pursuance of rule 15 of the Andhra Pradesh Excise (Arrack Retail, Vend and Special Conditions of Licences) Rules, 1969, by deducting such price from the advance money paid by the licensee, then, notwith standing 523 anything contained in any judgment decree or order of any court, tribunal or other authori ty to the contrary, the price so collected or recovered shall be deemed to be and shall be deemed always to have been validly collected or recovered as consideration for the grant of lease or licence or both of the lessee or licensee for the exclusive privilege in re spect of sale of liquor in accordance with the provisions of the principal Act as amended by this Act as if the amendments made to the Principal Act by sections 2 and 3 of this Act had been in force at all material times and accordingly, : (a) all acts, proceedings or thing done or taken by the State Government or by any offi cer of the State Government or by any other authority in connection with the collection of such price shall for all purposes be deemed to be and to have always been done or taken in accordance with law.
(b) no suit or other proceeding shall be maintained or continued in any court or before any authority for the refund, of, and no enforcement shall be made by any Court or other authority of any decree or order direct ing the refund of, any, such price which has been collected and which would have been validly collected as if the provisions of the Principal Act as amended by the Act had been in force at all material times.
" The Andhra Pradesh(Arrack, Retail Vend Special Condi tions of Licences) Rules, 1969 were made by the Government of Andhra Pradesh in exercise of the powers conferred by various provisions of the Andhra Pradesh Excise Act.
Rule 7 obliges the licensee to buy arrack from a recognised dis tillery, warehouse or depot as may be allotted by the de partment at the issue price as notified by the Commissioner from time to time.
Rule 11 provides for remittences of duty etc.
into the Government treasury.
Rule 15 deals with mini mum guaranteed quantity of liquor.
It is necessary to ex tract the first two clauses of rule 15 and they are as follows: "15.
Minimum guaranteed quantity of arrack (1) No licensee shall purchase arrack less than the speci fied minimum guaranteed quantity in any month.
If in any month, quantity less than the minimum guaranteed 524 quantity fixed for that month is drawn, at the end of that month issue price to the extent of deficit purchase shall be deducted from the advance money paid by the licensee under the minimum quantity of arrack guaranteed by him and the licensee shall be called upon to indemnity the amount so adjusted by the end of the succeeding month in which short drawn quantity had occured.
Provided that the Excise Superintendents may permit the licensee to lift the short drawn minimum guaran teed quantity of the previous month in the succeeded month for special reasons expert for the month of September, unless the licensee has committed default in lifting the minimum guaranteed quantity for two successive months; Provided further that where the Commissioner deems it necessary to permit a shop keeper to draw the deficit quantity short drawn in any month in the subsequent, he shall obtain the prior approval of the Government for grant ing such permission.
(2) Where a licensee fails to lift the arrack as permitted by the Excise Superintendent or to indemnity the advance amount so adjusted by the end of the succeeding month in which the short drawal of quantity had occurred, the right acquired by the defaulting licensee shall be reauctioned forthwith.
" Rule 17 prescribes "every licensee shall be bound by the provisions of Andhra Pradesh Excise Act, 1968, and the rules and orders made under from time to time.
" The Andhra Pradesh Excise(Lease of fight to sell liquor in retail) rules 1969 are another set of rules made under the various provisions of Andhra Pradesh Excise Act.
Rule 2(ix) defines "rental" to mean 'the rent payable in respect of a shop or group of shops in consideration of the grant of lease for sale of liquor '.
Rule 3 provides for the lease of the fight to sell liquor in retail.
Clause 1 of Rule 3 may be usefully extracted here and it is as follows: "3.
Lease to right to sell liquor in retail: (1) Subject to the provisions of these rules, every lease of right to sell 525 liquor in retail shall be granted by auction.
The lease shall ordinarily be for a period of one excise year; Provided that where the Commissioner considers it necessary to grant the lease of right to sell liquor in retail in any other manner, he shall do so with the prior approval of the Government.
" The rest of the rules relate to the procedure to be followed at the auction and thereafter.
Rule 16 requires the auction purchaser to pay 2 per cent of the annual rental as earnest money together with one month 's rental on the day of auction immediately after the acceptance of tender or bid as the case may be.
The earnest money and one month 's rental are to be in addition to the deposit of rental prescribed by Rule 18.
Rule 18(1) provides for the deposit by auction purchaser within fifteen days from the date of auction, two months ' rental in cash or in fixed deposit certificates.
Rule 21 provides for execution of counterpart agreement by the licensee in form 42.
This is required to be done before taking out a licence in respect of lease granted to him for the sale of liquor.
Rule 22 provides that the lease shall not take effect until the auction purchaser obtains a li cence.
Rule 24 prescribes that every auction purchaser shall be bound by all the provisions of the Excise Laws which are in force or which may come into force and of the rules or orders made from time to time by the Government or Commis sioner or by the competent authority.
The prescribed form for the counterpart agreement provides among other thing for an undertaking that the licensee shah abide by all the provisions of the Andhra Pradesh Excise Act and the Rules and Orders thereunder existing and also those that would be issued from time to time in that respect.
The Andhra Pradesh Excise (Lease of right to sell liquor in retail) Rules, 1969 and the Andhra Pradesh Excise(Arrack, Retail Vend Special Conditions for Licences) Rules were duly amended in 1984.
It is to be mentioned here that the issue price of arrack is notified well in advance of the Excise year and the minimum guaranteed quantity of liquor is also fixed in regard to each shop well in advance of the auction.
The issue price is always a definite sum per bulk litre of liquor.
The notification specifying the issue price does not attempt to split up the issue price into various components such as cost price, Excise duty, transport charges etc.
Cost price, Excise duty and transport charges are not separately and individually charged.
Issue price is the sum total of whatever has gone into the price of liquor at the time it is issued and it is a single pre determined definite sum and not the total 526 of separate sums representing so many specified components.
For example, the issue price of arrack for the year 1979~80 was notified in the following manner: "In exercise of the powers conferred by Rule 7(1) of the Andhra Pradesh Excise (Arrack, Retail sale Special Conditions for Licences) Rules, 1969, the Commissioner of Excise, Andhra Pradesh, hereby notifies the issue price of arrack for the Excise Year 1979 80 at Rs.5.10 per bulk liter of 30x U.P. strength and Rs.3 per bulk liter of 60x U.P. strength.
" It is however not disputed that excise duty does enter the determination of the issue price but that has nothing to do with the excise contractor whose obligation is to pay the whole of the issue price.
As we said the issue price as well as minimum guaranteed quantity are both fixed well in ad vance and it is with full knowledge of the issue price and the minimum guaranteed quantity that every bidder partici pates in the auction.
We wish to emphasise here that the 'issue price ' is that which is not notified as issue price and not its components, if any.
These components which have come together to become 'issue price ' are not to be separat ed again.
To borrow the analogy of Chemistry it is a chemi cal compound and not a mechanical mixture.
Excise duty loses its identity, as it were, and becomes an inseparable part of 'issue price '.
The learned counsel for the contractors however, argued that excise duty was admittedly a part of issue price and that the legislature, while amending the Excise Act in 1984, had also recognised the distinctive duty element in issue price.
He also invited our attention to Narasimha Rao vs Superintendent of Excise (supra).
It is true that it is not disputed that the element of excise duty has entered the issue price but that does not mean that it continues to retain its character as Excise duty.
In V. Narasimha Rao vs Superintendent of Excise (supra), the High Court of Andhra Pradesh, after refering to Rule 11 of the retail vend Rules, observed that it could be safely taken that the three items, namely, duty, cost and sales tax constituted the issue price.
It is one thing to say that several elements enter into the determination of issue price but it is altogether a different thing to say that these erstwhile constituent elements retain their character and individually as such even after determination of issue price.
In the statement of objects and reasons of the amend ing Act there is reference to 'issue price ' together with excise duty ' and 'issue price including excise duty '.
In s.4 of the amending Act there is a reference to 'issue price(which includes excise duty also) '.
These references to issue 527 price and excise duty are made in the context of the judg ment of the Five Judge Full Bench of the Andhra Pradesh High Court which has treated excise duty as a severable element of issue price, the effect of which was sought to be got rid by the amending Act.
It was in that context that there was a reference to the excise duty element of issue price.
We do not think that it is permissible for us to hold that the element of excise duty which has gone into the determination of issue price continues to retain its individual character so as to be capable of being severed and dealt with sepa rately.
Basing himself on an observation made in Panna Lal vs State of Rajasthan; , it was argued by the learned counsel on behalf of the Excise Contractors, that issue price can only relate to liquor drawn by the contrac tors and cannot pertain to undrawn liquor.
There can be no question that issue price must generally relate to liquor which is drawn by the Contractors but it does not follow therefrom that issue price cannot be adopted by agreement between the parties as the measure of compensation to be paid in the case of undrawn liquor.
In fact, it may not be quiet correct even to view it as compensation as we shall presently see.
It is no more and no less than the price which the contractor agrees to pay for the grant of the privilege to sell liquor, drawn or undrawn.
We may now examine the situation as it obtained before the amending Act, 1984.
It is well settled that all right in regard to manufacture and sale of intoxicants vest in the State.
It is open to the State to part with those rights for a consideration.
The consideration for parting with the privilege of the State is neither Excise duty nor Licence fee but it is the price of the privilege.
Section 17 of the Andhra Pradesh Excise Act as it stood before the amendment provided for the grant of a lease for the manufacture or sale of an intoxicant subject to such conditions as the Government deemed fit to impose.
It also provided that a lease shall not take effect until a licence under the Act was also issued.
Section 21 provided for the levy of Excise duty on excisable articles and s.22 prescribed the mode of levy of excise duty.
Section 23 provided that, notwithstand ing anything in sec.
21 and 22, the sum accepted in consid eration for the grant of any lease under section 17 was to be the excise duty payable in respect of that excisable article.
The marginal note of s.23 is "Excise duty in respect of lease".
Rental we have seen has been defined in the Andhra Pradesh (Lease of fight to sell liquor in retail) Rules, 1969, as meaning "the rent payable in respect of a shop or group of shops in consideration of the grant of lease for the sale of liquor".
Rule 3 prescribes that every lease of right 528 to sell liquor in retail shall be granted by auction.
Rule 7 of the Andhra Pradesh (Arrack Retail Vend Special Conditions of Licences) Rules prescribes that the licensee shall pur chase arrack from the distillery, warehouse or depot allot ted by the Government and shall pay issue price as notified by the Commissioner from time to time.
Rule 15 provides for the purchase of a specified minimum guaranteed quantity of arrack every month and for the adjustment of the issue price in case of any short fall in the purchase of the minimum guaranteed quantity of liquor.
Thus reading sections 17 and 23 of Andhra Pradesh Excise Act together with the Andhra Pradesh Excise (Lease of Right to sell liquor in retail) Rules, 1969 and Andhra Pradesh (Retail Vend Special Condi tions of Licences) Rules, the picture which emerges is that the privilege of selling liquor which includes the lease of the shop for an area and the licence to sell liquor therein may be granted by the State by public auction subject to (1) payment of rental being the highest bid at the auction (It is to be noted here that rental is the rent payable in consideration of grant of lease for the sale of liquor but it is not the sale or exclusive consideration for the lease), (2) the requirement that the licensee shall purchase arrack at the issue price, and (3) the further requirement that the licensee shall purchase a minimum guaranteed quan tity of arrack, which he has to make good in case of short fall.
The consideration for the grant of the privilege to sell liquor is not merely the rental to be paid by the lessee but also the issue price of the arrack supplied or treated as supplied in case of short fall, which is also to be paid by the lessee licensee.
There is no question of the lessee licensee having to pay the excise duty though it may be that the issue price is arrived at after taking into account the excise duty payable.
If this is the true posi tion, the question arises whether the contractor can claim to deduct from the issue price payable by him in respect of short drawn arrack, the amount said to be attributable to excise duty.
Once we have understood the true nature of 'issue price ' and the true consideration for the grant of the exclusive privilege to sell liquor, the question posed in the previous paragraph is not difficult to answer.
We have guidance from several decisions of this Court.
The first of the cases on which the learned counsel for the liquor contractors relied was that of Bimal Chandra Banerjee vs State of Madhya Pradesh, ; The successful bidders at an excise auction who had failed to take delivery of the prescribed minimum quantity of liquor which they were required to sell under the condition of auction were called upon to pay excise duty on the quantity of liquor which they had failed to take.
Clause 2(c) of the 529 notification prescribing the conditions of auction provided that the contractor had to make good every month "the defi cit of monthly average of the total minimum duty".
The court found that none of the provisions of the Act empowered the rule making authority viz. the State Government to levy tax on excisable articles which had not been either imported, exported, transported, manufactured, cultivated or collected under any licence or manufactured in any distillery estab lished or distillery or brewery licenced under the Act.
The Court said, "Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift.
In so doing it was attempting to exercise a power which it did not possess.
No tax can be imposed by any by law or rule or regulation unless the statute itself under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be dele gated to the executive.
" This was clearly a case where the State purported to levy excise duty on the unlifted quantity of liquor ' and this could not be done under the authority of law.
The second case on which the learned counsel relied was that of State of Madhya Pradesh vs Firm Gappulal etc.
; , In that case there was no dispute that the demand made on the contractors was in respect of duty on liquor which had not been lifted.
It was held that the demand could not be made.
The decision of the court in Panna Lal 's case was distinguished on the ground that in that case there was not levy of excise duty in enforcing the payment of the guaranteed sum or the stipulated lump sum mentioned in the licences.
It was also pointed out that in Panna Lal 's case the excise duty component of the issue price was found to be a measure of the quantum of or extent of the conces sion or the remission to be given to the liquor contractors.
The lump sum amount payable for the exclusive privilege was not to be confused with the issue price.
In essence, it was said, what was sought to be recovered from the liquor con tractors in Panna Lal 's case was the shortfall occasioned on account of failure on the part of liquor contractors to fulfil the terms of licence.
Gappulal 's case is not of any assitance to the contractors in the present case as what was sought to be recovered there, was undoubtedly excise duty which was not leviable on unlifted liquor.
The third case relied on by the learned counsel for the con 530 tractors was that of Excise Commissioner, Uttar Pradesh vs Ram Kumar, The licence granted to each of the contractors in this case provided that on his failure to lift the monthly proportonate quota in any month, he shall be liable to pay compensation to the State Government at the rate equal to the rate of still head duty . on the quantity falling short of such monthly proportionate quota.
The contractors having failed to lift or sell the minimum quantity of quota of liquor were required to compensate the State as provided by the licence.
The Court held that the demand though disguised as compensation was in reality a demand for excise duty on the unlifted quantity of liquor and that was not authorised by the provisions of the Act.
Thus we see that in Bimal Chandra Banerjee 's case and Gappulal 's case, what was sought to be recovered, was excise duty and in Ram Kumar 's case also what was sought to be recovered was excise duty, though disguised as compensation.
Such excise duty on unlifted liquor was not leviable.
Refer ring to these cases, Chandrachud, CJ.
observed in State of Haryana vs Jage Ram, ; "In Bimal Chandra Banerjee 's case, it was held by this court that the levy of excise duty on undrawn liquor was beyond the power of the State Government and that therefore, the rule imposing the condition to that effect was invalid.
That decision was followed in State of Madhya Pradesh vs Firm Gappulal where also the licensees were required to pay what was described as 'Pratikar ' which was nothing but excise duty on undrawn liquor.
The same situa tion obtained in Excise Commissioner vs Ram Kumar because the real nature of the payment which the licensee were required to pay there, was excise duty on undrawn liquor.
"These decisions cannot held the respondents because the true position, as we stated earlier, is that the amount which the respondents are called upon to pay is not excise duty on undrawn liquor but is the price of a privilege for which they bid at the auction of the vend which they wanted to conduct.
" The learned counsel for the State of Andhra Pradesh relied on Har Shankar & Ors., vs The Dy.
Excise & Taxation Commr.
& Ors.
, ; ; Panna Lal vs State of Rajasthan (supra) and State of 531 Haryana vs Jage Ram (supra).
In Har Shankar 's case, it was held by a Constitution Bench of the Court (Chandrachud, J. speaking for the Court) that since rights in regard to intoxicants belonged to the State, it was open to the Gov ernment to part with those rights for a consideration.
In a scheme providing for the parting of the right for a consid eration, it was not of the essence whether the amount charged to the licences was pre determined or whether it was left to be determined by bids offered in auctions.
The power of the Government to charge a price for parting with its rights and not the mode of fixing that price was constituted the essence of the matter.
Nor indeed did the label affixed to the price determine either the true nature of the charge left by the Government or its rights to levy the same.
The amount charged was neither a fee properly so called nor indeed a tax but was in the nature of a price of the privi lege which the purchaser had to pay in any trade or business transaction.
Once it was appreciated that the auctions were only a mode or medium for ascertaining the best price ob tainable for the grant of a privilege to sell liquor, there would be no further contradiction in them.
In Panna Lal 's case, the court held: "The agreements gave the liquor contractors an exclusive privilege to sell country liquor in a specified area for the period fixed for a stipulated sum of money for enjoying the privilege.
If the contractors do not sell any liquor, they are yet bound to pay the stipu lated sum.
If they sell liquor, they are given the benefit of remission in the price of the exclusive privilege.
The measure for this remission is the excise duty leviable to the extent that the liquor contractor can neutra lise the entire amount of exclusive privilege in the excise duty payable by them.
