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vil Appeals Nos.
359394 of 1989.
From the Order dated 26.5.1988 of the Customs Excise and (;old (Control) Appellate Tribunal, New Delhi in 545 546/88 C in Appeal No. E/COD/699/87 C in Appeal No. E/847/84 C with E/1/85 C. WITH Civil Appeals Nos. 642 643/91, 1723 1731/91.
A.K. Ganguli, Ms. Sushma Suri, P. Parmeshwaran and A. Subba Rao for the Appellant.
Rajinder Sachar, Aruneshwar Gupta, Manu Mridul, P.I. Jose and Sanjay Parekh for the Respondents.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
These appeals by the Revenue under Section 35L of the in volve the interpretation of the Notification No. 179/77 CE dated 18.6.1977.
The Notification read thus: "In exercise of the powers conferred by sub rule (1) of rule 8 of 128 the Central Excise Rules, 1944, the Central Government hereby exempts all goods failing under Item No. 68 of the First Schedule to the (1 of 1944) in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power, from whole of the duty of excise leviable thereon".
Tariff Item 68 during the relevant period read: "All other goods, not elsewhere specified, manufactured in a factory but excluding. " M/s. Rajasthan State Chemical Works, the respondents in Civil Appeals Nos.
3593 94 of 1989, are manufacturers of crude sodium sulphate.
In the process of manufacture of common salt from brine, in the salt pans in which the proc ess of evaporation takes place some quantities of sodium sulphate present in the brine also crystalise and settle at the bottom as crust.
The sodium sulphate is thus obtained as a bye product.
For the purpose of the manufacture, brine is pumped into salt pans using diesel pumps.
The benefit of the aforesaid notification was not given to these respondents as pumping of brine into the pans was carried on with the aid of power.
The claim for exemption though denied by the original authority, was allowed by the Collector of Customs (Appeals) and that order was affirmed by the Tribunal.
M/s. Sunderson (Minerals) Ltd., the respondents in Civil Appeals Nos.
642 643 of 1991 and 1723 1731 of 1991 are manufacturers of lime from coke and lime stone.
The raw materials are lifted to the platform at the head of the kiln by the aid of power.
At the kiln head, the raw materials are mixed manually and fed into the kiln.
Since power is used for lifting the raw materials at the kiln head, these re spondents were denied the benefit of the notification by the Assistant Collector.
The appeal before the Collector of Appeals was dismissed.
The Tribunal, however, accepted the claim of the respondents.
The Revenue being aggrieved has challenged the respec tive orders of the Tribunal in these appeals.
129 In both these set of cases, the view taken by the Tribu nal is that the manufacturing process starts from the stage of feeding raw materials into the salt pan or the kiln as the case may be.
The transportation of the raw materials to the platform at the kiln head and the pumping of brine into the salt pan is a stage prior to the commencement of manu facturing process.
Therefore, the transferring of the raw materials is not a part of the process of manufacture and the use of power for such transfer would not disentitle the respondents from the benefit under the notification.
It has been contended before us on behalf of the appel lant that pumping the brine into the pan o: lifting the raw materials to the kiln head is a process in relation to the manufacture of the final product and since that process with the aid of power is integrally connected with the manufac ture, the exemption would not apply.
On the other hand, it is reiterated for the respondents that if the process car ried on with the aid of power does not bring about any change in the raw material, it cannot be said that any process in or in relation to the manufacture of an article has been carried on with the aid of power and, therefore, mere transfer of raw materials by the use of power cannot be considered as a process of manufacture.
The Central Government has exempted all goods failing under Item No. 68 of the First Schedule to the Act in or in relation to the manufacture of which no process is ordinari ly carried on with the aid of power from the whole of the duty of excise leviable thereon.
The exemption under this notification is available only when the goods are manufac tured without the aid of power at any stage of the process.
Where manufacture involves series of processes and if anyone of such processes is carried on with the aid of power, the case is taken out of the purview of the notification.
We have to consider what activity amounts to process in or in relation to manufacture of goods for the application of the notification.
The word 'manufacture ' has been defined in Section 2(1) of the , thus: "2(1). 'Manufacture ' includes any process (i) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the Schedule to the as amounting to manufacture".
130 Clause (f) gives an inclusive definition of the term 'manufacture ', According to the dictionary, the term 'manu facture ' means a process which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article.
In determining what constitutes 'manufacture ' no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in which the term is used in the provision under consideration.
Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation.
Naturally, manufacture is the end result of one or more processes through which the original commodities are 'made to pass.
The nature and extent of processing may vary from one class to another.
There may be several stages of processing, a different kind of processing at each stage.
With each process suffered the original commodity experiences a change.
Whenever a commodi ty undergoes a change as a result of some operation per formed on it or in regard to it, such operation would amount to processing of the commodity.
But it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place.
Manufacture thus involves series of processes.
Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations.
It is the cumulative effect of the various processes to which the raw material is subjected to, manufactured product emerges.
Therefore, each step towards such production would be a process in relation to the manufacture.
Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture of processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture.
The natural meaning of the word 'process ' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject matter in order to transform or reduce it to a certain stage.
According to Oxford Dictionary one of the meanings of the word 'process ' is "a continuous and regular action or succession of actions taking place or carried on in a defi nite manner and leading to the accomplishment of some re sult.
" The activity contemplated by the definition 131 is perfectly general requiring only the continuous or quick succession.
It is not one of the requisites that the activi ty should involve some operation on some material in order to its conversion to some particular stage.
There is nothing in the natural meaning of the word 'process ' to exclude its application to handling.
There may be a process which con sists only in handling and there may be a process which involves no handling or not merely handling but use or also use.
It may be a process involving the handling of the material and it need not be a process involving the use of material.
The activity may be subordinate but one in rela tion to the further process of manufacture.
In J.K. Cotton Mills vs
S.T. Officer; , , this Court 'in construing the expression 'in the manufacture of goods ' held thus: "But there is no warrant for limiting the meaning of the expression 'in the manufacture of goods ' to the process of production of goods only.
The expression 'in the manufac ture ' takes in within its compass, all proc esses which are directly related to the actual production".
The Court further held thus: "The expression 'in the manufacture of goods ' would normally encompass the entire process carried on by the dealer of converting raw materials into finished goods.
Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judg ment, fail within the expression 'in the manufacture of goods '.
" In that case, the assessee carrying on the business of manufacturing textile goods claimed that certain goods namely drawing material etc.
were used in the manufacture.
The Court said that if the process of designing is so inte grally connected with the process of manufacturing of cloth, there is no reason to regard the process of designing as not being a part of the process of manufacture.
The process of designing may be distinct from the actual process of turning out finished goods but, there is no warrant for limiting the meaning of the expression 'in the manufacture of goods ' to the process of production of goods only.
The expressions ' 'in the manufacture of goods ' takes within its encompass all processes which are directly related to the actual produc tion.
132 In Union of India vs Delhi Cloth & General Mills, [1963] Supp. 1 S.C.R. 586, this Court held thus: "The definition of 'manufacture ' as in section 2 (13 puts it beyond any possibility of contro versy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available." In that case, it was contended that manufacture is complete as soon as by the application of one or more proc esses the raw material undergoes some change.
In answering the contention, the Court stated thus: "We are unable to agree with the learned Counsel that by inserting this defini tion of the word "manufacture" in section 2 (f) the legislature intended to equate "processing" to "manufacture" and intended to make mere "processing" as distinct from "manufacture" in the same sense of bringing into existence of a new substance known to the market, liable to duty.
The sole purpose of inserting this definition is to make it clear that at certain places in the Act the word 'manufacture ' has been used to mean a process incidental to the manufacture of the article.
Thus in the very item under which the excise duty is claimed in these cases, we find the words: "in or, in relation to the manufacture of which any process is ordinarily carried on with the aid of power".
The definition of 'manufacture ' as in section 2 (f) puts it beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be ap plicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available.
It is only with this limited pur pose that the legislature, in our opinion, inserted this definition of the word 'manufac ture ' in the definition section and not with a view to make the mere '*processing" of goods as liable to excise duty.
" A process is a manufacturing process when it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity.
But, that process itself may consist of 133 several processes which may or may not bring about any change at every intermediate stage.
But the activities or the operations may be so integrally connected that the final result is the production of a commercially different arti cle.
Therefore, any activity or operation which is the essential requirement and is so related to the further operations for the end result would also be a process in or in relation to manufacture to attract the relevant clause in the exemption notification.
In our view, the word 'process ' in the context in which it appears in the aforesaid notifi cation includes an operation or activity in relation to manufacture.
The transfer of raw material to the reacting vessel is a preliminary operation but it is part of a continuous process but for which the manufacture would be impossible.
The handling of the raw materials for the purpose of such trans fer is then integrally connected with the process of manu facture.
The handling for the purpose of transfer may be manual or mechanical but if power is used for such opera tion, it cannot be denied that an activity has been carried on with the aid of power in the manufacturing process.
The use of diesel pump sets to fill the pans with brine is in activity with the aid of power and that activity is in relation to the manufacture.
It is not correct to say that the process of manufacture starts only when evaporation starts.
The preliminary steps like pumping brine and filling the salt pans form integral part of the manufacturing proc ess even though the change in the raw material commences only when evaporation takes place.
The preliminary activity cannot be disintegrated from the rest of the operations in the whole process of manufacture.
Similarly, when coke and lime are taken to the platform in definite proportions for the purpose of mixing, such operation is a step in the manufacturing process.
It precedes the feeding of the mix ture into the kiln where the burning takes place.
The whole process is an integrated one consisting of the lifting of the raw materials to the platform mixing coke and lime and then feeding into the kiln and burning.
These operations are so interrelated that without anyone of these operations manufacturing process is impossible to be completed.
There fore, if power is used in anyone of these operations or anyone of the operations is carried on with the aid of power, it is a case where in or in relation to the manufac ture the process is carried on with the aid of power.
Learned counsel for the appellant relying on the deci sion of the Gujarat High Court in Nirma Chemical Works & Ors.
vs Union of india & Ors., , submitted that process means an operation which brings about some change in the raw material.
That in the present case, the operation of putting the raw materials, namely, coke ,red lime 134 stone on the kiln head does not bring about any change in the raw material but the raw materials remain in the same shape as they were when they were brought in the truck and were dumped separately on the ground and, therefore, this operation can be termed only 'transportation ' and cannot be called a 'process '.
The Gujarat High Court in Nirma Chemi cal Works (supra) said: "It must be made clear that it is only at the stage of transferring liquid raw materials from the motor tanker to the storage tank that power is used and at no subsequent stage is any power used.
If no change is brought about in the raw material until it reaches the re action ves sel, then no process of manufacture can be said to have taken place until the raw materi als are taken to the re action vessel.
Till then they are all preparations made but the raw materials continue to be the same raw materials.
Until sulphuric acid and alkyd benzene start re acting on each other, no change takes place in the raw materials.
Merely because the goods are stored in one place, may be at an elevated place above the ground, it cannot be said that a process of manufacture which would convert the raw mate rial by different stages into the final product has been undergone.
In view of the decision in Chowgule & Co. 's (supra) as to what is meant by processing, it is clear that unless and until some change takes place in the raw material of the original commodity, no process can be said to have been gone through.
Before any operation can be characterised as a process, the commodity must, as a result of the operation, experience some change.
" Counsel for the respondents submitted that a process in or in relation to the manufacture commences as soon as the change is brought about in the raw material and ends till the manufactured product is marketed.
Until some change physical or chemical is brought about in the raw material, there is no process in or in relation to the manufacture.
Mere collecting, storing or dealing with the raw material are operations and/or activities prior to the beginning of process.
Mere physical alteration of the site or placement of raw materials or stacking, storing the same cannot be said to be a process in relation to manufacture.
In the case of preparation of sodium sulphate, it is said that the process in or in relation to manufacture commences after the brine is placed in the salt pans.
The counsel 135 submits that if every operation and/or activity and/or action is treated as a 'process ' in or in relation to manu facture then power is used in (i) erection of factory where steel, cement, bricks etc.
are used, (ii) day to day trans portation and (iii) use of electricity for lights, fans etc.
These arguments are far fetched.
The activity in relation to which power is used is not to be considered into isolation where the activity is such that it forms an integral part of the whole process.
The Gujarat High Court in interpreting the word 'process ' has assumed that 'process ' is synonymous to 'processing ' and has drawn support from the observations of this Court in Chowgule & Co. Pvt. Ltd. vs Union of India, ; We are afraid, the observations had not been properly understood or applied in drawing inference that process when used in relation to manufacture must be one that produces a change in the commodity.
It has been made clear in Dy.
Commissioner, Sales Tax; Ernakulam vs Pio Food Packers, ; that: "Commonly manufacture is the end result of one or more processes through which the original commodity is made to pass.
The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage.
With each process suffered, the original commodity experiences a change.
But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that manufacture can be said to take place? It has been made clear in Union of India vs Delhi Cloth & Genera, Mills (supra) that the definition of the word 'manufacture ' in Section 2 (f) puts it beyond any possibili ty of controversy that if the power is used for any of the numerous processes that are required to turn the raw materi als into a finished article known to the market, it would be a case where in or in relation to manufacture process has ordinarily been carried on with the aid of power.
It is, therefore, wrong to conclude that every operation in the course of the manufacture should bring about a change and if any operation with the aid of power does not result in a change, it cannot be an integral part of the process in or in relation to manufacture.
In Chowgule & Co. Pvt.
Ltd. case, what this Court said is that: 136 "Wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity.
" What is necessary in order to characterise an operation as "processing" is that the commodity must, as a result of the operation, experience some change.
The question is not whether there is manual application of energy or there is application of mechanical force.
Whatever be the means employed for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the opera tion constitutes "processing".
In drawing the distinction between 'processing ' and 'manufacture ', this Court observed in Delhi Cloth Mills case thus: "To say this is to equate "processing" to "manufacture" and for this we can find no warrant in law.
The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance", however minor in consequence the change may be." Thus "processing" may be an intermediate stage in manu facture and until some change has taken place and the com modity retains a continuing substantial identity through the processing stage, we cannot say that it has been manufac tured.
That does not, however, mean that any operation in :he course of such process is not in relation to the manu facture.
While interpreting the same exemption notification in Standard Fireworks Industries vs Collector, , it was held that manufacture of fireworks requires cutting of steel wires and the treatment of papers red, therefore, it is a process for manufacture of goods in question.
The Notification purports to allow exemption from duty only when in relation to the manufacture of goods no process is ordinarily carried on with the aid of power.
It was observed that cutting of steel wires or the treatment of the papers is a process for the manufacture of goods in question.
We are, therefore, of the view that if any operation in the course of manufacture is so integrally connected with the further operations which result in the emergence of manufactured goods and such operation is carried on with the aid of power, the process in or in relation to the manufac ture must be deemed to be one carried on with the aid of power.
In this 137 view of the matter, we are unable to accept the contention that since the pumping of the brine into the salt pans or the lifting of coke and lime stone with the aid of power does not bring about any change in the raw material, the case is not taken out of the Notification.
The exemption under the Notification is not available in these cases.
Accordingly, we allow these appeals.
In the facts and cir cumstances of the case, we make no order as to costs.
G.N. Appeals allowed. | By way of notification dated 18.6.1977, the Central Government exempted from duty all goods falling under Tariff item No. 68 of the First Schedule to the in or in relation to manufacture of which no process was ordinarily carried on with the aid of power.
The respondents in the first set of appeals have been manufacturing crude sodium sulphate.
Since the respondents used diesel pumps for pumping brine into salt pans, in the process of manufacture, the benefit of the said notification was denied to them on the ground that the process of manu facture was carried on with the aid of power.
However, on appeal, the Collector of Customs (Appeals) allowed the benefit to the respondents.
Revenue preferred an appeal and the Tribunal affirmed the Collector 's order.
In the other appeals, the Respondents, manufacturer of lime, used to lift the raw materials to the platform at the head of the kiln by the aid of power and the raw materials were mixed manually into the kiln.
The benefit of the said notification was denied to the Respondents by the Assistant Collector.
Even an appeal before the Collector of Appeals failed.
However, on appeal the Tribunal accepted the claim of the Respondents.
In all these matters the Tribunal took the view that the manufacturing process started from the stage of feeding raw materials into the salt pan or the kiln as the case may be and the transferring of the raw materials was a stage prior to the manufacturing process and so the 125 use of power for such transfer would not disentitle the respondents from the benefit under the said notification.
Aggrieved by the orders of the Tribunal, the Revenue has preferred the present appeals.
Before this Court, the Revenue contended that pumping the brine into the pan or lifting the raw materials to the kiln head was a process in relation to the manufacture of the final product and since that process with the aid of power was integrally connected with the manufacture, the exemption would not apply.