If the contractors fail to lift adequate quantity of liquor and thereby fail in neutralising the entire price of exclusive privilege, the contractors are not called upon to pay excise duty.
" It was held that there was no leviable excise duty in en forcing the payment of the guaranteed sum or the stipulated lump sum mentioned in the licence.
We have already referred to the references made to 'rental ' and 'issue price '.
We finally come to the State of Haryana vs Jage Ram (supra) which we may now take to be the last word on the subject.
Chandrachud, CJ spoke for the Court and said,: "The amount which the respondents agreed to pay to the 532 State Government under the terms of the auc tion is neither a fee properly so called which would require the existence of a quid pro quo, nor indeed is the amount in the nature of excise duty, which by reason of the constitu tional constraints had to be primarily a duty on the production or manufacture of goods produced or manufactured within the country.
The respondents cannot therefore complain that they are being asked to pay 'excise duty ' or "stillhead duty" on quota of liquor not taken, lifted or purchased by them.
The respondents agreed to pay a certain sum order the terms of the auction and the Rules only prescribe a convenient mode whereby their liability was spread over the entire year by splitting it up into fortnightly instalments.
The Rules might as well have provided for payment of a lump sum and the very issuance of the licence could have been made to depend on the payment of such sum.
If it could not be argued in that event that the lumpsum payment represented excise duty, it cannot be so argued in the present event merely because the quota for which the respondents gave their bid is re quired to be multiplied by a certain figure per proof litre and further because the re spondents were given the facility of paying the amount by instalments while lifting the quota from time to time.
What the respondents agreed to pay was the price of a privilege which the State parted with in their favour.
They cannot therefore avoid their liability by contending that the payment which they were called upon to make is truly in the nature of excise duty and that no such duty can be imposed on liquor not lifted or purchased by them".
The result of our discussion is that even prior to the 1984 amendment, the amount which each of the contractors was required to pay or have adjusted was not excise duty on undrawn liquor, but was part of the price which he had agreed to pay for the grant of the privilege to sell liquor.
The judgment of the High Court of Andhra Pradesh in Atluri Brahmanandam vs Tahsildar of Gannnvaram (supra) is reversed.
The appeals filed by the State of Andhra Pradesh are al lowed.
We mentioned that in order to remedy the situation resulting from the Full Bench judgment of the Andhra Pradesh High Court, the Andhra Pradesh Legislature enacted the Andhra Pradesh Excise (Amendment) Act 10 of 1984.
In the view that we have now taken the amendment of the Act has become a needless exercise.
However, we 533 may briefly consider the attack on the amending Act.
It was argued that the amending Act did not effectually remove the vices or defects pointed out by the Full Bench in Brahmanan dam 's case (supra) as secs.
21 and 22 were left in tact.
It was said that without amending secs.
21 and 22, the amend ment of sec.
23 effected by the Andhra Pradesh Legislature led no where towards achieving the result aimed at by the Legislature.
Nor could the Legislature validate the demands earlier made and struck down by the courts merely by enact ing that the demands were to be deemed to be valid without removing the vices or defects from which those demands suffered.
We are not inclined to agreed with these submis sions. Sec.
17 of the Andhra Pradesh Excise Act which deals with the grant of the fight to sell liquor has been substan tially amended.
Even the marginal note has been changed from "power to grant lease" to "grant of exclusive privilege of manufacture, etc.
" The new sec.
17 makes it clear that what is proposed to be granted is the exclusive privilege to manufacture or sell liquor in the shape of a lease or li cence or both.
The explanation makes it clear that the lease shall not take effect unless a licence is issued.
Having regard to the vital amendment of sec.
17, no further amend ment of secs.
21 and 22 was necessary.
The consequential amendment to sec.
23 has however been made.
Again the mar ginal note has been changed from "excise duty in respect of lease" to "payment for exclusive privilege.
" It is now specified in the new section that the payment of the same in consideration of the grant of lease or licence or both for the exclusive privilege is to be instead of or in addition to any excise duty or fees leviable in secs.
21 and 22.
We are, therefore, satisfied that the amendments effected to secs.
17 and 23 have fulfilled the object of removing the vices or defects pointed out by the Full Bench in Atluri Brahmanandam 's case, if indeed there were defects or vices.
In the result, the petitions for special leave to appeal filed against the judgments of the Andhra Pradesh High Court upholding the amending Act and the demands made by the excise authorities are dismissed.
P.S.S. Appeals & Petitions dismissed.
|
Section 17 of the Andhra Pradesh Excise Act 1968, as it stood at the relevant time, provided for the grant of lease for the manufacture or sale of an intoxicant.
It also pro vided that a lease shall not take effect until a licence under the Act was also issued.
Section 23 provided that the sum accepted in consideration for the grant of any lease under s.17 was to be the excise duty payable in respect of that excisable article.
Rule 3 of the Andhra Pradesh (Lease of Right to Sell Liquor in Retail) Rules, 1969 prescribes that every lease of right to sell liquor in retail shall be granted by auction.
Rule 7 of the Andhra Pradesh (Arrack Retail Vend Special Conditions of Licences) Rules, 1969 requires the licences to purchase arrack from the distillery, warehouse or depot allotted by the Government and to pay 'issue price ' as notified.
Rule 15 provides for the purchase of a specified minimum guaranteed quantity of arrack every month and for the adjustment of the issue price in case of any short fail in the purchase of the minimum guaranteed quantity of liq uor.
A question arose as to whether under the Excise Law prevailing in the State, the Government was entitled to claim from the excise contractors, who failed to lift the minimum guaranteed quantity of liquor, the amount said to represent the excise duty component in the issue price of liquor relating to such unlifted quantity of liquor.
A Full Bench of three Judges of the High Court in V. Narasimha Rao vs Superintendent of Excise, (AIR held in favour of the Government.
It took the view that three items, namely, duty, cost 514 and sales tax constituted the issue price.
This view, howev er, was overruled by the Full Bench of Five Judges of the same High Court in Atluri Brahmanandam vs Tahsildar of Gannavaram, (AIR wherein it was held that the Government could not do so.
It treated the excise duty as a severable element of issue price.
That judgment was assailed in the appeals and petitions filed by the Government.
To nullify the effect of that judgment and to validate the demands raised by the Government the State Legislature enacted the Andhra Pradesh Excise (Amendment) Act X of 1984.
The amended s.17 provides for grant of lease or licence for exclusive privilege of manufacture, supply by wholesale or sale of any liquor or other intoxicants.
The new s.23 empow ers the competent officer to accept payment of a sum in consideration of the grant of lease or licence or both for the exclusive privilege in respect of the liquor or any other intoxicant under s.17.
Section 4 of the Amending Act, provides for the validation of earlier demands made in respect of issue price of short drawn minimum guaranteed quantity of liquor.
Demands raised pursuant to the Amending Act were upheld by the High Court by a later judgment.
The aggrieved excise contractors filed appeals to this court.
Some of the contractors who had originally succeeded because of the decision of Five Judges Bench and were again called upon to make good the deficit after the Amending Act was passed, having failed in the High Court filed special leave petitions to this Court.
It was contended for the aggrieved contractors that what was sought to be recovered from them was excise duty on unlifted quantity of liquor which was not authorised by the provisions of the Act, as the excise duty being a part of the issue price it could only ;elate to liquor drawn by them and not pertain to undrawn liquor, that without amending ss.21 and 22 of the Excise Act the amendment of s.23 affect ed by the Legislature led nowhere towards achieving the result aimed at by the Legislature and that the Legislature could not validate the demands earlier made and struck down by the Courts, merely by enacting that the demands were to be deemed to be valid without removing the vices and the defects.
Disposing of the appeals and the special leave petitions, the Court, HELD: 1.1 Once 'issue price ' is determined its compo nents, such as excise duty, cost price, transport charges etc.
cease to retain their individual character.
They cannot then be severed from the issue 515 price and dealt with separately.
The Five Judges Bench of the High Court was, therefore, wrong in holding that excise duty was a severable element of issue price.
[526H; 527A B] 1.2 Issue price is the sum total of whatever has gone into the price of liquor at the time it is issued and it is a single pre determined definite sum per bulk litre and not the total of separate sums representing to many specified components.
The 'issue price ' is that which is notified as issued price and not its components, if any.
These compo nents which have come together to become 'issue price ' are rendered incapable of being separated again.
Excise duty loses its identity, as it were, and becomes an inseparable part of 'issue price '.
[525H; 526A] A lessee licensee, therefore, was not entitled to claim deduction from the issue price payable by him in respect of short drawn quantity of arrack the amount attributable to the excise duty.
[528F] V. Narasimha Rao vs Superintendent of Excise, AIR 1974 AP 157, distinguished.
Atluri Brahamanandam vs Tahsildar of Gannavaram, AIR 1977 AP 196, overruled.
2.1 The issue price is no more and no less than the price which the contractor agrees to pay for the grant of the privilege to sell liquor, drawn or undrawn.
The minimum guaranteed quantity of liquor as well as the issue price are both fixed well in advance of the auction in regard to each shop and it is with full knowledge of the issue price and the minimum guaranteed quantity that every bidder partici pates in the auction.
1527D; 526C D] 2.2 There can be no question that issue price must generally relate to liquor which is drawn by the contractor but it does not follow therefrom that issue price cannot be adopted by agreement between the parties as a measure of compensation to be paid in the case of undrawn liquor.
[527C D] Panna Lal vs State of Rajasthan, , referred to.
3.1 Even prior to the 1984 amendment, the amount which each of the contractors was required to pay or to have adjusted was not excise duty on undrawn liquor, but was part of the price which he had agreed to pay for the grant of the privilege to sell liquor.
[527D] 516 3.2 All rights in regard to manufacture and sale of intoxicants vest in the State.
It is open to the State to part with those rights for a consideration.
The considera tion for parting with the privilege of the State is neither excise duty nor licence fee but it is the price of the privilege.
[S27E F] 3.3 Reading sections 17 and 23 of the Andhra Pradesh Excise Act 1968 together with the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules 1969 and Andhra Pradesh (Arrack Retail Vend Special Conditions of Licences) Rules 1969, makes it evident that the privilege of selling liquor, which includes the lease of the shop for an area and the licence to sell liquor therein may be granted by the State by public auction subject to: (1) payment of rental being the highest bid at the auction, (2) the re quirement that the licensee shall purchase arrack at the issue price, and (3) the further requirement that the licen see shah purchase a minimum guaranteed quantity of arrack, which he has to make good in case of short fail.
The consid eration for the grant of the privilege to sell liquor is not merely the rental to be paid by the lessee but also the issue price of the arrack supplied or treated as supplied in case of short fail, which is also to be paid by the lessee licensee.
There is no question of the lessee licensee having to pay the excise duty though it may be that the issue price is arrived at after taking into account the excise duty payable.
[S28B E] Panna Lal vs State of Rajasthan, ; ; State of Haryana vs Jage Ram, ; and Har Shankar & Ors.
vs The Dy.
Excise & Taxation Commr.
& Ors.
, ; , referred to.
Bimal Chandra Banerjee vs State of Madhya Pradesh, ; ; Madhya Pradesh vs Firm Cappulal etc.
; , and Excise Commissioner, Uttar Pradesh vs Ram Kumar, 1976 (Suppl) SCR 532, distinguished.
The new s.17 of the Excise Act makes it clear that what is proposed to be granted is the exclusive previlege to manufacture or sell liquor in the shape of a lease or li cence or both.
The explanation makes it clear that the lease shall not take effect unless a licence is issued.
Having regard to the vital amendment of section 17, no further amendment of s.21 and 22 was necessary.
In the new s.23 it is now specified that the payment in consideration of the grant of lease or licence or both for the exclusive privilege is to be instead of or in addition to any excise duty or fees leviable in ss.21 and 22.
The amendments effected to ss.17 and 23, 517 therefore, have fulfilled the object of removing the vices or defects in the Act if indeed there were any.
[533C F]
|
ivil Appeal No. 1262 of 1979 From the Judgment and order dated 3.4.1978 of the High Court of Judicature at Calcutta in Appeal from Appellate Decree No. 1700 of 1972.
S.T. Desai and M.L. Verma for the Appellants.
Govind Mukhoty and R.P. Gupta for the Respondents.
M .N. Krishmani and V. Shekar for the Intervenor.
The Judgment of the Court was delivered by NATARAJAN, J.
This Appeal by Special Leave is by a tenant and is directed against the judgment of the Calcutta High Court in an Appeal against Appellate decree No. 1700 of 1972.
The defence of appellant in the suit filed by the first respondent for eviction was struck out and thereafter a decree for eviction was passed and the said decree was confirmed by the Appellate Court and the High Court and hence this Appeal by Special Leave.
During the pendency of the suit the first respondent had entered into an agreement for sale of his building in which the suit property forms the ground floor to one Ramdir Singh Agarwala but subsequently executed a Sale Deed in favour of one Chidanand Halder.
Ramdin Singh Agarwala filed a suit for specific performance in the Court of the Sub Judge, Alipore and obtained a decree.
The subsequent purchaser Chidanand Halder has filed an appeal against the 564 judgment and decree in the said suit and the appeal is pending disposal before the High Court.
Both the parties, claiming to have acquired title to the building of which the suit property forms a part have filed CMP Nos. 19671 and 32297 of 1986 seeking impleadment in this Appeal.
The first respondent who succeeded to the suit property after the death of his father filed a suit against the appellant and its director the second respondent for eject ment on the ground of default in payment of the monthly rent of Rs. 550 from March 1965 to July 1966.
The appellant filed a written statement denying the default in payment of rent and also filed an application under Section 17(2) of the West Bengal Premises Act, 1956 (for short the Act) to seek the orders of the Court regarding the amount of rent payable to the landlord.
During the pendency of the proceedings the West Bengal Premises Tenancy (Amendment) Ordinance No. VI of 1967 (later replaced by the West Bengal Premises Tenancy (Amendment) Act 30 of 1969) came to be promulgated with effect from 26.8.67.
By Section 2 of the Ordinance Sub Sections (2A) and (2B) to Section 17 of the Act were inserted.
Section 5 of the Ordi nance gave retrospective effect to the amendments by provid ing that the amendments made by Section 2 of the Ordinance shall have effect in respect of all suits including Appeals which were pending at the date of commencement of the Ordi nance.
The amendments inter alia enabled tenants who were in default to apply to the Court and pay the arrears of rent in instalments and thereby avert their eviction.
To avail the benefit of the amended provisions the appellant preferred an application on 22.9.67 i.e. within one month from the date of promulgation of the Ordinance under Section 17(2A)(b) praying for payment of the arrears of rent in instalments.
By Order No. 39 the trial court fixed the amount of arrears payable at Rs. 13,602 and gave directions for the amount being paid in three instalments.
As an error was noticed in the calculation of the rent arrears, the appellant filed a review petition and the Court re fixed the arrears at Rs.9,752 by Order No. 72.
Subse quentiy this order was also revised and eventually the appellant paid the entire arrears of rent in accordance with the directions of the court by 31.7.70.
It may be stated here that the payment covered the period ending with 29.2.1968 i.e. upto the end of the month previous to the date on which Order No. 39 was made, viz. 16.3.
565 In the meanwhile the first respondent had filed an application under Section 17(3) for striking out the defence of the appellant against the delivery of possession of the demised premises for noncompliance with the terms of Section 17(1).
On 14.3.70 the court allowed the said application and struck out the defence of the appellant, on the ground that in paying the rents for the months of September 1968 and March 1969 there had been a delay of 44 days and 6 days respectively and this was in contravention of Section 17(1) of the Act.
Thereafter the suit for eviction was decreed and the said decree came to be confirmed by the Appellate Court and the High Court.
The appellant filed an application on 13.6.70 under Section 148 Civil Procedure Code for extension of time for deposit of amount for the months of September 1968 and March 1969 so as to cover the delays that had occurred in the payment of rent for those two months.
This application was dismissed by the Trial Court on 30.7.70.
It was thereafter the decree for eviction was passed.
Resisting the application under Section 17(3) filed by the first respondent the appellant contended that since he had paid the arrears of rent as per the orders of the Court under Section 17(2A)(b), the first respondent 's suit should be dismissed under Section 17(4) of the Act.
The Trial Court rejected the contention and held that in view of the default in depositing the rent for the months of September 1968 and March 1969 within time i.e. before the 15th of the next succeeding month, the appellant had contravened Section 17(1) of the Act and therefore, the appellant was not enti tled to protection under Section 17(4).
The High Court went a step further and held that even the application under Section 17(2A)(b) was not maintainable and hence the appel lant cannot raise a plea that he had paid the arrears of rent within time and as such the Trial Court should have dismissed the suit under Section 17(4).
The High Court 's reasoning is as under: "In our view, the application under section 17(2A)(b) was not also maintainable.
It is true that section 17 (2A)(b) was made applica ble to pending suits by the Ordinance.
But such applicability will be subject to the limitation imposed by sub section (2B) of Section 17, namely, that an application under sub section (2A)(b) has to be made before the expiry of the time specified in sub section (1) of Section 17 for the deposit or payment of the amount due on account of default in payment of rent.
Under sub section (1) of Section 17 the time specified is one month from the service of 566 the writ of summons on the defendant or where he appears in the suit or proceeding without the writ of summons being served on him, within one month of his appearance.
In the instant case, the summons was served on the defendants on April 6, 1967.
The application under section 17(2A)(b) having been filed on September 22, 1967, it was barred by limita tion . .
In our view, after the expiry of one month of the service of summons on the defendants, they had no right to avail them selves of the provisions of section 17(2A).
Sub section (2B) of section 17 having pre scribed a time limit for an application under sub section (2A), no other period of limita tion can be substituted for the purpose of making an application for instalments.
It is true that the Act is a remedial statute, but that fact does not give the Court jurisdiction to alter the period of limitation as pre scribed by the statute for the purpose of giving relief to the tenant.
If the legisla ture had intended that the tenant in a pending suit would be entitled to make an application under section 17(2A) within one month of the date of promulgation of the Ordinance, it would have expressly provided for the same as it has done in other cases covered by section 17B and 17D." Having regard to the reasons given by the Trial Court and the High Court for striking out the defence of the appellant and the inapplicability of Section 17(4) to the case, two questions fall for consideration, viz. (1) whether the appellant was not entitled to the benefit of Section 17(2A)(b) of the Act since the application under the subsec tion had not been filed within one month from the date of service of the writ of summons and (2) whether in any even the delayed payment of rent for the months of September 1968 and March 1969 necessarily warranted the striking out of the defence.
Mr. S.T. Desai, learned counsel for the appellant, contended that the decisions rendered by the trial court and the High Court are clearly unsustainable.
On the contrary, the learned counsel for the first respondent argued that the trial court and the High Court had acted perfectly in ac cordance with law.
Taking up the first question for consideration we find that the High Court has committed an error in failing to notice the overriding effect of Section 17(2A) and Section 5 of the Ordinance.
Section 17(2A) begins with the words "Notwithstanding anything contained in sub section (1) or sub section (2) on the application of the tenant, the 567 Court may, by order" and then sets out sub sections (a), (b) and the Proviso.
Then comes the all important Section 5 of the Ordinance which is in the following terms: "5.
Retrospective effect.
The amendments made by section 2 shall have effect in respect of all suits including appeals which are pending at the date of commencement of this Ordi nance".
(Emphasis supplied. ) Since the Ordinance came to be replaced long after by the Act, Section 5 of the Ordinance was not reproduced in the Act because it had served its purpose.
What is, however, of significance is that Section 5 of the Ordinance entitled the appellant to file an application under Section 17(2A)(b), in the suit filed by the first respondent which was pending then.
Unfortunately, the High Court has looked only into the Act and not the Ordinance and that is how Section 5 of the Ordinance has escaped its notice.
When Section 17(2A) and Section 5 of the Ordinance are read con jointly it may be seen that it was the intention of the legislature to extend the benefit of sub section (2A) to all pending suits and appeals irrespective of the fact whether the time limit of one month prescribed under Section 17(1) had expired or not.
No other construction is possible be cause any other construction would have the effect of ren dering otiose Section 5 of the Ordinance.
It is a well known rule of interpretation of law that remedial amendments have to be liberally construed so as not to deny its efficacy and it is the duty of the courts to avoid a conflict between two sections.
In Madhav Rao Scindia vs Union of India, AIR S.C. 1971 530 at 576 this Court has held as follows: "The Court will interpret a statute as far as possible, agreeably to justice and reason and that in case of two or more interpretations, one which is more reasonable and just will be adopted, for there is always a presumption against the law maker intending injustice and unreason .
A provision in a statute will not be construed to defeat its mainfest pur pose and general values which animate its structure.
" In Dy.
Custodian vs Offl.
Receiver, ; at 225 it was held as follows: "If it appears that the obvious aim and object of the statutory provisions would be frustrat ed by accepting the literal construction suggested by the respondent, then it may be 568 open to the court to enquire whether an alter native construction which would serve the purpose of achieving the aim and object of the Act, is reasonably possible.
" It was the intention of the Legislature to restrict the benefits given under Section 17(2A) to only those tenants against whom suits had been filed within one month prior to the promulgation of the Ordinance, there was no necessity to give retrospectivity to subsection (2A) under Section 5 of the Ordinance.
It has, therefore, to be held that all ten ants against whom suits or appeals were pending on the date of the promulgation of the Ordinance were entitled to seek the benefit of Section 17(2A) by filing an application within one month from the date of promulgation of the Ordi nance.
The High Court was, therefore, in error in holding that the application under Section 17(2A)(b) was itself not maintainable.
If the High Court 's view is to be accepted it would then amount to asking the appellant to perform the impossible i.e. asking the appellant to file an application under Section 17(2A)(b) which came into force on 26.8.67 within one month from 6.4.67 when the suit summons was served.
Therefore the first question has to be answered in favour of the appellant.
The resultant position would then be that in so far as the payment of arrears for the period ending 29.2.68 is concerned, the appellant had complied with the orders of the Court under Section 17(2A)(b) and was therefore entitled to claim the benefit of Section 17(4).
The second question now remains for consideration.
The trial court and the High Court have taken the view that the delayed payment of rent for the months of September 1968 and March 1969 attracted the striking out of the defence under Section 17(3) of the Act.
Sub sections (3) and (4) are worded as under: "(3) If a tenant fails to deposit, or pay any amount referred to in sub section (1) or sub section (2) within the time specified therein or within such extended time as may be allowed under clause (a) of sub section (2A), or fails to deposit or pay any instalment permitted under clause (b) of sub section (2A) within the time fixed therefore, the Court shall order the defence against delivery of posses sion to be struck out and shall proceed with the hearing of the suit; (4) If a tenant makes deposit or payment as required by sub section (1), sub section (2), or sub section (2A) no decree or order for delivery of possession of the prem ises 569 to the landlord on the ground of default in payment of rent by the tenant shall be made by the Court but the Court may allow such costs as it may deem fit to the landlord: Provided that a tenant shall not be entitled to any relief under this sub section if, having obtained such relief once in re spect of the premises, he has again made default in the payment of rent for four months within a period of twelve months.
" Perhaps on a rigid construction of sub section (3) without reference to sub section (4) it may be said that the failure to pay the rent for the months of September 1968 and March 1969 by the 15th of the next succeeding month may afford ground for striking out the defence of the appellant.
But then sub section (3) has to be read and understood with reference to sub section (4) also and in particular its Proviso.
Sub section (4) lays down that when a tenant makes payments as required by sub sections (1), (2) or (2A) no decree or order for delivery of possession shall be made on the ground of default in payment of rent by the tenant.
The Proviso sets out that a tenant who has obtained relief under sub section (4) is not entitled to seek relief once again under the sub section if he has again made default in the payment of rent for 4 months within a period of 12 months.
(Emphasis supplied. ) The Proviso, therefore, makes it clear that if the subsequent default is for a period less than 4 moths within a period of 12 months the tenant can claim relief under the sub section once again.
In this case the previous arrears related to the period ending with 29.2.1968 and those arrears had been paid in compliance of the Court 's order.
The appellant was, therefore, entitled to ask for the dismissal of the suit.
In so far as the subsequent default is concerned, it is well within the limitations prescribed by the proviso to sub section (4).
The default is only for two months and that too in a period of 13 months.
The appel lant will, therefore, be entitled to the protection of the proviso.
The trial court and the appellate court have failed to notice this aspect of the matter.
Even if the proviso is viewed in a limited sense as being attracted only to those cases where there has been full and complete compliance with the provisions of sub section (1) or (2) or (2A) of Section 17 and will not apply to a case as the one on hand, the appellant cannot be denied relief because the words "shall order the defence against delivery of possession to be struck out" occurring in Sec tion 17(3) have to be construed as a directory provision and not a mandatory provision 570 as the word "shall" has to be read as "may".
Such a canon of construction is warranted because otherwise the intendment of the Legislature will be defeated and the class of tenants for whom the beneficial provisions were made by the Ordi nance and the amending Act will stand deprived of them.
We may only refer to two decisions of this Court on this aspect of the matter.
In Govindal Chhagganlal Patel vs Agricultural Produce Market Committee, Godhra, ; , Chandrachud, C.J. speaking for the Court approved the following passage in Crawford on 'Statutory Construc tion ' (Ed. 1940, article 261, p. 516): (SCC p. 487, para 13) "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed.
The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also while considering its nature, its design, and the consequence which would follow construing it the one way or the other.
" In Ganesh Prasad Sah Kesari vs Lakshmi Narain Gupta, ; this Court, dealing with a similar provision for striking out of defence in Section 11A of the Bihar Build ings (Lease, Rent and Eviction) Control Act, 1947 referred to Govindlal Chhagganlal Patel 's case (supra), and held as follows: "Applying this well recognised canon of construction the conclusion is inescapable that the word 'shall ' used in the provision is directory and not mandatory and must be read as 'may '.
" Once the word "shall" used in Section 17(3) is read as "may" and consequently the provision for striking out of the defence is to be read as directory and not mandatory then it follows that the Court is vested with discretion to order either striking out of the defence or not depending upon the circumstances of the case and the interests of justice.
This Court has consistently taken the view that if the Court ' has the discretion not to strike out the defence of the tenant committing default in payment or deposit of rent as required by a provision in any Rent Restriction Act, then the Court surely has the further discretion to condone the default and extend the time for payment or deposit and such a discretion is necessary implication of the discretion not to strike out the defence.
We may only refer in this connection, to three earlier 571 decisions of this Court.
Shyamcharan Sharma vs Dharamdas, ; is a case which arose under the Madhya Pradesh Accommodation Control Act, 1961.
Santosh Mehta vs Om Prakash and Anr., ; and Ram Murti vs Bhola Nath and Another, were cases which arose under the Delhi Rent Control Act, 1958.
The Rent Control Act of Madhya Pradesh as well as the Rent Control Act of Delhi provided that if a tenant failed to make payment or deposit as required by the Section the Controller may order the defence against eviction to be struck out and proceed with the hearing of the application.
In all these cases it has been uniformly held that the powers of discretion vested in the Rent Controller give him further right to condone the delay in deposit or payment of rent for the subsequent months.
In this case the default was not one of non payment of the arrears or the rent for the subsequent period.
The default pertained to belated payments of rent for two months and was, therefore, a default in the technical sense than in the real sense and hence of an inconsequential nature.
Having regard to the intendment of the Act and the nature of the provisions it can never be said that the defaults were of such a serious nature ' as to warrant the court refusing to exercise its discretion and to feel constrained to strike out the defence.
Such being the case the answer to the second question has also to be in favour of the appellant.
The subordinate courts and the High Court were in error in holding that the delayed payment of rent for the months of September 1968 and March 1969 constituted such defaults as necessarily warranted the striking out of the defence under Section 17.
In the light of our conclusions the appeal succeeds and will accordingly stand allowed.
The suit filed by the first respondent will stand dismissed.
In so far as the petitions for impleadment are con cerned, though we heard the arguments of the counsel for the parties, we do not think their presence is necessary in the appeal and hence both the petitions are dismissed.
The parties will pay and bear the respective costs.
A.P.J. Appeal allowed and Petitions dismissed.
|
The first respondent filed a suit against the appellant and the second respondent for ejectment on the ground of default in payment of the monthly rent.
The appellant denied the alleged default and flied an application under s.17(2) of the West Bengal Premises Tenancy Act, 560 1956 to seek the orders of the Court regarding the amount of rent payable to the landlord.
During the pendency of the proceedings the West Bengal Premises Tenancy (Amendment) Ordinance No. VI of 1967 (later replaced by the WeSt Bengal Premises Tenancy (Amendment) Act 30 of 1969) came to be promulgated with effect from 26.8.67.
By s.2 of the Ordinance subs.(2A) and (2B) to s.17 of the Act were inserted.
Section 5 of the Ordinance gave retro spective effect to the amendments by providing that the amendments made by s .2 of the Ordinance shall have effect in respect of all suits including appeals which were pending on the date of commencement of the Ordinance.
The amendments inter alia enabled tenants who were in default to apply to the Court and pay the arrears of rent in instalments.
To avail the benefit of amended provisions the appellant preferred an application within one month under s.(2A)(b) praying for payment of arrears of rent in instalments.
The trial Court fixed the amount of arrears payable and allowed the payment thereof in three instalments.
The appellant paid the entire arrears of rent on 31.7.70 covering the period ending with 29.2.68.
In the meanwhile the first respondent had filed an application under s.17(3) for striking out the defence of the appellant against the delivery of possession of the demised premises for non compliance with the terms of s.17(1).
Resisting the application the appellant contended that since he had paid the arrears of rent as per the orders of the Court under s.17(2A)(b), the first respondent 's suit should be dismissed under s.17(4).
The trial Court allowed the application and struck out of the defence the appellant on the ground that in paying the rent for the months of September 1968 and March 1969 there had been a delay and thus the appellant had contravened s.17(1) and, therefore, he was not entitled to protection under section 17(4).
The appli cation filed by the appellant under section 148 CPC for extension of time for deposit of amount for the months of September 1968 and March 1969 was dismissed.
The suit was decreed and the decree confirmed by the Appellate Court and the High Court.
The High Court held that even an application under s.17(2A)(b) was not maintainable and hence the appellant cannot raise a plea that he had paid the arrears of rent within time and the trial Court should have dismissed the suit under section 17(4).
Allowing the Appeal and dismissing the Civil Miscellane ous Petitions, 561 HELD: 1.
When s.17(2A) of the West Bengal Premises Tenancy Act, 1956 and s.5 of the West Bengal Premises Tenan cy (Amendment) Ordinance No. VI of 1967 are read conjointly it is clear that the intention of the legislature was to extend the benefit of sub.s (2A) to aH pending suits and appeals irrespective of the fact whether the time limit of one month prescribed under s.17(1) had expired or not.
Any other construction would have the effect of rendering otiose s.5 of the Ordinance.
Since the Ordinance came to be re placed long after by the Act, s .5 of the Ordinance was not reproduced in the Act.
It is significant that s.5 of the Ordinance entitled the appellant to file an application under s.17(2A)(b), in the suit filed by the first respondent which was pending then.
The High Court has looked only into the Act and not the Ordinance and that is how s.5 of the Ordinance has escaped its notice.
The High Court has, there fore, committed an error in failing to notice the overriding effect of section 17(2A) and s.5 of the Ordinance.
[567C E] 2.
If the intention of the legislature was to restrict the benefits given under s.17(2A) to only those tenants against whom suits had been filed within one month prior to the promulgation of the Ordinance, there was no necessity to give retrospectively to s.(2A) under s.5 of the Ordinance.
It has, therefore, to be held that all tenants against whom suits or appeals were pending on the date of the promulga tion of the Ordinance were entitled to seek the benefit of s.17(2A) by filing an application within one month from the date of the promulgation of the Ordinance.
The High Court was, therefore, in error in holding that the application under s.17(2A)(b) was itself not maintainable.
[568B C] 3.
Remedial amendments have to be liberally construed so as not to deny its efficacy and it is the duty of the courts to avoid a conflict between two sections.
[567E] Madhav Rao Scindia vs Union of India, AIR S.C. 1971 530 at 576 and Dy.
Custodian vs Offl.
Receiver, ; at 225, relied upon.
In so far as the payment of arrears for the period ending 29.2.68 is concerned, the appellant had complied with the orders of the Court under s.17(2A)(b) and was, there fore, entitled to claim the benefit of s.17(4).
[568E] 5.
Sub section (3) has to be read and understood with reference to sub s.(4) also and in particular its Proviso.
Sub section (4) lays down that when a tenant, makes payment as required by sub s.(1), (2) or (2A) 562 no decree or order for delivery of possession shall be made on the ground of default in payment of rent by the tenant.
The Proviso sets out that a tenant who has obtained relief under sub.s.(4) is not entitled to seek relief once again under the sub section if he has again made default in the payment of rent for 4 months within a period of 12 months.
The Proviso, therefore, makes it clear that if the subse quent default is for a period less than 4 months within a period of 12 months the tenant can claim relief under the sub section once again.
[569C E] In the instant case, the previous arrears related to the period ending with 29.2.68 and those arrears had been paid in compliance of the Court 's order.
The appellant was, therefore, entitled to ask for the dismissal of the suit.
In so far as the subsequent default is concerned, it is well within the limitations prescribed by the Proviso to sub section (4).
The default is only for two months and that too in a period of 13 months.
The appellant will, therefore, be entitled to the protection of the proviso.
[569E F] 6.
The words "shall order the defence against delivery of possession to be struck out" occurring in s.17(3) have to be construed as a directory provision and not a mandatory provision as the word "shall" has to be read as "may".
Such a canon of construction is warranted because otherwise the intendment of the legislature will be defeated and the class of tenants for whom the beneficial provisions were made by the Ordinance and the Amending Act will stand deprived of them.
[569H; 570A B] Govindlal Chhagganlal Patel vs Agricultural Produce Market Committee, Godhra, ; ; and Ganesh Prasad Sah Kesari vs Lakshmi Narain Gupta, ; , relied upon.
Once the word "shall" used in s.17(3) is read as "may" and consequently the provision for striking out of defence is to be read as directory and not mandatory then it follows that the Court is vested with discretion to order either striking out of defence or not depending upon the circumstances of the case and the interest of justice.
If the Court has the discretion not to strike out the defence of the tenant committing default in payment for deposit of rent as required by a provision in any Rent Restriction Act, then the Court surely has the further discretion to condone the default and extend the time for payment or deposit and such a discretion is a necessary implication of the discre tion not to strike out the defence.
[570F H] 563 Shyamcharan Sharma vs Dharamdas, ; ; Santosh Mehta vs Om Prakash and Anr., ; and Ram Murti vs Bhola Nath and Another, , relied upon.