The Respondents contended that if the process carried on with the aid of power does not bring about any change in the raw materials, it cannot be said that any process in or in relation to the manufacture of an article has been carried on with the aid of power and, therefore, mere transfer of raw materials by the use of power cannot be considered as a process of manufacture.
Allowing the appeals, this Court, HELD: 1. Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations.
It is the cumulative effect of the various processes to which the raw materials is subjected to the manufactured product emerges.
Therefore, each step towards such production would be a process in relation to manufacture.
Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture of processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture.
[130 E F).
2.1 The natural meaning of the word 'process ' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject matter in order to transform or reduce it to a certain stage.
There is nothing in the natural meaning of the word 'process ' to exclude its application to handling.
There may be process which consists only in handling and there may be a process which involves no handling or not merely handling but also use.
It may be a process involving the handling of the material and it need not be a process involving the use of material.
The activity may be subordinate but one in relation to the further process of manufacture.
[130G, 131 A B] 126 2.2 A process is a manufacturing process when it brings out a complete transformation for the whole compo nents so as to produce a commercially different article or a commodity.
But, that process itself may consist of several processes which may or may not bring about any change at every intermediate stage.
But the activities or the opera tions may be so integrally connected that the final result is the production of a commercially different article.
Therefore, any activity or operation which is the essential requirement and is so related to the further operations for the end result would also be a process in or in relation to manufacture to attract the relevant clause in the exemption notification.
The word 'process ' in the context in which it appears in the notification includes an operation or activi ty in relation to manufacture.
[132H, 133 A B] J.K. Cotton Mills vs
S.T. Officer; , ; Union of lndia vs Delhi Cloth & General Mills, [1963] Supp. 1 SCR 586, relied on.
3.1 The transfer of raw material to the reacting vessel is a preliminary operation but it is part of a continuous process ,but for which the manufacture would be impossible.
The handling of the raw materials for the purpose of such transfer is then integrally connected with the process of manufacture.
The handling for the purpose of transfer may be manual or mechanical but if power is used for such opera tion, it cannot be denied that an activity has been carried on with the aid of power in the manufacturing process.
The use of diesel pump sets to fill the pans with brine is an activity with the aid of power and that activity is in relation to the manufacture.
It is not correct to say that the process of manufacture starts only when evaporation starts.
The preliminary steps like pumping brine and filling the salt pans form integral part of the manufacturing proc ess even though the change in the raw material commences only when evaporation takes place.
The preliminary activity cannot be disintegrated from the rest of the operations in the whole process of manufacture.
Similarly, when coke and lime are taken to the platform in definite proportions for the purpose of mixing, such operation is a step in the manufacturing process.
It precedes the feeding of the mix ture into the kiln where the burning takes place.
The whole process is an integrated one consisting of the lifting of the raw materials to the platform mixing coke and lime and then feeding into the kiln and burning.
These operations are so interrelated that without anyone of these operations manufacturing process is impossible to be completed.
There fore, if power is used in 127 anyone of these operations or anyone of the operations is carried on with the aid of power, it is a case when in or in relation to the manufacture the process is carried on with the aid of power.
[133 C G] 3.2 'Processing ' may be an intermediate stage in manu facture and until some change has taken place and the com modity retains a continuing substantial identity through the processing stage, one cannot say that it has been manufac tured.
That does not, however, mean that any operation in the course of such process is not in relation to the manu facture.
[136 E] Dy.
Commissioner, Sales Tax; Ernakulam vs Pio Food Packers, ; ; Union of India vs Delhi Cloth & General Mills, [1963] Suppl.
1 SCR 586; Standard Fireworks Industries vs Collector, , relied on.
Nirma Chemical Works & Ors.
vs Union of India & Ors.
, ; Chowgule & Co. Pvt. Ltd. vs Union of India, ; , referred to. |
Civil Appeals Nos.
272 1 & 2722 (N) of 1972.
From the Judgment and order dated 30.3.1972 of the Bombay High Court in First Appeal No. 440/62 and 577 of 1962.
Dr. D.Y. Chandrachud, section Dutt and P.H. Parekh for the Appelant.
A.M. Khanwilkar and Ajit section Bhasme for the Respondents.
The Judgment of the Court was delivered by THAKKAR, J.
Controversy is centred on the question of valuation of the lands under acquisition.
The trial Court had correctly valued the lands and the High Court had erroneously revised the valuation downwards complains the original owner of the land who is the appellant in these two allied appeals.
The lands in question situated in a locality known as 'Tigris Camp ' within the city limits of Poona in Maharashtra admeasuring 15 acres and 17 Gunthas, comprised in Survey Nos. 85 and 86, were 1.
By Certificate under Article 133( l)(a) of the Constitution of India as it existed at the material time.
534 placed under acquisition pursuant to a Notification under section 4 of the Land Acquisition Act published on March 8, 1956.
The acquisition was a part of the total acquisition of 101 acres 33 Gunthas made for a public purpose viz. for construction of the Headquarters, Poona Rural Police Charge.
The appellant was not satisfied with the compensation offered by the Land Acquisition officer in respect of his parcel of 15 Acres 7 Gunthas and applied for a reference being made under section 18 of the Land Acquisition Act.
Two references were made to a Civil Court under section 18 of the Land Acquisition Act for determining the market value of the lands for the purpose of awarding compensation to the appellants.
The Trial Court determined the market value of 2 1/4 acres forming part of Survey Nos. 85 and 86 at Rs.15,00 per acre.
Market value in respect of the remaining 13 acres and 7 Gunthas was determined at Rs.8692 per acre.
The present dispute is confined to valuation of 13 Acres 7 Gunthas forming part of Survey No. 85.
The High Court has reduced the total compensation payable in respect of the land in question from Rs.1,14,517 computed at Rs.8692 per acre to Rs.63,846 (which works out at Rs.4845.87 per acre) thereby reducing the compensation awarded to the appellant by Rs.50,554 in respect of this parcel of land.
Before tackling the problem of valuation of the land under acquisition it is necessary to make some general observations.
The compulsion to do so has arisen as the Trial Court has virtually treated the award rendered by the Land Acquisition officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to some extent.
The true position therefore requires to be capsulized.
The following factors must be etched on the mental screen: (1) A reference under section 18 of the Land Acquisition Act is not an appeal against the award and the Court cannot take into account the material relied upon by the Land Acquisition officer in his Award unless the same material is produced and proved before the Court.
(2) So also the Award of the Land Acquisition officer is not to be treated as a judgment of the trial Court open or exposed to challenge before the Court hearing the Reference.
It is merely an offer made by the Land Acquisition officer and the material utilised by him for making his valuation cannot be utilised by the Court unless produced and proved before 535 it.
It is not the function of the Court to suit in appeal against the Award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition officer, as if it were an appellate court.
(3) The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it.
(4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court.
Of course the materials placed and proved by the other side can also be taken into account for this purpose.
(5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under sec.
4 of the Land Acquisition Act (dates of Notifications under secs.
6 and 9 are irrelevant).
(6) The determination has to be made standing on the date line of valuation (date of publication of notification under sec.
4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day.
It has also to be assumed that the vendor is willing to sell the land at a reasonable price.
(7) In doing so by the instances method, the Court has to correlate the market value reflected in the most comparable instance which provides the index of market value.
(8) only genuine instances have to be taken into account.
(Some times instances are rigged up in anticipation of Acquisition of land).
(9) Even post notification instances can be taken into account (1) if they are very proximate,(2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects.
536 (l0) The most comparable instances out of the genuine instances have to be identified on the following considerations: (i) proximity from time angle, (ii) proximity from situation angle.
(11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis a vis land under acquisition by placing the two in juxtaposition.
(12) A balance sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do.
(13) The market value of the land under acquisition has there after to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors (14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do.
We may illustrate some such illustrative (not exhaustive) factors: Plus factors Minus factors 1.
smallness of size.
largeness of area.
2. proximity to a road.
situation in the interior at a distances from the Road.
frontage on a road.
narrow strip of land with very small frontage compared to death.
nearness to developed area.
lower level requiring the depressed portion to be filled up.
regular shape.
remoteness from developed locality.
537 6.
level vis a vis land 6.
some special under acquistion.
disadvantageous factor which would deter a purchaser.
special value for an owner of an adjoining property to whom it may have some very special advantage.
(15) The evaluation of these factors of course depends on the facts of each case.
There cannot be any hard and fast or rigid rule.
Common sense is the best and most reliable guide.
For instance, take the factor regarding the size.
A building plot of land say 500 to 1000 sq.
yds cannot be compared with a large tract or block of land of say l000 sq.
yds or more.
Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur.
The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approx.
between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots.
The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be looked up, will be longer or shorter and the attendant hazards.
(16) Every case must be dealt with on its own facts pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself.
(17) These are general guidelines to be applied with understanding informed with common sense.
The problem which has surfaced in the present appeals needs to be recapitulated.
The question is whether in scaling down the total compensation payable to the appellant from Rs.1,14,517 to Rs.63,846, the High Court has violated any principle of valuation or adopted any faulty methodology.
538 The formula evolved by the High Court may be briefly outlined.
The High Court has taken into account the market value reflected in the instances pertaining to small parcels of land cited by the parties which on the analysis of the evidence have been considered as compar able subject to factors of differentiation.
The High Court has valued the land having best situation admeasuring 9 acres comprised in Survey No. 86 which abuts on the Ganeshkhand Road at Rs.20,000 per acre.
Having done so the market value reflected therein has been unloaded to account for the minus factors pertaining to the rest of the lands including the land in question.
The lands comprised in Survey No. 86 situated in the interior were valued at Rs.16,000 per acre, whereas lands abutting on Pashan Road were valued at Rs.12,000 per acre.
The appellant 's land, which was agricultural land albeit with future potential for development as building site, was situated far far in the interior in the midst of blocks of undeveloped land.
The formula for evaluation involved taking of three steps: (1) The High Court formed the opinion that allowance for largeness of block deserved to be made at 25% instead of 20% as done by the Trial Court.
(2) The High Court formed the opinion that the development would take about 12 years to reach the appellant 's land.
On these premises the High Court formed the opinion that the land of the appellant could be valued at Rs.7000 per acre as a block.
(3) The High Court directed that the market value so ascertained should be further depressed to account for the factor as regards the waiting period of 12 years which was the estimated period for development reaching the appellant 's land.
The 'present value ' of the land was accordingly de duced by depressing the valuation of Rs.7000 per acre by reference to Miram 's Tables on the basis of discount rate of 5% per annum to account for the factor that approximately 12 years would elapse before development could reach the appellant 's land.
That is how the total compensation payable to the appellant for the block of land admeasuring 13 acres 7 gunthas was determined at Rs.63,846 which works out at approximately Rs.4,845.87 per acre.
539 The valuation made by the High Court has been faulted on three A grounds: (1) The High Court should not have made a deduction of 25% in place of deduction made by the Trial Court at 20% to account for the factor pertaining to the largeness of the block of land under acquisition.
(2) The High Court had grossly undervalued the land in determining the market value of the appellants ' land at Rs.7,000 per acre.
(3) There was no warrant for pushing down or depressing the market value of land as determined by the Trial Court in order to deduce the 'present value ' by reference to Miram 's Tables to account for the factor as regards the estimated time lag for development reaching the block of land in question which was situated in the interior.
Besides, the time lag of 12 years as estimated by the High Court was excessive and unrealistic.
The first two grounds are devoid of merit.
It is common knowledge that when a large block of land is required to be valued, appropriate deduction has to be made for setting aside land for carving out roads, leaving open spaces, and plotting out smaller plots suitable for construction of buildings.
The extent of the area required to be set apart in this connection has to be assessed by the Court having regard to shape, size and situation of the concerned block of land etc.
There cannot be any hard and fast rule as to how much deduction should be made to account for this factor.
It is essentially a question of fact depending on the facts and circumstances of each case.
It does not involve drawing upon any principle of law.
It cannot be said that the High Court has committed any error in forming the opinion that having regard to the facts and circumstances of the case 25% deduction was required to be made in this connection.
The High Court cannot be faulted on this score.
The more serious grievance of the appellant however is that the High Court has depressed the market value excessively in evaluating the land in question at Rs.7,000 per acre as compared to the land abutting on the Ganeshkhand Road valued at Rs.20,000 per acre, the land abutting in the interior of Survey No. 86 valued at Rs.16,000, and land abutting on Pashan Road valued at Rs.12,000 per acre.
A glance 540 at the sketch on the record shows that the appellant 's land is situated very much in the interior as compared to the other parcels of land.
It is in the midst of large blocks of undeveloped land.
A hypothetical purchaser would not offer the same market value for lands with such a situation as lands which are nearer to the developed area and abut on a road or are nearer to a road.
The development of lands which are nearer to the developed area and nearer to the road can reasonably be expected to take place much earlier.
Only after such lands are developed and construction comes up, the development would proceed further in the interior.
It would not be unreasonable to visualize that a considerable time would elapse before development could reach the block of undeveloped land located in the interior.
Besides, the land which is situated in the interior does not fetch the same value as the land which is nearer to the developed area and nearer to the road.
If a hypothetical purchaser opts to purchase the land situated in the interior in the midst of an undeveloped area, he would doubtless take into account the factor pertaining to the estimated time for development to reach the land in the interior.
For, his capital would be unprofitably looked up for a very long time depending on the estimated time required for the development to reach the land in the interior.
Meanwhile he would have to suffer loss of interest.
It is, therefore, understandable that the land in the interior would fetch much smaller price as compared to the lands situated nearer to the developed locality.
More so as all these factors are incapable of precise or scientific evaluation.
The valuer has to indulge in some amount of guess work and make the best of the situation.
The High Court having accorded anxious consideration to all these factors of uncertainty has arrived at the valuation of Rs.7000 per acre.
Says the High Court in paragraph 51 of the Judgment: "This brings up for final consideration the plots which we have described as interior plots in all the survey numbers and which do not have a frontage on the roads.
A lower price will have to be provided for these plots, since the plot holders will have to spend moneys for getting water and drainage connections which are given only upto the Municipal Roads.
Then again, in our opinion, the interior plots would not be sold at all as long as any of the plots having a frontage on Pashan Road or Baner Road are sold, though once such plots have been disposed of the demand for interior plots would certainly pick up.
Here again, it is impossible to be precise in fixing the value; but in our opinion the interior plots may fairly be valued at Rs.7,000 541 per acre.
As stated earlier, the sales of these plots would commence after all the plots having a frontage on Pashan Road and Baner Road are disposed of i.e. after 12 years, and we may say that those plots would be sold within a period of about 4 years.
" It is not possible to find fault with the reasoning or conclusion of the High Court.
The High Court was day in and day out engaged in valuation of the lands in different parts of the state and was fully aware of the landscope.
There is no yardstick by which the future can be forseen with any greater degrees of preciseness.
The High Court has made the estimate as regards the time lag for development to reach the appellant 's land to the best of its judgment.
Having taken into account all the relevant factors, the High Court has arrived at the aforesaid determination.
And in doing so, the High Court has not committed any error or violated any principle of valuation.
It is purely a question of fact and it is not possible to detect any error even in the factual findings recorded by the High Court.
In fact the High Court has been extremely considerate and has approached the question of valuation with sympathy and understanding for the land owner.
The High Court did not opt for an easy way out by taking the view that since there was no comparable instance of undeveloped lands in the interior on the basis of which the valuation of the appellant 's land could be made, the Award made by the land Acquisition officer should remain undisturbed.
The High Court has done the best under the circumstances albeit by making recourse to some guess work which in the circumstances of the case was inevitable.
There is no material on the basis of which this Court can uphold the plea of the appellant that the valuation at Rs.7,000 per acre does not reflect the true market value or that the land in question is under valued.
The argument urged by the appellant in this behalf, under the circumstances, cannot be accepted.
Turning now to the third ground, it appears that the appellant 's grievance is justified.
The grievance is that there was no warrant for making any further deduction once the land was valued at Rs.7,000 as against the valuation of the best parcel of land at Rs.20,000 which was made precisely to account for the factor pertaining to its situation in the interior.
There was therefore no warrant for ascertaining the present value of Rs.7,000 as if Rs.7,000 would be fetched after 12 years.
Now the parcel of land admeasuring 13 acres 7 gunthas comprised in Survey No. 85 which was situated very much in the interior was valued by the Trial Court at Rs. 10,866 per acre (less 20% to account for roads etc.).
This parcel of land was valued at Rs.7,000 per acre by the High 542 Court.
The High Court had valued the land with the best situation on the Ganeshkhand Road at Rs.20,000 per acre.
As against this the appellant 's land was valued at mere Rs.7,000 per acre which reflected an unloading by Rs.13,000 per acre which works out at 65%.
This pushing down was made to account for its situation in the interior on the premise that development would take about 12 years to reach the land under acquisition.