In the instant case, the default was not one of non payment of the arrears of the rent for the subsequent peri od.
The default pertained to belated payment of rent for two months and was, therefore, a default in the technical sense than in the real sense and hence of an inconsequential nature.
Having regard to the intendment of the Act and the nature of the provisions it can never be said that the defaults were of such a serious nature as to warrant the court refusing to exercise its discretion and to fell con strained to strike out the defence.
[571C E]
|
Civil Appeal No. 383(N) of 1973.
From the Judgment and Order dated 7.3.1972 of the High Court of Kerala in S.A. No. 549 of 1971.
G. Viswanath Iyer and Narayan Nettar for the Appellants.
T.S. Krishnamurthy Iyer, Vijay Kumar Verma and Madhu Moolchandani for the Respondent.
The Judgment of the Court was delivered by KHALID, J.
The appellants are the defendant in O.S. 55 of 1952 in the Sub Court, Mangalore.
Their father had ob tained sale of the property involved in this appeal by a document dated 28 4 1939, executed by the widowed mother of the respondent plaintiff who was a minor, aged six years, she acting as his guardian.
After he attained majority, he filed a suit for a declaration that the said sale deed was invalid and was not binding upon him and for recovery of possession thereof.
The Trial Court dismissed the suit.
In appeal, the appellate court confirmed the decree and Judg ment of the Trial Court.
In second appeal, the High Court of Kerala, by its Judgment, dated 27 11 1969, set aside the Judgments of the Courts below, allowed the appeal and de creed the suit.
The decree directed recovery of possession of the properties on payment of the sum of Rs.4,700 being the sale consideration and a sum of Rs.4,164 being the compensation for improvements.
On 15 9 1970, the decree holder, respondent herein, filed R.E.P. 68/70 in the Sub Court, Kasargod, depositing the amount due under the decree of the High Court and pray ing for delivery of the properties from the possession of the Judgment debtors, the appel 703 lants.
Execution was resisted by the appellants on the ground that no delivery could be ordered without payment of the value of improvements effected by them subsequent to the year 1952.
They also filed R.E.A. No. 146/70 for the issue of a commission to re value the improvements, claiming that they had effected improvements to the tune of Rs.80,000.
The respondent contested this application, denied that the appellants had made any improvements and contended that the question of improvements had been concluded by the Judgment of the High Court in the second appeal.
The executing Court dismissed this petition.
Aggrieved by this order, the appel lants filed an appeal before the District Judge, Tellicher ry, who allowed the appeal by his Judgment dated 12th April, 1971 and set aside the order of the executing Court.
The matter was taken to the High Court by way of Execution Second Appeal.
A Division Bench of the Kerala High Court, on a reference from a learned Single Judge, set aside the Judgment of the District Judge by its Judgment dated 7 3 1972 and restored the order of the Subordinate Judge and directed recovery of the property.
The appellants, moved the High Court for grant of certificate of fitness, which prayer was declined and hence have filed this appeal, by special leave.
The suit was filed by the plaintiff within three years 'of his attaining majority alleging that the assignee took advantage of the ignorance and helpless condition of the plaintiff 's mother, who was a young widow and that there was neither legal necessity nor pressure from the estate for effecting the sale.
He averred in the plaint that there was a partition decree in his favour in which he had been allot ted these properties with outstanding amounting to Rs.5,300 and mesne profits to the extent of Rs.1,549 which were sufficient to discharge the debts due by the estate.
The entire immovable properties belonging to the plaintiff, including the family residential house, were alienated.
The High Court in second appeal on the trial side held that the alienation was not something which a man of ordinary pru dence would have effected, had the properties been owned by him and thus held it not binding on the plaintiff.
The learned Judges of the Division Bench then considered the question of the defendant 's right for compensation for improvements, if any, effected.
This claim was denied.
In the written statement filed by the defendant, as noted by the High Court, all that was claimed was that improvements had been effected to the tune of Rs.4,000.
But no specific claim was made for compensation in the event of eviction.
The High Court also noted that the averment regarding im provements was itself made in the context of denying that the property would have fetched Rs.11,000 at the time of sale.
In the 704 additional written statement filed by the defendant a claim was made that improvements to the value of Rs.11,168 had been effected after the sale date and that under any circum stances, the defendants were entitled to just and adequate compensation for them.
The Division Bench adverting to this aspect of the case held against the appellants with the following observation: "The basis of the claim has not been stated anywhere, and no averments of fact necessary for attracting section 51 of the Transfer of Property Act or Section 4 of the Kerala Com pensation for Tenants ' Improvements Act, 1958, have been made.
Hence, the claim for value of improvements would appear to be unsustainable.
However, no objection has been taken by the appellant in the lower appellate court or in this Court to the finding of the trial court that in case of eviction, the defendants would be entitled to Rs.4,164.8.0 as compensation for improvements.
" It was with these observations regarding improvements that the appeal was allowed and the suit for recovery decreed.
When the matter reached the High Court in second appeal on the execution side the matter was heard by another Divi sion Bench of the Kerala High Court.
The Division Bench relied upon the following observation in the Judgment of the Division Bench on the original side and declined relief of value of improvements to the appellants, with the following observation: The Division Bench considered the question of value of improvements in paragraph 9 of the Judgments and Unnikrishna Kurup, J. who spoke for the Division Bench has stated in unequivocal terms: "Hence, the claim for value of improvements would appear to be unsustainable.
However, no objection has been taken by the appellant in the lower appellate court or in this Court to the finding of the trial court that in case of eviction, the defendants would be entitled to Rs.4,164,8.0.
as compensation for improve ments.
" We may in passing on also observe that the appellant had filed an application for special leave against the first Judgment in second appeal.
which was dismissed.
The claim of value of improvements was 705 rejected by the Division Bench with the following observa tion: "The sum of Rs.4,164.8.0 was directed to be paid, we repeat, not because the respondents were entitled to it, but because the appellant agreed to pay it.
" It is with these materials that the present claim of the appellants for value of improvements has to be considered.
We may indicate at this stage itself that the Commissioner appointed at the instance of this Court, assessed the value of improvements at Rs.1,00,031.40, by his report dated 12 10 1972.
The learned counsel for the appellant made a forceful plea that the Judgment of the High Court was wrong and that the conclusion arrived at by the High Court was as a result of a confusion regarding the pleadings in the case and the question of law involved.
He stated that at the trial stage an issue was struck as issue No. 8 regarding the value of improvements.
This question was adjudicated and the value of improvements was adjudged after due consideration of this issue.
His further submission is that the appellants were tenants within the meaning of Section 2(d) of the Kerala Compensation for Tenants Improvements Act, 1958 (Act 29 of 1958), and that the claim for value of improvements was made on the strength of Section 5 of the Act.
He relied upon a Division Bench ruling in Veerasikku Gounder vs Kuri an, 1 in support of his contention that the appellants were tenants and were entitled to the value of improvements.
The property is situated in the old South Kerala Dis trict which formed part of the then Madras Presidency.
At the time the suit was filed, there was no enactment in force in that area, enabling persons in possession of property belonging to another to claim value improvements in a suit for recovery of possession.
The area, where the property in dispute is situated, became part of Kerala when the said State was formed.
When Act 29 of 1958 was enacted, there were two enactments in existence, applicable to the Travan core Cochin and the Malbar Area, regarding the claims for improvements for tenants in possession.
They are the Travan core Cochin Compensation for Tenants Improvements Act, 1956 and the Malbar Compensation for Tenants Improvements Act, 1899.
Both these Acts were repealed when Act 29 of 1958 was enacted.
Section 2(d) of the new Act defines 'tenant ', the relevant portion of which reads as follows: "2(d) 'tenant ' with its grammatical variations and cognate 706 expression includes (i) . . . (ii) . . (iii) a person who comes into possession of land belonging to another person and makes improvements thereon in the bona fide belief that he is entitled to make such improvements.
" The appellants contention is that they satisfy this defini tion and that, therefore, they are entitled to the benefit of this Act.
Section 4 deals with the entitlement to compen sation for improvements for tenants for the improvements made by them, or their predecessor in interest on eviction.
Section 5 states that when in a suit for eviction instituted against the tenant the plaintiff succeeds and the defendant establishes a claim for compensation due under Section 4 for improvements, the Court shall ascertain the amount of com pensation and shall pass a decree for payment of the amount so found due to the tenants.
Subsection 3 of this section gives an additional right to such tenants for value of improvements effected after the decree by evaluation.
We read the section for a correct understanding of the same: "5(3) The amount of compensation for improve ments made subsequent to the date upto which compensation for improvements has been ad judged in the decree and the re valuation of an improvement, for which compensation has been so adjudged, when and in so far as such revaluation may be necessary when reference to the condition of such improvements at the time of eviction as well as any sum of money accru ing due to the plaintiff subsequent to the said date for rent, or otherwise, in respect of the tenancy, shall be determined by order of the court executing the decree and the decree shall be varied in accordance with such order.
" It is basing on this Section that the claim is made for value of improvements by the appellants.
The suit was filed in 1952.
At the time there was no enactment available for the defendant to claim value of improvements.
Neither in the original written statement nor in the additional written statement 707 dated 15 11 1954, did the defendants claim the value of improvements under the Act.
It is true that at the execution stage a plea was raised under Section 5 of Act 29 of 1958.
But it is necessary to remember that in the Judgment in the Second Appeal No. 464 of 1964, the Division Bench decided on 27 11 1969, that no claim for .improvements was made either under Section 51 of the Transfer of Property Act or under Section 4 of Act 29 of 1958.
Moreover, the High Court also found that no objection was taken by the appellants in the lower appellate court or before the High Court to the find ing that in case of eviction the defendant would be entitled to Rs.4,164.8.0 as compensation.
This Judgment was rendered when Act 29 of 1958 had already come into force.
Against this Judgment this Court was moved by filing a special leave petition and that was dismissed.
Thus, there is a concluded finding against the appellants that they were not entitled to anything more than the value of improvements decreed by the trial Court.
In the Judgment under appeal also the High Court has reiterated the fact that the appellants were being paid the amount mentioned above not because they were entitled to it, but because the appellant agreed to pay it.
The learned counsel for the appellants Shri G. Vishwanatha Iyer tries to over come the finality of this Judgment with the contention that the value of improvements has to be ascertained under the Act on the execution side and his claim cannot be de feated by flourishing the Judgment of the High Court and the dismissal of the S.L.P.
We find it difficult to accept the appellant 's case.
Section 5 comes into operation only when a defendant against whom a suit for eviction is instituted establishes a claim for compensation under the Act.
The Judgment of the High Court rendered in 1969 has clearly held that the value of improvement awarded was not under Section 4 of the Act but was an amount agreed by the plaintiff.
The appellants cannot succeed and have not succeeded in satisfy ing us that they ever made a claim for compensation under Section 4 of the Act and succeeded in such a claim.
There fore their further claim for getting the improvements reval ued cannot be accepted.
We do not wish to pronounce upon the question whether a person like the appellants who came into possession of the properties of a minor through his young widowed mother could be brought within the definition of tenant in Section 2(d)(iii).
This matter will have to be considered in an appropriate case and the correctness of the decision of the Kerala High Court brought to our notice by the appellant 's counsel tested then.
The appeal has only, therefore, to be dismissed.
708 However, we feel that some equity has to be worked out in this case.
This Court issued notice in the S.L.P. on 20 6 1972.
On 1 9 1972 stay of operation of decree was granted, and an opportunity was given to enable the parties to come to a compromise.
On 18 9 1972, this Court directed a Commissioner to be appointed to assess the value of improve ments which were made subsequent to the date upto which the compensation for improvements had already been adjudged.
It was pursuant to this direction that a report was submitted showing the value of improvements at more than a lakh of rupees.
On 23 2 1973, this Court granted special leave and stayed the operation of the decree on condition that the appellants deposit a sum of Rs.5,000 each year in the Trial Court and permitting the respondents to withdraw the same on furnishing security.
On April 1, 1980, this Court passed an order as follows: "Counsel on both sides, after arguments were heard in substantial measure, agreed with us that this was a case pre eminently fit for settlement.
The question of law raised is a ticklish one and the consequences will be 'all or nothing '.
The suggestion which appears to be acceptable to counsel on both sides is one of two alternatives, the option to choose being left to the respondent, since he has won in the High Court.
The alternatives are: (a) the appellant is to pay a sum of Rs.50,000 to the respondent in addition to the respondent being entitled to withdraw an amount of Rs.30,000 plus Rs.8,000 and odd lying in deposit to the credit of the suit.
In this event the appeal will stand allowed and the property will be kept by the appellant as owners of the property; (b) alternatively, the respondent will pay to the appellant a sum of Rs.50,000 and the appellant will be further entitled to withdraw a sum of Rs.30,000 plus Rs.8,000 now lying in deposit to the credit of the suit.
Thereupon the appellant will surrender posses sion forthwith to the respondent.
The property be kept in the same condition as it is now.
Post the matter on Tuesday i.e. 8 4 80.
" When the matter came before us for hearing, we asked the counsel whether a compromise was possible.
We found that the parties were not agreeable for a compromise.
The appellants have been in 709 possession of the properties ever since 1934 and have been enjoying the income therefrom.
It is true that they have effected improvements to the property.
That being so, we feel that the appellants should not be left without any compensation for the improvements effected.
We make this observation purely on an equitable basis.
We direct the respondents to pay to the appellants a sum of Rs.30,000 in addition to the amount decreed.
On such payment the appel lants shall deliver the property to the respondents.
The respondents will be at liberty to withdraw the amounts deposited by the appellants in the Trial Court pursuant to the orders of this Court if not already withdrawn.
A.P.J. Appeal dis missed.
|
The appellants ' father had obtained sale of the property in question during the minority of the respondent through his widowed mother, who was acting as his guardian.
The respondent, on attaining majority, filed a suit for declara tion that the said sale deed was invalid and not binding upon him and for recovery of possession of the property.
The judgment and decree of the trial Court dismissing the suit was affirmed by the Appellate Court.
In Second Appeal, the High Court set aside the judgments of the Court below, allowed the appeal and decreed the suit, directing recovery of possession of properties on payment of Rs.4,700 being the sale consideration and a sum of Rs.4,164 being the compensa tion for improvement.
The Special Leave Petition filed by the appellants was dismissed.
The respondent filed execution, which was resisted by the appellants on the ground that the properties could not be ordered to be delivered without payment of the value of improvements effected by them subsequent to the year 1952.
They also filed an application for the issue of a commission to revalue the improvements, claiming that they had effected improvements to the tune of Rs.gO,O00.
The respondent con tested this application denying that the appellants had made any improvements and contended that the question of improve ments had been concluded by the judgment of the High Court in the Second Appeal.
The executing Court dismissed this petition.
The District Judge allowed the appeal filed by the appellants and set aside the order of the executing Court.
The High Court set aside the judgment of the District Judge and restored the order of the executing Court and directed recovery of the property.
The High Court observed that "the sum of Rs.4,164.8.0 was directed to be paid not because the respondents were entitled to it, but because the appellant agreed to pay it. ' ' In the appeal to this Court, on behalf of the appellants it was 701 contended: (1) that the judgment of the High Court was wrong and that the conclusion arrived at by the High Court was as a result of confusion regarding the pleadings in the case and the question of law involved; (2) that at the trial stage an issue was struck as issue No. 8 regarding the value of improvements which was adjudicated and the value of improvements was adjudged; (3) that the appellants were tenants within the meaning of section 2(d) of the Kerala Compen sation for Tenants Improvements Act, 1958 (Act 29 of 1958) and that their claim for value of improvements was made on the strength of section 5 of the Act and, therefore, they are entitled to the value of improvements; and (4) that the value of improvements has to be ascertained under the Act on the execution side and their claim cannot be defeated by flourishing the judgment of the High Court and the dismissal of the S.L.P. Dismissing the Appeal, HELD: 1.
The suit was filed in 1952.
At that time there was no enactment available for the defendant to claim value of improvements.
Neither in the original written statement nor in the additional written statement dated 15.11.1954, did the defendants claim the value of improvements under the Act.
Though at the execution stage a plea was raised under section 5 of Act 29 of 1958, but in the Judgment in the Second Appeal No. 464 of 1964 dated 27.11.1969, the Division Bench decided that no claim for improvements was made either under section 51 of the Transfer of Property Act or under section 4 of Act 29 of 1958.
Moreover, the High Court also found that no objection was taken by the appellants in the lower Appellate Court or before the High Court to the finding that in case of eviction the defendant would be entitled to Rs.4,164.8.0.
as compensation.
This judgment was rendered when Act 29 of 1958 had already come into force.
Against this judgment a special leave petition was filed and dismissed.
Thus, there is a concluded finding against the appellants that they were not entitled to anything more than the value of improvements decreed by the trial Court.
[706H; 707A C] 2.
Section 5 comes into operation only when a defendant against whom a suit for eviction is instituted establishes a claim for compensation under the Act.
The Judgment of the High Court rendered in 1969 has clearly held that the value of improvement awarded was not under section 4 of the Act but was an amount agreed by the plaintiff.
The appellants cannot succeed and have not succeeded in satisfying this Court that they ever made a claim for compensation under section 4 of the Act and succeeded in such a claim.
Therefore, their further claim for getting the improvements revalued cannot be ac cepted.
[707E G] 702 3.
The question whether a person who came into posses sion of the properties of a minor could be brought within the definition of 'tenant ' in section 2(d)(iii) will have to be considered in an appropriate case.
[707G H] 4.
Purely on an equitable basis, the respondent shall pay to the appellants a sum of Rs.30,000 in addition to the amount decreed.
On such payment the appellants shall deliver the property to the respondent.
The respondent shall be at liberty to withdraw the amounts deposited by the appellants in the trial court pursuant to the order of this Court, if not already withdrawn.
[709B C]
|
Criminal Appeal No. 169 of 1987.
From the Judgment and Order dated 11.8.1986 of the Allahabad High Court in Criminal Appeals No. 583, 892 896 of 1985 and Capital Reference No. 2 of 1985.
724 Shakeel Ahmad for the Appellants.
The Judgment of the Court was delivered by SEN, J.
Appellants Asharfi Lal and Babu who are real brothers, are under sentence of death on their conviction under section 302 read with section 149 of the Indian Penal Code, 1860 for having committed the brutal murders of their two nieces Kumari Sumati, aged 14 years and Kumari Kalkanta, aged 20 years, daughters of their pre deceased paternal cousin, and under section 307 read with section 149 of the Indian Penal Code for having attempted to commit the murder of Smt.
Bulakan, widow of Devi, and sentenced to undergo rigorous 'imprisonment for 7 years.
The remaining appellants Ganga Prasad and Hemraj, two sons of Asharfi Lal, and Mata Badal, son of Babu, have been convicted under section 302 read with section 149 of the Indian Penal Code for having committed the two murders in further ance of the common object of their unlawful assembly and each of them sentenced to life imprisonment.
They have also been convicted under section 148 for the attempted murder of Smt.
Bulakan.
There was long drawn litigation between the Smt.
Bulakan on the one hand and the appellants on the other in respect of certain agricultural property.
The last of the series of the litigation was a proceeding initiated under section 145 of the Code of Criminal Procedure, 1973 on a report made by Smt.
Bulakan, P.W. 1.
To wreak their vengeance, the appellants effected an entry on the night between August 13/14, 1984 into the courtyard of the adjoining house where the three ladies were sleeping on three different cots.
The testimony of Smt.
Bulakan, P.W. 1 shows that she woke up hearing the shrieks of her younger daughter Kumari Sumati and found that appellant Mata Badal was perched over the lower part of the body of Kumari Sumati pressing down her legs while appellant Babu repeatedly struck her with a gandasa and severed her neck.
The girl died almost instanta neously; her head hung down the cot partially attached to the neck.
Bulakan further deposes that appellant Ashar fi Lal struck her other daughter Kumari Kalkanta on the neck and face with a banka while appellant Hemra chopped off the right hand of the girl with a gandasa.
She also shrieked and appellant Ganga Prasad struck her on the face and upper part of the body with a gandasa.
She ran from her house through the village abadi and fell down near the house of Kandhai, P.W. 2, which was some 30 40 paces away.
She narrated the incident to Kandhai who immediately ran and informed Bhag wati Prasad Pandey, P.W. 3 who resided some 200 paces away.
The Village Pradhan Bhagwati Prasad Pandey, P.W. 3 accompa nied by some of the villagers arrived at the house of Smt.
Bulakan and saw the 725 deceased Kumari Sumati lying dead on the cot and Kumari Kalkanta lying unconscious in a pool of blood on another cot.
She subsequently died in the hospital.
Learned counsel for the appellants made no endeavour to challenge the conviction of the appellants for having com mitted various offences with which they were charged, and rightly so.
The conviction of the appellants rests on the unimpeachable and truthful evidence of Smt.
Bulakan who was herself the victim of the murderous assault, as conoborated by P.W. 2 Kandhai and P.W. 3 Bhagwati Prasad Pandey.
She is a natural witness and has given a vivid description of the entire incident resulting in the gruesome deaths of her daughters Kumari Sumati and Kumari Kalkanta.
It is estab lished in evidence that immediately after the occurrence she named all the assailants.
The first information report (Exh.
Ka 1) lodged by Bhagwati Prasad Pandcy P.W. 3, the Village Pradhan, contains the names of the assailants.
The 1st Additional Sessions Judge, Barabanki by his judgment and sentence dated August 23, 1985 convicted the two appellants Asharfi Lal and Babu under section 302 of the Indian Penal Code on two counts of murder and awarded them capital punishment.
He also convicted Ganga Prasad and Hemraj, two sons of Asharfi Lal, and Mata Badal, son of Babu, under section 302 read with section 149 and sentenced each of them to undergo life imprisonment.
All the appellants have also been convicted under section 148 of the Indian Penal Code.
The High Court by its judgment dated August 11, 1986 on a careful consideration of the evidence has agreed with the learned Additional Sessions Judge and confirmed the conviction and sentences awarded to the appellants.
In affirming the sentence of death imposed on the two appellants Asharfi Lal and Babu, the High Court observed that on a careful consideration of the entire material, the facts and circumstances and the applicable law, it was satisfied that this was one of the rarest of the rare cases where death penalty is the only appropriate sentence which ought to be imposed on them.
We have heard learned counsel for the appellants mainly on the question of sentence but we are not impressed with his submission.
The two appellants Asharfi Lal and Babu were guilty of a heinous crime out of greed and personal ven geance and deserve the extreme penalty.
This case fails within the test 'rarest of the rare cases ' as laid down by this Court in Bachan Singh vs State of Punjab, as elaborated in the later case of Machhi Singh vs State of Punjab, The punishment must fit the crime.
These were cold blooded brutal murders in which two innocent girls lost their 726 lives.
The extreme brutality with which the appellants acted shocks the judicial conscience.
Failure to impose a death sentence in such grave cases where it is a crime against the society particularly in cases of murders committed with extreme brutality will bring to naught the sentence of death provided by section 302 of the Indian Penal Code.
It is the duty of the Court to impose a proper punishment depending upon the degree of criminality and desirability to impose such punishment.
The only punishment which the appellants deserve for having committed the reprehensible and gruesome murders of the two innocent girls to wreak their personal vengeance over the dispute they had with regard to property with their mother Smt.
Bulakan is nothing but death.
As a measure of social necessity and also as a means of deterring other potential offenders the sentence of death on the two appellants Asharfi Lal and Babu is confirmed.
The appeal is dismissed accordingly.
N.P.V. Appeal dis missed.
|
The prosecution alleged that in order to wreak their vengeance on account of long drawn litigation in respect of certain agricultural property between P.W. 1 and the appel lants two real brothers and their three sons, the appel lants effected entry on the night of 13/14 8 1984 into the courtyard of the adjoining house where P.W. 1 and her two daughters.
were sleeping and brutally attacked them with gandasas and a banka.
The younger daughter was repeatedly struck with a gandasa and her neck was severed, as a result of which she died instantaneously, while the other daughter was struck on the neck and face with a banka and her right hand was chopped off with the gandasa, and she died later in the hospital.
P.W. 1 was struck on the face and upper part of the body with the gandasa.
She ran from the house through the village abadi and narrated the incident to P.W. 2 who, in turn, informed P.W. 5, the Village Pradhan.
After visit ing the scene of offence, P.W. 3 filed a First Information Report.
The appellants were tried and the two brothers were convicted under Section 302 of the Indian Penal Code on two counts of murder and were awarded capital punishment while the other three appellants were convicted under Section 302 read with Section 149 of Indian Penal Code and sentenced to life imprisonment.
All the appellants were also convicted under Section 148 of the Indian Penal Code.
723 The High Court, affirming the conviction and sentences awarded to the two brothers, observed that it was satisfied that this was one of the 'rarest of the rare cases ' where death penalty was the only appropriate sentence which ought to be imposed on them.
Dismissing the appeal, this Court HELD: 1.1 It is the duty of the Court to impose proper punishment depending upon the degree of criminality and desirability to impose such punishment.
[726B] 1.2 The punishment must fit the crime.
The present cases were cold blooded brutal murders in which two innocent girls lost their lives.
The extreme brutality with which the appellants acted shocks the judicial conscience.
The only punishment which the appellants deserve for having committed the reprehensible and gruesome murders of two innocent girls to wreak their personal vengeance over the dispute they had with regard to property with their mother is nothing but death.
[725H; 726B C] 1.3 Failure to impose death sentence in such grave cases where it is a crime against the society particularly in cases of murders committed with extreme brutality, will bring to naught the sentence of death provided by Section 302 of the Indian Penal Code.
[726A B] 1.4 As a measure of social necessity and also as a means of deterring other potential offenders the sentence of death on the two appellants is confirmed.
[726C] 1.5 The two appellants were guilty of a heinous crime out of greed and personal vengeance and deserve the extreme penalty.
This case falls within the test 'rarest of the rare cases ' as laid down by this Court.
[725G H] Bachan Singh vs State of Punjab, [1980] SCC 684 and Machhi Singh vs State of Punjab, referred to.
|
: Criminal Appeal Nos.
287 288 of 1978.
From the Judgment and Order dated 14.10.1977 of the Allahabad High Court in Criminal Appeal Case No. 2242 of 1972.
966 Frank Anthony, Sushil Kumar and J.K. Das for the Appel lant in Crl.
A.No. 287 of 1978.
U.R. Lalit, S.K. Bisaria and A.D. Malhotra for the Appellant in Crl.
288 of 1978.
Prithvi Raj, C.P. Mittal and Dalveer Bhandari for the Re spondent.
The Judgment of the Court was delivered by NATARAJAN, J.
These Appeals by Special Leave arise out of a common judgment rendered by the Allahabad High Court in three Criminal Appeals filed before it by the appellants and one Raj Kishore.
Appellant Subash and appellant Shiv Shankar were convicted alongwith Raj Kishore by the 4th Additional Sessions Judge, Bareilly under Section 302 read with Section 34 Indian Penal Code and Section 324 read with Section 34 Indian Penal Code respectively for having committed the murder of one Ram Babu and for having caused hurt with a knife to witness Dinesh Shankar.
For the said convictions they were awarded imprisonment for life and three year 's R.I., respectively and the sentences were ordered to run concurrently.
One Om Kumar who was also sent up for Sessions trial under the two charges mentioned above was acquitted by the Sessions Judge.
The three convicted persons preferred appeals to the High Court and the High Court has confirmed the convictions and sentences awarded to Subash and Shiv Shankar but acquitted Raj Kishore.
The offences in question were committed on March 12, 1971 i.e., a day after Holi Festival at about 11 a.m. on the Bareilly Nainital Road in Bareilly.
The prosecution case was that while Shiv Shankar caught hold of Ram Babu, Subash, Raj Kishore and Om Kumar repeatedly stabbed him with knives and caused fatal injuries to him.
When Dinesh Shankar (P.W. 2) tried to intercede he was also stabbed by Subash and caused an injury.
Besides, Dinesh Shankar (P.W. 2) the occurrence was witnessed by an uncle of Ram Babu viz.
Budh Sen (P.W. 1) and Shyam Behari (P.W. 3) and some others.
Ram Babu and Dinesh Shankar were taken to the hospital but Ram Babu was pronounced dead in the hospital.
The motive for the occur rence was that about 15 or 20 days prior to the occurrence Ram Babu had given a machine part to Subash for being welded but Subash failed to carry out the work; nevertheless he refused to return the machine part without the repair charges being paid to him.
Ram Babu refused to pay the charges and there was an altercation but the parties were pacified by 967 Dinesh Shankar and Ram Babu took away the machine part without paying any charges to Subash.
The quarrel had taken place about 3 or 4 days before the occurrence.
Bearing this grudge in mind, when Ram Babu, accompanied by Budh Sen and Dinesh Shankar was proceeding to Qutabkhana to witness the Holi celebrations, Subash assisted by his three companions attacked Ram Babu in the manner set out earlier and caused fatal injuries to him.
There were as many as 14 injuries on Ram Babu among which 7 were punctured wounds.
Among the punctured wounds, injury nos.
7 and 8 were deep injuries which had injured the pleura, left lung, pericardium and the heart.
These injuries were certified to be sufficient in the ordinary course of nature to cause death.
Dinesh Shankar (P.W. 2) also had sustained an incised wound on his left thigh.
Budh Sen (P.W. 1) got a report Exhibit Kha 1 written by his son and presented it at the Police Station at 1.12 p.m.
Therein he has stated that accused Subash was known to him but the other three assailants were not known to him but another witness Bhuvan Chand examined as C.W. 1, had in formed him that one Raja Ram was one of the assailants of Ram Babu.
It would appear that subsequently Bhuvan Chand refused to testify out of fear of the accused and hence he was not cited as a witness in the charge sheet.
Even so, having regard to the averments in Exhibit Kha 1, the Ses sions Judge examined Bhuvan Chand as a court witness.
He, however, failed to corroborate Budh Sen and stated that he did not know anything about the occurrence.
Subash was absconding and he surrendered before the court on 12.3.71.
He was subsequently questioned by the Investigating Officer and he gave information regarding the names and addresses of the other three assailants.
Raj Kishore was arrested on 23.5.1971 and Shiv Shankar was arrested on 14.6.71 from the office of the Central Excise, Bareilly where he was employed.
Om Kumar surrendered himself in Court on 15.7.71.
Test identification parades were held for Raj Kishore and Shiv Shankar on 5.5.71 wherein Shiv Shankar was identi fied by Budh Sen, Dinesh Shankar and Shyam Behari but Raj Kishore was identified only by Dinesh Shankar.
In the subse quent test identification parade held for Om Kumar on 27.7.71 none of the witnesses was able to identify him.
The defence of all the accused was one of denial.
Since accused Om Kumar was not identified by any of the witnesses at the test identification parade and since his name was not 968 mentioned in Exhibit Kha 1 the Sessions Judge acquitted him of the charges and convicted only the two appellants and Raj Kishore.
The High Court acquitted Raj Kishore because he had been identified only by Dinesh Shankar and not by the other witnesses but, however, confirmed the conviction of these two appellants and it is against such confirmation by the High Court, the appellants have preferred these Appeals.
Before dealing with the case of Subash we can conven iently deal with the appeal of Shiv Shankar.
Admittedly he was not known to any of the eye witnesses and his name does not also find a place in the First Information Report Exhib it Kha 1.
His name came to be known only through Subash when he was questioned in the jail on 7.4.1971.
Even if it were so, it is not understandable why the Investigating Officer should have taken three weeks to question Subash after his surrender in Court on 17.3.1971.
Be that as it may, even after getting the name and address of Shiv Shankar from Subash, the Investigating Officer has failed to trace him and arrest him till 14.6.1971.
Shiv Shankar was an employee in the office of the Central Excise Department at Bareilly itself.
It is, therefore, difficult to believe that the Investigating Officer would not have been able to trace him and arrest him for nearly 9 weeks after coming to know of Shiv Shankar 's name and address from Subash.
As a matter of fact, the Investigating Officer has stated in his evidence that he visited the house of Shiv Shankar two or three times to arrest him but Shiv Shankar was not to be found.
If Shiv Shankar was absent from the house the Investigating Officer could have easily learnt from the neighbours where he was working and where he had gone and located him and arrested him.
It is not the prosecution case that Shiv Shankar was absconding.
In such circumstances it is difficult to accept the prosecution case that the Investigating Officer could not trace and arrest Shiv Shankar till 14.6.71 in spite of coming to know on 7.4.71 itself that he was one of the assailants of Ram Babu.
Apart from this infirmity we further find that Shiv Shankar was not put up for test Identification parade promptly.
The identification parade has been held three weeks after his arrest and no explanation has been offered for the delay in holding the test identification parade.
There is, therefore, room for doubt as to whether the delay in holding the identification parade was in order to enable the identifying witnesses to see him in the police lock up or in the jail premises and make a note of his features.
Over and above all these things there remains the fact that a 969 sufficiently long interval of time had elapsed between the date of occurrence when the witnesses had seen Shiv Shankar for a few minutes and the date of the test identification parade.
It is, no doubt, true that all the three witnesses had correctly identified Shiv Shankar at the identification parade but it has to be borne in mind that nearly 4 months had elapsed during the interval.
It is relevant to mention here that neither in Exhibit Kha I nor in their statements during investigation, the eye witnesses have given any descriptive particulars of Shiv Shankar.
While deposing before the Sessions Judge they have stated that Shiv Shankar was a tall person and had 'sallow ' complexion.
If it is on account of these features the witnesses were able to identi fy Shiv Shankar at the identification, parade, they would have certainly mentioned about them at the earliest point of time because their memory would have been fresh then.
Thus in the absence of any descriptive particulars of Shiv Shan kar in Exhibit Kha 1 or in the statements of witnesses during investigation, it will not be safe and proper to act upon the identification of Shiv Shankar by the three wit nesses at the identification parade and hold that he was one of the assailants of Ram Babu.
As pointed out in Muthu Swami vs State of Madras, A.I.R. 1954 S.C 4 where an identifica tion parade is held about 2 1/2 months after the occurrence it would not be safe to place reliance on the identification of the accused by the eye witnesses.
In another case Mohd. Abdul Hafeez vs State of Andhra Pradesh, A.I.R. 1983 S.C. 361 it was held that where the witnesses had not given any description of the accused in the First Information Report, their identification of the accused at the Sessions trial cannot be safely accepted by the court for awarding convic tion to the accused.
In the present case there was a long interval of nearly 4 months before the test identification parade was held and it is difficult to accept that in spite of this interval of time the witnesses were able to have a clear image of the accused in their minds and identify him correctly at the identification parade.
Mr. U.R. Lalit, learned counsel for Shiv Shankar further contended that Shiv Shankar had certain distinctive features like scars on the face, reddish lips etc., and these marks of identification should have been furnished to the witness es before they were called upon to identify Shiv Shankar at the identification parade.