If the appellant 's land just adjoined the land valued at Rs.20,000 per acre it would have been valued at the same figure of Rs.20,000.
It has been valued at Rs.7,000 per acre precisely because it is so situated that development would reach the appellant 's land after 12 years as estimated by the High Court.
But after 12 years it would become land adjoining to developed area and not land which could be treated as in the interior.
Therefore, if present value was to be ascertained it should be ascertained on the basis of present value of land which would fetch Rs.20,000 per acre after 12 years and not present value of land which would fetch Rs.7.000 per acre after 12 years.
In fact present value of Rs.20,000 payable at the end of 12 years at 8% would work out at Rs.6942 (.3971 x 20,000 = 6942)1.
The High Court was therefore right in valuing the land in interior at Rs.7,000 per acre but wrong in directing that present value of Rs.7,000 payable after 12 years should be ascertained.
The last ground is thus well founded .
In the result appellant must be awarded compensation at Rs.7,000 per acre subject to deduction or allowance of 25% to account for land required to be set apart for roads, open spaces etc.
In other words appellant will be entitled to be paid compensation for 13 acres 7 gunthas comprised in Survey No. 85 at Rs.5,250 per acre (Rs.7,000 less 25% i.e. Iess 1750=Rs.5,250) in place of the lesser sum awarded by the High Court.
Appeal must be partly allowed to this extent accordingly.
F The question however remains whether the appellant is entitled to the benefit of Central Amending Act (Act 68 of 1984) providing payment of solatium and interest at enhanced rates on the ground that present appeals were pending before this Court on 30th April, 1982.
The appellants would be entitled to the benefit thereof by virtue of section 30(2) of the Act if the view is taken that the said Act has retrospective operation in the sense that amended section 23(2) and section 28 apply also in relation to an order under appeal against an award made by the Collector of Court between April 30, 1982 and the commencement of the Amending Act.
This must depend on the deci 1.
See Mirarm 's Table 7 at 657 of A.K. Mitra 's Theory and Practice of Valuation (2nd Edition) Published by Eastern Law House.
543 sion of the Constitution Bench which is expected soon.
The appellant Will be entitled to the benefit of Central Amending Act (Act 68 of 1984) in case the Constitution Bench upholds the view expressed in Bhag Singh case [1985] 3 SCC p. 737 and overrules the view expressed in Kamalajammanniavaru Case [1985] 1 SCC p. 582.
In case the Constitution Bench affirms the view taken in Kamalajammanniavaru Case, the appellant will not be entitled to such benefit.
Appeal is partly allowed accordingly to the aforesaid extent.
Order passed by the High Court is modified to the corresponding extent.
Having regard to the facts and circumstances of the case there will be no order regarding costs in this Court.
S.L. Appeal allowed. | The appellant not being satisfied with the compensation offered by the Land Acquisition officer in respect of his land placed under acquisition under the Land Acquisition Act, applied for a reference to a civil court, for determining the market value of the land for awarding compensation to the appellant.
The Trial Court determined the market value of the land in question at Rs.8692 per acre.
The High Court reduced the amount of compensation payable to Rs.4845.87 from Rs.8692 per acre.
The appellant moved this Court for relief, complaining that the High Court had erroneously revised downwards the valuation correctly arrived at by the Trial Court.
Allowing the appeal partly, the Court ^ HELD: The trial Court had virtually treated the award rendered by the Land Acquisition officer as a judgment under appeal.
The Court laid down general guidelines to be followed in respect of methodology for valuation, in order to capsulize the true position.
[534E] F The valuation made by the High Court had been faulted on three grounds: (1) The High Court should not have made a deduction of 25% in place of deduction made by the Trial Court at 20% to account for the factor pertaining to largeness of the block of land under acquisition.
[539B] (2) The High Court had grossly under valued the land in determining the market value of the appellant 's land at Rs.7000 per acre as a block.
[539B C] 532 (3) There was no warrant for pushing down or depressing the market value of land as determined by the Trial Court in order to deduce the 'present value ' by reference to Miram 's Tables to account for the factor as regards the estimated time lag for development reaching the block of land in question which was situated in the interior.
Besides, the time lag of 12 years as estimated by the High Court was excessive and unrealistic.
[539C D] The first two grounds were devoid of merit.
It was not possible to find fault with the reasoning or conclusion of the High Court.
The High Court was regularly engaged in valuation of the lands in different parts of the State and was fully aware of the landscape.
It had made the estimate as regards the time lag for development to reach the appellant 's land to the best of its judgment, and having taken into account all the relevant factors, it had arrived at its determination.
The High Court had not committed any error or violated any principle of valuation.
It was purely a question of fact and it was not possible to detect any error even in the factual findings recorded by the High Court.
There was no material on the basis on which the plea of the appellant could be upheld that the valuation of Rs.7000 per acre did not reflect the true market value or that the land in question was undervalued.
[541B F] The Appellant 's grievance with regard to the third ground was justified.
The appellant 's parcel of land in question, situated very much in the interior, was valued by the Trial Court at Ks.
l0,866 per acre (less 20% for roads, etc.).
The High Court valued this parcel of land at Rs.7,000 per acre.
It had valued the land with the best situation on the Ganeshkhand Road at Rs.20,000 per acre.
As against this, the appellant 's land was valued at Rs.7,000 per acre.
This pushing down was made to account for its situation in the interior on the premise that development would take about 12 years to reach the appellant 's land under acquisition.
But after 12 years, it would become land adjoining the developed area and not land which could be treated as in the interior.
If the present value was to be ascertained, it should be ascertained on the basis of present value of land which would fetch Rs.20,000 per acre after 12 years and not present value of land which would fetch Rs.7,000 per acre after 12 years.
In fact the present value of Rs.20,000 payable at the end of 12 years at 8% would work out to Rs.6942 according to Miram 's Table 7, p.657 of A.K. Mitra 's Theory and Practice of Valuation 2nd Edition.
The High Court was right in valuing the land in interior at Rs.7,000 per acre but wrong in directing that present value of Rs.7,000 payable after 12 years should be ascertained.
The appellant must be awarded compensation at Rs.7,000 533 per acre subject to deduction or allowance of 25% to account for land required to be set apart for roads, open spaces, etc.
The appellant would be entitled to be paid compensation for his land in question at Rs.5250 per acre (Rs.7,000 less 25%) in place of lesser amount awarded by the High Court.
[541F H; 542A F] The appellant would be entitled to the benefit of the Central Amending Act 68 of 1984 in view of section 30(2) of the Act because these appeals were pending before this Court on 30th April, 1982, if the view is taken that the said Act had retrospective operation in the sense that the amended section 23(2) and section 28 apply also in relation to an order under appeal against an award made by the Collector or Court between April 30, 1982 and the commencement of the Amending Act.
This must depend upon the decision of the Constitution Bench of this Court, expected soon; the appellant would be entitled to the benefit as above said if the Constitution Bench upholds the view expressed in Bhag Singh case, (1985) 3 SCC p. 737 and overrules the view expressed in Kamalajamanniavaru case, [542G H; 543A B] |
Criminal Appeal No. 214 of 1979.
From the Judgment and Order dated 22.11.1978 of the Punjab and Haryana High Court in Criminal Appeal No. 701 of 1975.
A.N. Mulla, O.P. Sharma and R.C. Gubrele for the Appellants.
Ms. Amita Gupta and R.S. Suri for the Respondents.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
Balbir Singh and Inderjit Singh, the appellants, are brothers.
Onkar Singh, brother of Brijinder Singh, the father of the appellants, died of multiple in juries on 8.7.1974.
The appellants along with Mehar Singh, were tried on the charge of murder under Section 302, I.P.C. read with Section 34, I.P.C. The Sessions Judge acquitted the accused of the charge.
The High Court, in appeal pre ferred by the State, convicted these appellants and sen tenced them to undergo imprisonment for life under Section 302, I.P.C. The appeal being one under Section 2 of the , the appellants ' learned counsel persuaded us to go through the entire evidence maintaining that the High Court has erred in interfering with the order of acquittal.
Ac cording to the learned counsel, the view taken by the trial court is reasonable and there was no justification for upsetting the judgment even if a different view could have been taken by the appellate court on reappraisal of the evidence.
It was contended that the High Court has not effectively dislodged the various reasons given by the trial Court for discarding the evidence and that the conclusion drawn by the High Court on the evidence on record is clearly wrong.
In order to appreciate these arguments, it is necessary to set out briefly the facts of the case and summarize the relevant evidence.