We do not think it necessary to go into the merits of this argument in the light of our conclusion already reached.
As the conviction of Shiv Shan kar is based solely with reference to his identification at the identification parade, he has to be given the benefit of doubt and acquitted in the light of our finding.
According ly, Shiv Shankar 's appeal has to succeed.
970 Coming now to the appeal of Subash it was strenuously contended by Mr. Frank Anthony, learned counsel that the prosecution evidence suffers from numerous infirmities and as such the Sessions Judge and the High Court ought not to have convicted him.
His further argument was that in any case the benefit of doubt given to Om Kumar and Raj Kishore, ought to have been given to Subash also.
Mr. Anthony argued that Exhibit Kha 1 could not have been given at 1.12 p.m. because there is no evidence to show when the report was sent to the Magistrate and when it was received by him.
The learned counsel referred to Gurdev Singh and others vs The State, [1963] Punjab Law Reporter, 409 where the dangers ensuing from a First Information Report not being lodged promptly have been pointed out.
We are unable to accept the argument of Mr. Anthony because there are no materials to warrant an inference that Exhibit Kha 1 had been given later but ante dated to cover up the delay in making the report.
It is true that the First Information Report sent to Court does not contain the Magistrate 's endorsement regarding the time of its receipt, but Ram Kishan, Head Constable (P.W. 5) has deposed that the special report was despatched to the Magistrate at 1.20 p.m. itself through constable Chiman Lal and that the General Diary contains an entry to that effect.
It was seriously urged by Mr. Anthony that the motive put forward for the occurrence Was of a flimsy nature and it is unbelievable that for non payment of repair charges Subash would have attacked Ram Babu along with his compan ions.
This argument has to fail because Dinesh Shankar has clearly deposed that there was an altercation between Subash and Ram Babu there on four days earlier and Ram Babu took away the machine part without paying repair charges to Subash.
There is, therefore, nothing improbable in Subash having nurtured a grievance against Ram Babu and wanting to settle scores with him.
The evidence of the eye witnesses is clearly to the effect that Subash told his companions on seeing Ram Babu, that he is the person who had quarrelled with him and taken away the machine part without paying the repair charges.
Making common cause of his grievance Su bash 's companions had also joined him in perpetrating an attack on Ram Babu.
The intent of Subash in launching an attack on Ram Babu can be gauged from the fact that when Dinesh Shankar tried to intervene, he had prevented him and inflicted a stab injury on him also.
The further argument of Mr. Anthony was that Budh Sen did not have proper eye sight, that Shyam Behari was a chance witness and 971 that Bhuvan Chand named in Exhibit Kha 1 had failed to support the prosecution case and as such there is no accept able evidence to convict Subash.
He also stated that even though Dinesh Shankar is an injured witness, there is no guarantee his evidence is truthful.
None of these conten tions in our opinion, has any merit.
Budh Sen has stated that his eye sight is poor without glasses but with specta cles he can see well.
It is not the case of the appellant that Budh Sen was not wearing his spectacles at the time of the occurrence.
In so far as Dinesh Shankar and Shyam Behari are concerned, their presence at the scene cannot admit any doubt because their names find a place in Exhibit Kha I. Moreover Dinesh Shankar has sustained an injury on his left thigh.
The evidence of these witnesses has been accepted by the Session Court and the High Court and we see no reason to take a different view.
In so far as Bhuvan Chand (C.W. 1) is concerned, the prosecution has satisfactorily explained why he was not cited as a witness.
He had no doubt furnished the name of Raja Ram alias Raj Kishore to Budh Sen but he subse quently backed out fearing reprisal at the hands of the accused.
Mr. Anthony argued that even if his contentions are not accepted, Subash can be convicted only for an offence under Section 324 Indian Penal Code for the injury caused to Ram Babu as well as Dinesh Shankar.
We may mention here that the Sessions Judge had framed a separate charge against the appellant Subash under Section 324 Indian Penal Code in addition to the charge under Section 302 read with Section 34 Indian Penal Code.
Mr. Anthony invited our attention to State of U.P. vs Hari Prasad, ; and Ugar Ahir vs State of Bihar, A.I.R. 1965 S.C. 277 to contend that when the sub stratum of the prosecution case fails, the entire case has to fail.
We find the facts in those cases were entirely different and hence they can have no relevance to this appeal.
In the present case, the prosecution version fully survives in spite of the acquittal of the other ac cused for want of proof of indentity.
The last argument of Mr. Anthony was that in any event when the other accused persons are acquitted, Subash alone cannot be convicted under Section 302 read with Section 34 Indian Penal Code in the absence of evidence to show that he caused any of the fatal injuries on Ram Babu.
This argument is devoid of any merit.
The case of Subash stands on a different footing from that of the other accused because he has been clearly named and the particulars of his profession and address have been furnished in Exhibit Kha 1.
All the witnesses have stated that he was known to all of them.
In contrast the names of the other accused were not known to the eye witnesses and the name of Raj Kishore alone had been furnished to Budh Sen by Bhuvan Chand.
972 Besides attacking Ram Babu Subash had also attacked Dinesh Shankar.
He was absconding and had later surrendered himself in court.
No test identification parade was held for him because his identity was never in doubt.
He had a grudge against Ram Babu and it was on his instigation the attack on Ram Babu had been launched.
His case, therefore, stands on a distinctively different footing from that of the other accused persons.
Even though the other accused are acquitted it is only for want of proof of their identity and not because the eye witnesses had not seen the occurrence or that the occurrence had taken place in a different manner.
Subash cannot, therefore, escape the consequences of the attack jointly committed by him and his accomplices in furtherance of their common intention even though the other accused stand acquitted for want of acceptable proof of their identity.
Mr. Anthony referred us to the decision in Vijay Kumar vs State of J & K, A.I.R. 1982 S.C. 1022 to contend that when the other accused stand acquitted Subash also should be acquitted of the charge under Section 302 read with Section 34 Indian Penal Code.
The facts in that case bear no comparison with the facts in this case.
On the other hand Amir Hussain vs State of U.P., A.I.R. 1975 S.C. 2211 will be the decision apt for consideration in this case.
In the above case 10 persons were acquitted by the Sessions Judge and three alone were convicted under Section 302 read with Section 34 Indian Penal Code.
Among those three, two were acquitted by the High Court and consequently only one of the accused stood convicted.
The said accused appealed to this court and contended that since the other two accused had been acquitted, he should also be acquitted of the charge under Section 302 read with Section 34 Indian Penal Code.
Repelling the contention this Court held as follows: "Much stress has been laid on behalf of the appellant upon the fact that despite the evidence of the above mentioned four eye witnesses, the High Court has acquitted Kari muddin and Mohd. Ibrahim accused.
It is, in our view, not necessary to express an opinion on the point as to whether those two accused were rightly acquitted or not.
All that we can say is that the benefit of doubt which resuit ed in the acquittal of the other two accused would not vitiate the conviction of the appel lant in case the evidence adduced against him is found to be satisfactory and convincing.
The material on record establishes that the appellant had a motive to join in the assault on Ibrahim Pradhan.
The appellant held out a threat and report about it was lodged by Ibrahim deceased at the police station about 973 3 1/2 months prior to the present occurrence.
The evidence about the motive lends assurance to the evidence of the eye witnesses regarding the complicity of the appellant.
We would, therefore, maintain the conviction of the appellant.
As regards the sentence, it may be stated that the only injury which is attribut ed to the appellant is an incised wound on the right arm of Ibrahim.
The incised wound which was found on the scalp of Mehandi Hasan was ascribed by the eye witnesses to Karimuddin who has been acquitted.
In view of the fact that a comparatively minor injury was at tributed to the appellant and he is being vicariously held liable for the fatal injuries caused by the other culprits, we consider it to be a fit case in which we might substitute the lesser sentence for the extreme penalty of death.
We accordingly maintain the conviction of the appellant but reduce his sentence to that of imprisonment for life.
" We are, therefore, of the view that even though the other accused stand acquitted and even though there is no evidence that Subash caused one of the fatal injuries, he cannot escape conviction under Section 302 read with Section 34 Indian Penal Code when his participation with three other assailants in the attack on Ram Babu has been established beyond reasonable doubt by the prosecution.
We, therefore, confirm his convictions and the sentences awarded therefor.
In the result Crl.
Appeal No. 287 of 1978 will stand dismissed while Crl.
Appeal No. 288 of 1978 will stand allowed.
Appellant Subash will surrender himself to custody failing which he should be arrested for serving out the sentence.
Appellant Shiv Shankar will stand acquitted of the convictions under Section 302 read with Section 34 Indian Penal Code and 324 read with Section 34 Indian Penal Code and his bail bonds will stand cancelled.
N.P.V. Crl.
Appeal No. 287/78 dismissed.
Appeal No. 288/78 allowed.
|
The prosecution alleged that there was a dispute between the appellant in Appeal No. 287 of 1978 and the deceased in regard to payment of repair charges for a machine part and that three or four days later this appellant alongwith others attacked the deceased when he was accompanied by P.W. 1 and P.W. 2.
It was further alleged that while the appel lant in Appeal No. 288 of 1978 caught hold of the deceased, the appellant in the first appeal and two others repeatedly stabbed him with knives and caused several injuries.
P.W. 2 was also injured when he tried to intercede.
The deceased and P.W. 2 were taken to hospital where the deceased was pronounced dead.
P.W. 1 presented a complaint at the Police Station.
The appellant in the first appeal absconded and surren dered before the court later.
On questioning, he named the assailants, who were arrested on different dates.
Test indentification parades were held for two accused persons wherein the appellant in the second appeal was identified by three witnesses, but the other accused was identified by only of them.
In the subsequent identification parade held for another accused, none of the witnesses was able to identify him.
All the accused were tried and the two appel lants and another accused were convicted under Section 302 read with Section 34 Indian Penal Code and Section 324 read with Section 34 Indian Penal Code for having committed murder of the deceased and caused hurt with a knife to P.W. 2 and were awarded imprisonment for life and three years ' rigorous imprisonment respectively, the sentences to run concurrently.
The fourth accused who was not identified by any one of the witnesses at the identification 963 parade and whose name was not mentioned in the First Infor mation Report, was acquitted.
The High Court in appeal confirmed the conviction of the two appellants but acquitted the third accused on the ground that he had been identified by only P.W. 2 and not by other witnesses.
In the appeal to this Court, it was submitted on behalf of the appellant in Criminal Appeal No. 287 of 1978 that the prosecution evidence suffers from numerous infirmities and as such, the trial court and the High Court ought not to have convicted him, that in any case the benefit of doubt given to the two of the other accused ought to have been given to him, that there was an attempt to cover up the delay in making the report, that the motive put forward for the occurrence was of a flimsy nature and it was unbelieva ble that for non payment of repair charges the deceased would have been attacked alongwith his companions, that P.W. 1 did not have proper eye sight, that P.W. 3 was a chance witness and that C.W. 1 failed to support the prosecution case, and that even though P.W. 2 was an injured witness, there was no guarantee that his evidence is truthful.
It was further urged that the appellant could be convicted only for an offence under Section 324 Indian Penal Code for the injury caused to the deceased as well as P.W. 2, that as the sub stratum of the prosecution fails, the entire case had to fail and that when the other accused persons were acquitted, the appellant alone cannot be convicted under Section 302 read with Section 34 I.P.C., in the absence of evidence that he caused any of the fatal injuries on the deceased.
It was submitted on behalf of the appellant in Criminal Appeal No. 288 of 1978 that neither his name nor any of his characteristics were mentioned in the First Information Report by any of the eye witnesses, that he was falsely implicated, that there was no motive for him to murder the deceased, that one of the prosecution witnesses had alto gether denied his presence, that there was delay in his arrest and ho1ding of the identification parade and he was exposed to the identifying witnesses by not covering his distinctive features, that the prosecution had failed to prove beyond reasonable doubt his participation in the commission of the occurrence and that when the other ac cused, one of whose name figured in the First Information Report, were acquitted by giving the benefit of doubt.
he should also have been given the same benefit of doubt.
Dismissing the appeal of the appellant in Appeal No. 287 of 1978 and allowing the appeal of the appellant in Appeal No. 288 of 1978, this Court, 964 HELD: 1.
When participation of the appellant with the other assailants is established beyond reasonable doubt by the prosecution, he cannot escape the consequences of the attack committed by him and his accomplices in furtherance of their common intention and conviction under Section 302 read with Section 34 Indian Panel Code even though the other accused stand acquitted and even though there may be no evidence that the accused caused one of the fatal injuries.
[973E] 2.
The other accused were acquitted only for want of acceptable proof of their identity and not because the eye witnesses had not seen the occurrence or that the occurrence had taken place in a different manner.
Therefore, there is no merit in the contention that when the other accused persons were acquitted, the appellant in Criminal Appeal No.287 of 1978 alone cannot be convicted under Section 302 read with Section 34 Indian Penal Code, in the absence of evidence to show that he caused any of the fatal injuries on the deceased.
The appellant, therefore, cannot escape the consequences of the attack jointly committed by him and his accomplices in furtherance of the common intention.
[972B E] 3.
There is nothing improbable in the appellant having nurtured a grievance against the deceased and wanting to settle scores with him.
The evidence of the eye witnesses was clearly to the effect that the appellant told his com panions on seeing the deceased that he was the person who had quarreled with him and taken away the machine part without paying the repair charges.
Making common cause of his grievance, the appellant 's companions had also joined him in perpetrating an attack on the deceased.
The trial court and the High Court were right in accepting the evi dence of these witnesses.
[970F G] 4.
There is no merit in the contention that the appel lant can be convicted only for an offence under Section 324 Indian Penal Code for injury caused to the deceased as well as P.W. 2.
The trial court had framed a separate charge against the appellant under Section 324 Indian Penal Code in addition to the charge under Section 324 read with Section 34 Indian Penal Code.
There is also no merit in the conten tion that when the sub stratum of the prosecution case fails, the entire case has to fail.
The prosecution version fully survives in spite of the acquittal of the other ac cused for want of proof of identity.
[971 D F] 5.
Where there is delay in holding an identification parade, it would not be safe to place reliance on the iden tification of the accused by the eye witnesses.
[969D E] 965 6.
Where the witnesses had not given any description of the accused in the First Information Report or in the state ments during the investigation, their identification of the accused at the trial cannot be safely accepted by the court for convicting the accused.
[969E] 7.
The appellant in Criminal Appeal No. 288 of 1978 was not arrested for nearly nine weeks after coming to know of his name and address from the other appellant.
It was not the case of the prosecution that the appellant was abscond ing.
Apart from this infirmity, the appellant was not put up for test identification parade promptly and it was held three weeks after his arrest and no explanation was offered for the delay in holding it.
There is, therefore, room for doubt as to whether the delay in holding the identification parade was in order to enable the identifying witnesses to see him in the police lock up or in the jail premises and make a note of his features.
A sufficiently long interval of time had elapsed between the date of occurrence when the witnesses had seen the appellant for a few minutes and the date of the identification parade.
[968D H; 969A] 8.
Although all the three witnesses had identified the appellant at the identification parade, after nearly four months, in the absence of any descriptive particulars of the appellant in the First Information Report or in the state ments of witnesses during the investigation, it would not be safe and proper to act upon the identification of the appel lant by the three witnesses at the identification parade and hold that he was one of the assailants of the deceased.
[969A D] 9.
As the conviction of the appellant was based solely with reference to his identification at the parade, he has to be given the benefit of doubt and acquitted.
[973E] Muthu Swami vs State of Madras, AIR 1954 SC 4; Mohd. Abdul Hafeez vs State of Andhra Pradesh, ; Gurdev Singh and others vs The State, 1963 Punjab Law Re porter, 409; State of U.P. vs Hari Prasad, ; ; Ugar Ahir vs State of Bihar, AIR 1965 SC 277; Vijay Kumar v: State of J & K, AIR 1982 SC 1022; and Amir Hussain vs State of U.P., AIR 1975 SC 2211, referred to.
|
vil Appeal No. 1598 (NT) of 1974.
From the Judgment and Order dated 26.2.1971 of the Allahabad High Court in I.T. Reference No. 92 of 1966.
C.M. Lodha, N.M. Tandon and Miss A. Subhashini for the Appellant.
Dhananjoy Chandrachud (Amicus Curiae) for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal from the judgment and order of the High Court of Allahabad dated 26th February, 1971.
The assessee is a partnership firm which at the relevant time enjoyed the status of a registered firm for the assessment years 1960 61, 1961 62 and 1962 63.
In the assessment proceedings for the assessment year 1960 61, the assessee suffered a loss of Rs.60,054 in the speculation business which was to be carried forward for adjustment against speculation profits of future years.
For the assess ment year 1961 62 also, the assessee had suffered a loss amounting to Rs.6,839 in 945 speculation business and this was also to be carried forward for adjustment against speculation profits of future years.
For the assessment year 1962 63 which is the year with which this appeal is concerned, the assessee made a profit of Rs.58,102 from speculation business.
In the assessment proceedings for that year the assessee claimed that a loss of Rs.60,054 suffered in respect of the assessment year 1960 61 and the loss of Rs.6,839 suffered in respect 0" the assessment year 1961 62 should be set off against this speculation profit of Rs.59,102 for this year.
If that had been done, the speculation profits of the year under consid eration would have been absorbed completely by the losses brought forward from the preceding years.
The Income tax Officer, however, rejected the assessee 's claim.
He held that as the assessee was a registered firm, the losses could be carried forward and set off only by the partners and not by the firm.
The appeal by the assessee before the Assistant Appellate Commissioner was dismissed.
The assessee went up in appeal to the Tribunal.
The Tribunal held that the right to carry forward the losses relating to the assessment years 1960 61 and 1961 62 was governed by the Indian Income tax Act, 1922 (hereinafter called the '1922 Act ') and the section 75(2) of the Income tax Act, 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case.
The Tribunal was of the view that when an Act was passed repealing an earlier enactment, it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly.
The Tribunal, therefore, held that the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63 and accordingly allowed the appeal.
The revenue sought for reference to the High Court of Allahabad on the following question: "Whether, the assessee is, in law, entitled to set off of the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year?" The High Court considering the provisions of section 75 of 1961 Act came to the conclusion that a right had accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation busi 946 ness of future years.
The High Court was of the view that that was a right which had accrued to it before the 1961 Act was brought into force.
The High Court came to the conclusion that by virtue of section 6 of the that right continued to subsist.
The High Court, therefore, was of the view that the Tribunal was fight in holding that the assessee was entitled to set off the specu lation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year 1962 63.
In appeal on behalf of the revenue before us, it was contended that the High Court was in error.
Our attention was drawn to the provisions of section 24(2) of 1922 Act which, inter alia, provided that where any assessee sus tained any loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending 31st day of March, 1940, in any business, profession or vocation, and the loss could not be wholly set off under sub section (1) of section 24 of the said Act, so much of the loss as was not so set off or the whole loss where the assessee had no other head of income would have been carried forward in the manner indicated therein.
So, therefore, the 1922 Act 'gave a right to set off speculation losses against speculation profits and to the extent it was unabsorbed, it had a fight to carry for ward the losses for the future years to be set off against speculation profits for future years.
It was submitted that in a way it was vested right a fight on assessment to set off the losses against the profits of the year in question and if not fully absorbed to carry forward to be set off against the profits of future years.
It was submitted on behalf of the revenue that it therefore continued so long as the Act permitted the setting off in that manner.
It was, however, urged that in view of the coming into operation of 1961 Act which came into operation on 1st of April, 1962, that fight no longer was there with the assessee.
Section 75 of 1961 Act provided an entirely new scheme.
It was as follows: "75.
Losses of registered firms. (1) Where the assessee is a regis tered firm, any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm, and they alone shall be entitled to have the amount of the loss set off and carried forward for set off under sections 70, 71, 72, 73, 74 and 74A. (2) Nothing contained in sub section (1) of section 72, sub section (2) of section 73, sub section (1) of section 947 74 or sub section (3) of section 74A shall entitle any assessee, being a registered firm, to have its loss carried forward and set off under the provisions of the aforesaid sec tions.
" As a result of sub section (2) of section 75 of the said Act, there is prohibition, according to the revenue, enti tling the assessee being registered firm to have its loss carried forward and set off under the provisions except in the manner indicated in sub section (2) of section 75 of the Act.
It was submitted that as the assessment for the year 1962 63 had to be made under the provisions of 1961 Act, the assessee could not have the benefit of set off of the car ried forward loss.
In support of this contention reliance was placed on the decision of the Allahabad High Court in Commissioner of Income tax, Kanpur vs Mangiram Gopi Chand, where it was held that a registered firm could, so long as the 1922 Act was in force, carry forward speculation loss, if it could not be set off against specu lation income of the year in question.
However, the Court observed after coming into force of 1961 Act, specific provisions had been made in respect of losses of registered firms and such right of set off of speculation losses was no longer available.
The High Court was of the view that the right of a registered firm to set off and carry forward losses under section 24(2) of the 1922 Act was a substantive right.
However, where a repealing provision indicated the effect of the repeal on previous matters and provided for the operation of the previous law in part as also the opera tion of the new law in the other part in positive terms, the repealing and saving provision could be said to be self contained and excluded the applicability of section 6, according to the Allahabad High Court, of the .
Section 297(2) of 1961 Act, according to the Allahabad High Court, must be taken to be a self contained code in respect of the operation of 1922 Act and the rights which might have been created under it.
Inasmuch as section 297(2) of the 1961 Act did not save, said the Allahabad High Court, the right, if any, of a registered firm to set off its speculation losses, which have been carried forward, against the speculation profits of the firm, the right, if any, created by section 24(2) could not be said to remain intact after the repeal of the 1922 Act.
Speculation losses of years anterior to 1962 63 could not, therefore, be car ried forward and set off against speculation profits of a registered firm.
The Allahabad High Court considering the decision of this Court in State of Punjab vs Mohar Singh, ; observed that the principle laid down by this Court was that where the repealing provision indicated the effect of repeal on previ 948 ous matters and provided for the operation of the previous law in part and in negative terms as also for the operation of the new law in other part in positive terms, the repeal ing and the saving provision could be said to be self con tained Act.
While we respectfully agree with the principle applicable in interpreting the application of the Act, we are of the opinion that the Allahabad High Court was not fight in the application of that principle in the light of section 297(2) of 1961 Act in the aforesaid decision.
There is nothing in any of the clauses of subsection (2) of sec tion 297 of the Act which indicates that accrued rights under 1922 Act lapsed in respect of the assessment to be made after coming into operation of 1961 Act.
According to the Allahabad High Court in that decision, section 297(2)(a) provided for completion of assessment in accordance with the old Act where the return was filed before the commencement of the 1961 Act but section 297(2)(b) of the Act provided for completion of assessment in accordance with the provi sion of the new Act where the return was filed even in respect of years covered by the 1922 Act, after 31st March, 1962.
Reading section 297 in the manner it did, the Allaha bad High Court was of the view that where the provisions of the previous Act stood repealed, the set off cannot be given.
The Allahabad High Court had, it appears, no occasion to notice the judgment under appeal.
On behalf of the revenue, reliance was also placed on a decision of the Calcutta High Court in the case of Reliance Jute Mills Co. Ltd. vs Commissioner of Income tax, West Bengal 1, on the question of carry forward of the loss after the coming into operation of the Finance Act, 1955.
The principle enunciated therein, in our opinion, will have no application to the controversy in the present case.
Our attention was also drawn by the revenue to the decision of the Kerala High Court in the case of Helen Rubber Indus tries Ltd. vs Commissioner of Income Tax, Mysore, Travan core Cochin and Coorg, The Kerala High Court observed that the loss incurred in Travancore (in a Part B State) by the assessee during M.E. 1123 which could only have been carried forward for two years in accordance with the provisions of section 32(2) of the Travancore Income tax Act, 1121, could be carried forward beyond those two years for a period of six years in accordance with sections 24(2) of the Indian Income tax Act, 1922 for the assessment year 195 1 52, as the Indian Income tax Act, 1922 was applicable for that assessment year and the assessee had the right to carry forward losses in accordance with the provisions of that Act.
The High Court had to construe section 3 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950.
This case must also be understood in the back ground of 949 the facts of that case which are different from the instant case with the provisions with which we are concerned.
That was not a case of deciding whether the vested right was curtailed and if so to what extent.
This Court in Karimtharuvi Tea Estate Ltd. vs State of Kerala, ; observed that it was well settled that the Income tax Act as it stands amended on the first day of April of any financial year must apply to the assessment of the year.
Any amendments in that Act which came into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assess ment was actually made after the amendments came into force.
There, the Kerala Surcharge on Taxes Act, 1957, having come into force on 1st September, 1957, being the date appointed by the Kerala Government under section 1(3) of the Act, and not being retrospective in operation, by express intendment or necessary implication, could not be made applicable from 1st April, 1957.
Since the Act was not the law in force on 1st April, 1957, no surcharge on agricultural income tax could be levied under that Act in respect of the assessment year 1957 58.
That decision had also not dealt with the question of affecting vested rights.
In our opinion the right given to the assessee for the assessment year 1961 62 under section 24(2) of 1922 Act was an accrued right and a vested right.
It could have been taken away expressly or by necessary implication.
It has not been so done.
Neither section 297(2)(b) nor any other sub clauses of sub section (2) of section 297 indicates contrary intention of the legislature regarding any vested right of the assessee under the 1922 Act.
On the contrary section 6(c) of the indicates that right should be preserved.
Reliance may be placed on the observations of this Court in T.S. Baliah vs
T.S. Rangachari, Income tax Officer, Cen tral Circle VI, Madras, This Court observed that the provisions of section 52 of the Indian Income tax Act, 1922, do not alter the nature or quality of the offence enacted in section 177 of the Indian Penal Code, 1860.
They merely provide a new course of procedure for what was al ready an offence.
There is no repugnancy or inconsistency; the two enactments can stand together and they must be treated as cumulative in effect.
This Court, however, ob served that in enacting section 297(2) of the Income tax Act, 1961, it was not the intention of the Parliament to take away the right of instituting prosecutions in respect of proceedings which were pending at the commencement of the Act.
Parliament had not made any detailed provision for the 950 institution of prosecutions in respect of offences under the 1922 Act.
Section 6(e) of the General Clauses Act, 1987 applied for the continuation of such proceedings after the repeal of the Indian Income tax Act, 1922, and a legal proceeding in respect of an offence committed under the 1922 Act may be instituted after the repeal of the 1922 Act by the 1961 Act.
The Court reiterated that before coming to the conclusion that there is a repeal of an earlier enactment by a later enactment by implication, the court must be satis fied that the two enactments are so inconsistent or repug nant that these could not stand together and the repeal of the express prior enactment must flow from necessary impli cation of the language of the later enactment.
In Commissioner of Income Tax (Central), Calcutta vs
B.P. (India) Ltd., the Calcutta High Court was concerned with section 25(3) of the 1922 Act.
It is not necessary to set out in extenso the facts of that case.
It suffices to say that the discontinuance of the assessee 's business in that case took place on 28th February, 1962.
It could not be disputed that if the 1961 Act had not come into effect, the assessee would have been entitled to get the relief as granted by virtue of section 25(3) of the 1922 Act.
It was observed that on a reading of section 6 of the , it was clear that unless a con trary intention appears, the repeal of an Act does not affect any existing right, privilege, obligation or liabili ty.
It is, therefore, necessary to find out from the provi sions of section 297 of the 1961 Act which.repeals the 1922 Act, whether the old rights and liabilities have been in tended to be destroyed.
There was no corresponding provision under the 1961 Act dealing with the type of claims mentioned in sub section (3) or (4) of section 25 of the 1922 Act.
It was contended by the revenue that what was not said was destroyed and such intention would be apparent in that case from section 297(2)(h) of the 1961 Act.
The High Court referred to the 12th Report of the Law Commission, and Speaking for the Court, one of us (Sabyasachi Mukharji,J.) said that it was not possible to accept the submission for the revenue that whatever was not said was destroyed.
The Court reiterated that there must be a manifest intention of Parliament to destroy a right or privilege under the old Act.
There is no such provision in the new Act.
In the instant case also, section 75(2) dealt with a different scheme of carrying forward of loss but it did not speak of any accrued right.
It did not destroy either by express words or by necessary implication the vested right given to an assessee under section 24 (2) of the Act of 1922.
There fore, unless one finds in section 297 or within the four corners of the any intendment express or implied of destroying the rights created by section 24(2) of 951 carrying forward the losses to set off in subsequent years in case of speculation business that right cannot be said to be destroyed.
The fact that the fight created by the operation of section 24(2) is a vested right cannot in our opinion be disputed.
See in this connection the observations of this Court in Gujarat Electricity Board vs Shantilal R. Desai, ; at 587 and Isha Valimohamad & Anr.
vs Haji Gulam Mohamad & Haii Dada Trust, [1975] 1 S.C.R. 720 at 723.
Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years.
The fight of carrying forward and set off accrued to the assessee under the Act of 1922.
A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that fight accrued unless the re pealing statute took away such right expressly or by neces sary implication.
This is the effect of section 6 of the .
In this case the 'savings ' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued.
In other words, whatever fights are expressly saved by the 'savings ' provision stand saved.
But, that does not mean that fights which are not saved by the 'savings ' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted.
Rights which have accrued are saved unless they are taken away expressly.
This is the principle behind section 6(c) of the .
The right to carry forward losses which had accrued under the repealed Income tax Act of 1922 is not saved expressly by section 297 of the Income tax Act, 1961.
But, it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922.
Section 6(c) saves accrued rights unless they are taken away by the repealing statute.
We do not find any such taking away of the rights by section 297 either expressly or by implica tion.
We are, therefore, of the opinion that the Allahabad High Court was in error in the view it took in the decision in Commissioner of Income tax, Kanpur vs Mangiram Gopi Chand (supra) but the High Court of Allahabad was fight in the judgment under appeal and the question was properly an swered.
The assessee in person did not appear at the time of the heating 952 of this appeal.
We requested Shri Chandrachud to assist us as amicus curiae.
We record that Shri Chandrachud has ren dered very able assistance to us in disposing of this ap peal.
This Court records its appreciation of the help ren dered by him.
The appeal in the premises fails and is dismissed with costs assessed at Rs.2,500 which amount should be paid to the amicus curiae.
A.P.J. Appeal dis missed.
|
The assessee, a partnership firm, enjoyed the status of a registered firm for the assessment years 1960 61, 1961 62 and 1962 63.
In the assessment proceedings for the year 1962 63 the assessee claimed that a loss of Rs.60,054 suf fered in the speculation business in the assessment year 1960 61 and the loss of Rs.6,839 suffered in the assessment year 1961 62 should be set off against the speculation profit of Rs.58,102 for the assessment year 1962 63.
The Income Tax Officer rejected the assessee 's claim holding that as the assessee was a registered firm, the losses could be carried forward and set off only by the partners and not by the firm.
The appeal by the assessee before the Assistant Appellate Commissioner was dismissed.
In the appeal to the Tribunal, the Tribunal held that the right to carry forward the losses relating to the as sessment years 1960 61 and 1961 62 was governed by the Indian Income Tax Act, 1922 and that section 75(2) of the Income Tax Act, 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case; that when an Act was passed repealing an earlier enactment, it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly and, therefore, the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63.
In the Reference, the High Court held: (1) that a right had 943 accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation business of future years; (2) that was a right which had accrued to it before the 1961 Act was brought into force; (3) that by virtue of section 6 of the General Clauses Act that right continued to subsist and (4) that the Tribunal was right in holding that the assessee was entitled to set off the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the assessment year 1962 63.
Dismissing the Appeal of the Revenue, HELD: 1.
The Allahabad High Court was in error in the view it took in the decision in Commissioner of Income Tax, Kanpur vs Mangi Ram Gopichand, but it was right in the judgment under appeal and the question was properly answered.
[951 G H] 2.
The right created by the operation of section 24(2) of 1922 Act is a vested right.
[951 A B] Gujarat Electricity Board vs Shantilal R. Desai, ; at 587 and Isha Valimohamad & Anr.
vs Haji Gulam Mohamad & Haji Dada Trust, [1975] 1 S.C.R. 720 at 723, referred to.
Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years.
The right of carrying forward and set off accrued to the assessee under the Act of 1922.
A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the re pealing statute took away such right expressly or by neces sary implication.
This is the effect of section 6 of the .
[951B D] 4.
Whatever rights are expressly saved by the 'savings ' provision stand saved.
But, that does not mean that rights which are not saved by the 'saving ' provision are extin guished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted.
Rights which have accrued are saved unless they are taken away expressly.
This is the principle behind section 6(c) of the .
[951E F] 944 5.
The right to carry forward losses which had ac crued under the repealed Income Tax Act of 1922 is not saved expressly by section 297 of the Income Tax Act, 1961.
But it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922.
Section 6(c) of the saves accrued rights unless they are taken away by the repealing statute.
Taking away of any such rights by section 297 either expressly or by implication is not found.
[951 F] Commissioner of Income tax Kanpur vs Mangiram Gopi Chand, , overruled.
State of Punjab vs Mohar Singh, ; ; Reliance Jute Mills Co. Ltd. vs Commissioner of Income tax, ; Helen Rubber Industries Ltd. vs Commissioner of Income Tax, Mysore Travancore Cochin and Coorg., and Karimtharuvi Tea Estate Ltd. vs State of Kerala, ; , referred to.
T.S. Baliah vs
T.S. Rangachari, Income tax Officer, Central Circle VI.
Madras, and Commissioner of Income tax (Central), Calcutta vs
B.P. (India) Ltd., , followed.
|
Special Leave Petition (Civil) No. 2730 of 1987.
From the Judgment and Order dated 8.12.1986 of the Punjab and Haryana High Court in R.S.A No. 1773 of 1986 (0 & M).
K.G. Bhagat and Sunil K. Jain for the Appellants.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question which arises for consideration in this case is whether under the provisions of the (hereinafter referred to as 'the Act ') a step son of a female dying intestate is entitled to claim a share in her property simultaneously with her son.
In other words the question involved is wheth er the word 'sons ' in clause (a) of sub section (1) of section 15 of the Act includes 'step sons ' also.
The facts involved in this Special Leave Petition are thus.
One Battan Singh who was also known as Badan Singh had two wives, namely, Mahan Kaur and Khem Kaur.
Mahan Kaur died during his life time after giving birth to two sons Lachman Singh (petitioner) and Gurdas Singh from the loins of Battan Singh.
Respondent No. 1 Kirpa Singh is the son of Battan Singh and Khem Kaur.