The deceased, Onkar Singh, at the time of his death was employed in government service and was resid ing in Chandigarh.
His brother, Darbara Singh, and his son Iswardial Singh, as well as these appellants were residing in the village.
Onkar Singh came to the village on 6th July, 1974.
On 8th July, 242 1974, at about 10.30 A.M., Darbara Singh, along with his wife, Surjit Kant, and son Ishwardial Singh had gone to the mango grove across the choe to collect mangoes for being given to Onkar Singh.
While they were returning home along the pathway, Onkar Singh was seen coming in the opposite direction.
These two appellants along with their companion emerged on the scene and attacked Onkar Singh Balbir Singh had a datar and Inderjit Singh had a sua and Mehar Singh had a lathi.
After inflicting injuries with the weapons the appellants escaped.
The deceased, Onkar Singh, was removed to the house of Darbara Singh for being rushed to the hospi tal but within a short time, he breathed his last.
The first information was lodged at the police station around 7.00 P.M., and the crime was registered and investi gated and finally chargesheeted.
The post mortem examination on the dead body revealed that Onkar Singh had sustained besides lacerated injuries three stab wounds and that he died on account of the shock and hemorrhage as a result of the injuries.
The motive alleged was that there had been some grouse on account of the transfer of agricultural land that belonged to the family, among the children of the three brothers.
The land stood in the name of the deceased 's son under cultivation of Darbara Singh at the material time.
The land was originally gifted to the appellants in 1964 but was reconveyed to the deceased.
The learned Sessions Judge found that the motive had been proved.
The two eye witnesses to the occurrence were Darbara Singh and his son Ishwardial Singh.
They narrated the incident.
Their evidence was discarded by the trial court for the reasons that there was a thick growth of reeds on either side of the pathway which was running zigzag and it was not, therefore, possible for the witnesses even if they were present in the vicinity to observe the assault and identify the assailants.
Another reason was that the medical evidence was in distinct conflict with the oral testimony and the nature of injuries were such that the same could not be attributed to the use of the weapons mentioned by the witnesses.
Yet another reason was that there had been no trace of blood either on the pathway or on the clothes worn by the deceased.
The time of death of the deceased as dis closed by the medical evidence did not agree with the ver sion of the witnesses.
There had been inordinate delay in lodging the F.I.R.
The first information report did not inspire confidence.
The witnesses had no consistent case regarding the role played by Mehar Singh and the evidence was interested and unconvincing.
The learned Judge, there fore, rejected the 243 same and recorded the order of acquittal.
The High Court had cautioned itself on the limited scope of interference while analysing and appreciating the evi dence and arriving at its own conclusion.
The High Court has given very cogent reasons to establish that the whole ap proach by the trial court was wrong and reasons for reject ing the evidence did not stand scrutiny.
Having heard the counsel on both sides, we agree with the High Court that the prosecution evidence in the case is wholly reliable and it leads to irresistible conclusion that these appellants had intentionally caused the death of Onkar Singh.
The occurrence took place in broad day light at a place close to the residence of the witnesses.
The appel lants are the near relations of the deceased and the wit nesses and it has happened in the background of the family rued.
The first information has been recorded within a few hours which in the circumstances of the case cannot be considered as unreasonably delayed.
The version given in the F.I.R, is substantially the same as the one spoken to by the witnesses before the court.
There had not been any accept able suggestion why Darbara Singh should foist a case against the appellants.
It is most unlikely that these witnesses would allow the real culprits to escape and their near relations to be implicated on the happening of such a tragedy in the family.
Both the father and the son have given consistent account of the role played by each of the appellants.
There would not have been any difficulty for the witnesses to identify the appellants from a distance and across the reeds even if they could get only a glimpse of them in the course of their action.
The evidence is also clear that there had not been thick growth of reeds to cause complete obliteration of the scene.
It could not, therefore, be assumed that the place of occurrence was out of bounds and that the witnesses have weaved a story of their own.
As rightly pointed out by the High Court, the medical evidence is not inconsistent.
The witnesses are clear that the appel lants used the datar on the wrong side and that accounts for the lacerated injuries.
Incised wounds may be produced by using the sua on that part of the body.
We do not find any material to infer that the death could not have happened at the time spoken to by the witnesses.
Since there had been internal hemorrhage and the injured person was immediately lifted from the place of occurrence the absence of blood at the scene is not strange.
The fact that the acquittal of Mehar Singh had not been interfered with by the High Court cannot advance the case of the appellants.
The High Court 244 has given him the benefit of doubt on the materials that emerged in the evidence.
That is no reason to discard the evidence of the witnesses so far as these appellants are concerned when such evidence does not suffer from any seri ous infirmity.
We find that the High Court had given weighty reasons in accepting the evidence and finding that the view taken by the trial court was clearly wrong.
We reject the contentions of the appellants.
There is no reason to interfere with the judgment of the High Court.
The appeal is accordingly V.P.R. Appeal dis missed. | The appellants along with another were tried of the charge of murder under Section 302, I.P.C., read with Sec tion 34, I.P.C. The prosecution case was that the appellants as well as the deceased 's brother and his son were residing in a vil lage.
The deceased came to the village on 6.7.1974.
On 8.7.1974 at about 10.30 a.m., the deceased 's brother along with his wife and his son had gone to the mango grove across the choe to collect mangoes to give to the deceased.
While they were returning home along the pathway, the deceased was seen coming in the opposite direction.
The two appellants along with another accused, emerged on the scene and at tacked the deceased.
Appellant No.1 had a datar and Appel lant No. 2 had a sua and their companion had a lathi.
After inflicting injuries with the weapons the appellants escaped.
The deceased was removed to the house of one Darbara Singh for being rushed to the hospital, but within a short time, he breathed his last.
The first information was lodged at the police station, around 7.00 P.M., and the crime was registered and investi gated and finally chargesheeted.
The post mortem examination of the dead body revealed that the deceased had sustained lacerated injuries and three stab wounds and that he died on account of the shock and hemorrhage as a result of the injuries.
The motive alleged was that there had been some grouse on account of the transfer of agricultural land that be longed to the family, among the 240 children of the three brothers.
The Sessions Judge acquitted the accused of the charge.
The High Court, in appeal preferred by the State convicted the appellants and sentenced them to undergo imprisonment for life, against which, this appeal under Section 2 of the Supreme Court (Enlargement of Criminal Appellate Jurisdic tion) Act, 1970 was filed.
The appellants contended that the view taken by the trial court was reasonable and there was no justification for upsetting the judgment even if a different view could have been taken by the appellate court on reappraisal of the evidence; that the High Court did not dislodge the various reasons given by the trial court for discarding the evidence and that the conclusion drawn by the High Court on the evidence on record was wrong.
Dismissing the appeal, this Court, HELD: 1.
The prosecution evidence in the case is wholly reliable and it leads to irresistible conclusion that the appellants had intentionally caused the death of the de ceased.
The occurrence took place in broad day light at a place close to the residence of the witnesses.
The appel lants are the near relations of the deceased and the wit nesses and it has happened in the background of the family rued.
The first information has been recorded within a few hours which in the circumstances of the case cannot be considered as unreasonably delayed.
The version given in the F.I.R. is substantially the same as the one spoken to by the witnesses before the Court.
[243 C D] 2.
The eye witnesses have given consistent account of the role played by each of the appellants.
There would not have been any difficulty for the witnesses to identify the appellants from a distance and across the reeds even if they could get only a glimpse of them in the course of their action, and the medical evidence is not Inconsistent.
[243 E F] 3.
The fact that the acquittal of the companion of the appellants had not been interfered with by the High Court cannot advance the case of the appellants.
The High Court has given him the benefit of doubt on the materials that emerged in the evidence.
That is no reason to discard the evidence of the witnesses so far as the appellants are concerned when such 241 evidence does not suffer from any serious infirmity; [243 H; 244 A] |
ivil Appeal Nos. 851 & 4125 of 1991.
From the Judgment and Order dated 15.12.1982 of the Punjab & Haryana High Court in R.S.A. No. 754 of 1974.
U.R. Lalit, M.R. Sharma, A.S. Sohal, G.K. Bansal, Anil Nauriya, K.L. Hathi, Ms. Anjna Sharma, N.A. Siddiqui and Mrs. Hemantika Wahi for the appearing parties.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These are defendants ' appeal and special leave petition arising out of a suit for posses sion brought by Balwant Singh the plaintiff.
In the Spe cial Leave Petition, we condone the delay and grant leave.