Gurdas Singh died during the life time of Battan Singh leaving behind his widow Gurbux Kaur and his son Amarjit Singh.
Battan Singh died intestate after the Act came into force.
On his death his property devolved on his heirs including his second wife Khem Kaur in accordance with the provisions of the Act.
Thereafter Khem Kaur died.
On her death dispute arose between her son Kirpa Singh on the one side and Lachman Singh, Amarjit Singh and Gurbux Kaur on the other.
Kirpa Singh claimed the entire property left behind by Khem Kaur on the ground 936 that he was the only son of Khem Kaur.
Lachman Singh, Amar jit Singh and Gurbux Kaur claimed that Kirpa Singh was entitled to only one third share in the property of Khem Kaur, Lachman Singh was entitled to one third share and Amarjit Singh, who was the son of Gurdas Singh, was entitled to the remaining one third share.
Both the parties relied upon clause (a) of section 15(1) of the Act.
While Kirpa Singh contended that the word 'sons ' in section 15(1)(a) of the Act meant only sons born of the body of the Hindu female dying intestate the others contended that the word 'sons ' in that clause included stepsons also.
In view of the above dispute Kirpa Singh filed a suit on the file of the Sub Judge 1st Class, Nakodar in the District of Jalandhar inter alia for a declaration that he was entitled to the entire property belonging to Khem Kaur against Lachman Singh, Amarjit Singh and Gurbux Kaur who contested the suit.
The trial court vide its judgment dated February 18, 1984 de creed the suit declaring that Kirpa Singh was entitled to the property belonging to Khem Kaur.
Lachman Singh preferred an appeal against the decree of the trial court in R.C.A. No. 202 of 1985 on the file of the learned Additional Dis trict Judge, Jalandhar.
That appeal was dismissed on Febru ary 19, 1986.
The second appeal filed by him against the judgment of the Additional District Judge, Jalandhar, in R.S.A. No. 1773 of 1986 on the file of the High Court of Punjab & Haryana was also dismissed in limine on December 8, 1986.
Aggrieved by the judgment of the High Court Lachman Singh has filed this petition for special leave under Arti cle 136 of the Constitution of India.
Section 15 of the Act, which is relevant for purposes of this case, reads thus: "15(1).
The property of a female Hindu dying intestate shall devolve according to the rules set out in section 16 (a) firstly, upon the sons and daughters (including the children of any predeceased son or daughter) and the husband; (b) secondly, upon the heirs of the husband; (c) thirdly, upon the mother and father; (d) fourthly, upon the heirs of the father; and (e) lastly, upon the heirs of the mother.
937 (2) Notwithstanding anything con tained in sub section ( 1 ), (a) any property inherited by a female Hindu from her father or mother shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter) not upon the other heirs referred to in sub section (1) in the order specified therein, but upon the heirs of the father; and (b) any property inherited by a female Hindu from her husband or from her father in law shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daugh ter) not upon the other heirs referred to in sub section (1) in the order specified there in, but upon the heirs of the husband.
Section 15 of the Act deals with the general rules of suc cession in the case of female Hindus.
Sub section (1) of section 15 provides that the property of a female Hindu dying intestate shall devolve according to the rules set out in section 16 of the Act firstly, upon the sons and daugh ters (including the children of any predeceased son or daughter) and the husband; secondly, upon the heirs of the husband; thirdly, upon the mother and father; fourthly, upon the heirs of the father; and lastly, upon the heirs of the mother.
Sub section (2) of section 15 of the Act arises for consideration only when a female Hindu dies intestate leav ing property without leaving behind her any son or daughter (including the children of any predeceased son or daughter) and in that event any property inherited by her from her father or mother shall devolve not upon the other heirs referred to in sub section (1) of section 15 of the Act in the order specified therein but upon the heirs of the father and any property inherited by her from her husband or from her father in law shall devolve not upon the other heirs referred to in sub section (1) of section 15 in the order specified therein, but upon the heirs of the husband, Rule 1 of section 16 provides that among the heirs specified in sub section (1) of section 15 those in one entry shah be preferred to those in the succeeding entry and those includ ed in the same entry shall take simultaneously.
It is not necessary to refer to rule (2) and Rule (3) of section 16 of the Act for purposes of this ease.
The only question which is to be determined here is whether the expression 'sons ' in clause (2) of section 15(1) of the Act includes 938 step sons also, ie., sons of the husband of the deceased by another wife.
In order to decide it, it is necessary to refer to some of the provisions of the Act.
Section 3(j) of the Act defines 'related ' as related by legitimate kinship but the proviso thereto states that illegitimate children shall be deemed to be related to their mother and to one another, and their legitimate descendants shall be deemed to be related to them and to one another and that any word expressing relationship or denoting a relative shall be construed accordingly.
Section 6 and section 7 of the Act respectively deal with devolution of interest in coparcenary property and devolution of interest in the property of a tarwad, tavazhi, kutumba, kavaru and illom.
Sections 8 to 13 of the Act deal with rules of succession to the property of a male Hindu dying intestate.
We are concerned in this case with the rules of succession to the property of a female Hindu dying intestate.
Sections 15 and 16 of the Act are material for our purpose.
Ordinarily laws of succession to property follow the natural inclinations of men and women.
The list of heirs in section 15(1) of the Act is enumerated having regard to the current notions about propinquity or nearness of relationship.
The words 'son ' and 'stop son ' are not defined in the Act.
According to Collins English Dic tionary a 'son ' means a male offspring and 'step son ' means a son of one 's husband or wife by a former union.
Under the Act a son of a female by her first marriage will not succeed to the estate of her 'second husband ' on his dying intes tate.
In the case of a woman it is natural that a step son, that is, the son of her husband by his another wife is a step away from the son who has come out of her own womb.
But under the Act a step son of a female dying intestate is an heir and that is so because the family headed by a male is considered as a social unit.
If a step son does not fall within the scope of the expression 'sons ' in clause (a) of section 15(1) of the Act, he is sure to fall under clause (b) thereof being an heir of the husband.
The word 'sons ' in clause (a) of section 15(1) of the Act includes (i) sons born out of the womb of a female by the same husband or by different husbands including illegitimate sons too in view of section 3(j) of the Act and (ii) adopted sons who are deemed to be sons for purposes of inheritance.
Children of any predeceased son or adopted son also fall within the meaning of the expression 'sons '.
If Parliament had felt that the word 'sons ' should include 'step sons ' also it would have said so in express terms.
We should remember that under the Hindu law as it stood prior to the coming into force of the Act, a step son, i.e., a son of the husband of a female by another wife did not simultaneously succeed to the stridhana of the female on her dying intestate.
In that case the son born out of her womb had precedence over a step son.
Parliament would have made express provision in the Act if it intended that there 939 should be such a redical departure from the past.
We are of the view that the word 'sons ' in clause (a) of section 15(1) of the Act does not include 'step sons ' and that step sons fall in the category of the heirs of the husband referred to in clause (b) thereof.
The decision of the Mysore (Karnataka) High Court in Mallappa Fakirappa Sanna Nagashetti and Others vs Shivappa and another, A.I.R. ; takes the view which we have expressed above.
According to the decision of the Bombay High Court in Rama Ananda Patil vs Appa Bhima Redekar and Others, A.I.R. 1969 Bombay 205 the emphasis in clause (a) of section 15(1) of the Act is on the aspect that the sons or the daughters are of her own body and not so much on the husband who was responsible for their birth and that therefore children of a female though by different husbands inherit her estate simultaneously.
The High Court of Punjab and Haryana has in Gumam Singh vs Smt.
Ass Kaur and Others, A.I.R. 1977 P & H 103 following the observations in the decisions of the Mysore and Bombay High Courts, referred to above, held that the word 'sons ' in section 15(1)(a) of the Act does not include a 'step son '.
The High Court of Calcut ta has also taken the same view in Smt.
Kishori Bala Mondal vs Tribhanga Mondal & Others, A.I.R. 1980 Calcutta 334.
It is true that the Allahabad High Court has taken a contrary view in Ram Katori vs Prakash Wati, I.L.R. 1968 (1) Allahabad 697.
In that case the facts were however slightly different, but the point involved was almost the same.
The facts of the case were as follows.
One Chandu Lal had mar ried a woman.
She died during the life time of Chandu Lal leaving behind her a daughter by Ram Katori.
Thereafter Chandu Lal married a second woman by name Ram Kali through whom he got a daughter by name Prakashwati.
Chandu Lal died in 1920 and on his death Ram Kali being his widow succeeded to his estate as a limited owner.
After the coming into force of the Act in 1956 her limited estate ripened into absolute estate and she became the full owner of the estate inherited by her from her husband.
Ram Kali died thereafter.
On her death Ram Katori, the daughter of Chandu Lal by his first wife contended that she was entitled to succeed simul taneously with Prakashwati to the estate of Ram Kali which originally belonged to her father and claimed one half share in it.
Her claim was resisted by Prakashwati stating that the word 'daughters ' in section 15(1)(a) of the Act did not include 'step daughters ' and that Ram Katori would fall under the category of the heirs of the husband and would be entitled to succeed either under clause (b) of section 15(1) or under clause (b) of section 15(2) of the Act and that too in the absence of 940 sons and daughters of Ram kali (including children of prede ceased sons and daughters).
It was further contended by Prakashwati that the fact that the property in question had formerly belonged to the husband of Ram Kali did not matter at all because Ram Kali had left behind her who was a daugh ter of her own body entitled to succeed under section 15(1)(a), and that Ram Katori being a step daughter could not claim under section 15(1)(a) of the Act.
The High Court of Allahabad felt that there was a distinction between clause (a) of section 15(1) and clauses (a) and (b) of section 15(2) of the Act in that whereas in section 15(1)(a) the words 'sons and daughters ' were unqualified, the words 'son or daughter ' in clauses (a) and (b) of section 15(2) were qualified by the words 'of the deceased ' and therefore conclusion was irresistible that the unqualified words 'sons and daughters ' in section 15(1)(a) of the Act indicated that they included also the children of her husband by another wife.
The High Court also appears to have been moved by the consideration that the opposite construction would be pat ently unfair to the children by her husband 's another wife since they would be deprived of their share in the property which originally belonged to their father.
We feel that neither of these reasons is correct.
The words 'sons and daughters . . and the husband ' in clause (a) of section 25(1) only mean 'sons and daughters . and the husband ' of the deceased.
They cannot be 'sons and daughters . and the husband ' of any body else.
All relatives named in the different clauses in sub section (1) of section 15 of the Act are those who are related to the deceased in the manner specified therein.
They are sons, daughters, husband, heirs of the husband, mother and father, heirs of the father and heirs of the mother of the deceased.
The use of the words 'of the deceased ' following 'son or daughter ' in clauses (a) and (b) of sub section (2) of section 15 of the Act makes no difference.
The words 'son or daughter of the deceased (including the children of any predeceased son or daughter) ' in clauses (a) and (b) of section 15(2) of the Act refer to the entire body of heirs failing under clause (a) of section 15(1) of the Act except the husband.
What clauses (a) and (b) of sub section (2) of section 15 of the Act do is that they make a distinction between devolution of the property inherited by a female Hindu dying intestate from her father or mother on the one hand and the property inherited by her from her husband and from her father in law on the other.
In the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter), in a case failing under clause (a) of section 15(2) of the Act the property devolves upon the heirs of the father of the deceased and in a case falling under clause (b) of section 15(2) of the Act the property devolves upon the heirs of the husband of the 941 deceased.
The distinction made by the High Court of Allaha bad on the ground of the absence or the presence of the words 'of the deceased ' in sub section (1) and sub section (2) of section 15 of the Act appears to be hyper technical and the High Court has tried to make a distinction where it does not actually exist.
The second reason, namely, that exclusion of 'step sons ' and 'step daughters ' from clause (a) of section 15(1) of the Act would be unfair as they would thereby be deprived of a share in the property of their father is again not well founded.
The rule of devolu tion in section 15 of the Act applies to all kinds of properties left behind by a female Hindu except those dealt with by clauses (a) and (b) of section 15(2) which make a distinction as regards the property inherited by her from her parents and the property inherited from her husband or father in law and that too when she leaves no sons and daughters (including children of predeceased sons and daugh ters).
If the construction placed by the High Court of Allahabad is accepted then the property earned by the female Hindu herself or purchased or acquired by her would devolve on step sons and stepdaughters also along with her sons and daughters.
Is it just and proper to construe that under clause (a) of section 15(1) of the Act her stepsons and step daughters, i.e., children of the husband by another wife will be entitled to a share along with her own children when the Act does not expressly says so? We do not think that the view expressed by the High Court of Allahabad represents the true intent of the law.
When once a property becomes the absolute property of a female Hindu it shall devolve first on her children (including children of the ' predeceased son and daughter) as provided in section 15(1)(a) of the Act and then on other heirs subject only to the limited change introduced in section 15(2) of the Act.
The step sons or step daughters will come in as heirs only under clause (b) of section 15(1) or under clause (b) of section 15(2) of the Act.
We do not, therefore, agree with the reasons given by the Allahabad High Court in support of its decision.
We disagree with this decision.
In the circumstances, we hold that the High Court of Punjab and Haryana against whose decision this petition is filed was right in affirming the decree passed in favour of Kirpal Singh, Respondent No. 1 herein.
The Special Leave Petition is, therefore, dismissed.
A.P.J. Petition dismissed.
|
Battan Singh had two wives, namely, Mahan Kaur and Khem Kaur.
Mahan Kaur died during his lifetime after giving birth to two sons, Lachman Singh (petitioner) and Gurdas Singh.
Gurdas Singh pre deceased Battan Singh leaving behind his widow Gurbax Kaur and his son Amarjit Singh.
Respondent No. 1, Kirpa Singh is the son of the Battan Singh and Khem Kaur.
Battan Singh died intestate after the came into force and his property devolved on his heirs including his second wife Khem Kaur.
On her death, Kirpa Singh claimed her entire property on the ground that he was her only son.
Lachman Singh, Amarjit Singh and Gurbax Kaur claimed that Kirpa Singh was entitled to only 1/3rd share in the property of Khem Kaur, Lachman Singh was entitled to 1/3rd share and Amarjit Singh was entitled to the remaining 1/3rd share.
Kirpa Singh filed a suit for declaration that he was entitled to the entire property belonging to Khem Kaur against Lachman Singh, Amarjit Singh and Gurbax Kaur.
The trial Court decreed the suit.
The appeals filed by Lachman Singh before the Additional District Judge and in the High Court were dismissed.
Dismissing the Special Leave Petition, HELD: 1.
Ordinarily laws of succession to property follow the natural inclinations of men and women.
[938C D] 2.
The list of heirs in section 15(1) of the is enumerated having regard to the current notions about the propinquity 934 or nearness of relationship.
The words 'son ' and 'step son ' are not defined in the Act.
[938C D] 3.
Under the Act, a son of a female by her first mar riage will not succeed to the estate of her 'second husband ' on his dying intestate.
In the case of a woman it is natural that a step son, that is, the son of her husband by his another wife is a step away from the son who has come out of her own womb.
But under the Act a step son of a female dying intestate is an heir and that is so because the family headed by a male is considered as a social unit.
If a step son does not fail within the scope of the expression 'sons ' in cl.
(a) of section 15(1) of the Act, he is sure to fail under cl.
(b) thereof being an heir of the husband.
[938D F] 4.
The word 'sons ' in cl.
(a) of section 15(1) of the Act includes: (i) sons born out of the womb of a female by same husband or by different husbands including illegitimate sons too in view of section 3(j) of the Act, and (ii) adopted sons who are deemed to be sons for purposes of inheritance.
[938F G] 5.
Under the Hindu law as it stood prior to the coming into force of the Act, a step son, i.e. a son of the husband of a female by another wife did not simultaneously succeed to the stridhana of the female on her dying intestate.
In that case the the son born out of her womb had precedence over a step son.
Parliament would have made express provi sion in the Act if it intended that there should be such a radical departure from the past.
[938G H; 939A] 6.
The word 'sons ' in cl.
(a) of section 15(1) of Act does not include 'step sons ' and that step sons fail in the category of the heirs of the husband referred to in cl.
(b) thereof.
[939A B] Mallappa Fakirappa Sanna Nagashetti and Others vs Shi vappa and another, A.I.R. ; Rama Ananda Patii vs Appa Bhima Redekar and Others, A.I.R. 1969 Bombay 205; Gumam Singh vs Smt.
Ass Kaur and Others, A.I.R. 1977 P & H 103 and Smt.
Kishori Bala Mondal vs Tribhanga Mondal & Others, A.I.R. 1980 Calcutta 334 approved.
Ram Katori vs Prakash Nati L.L.R., [1968] 1 Allahabad 697, overruled.
The rule of devolution in section 15 of the Act applies to all kinds of properties left behind by a female Hindu except those dealt with by cls.
(a) and (b) of section 15(2) which make a distinction as regards the property 935 inherited by her from her parents and the property inherited from her husband or father in law and that too when she leaves no sons and daughters (including children of prede ceased sons and daughters).
[941B C] 8.
When once a property becomes the absolute property of a female Hindu it shall devolve first on her children (including children of the predeceased sons and daughter) as provided in section 15(1)(a) of the Act and then on other heirs subject only to the limited change introduced in section 15(2) of the Act.
The step sons or step daughters will come in as heirs only under cl.
(b) ors.
15(1) or under cl.
(b) or section 15(2) of the Act.
[941E F]
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