The suit was dismissed by the Court of first instance and the dismissal was affirmed by the appellate court but de creed by the High Court in the second appeal.
The issue raised in the appeal is of considerable importance and it relates to the construction of Section 15 of the ( 'the ').
One Smt.
Mahan Kaur, wife of Jaimal Singh inherited from her husband certain agricultural land measuring 110 kanals 12 marlas situate in village Hamhal, Jakhe Pal in Sangrur District.
Some of the lands were under mortgage and are in possession of defendants 2 to 6.
After coming into force of the , Mahan Kaur died intestate.
On being informed that there was no heir entitled to succeed to her property, the Revenue Assistant Collector sanctioned mutation in favour of the State.
Balwant Singh claiming to be a legal heir of Mahan Kaur brought the suit out of which the present appeal arise.
The suit was for possession of the 461 property of the deceased and also for a declaration decree that he was entitled to redeem the mortgaged property from defendants 2 to 6.
The suit was resisted by the State on the ground that the intestate has left behind no heir to succeed and the mutation effected in favour of the State was valid.
Defendants 2 to 6 contended that the right to redeem the mortgage has been extinguished and they have become the owners of the property by being in possession for more than sixty years.
The trial court held that the plaintiff was not entitled to succeed to the property of the deceased since the proper ty was inherited from her husband.
The issue relating to subsistance or otherwise of the mortgage was left open to be decided later as agreed upon by counsel for both the par ties.
The suit was accordingly dismissed by the trial court.
The plaintiffs appeal against the decree was dismissed by the District Judge, Sangrur.
The second appeal preferred by the plaintiff was, however, accepted by the High Court.
The High Court decreed the suit for possession even against de fendants 2 to 6.
That part of the decree has been challenged by defendants 2 to 6 in S.L.P. (Civil) No. 13923 of 1985.
Their grievance is that the High Court ought not to have decreed the suit against them since the plaintiff 's right to redeem the mortgage was not adjudicated by the trial court and by agreement, the question was expressly left open.
The submission of the defendants 2 to 6 appears to be correct and the decree against them made by the High Court is plain ly untenable.
There is indeed no controversy on that aspect of the matter.
L It is not in dispute that Mahan Kaur inherited the suit property from her husband.
She had no issue and she died intestate.
It is also not in dispute that there is no heir from her husband side entitled to succeed to the property.
The plaintiff is grandson of the brother of Mahan Kaur.
According to him he is entitled to get the property of the deceased.
The case of the State is that the plaintiff is not her qualified heir under the and it is a case of failure of heirs resulting in the devolution of the estate on the Government.
The issue raised in the case turns on the rules of succession to a property of a female dying intestate.
The mode of succession has been prescribed under Section 15 of the .
Section 15 has to be read alongwith Section 16.
They in turn have to be read alongwith the provisions of Section 8.
The property devolving upon the State has been provided under Section 29 of the .
Section 15 is important and it may be read in full: 462 "15.
General rules of succession in the case of female Hindus (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 pre deceased 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.
(2) Notwithstanding anything contained 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 pre deceased son or daughter), not upon the other heirs referred to in subsection (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 chil dren of any pre deceased son or daughter) not upon the other heirs referred to in sub sec tion (1) in the order specified therein, but upon the heirs of the husband." Sub section (1) of Section 15 groups the heirs of a female intestate into five categories and they are specified under clauses (a) to (e).
As per Sections 16 Rule 1 those in one clause shall be preferred to those in the succeeding clauses and those included in the same clause shall take simultaneously.
Sub section (2) of Section 15 begins with a non obstante clause providing that the order of succession is not that prescribed under sub section (1) of Section 15.
It carves out two exceptions to the general order of succes sion provided under sub section (1).
The first exception relates to the property inherited by a female Hindu from her father or mother.
That property shall devolve, in the ab sence of any son or daughter of the deceased (including the children of the pre deceased son or daughter), not upon the other heirs referred to in sub section (1) in the order specified 463 therein, but upon the heirs of the father.
The second excep tion is in relation to the property inherited by a female Hindu from her husband or from her father in law.
That property shall devolve, in the absence of any son or daugh ter of the deceased (including the children of the pre deceased son or daughter) not upon the other heirs referred to under sub section (1) in the order specified thereunder but upon the heirs of the husband.
The process of identifying the heirs of the intestate under sub section (2) of Section 15 has been explained in Bhajya vs Gopikabai and anr.
; There this Court observed that the rule under which the property of the intestate would devolve is regulated by Rule 3 of Section 16 of the .
Rule 3 of Section 16 provides that "the devolu tion of the property of the intestate on the heirs referred to in clauses (b), (d) and (e) of sub section (1) and in sub section (2) of Section 15 shall be in the same order and according to the same rules as would have applied if the property had been the father 's or the mother 's or the hus band 's as the case may be, and such person had died intes tate in respect thereof immediately after the intestate 's death".
This rule creates a fiction for the purpose of ascertaining the order of devolution.
It has to be assumed that the husband had died intestate immediately after the female intestate 's death.
Bearing in mind this fiction, one has to go to the Schedule under Section 8 of the to find out the heirs of the husband who are entitled to succeed to the property of the intestate.
The High Court has stated that the property inherited by Mahan Kaur from her husband became her absolute property in view of the provisions of Section 14 and the property would devolve upon the heirs specified under Section 15(1).
It has also observed that the plaintiff would be entitled to suc ceed to the estate of Mahan Kaur even under Section 15 (2) being an heir of her father under Entry (d) of sub section (1) of Section 15 of the .
In our opinion, both these reasons are basically faulty and cannot be accepted.
Counsel for the State argued that the property of the intestate has to be dealt with only under sub section (2) of Section 15, and since there is no heir in that category the property shall devolve on the Government under Section 29.
"Section 29 provides as follows: "ESCHEAT 464 "Failure of heirs If an intestate has no heir qualified to succeed to his or her property in accordance with the provisions of this , such property shall devolve on the Government: and the Government shall take the property subject to all the obligations and liabilities to which an heir would have been subject.
" The property is escheated to the Government when an intestate has left no heir qualified to succeed to his or her property.
The property shall devolve on the Government and the Government shall take the property subject to all the obligations and liabilities of the property.
It is only in the event of the deceased leaving behind no heir to succeed, the State steps in take the property.
The State does not take the property as a rival or preferential heir of the deceased but as the Lord paramount of the whole soil of the country.
In Halsburry 's Laws of England, 4th ed.
17 para 1439 it is stated as follows: "To whom land escheated Escheat in the case of death intestate before 1926 was to the mesne lord is he could be found but, as since 1290 sub infeudation has been forbidden, in the great majority of cases there was no record of the mesne tenure, and the escheat was to the Crown as the lord paramount of the whole soil of the country.
" Section 29, in our opinion, shall not operate in favour of the State if there is any other heir of the intestate.
Indeed, Section 29 itself indicates that there must be failure of heirs. 'Failure ' of heirs means the total absence of heirs to the intestate.
It is important to remember that female Hindu being the full owner of the property becomes a fresh stock of descend.
If she leaves behind any heir either under sub section (1) or under sub section (2) of Section 15, her property cannot be escheated.
Sub section (2) of Section 15, in our opinion, was intended only to change the order of succession specified under sub section (1) and not to eliminate the other classes of heirs.
This view finds support from the recommendations of the Joint Committee of two Houses of Parliament which went into the question of the Hindu Succession Bill.
The Hindu Succession Bill 1954 as originally introduced in the Rajya Sabha did not contain any clause corresponding to sub section (2) of Section 15.
It came to be incorporated on the recommendations of the Joint Committee of the two Houses of Parliament.
The reason given by the Joint Committee is found in Clause 17 of the Bill which reads as follows: 465 "While revising the order of succession among the heirs to a Hindu female, the Joint Committee have provided that properties inher ited by her from her father reverts to the family of the father in the absence of issue and similarly property inherited from her husband or father in law reverts to the heirs of the husband in the absence of issue.
In the opinion of the Joint Committee such a provision would prevent properties passing into the hands of persons to whom justice would demand they should not pass.
" The report of the Joint Committee which was accepted by Parliament indicates that sub section (2) of section 15 was intended to revise the order of succession among the heirs to a Hindu female and to prevent the properties from passing into the hands of persons to whom justice would demand that they should not pass.
That means the property should go in the first instance to the heirs of the husband or to the source from where it came.
In support of the contrary submission, attention was drawn to a passage from Hindu Law by S.V. Gupte in which it is stated "that the heirs of the husband will take where the property was inherited from the husband or from the father in law.
The object is to eliminate the father and the moth er, the heirs of the father, and the heirs of the mother altogether from succession where the property inherited was from the husband or the father in law and the deceased has left no son or daughter or any grandchild.
The effect of the clause is not only to eliminate the three classes of the heirs, being those mentioned in clauses (c), (d) and (e) to subsection (1), but to change the order of succession." (1981 Ed.
2 p. 522).
We however, find it difficult to share this view. ' It does not get support from the terms of sub section (2) of Section 15.
Sub section (2)(b) emphasises that the property of the intestate shall not devolve upon the heirs referred to in sub section (1) in the order speci fied thereunder but upon heirs of the husband.
The, object seems to be not to eliminate the other heirs under sub section (1) and not to exclude them from inheritance alto gether.
There is no justice in such a construction of Sec tion 15.
The Parliament could not have intended that result.
In this view of the matter, we dismiss the Civil Appeal No. 851 of 1991 preferred by the State but not for the reasons stated by the High Court.
We allow the appeal aris ing out of SLP (Civil) No. 13923 of 1985 466 and set aside that portion of the decree made by the High Court as against the defendants 2 to 6.
The suit filed by the plaintiff as against defendants 2 to 6 stands dismissed.
The parties may adjudicate elsewhere the subsistence or otherwise of the mortgage in question.
In the circumstances of the case, there will be no order as to costs.
G.N. CA No. 851/91 dismissed and CA No. 4125/91 allowed. | One Smt. 'M ' inherited from her husband certain agri cultural lands.
Some of the lands were under mortgage and in the possession of defendants 2 to 6.
She died intestate after the came into force.
As there was no heir entitled to succeed to her property, mutation was sanctioned in favour of the State.
The grandson of her brother claiming to be her legal heir filed a suit for possession of the property and for a declaration that he was entitled to redeem the mortgaged property from defend ants 2 to 6. 'The suit was resisted by the First Defendant, viz. the State on the ground that the intestate had left no heir to succeed and the mutation effected in favour of the State was valid.
Defendants 2 to 6 contended that the right to redeem the mortgage had extinguished, and they have become the owners of the property as they were in possession for more than sixty years.
The Trial Court dismissed the suit holding that the plaintiff was not entitled to succeed to the property of the deceased since the property was inherited from her husband.
As regards the mortgage, it was left open to be decided later as agreed to by the parties.
Plaintiff preferred an appeal and the District Judge dismissed the same.
On a second appeal preferred by him, the High Court decreed the 459 suit for possession even against defendants 2 to 6.
The State as well as the defendants 2 to 6 have preferred the present appeals by special leave.
The appellant State contended that the plaintiff Re spondent was not a qualified heir under the and hence it was a case of failure of heirs resulting in the devolution of estate on the Government.
The other appel lants (Defendants 2 to 6) contended that the High Court ought not have decreed the suit against them since the plaintiff Respondent 's right to redeem the mortgage was not adjudged by the trial court and by agreement the question was expressly left open.
Dismissing the appeal preferred by the State and allow ing the appeal of defendants 2 to 6, this Court, HELD: 1.
The property is escheated to the Government when an intestate has left no heir qualified to succeed to his or her property.
The property shall devolve on the Government and the Government shall take the property sub ject to all the obligations and liabilities of the property.
It is only in the event of the deceased leaving behind no heir to succeed, the State steps in to take the property.
The State does not take the property as a rival or preferen tial heir of the deceased but as the Lord paramount of the whole soil of the country.
[464 B,C] 2.
Section 29 of the shall not operate in favour of the State if there is any other heir of the intestate.
Indeed, Section 29 itself indicates that there must be failure of heirs. 'Failure ' of heirs means the total absence of heirs to the intestate.
A female Hindu being the full owner of the property becomes a fresh stock of descend.
If she leaves behind any heir either under sub section (1) or under sub section (2) of Section 15, her property cannot be escheated.
[464 E,F] Halsbury 's Laws of England, 4th Edn.
17 para 1439; referred to.
Sub Section (2) of Section 15, intended only to change the order of succession specified under sub section (1) and not to eliminate the other classes of heirs.
Section 15(2) came to be incorporated on the recommendations of the Joint Committee of the two Houses of Parliament.
The report of the Joint Committee which was accepted by Parliament indicates that this sub section was intended to revise the order of succession among the heirs to a Hindu female and to prevent the properties from passing into the hands to per sons to whom justice would 460 demand that they should not pass.
That means the property should go in the first instance to the heirs of the husband or to the source from where it came.
[464 F, H, 465 C] 3.2.
Sub section (2)(b) of Section 15 emphasises that the property of the intestate shall not devolve upon the heirs referred to in sub section (1) in the order specified thereunder but upon heirs of the husband.
The object is not to eliminate the other heirs under sub sectiOn (1) and not to exclude them from inheritance altogether.
There is no justice in such a construction of Section 15.
The Parliament could not have intended that result.
[465 F G.] Bhajya vs Gopikabai and Anr, ; , referred to. |
Criminal Appeal No. 624 of 1979.
From the Judgment and Order dated 27.3.1979 of the Madhya Pradesh High Court in Criminal Appeal No. 498 of 1977.
Frank Anthony, Sushil Kumar Jain, Ms. Pratibha Jain and R.V. Singh for the Appellants.
U.N. Bachhavat, Uma Nath Singh and J.M. Sood for the Respon dent.
The following Order of the Court was delivered: These two appellants, namely, Mathura Prashad and Binda Prashad have preferred this appeal questioning the correct ness and legality of the judgment rendered in Criminal Appeal No. 498/77 by the High Court of Madhya Pradesh at Jabalpur Bench.
These two appellants (A4 and A5 before the Trial Court) along with three others, namely, Gulab Chand and Gulab Singh and Laxman Rao (who were arrayed as accused Nos. 1 to 3) took their trial on the accusation that on the night intervening 5/6.12.75 at about 12.30 a.m. at Sarkanda, Bilaspur within the limits of Bilaspur Police Station, Civil Lines intentionally caused the death of the deceased, Keshav Singh by Gulab Singh stabbing the deceased with a knife and the rest of the people assaulting him and that in the course of the same transaction, they also committed the offence of dacoity.
Under the above accusation, they were tried for offences punishable u/s 302 IPC in the alternative u/s 302 IPC read with 149 IPC and also for offence u/s 396 IPC.
The Trial Court found the third accused, namely, Laxman Rao not guilty of any of the charges and consequently, acquitted him but convicted these two appellants and accused Nos. 1 and 2 who are not before us u/s 302 read with 34 IPC and sentenced each of them to undergo imprisonment for life.
However, the Trial Court acquitted the appellants and the other two accused of the offence u/s 396 IPC.
On being aggrieved by the judgment of the Trial Court, the convicted accused namely, these two appellants, Gulab Chand and Gulab Singh filed 429 an appeal before the High Court which for the reasons men tioned in its judgment, dismissed the appeal confirming the conviction recorded by the Trial Court.
Challenging this judgment, these two appellants filed their SLP No. 1902/79 and the other two convicted accused, namely, Gulab Chand and Gulab Singh (A1 and A2) filed a separate petition in SLP (Crl.) No. 1435/79.
This Court by an order dated 29.10.79 granted leave so far as SLP filed by these two appellants, but dismissed the SLP filed by the first and the second accused namely, Gulab Chand and Gulab Singh.
Hence, the present appeal by these two appellants.
The facts of the case which led to the filing of this appeal are well set out in the judgments of the Trial Court and the High Court and hence we think that it is not neces sary for us to proliferate the same except to refer to certain salient features relevant for the disposal of this appeal.
The deceased Keshav Singh was a petition writer.
He was living in his house at Sarkanda in Bilaspur with his wife Smt.
Phatokan Bai (PW 19) and two daughters, namely, Anjani Bai (PW 1) and Shail Kumari (PW 2) and his son, Ram Kumar (PW 3) who was younger to PW 1 and eider to PW 2.
There were some tenants in different parts of that house.
The accused Gulab Chand occupied a portion of that house as a tenant, but vacated the same about two months before this occurrence due to frequent quarrels between the children and ladies of the families belonging to Gulab Chand and that of the deceased.
It is alleged that the wife of Gulab Chand had complained about some alleged misbehaviour of the deceased with her.
According to the prosecution, when the deceased was sleeping in a room with his wife on the iII fated night, he heard someone knocking at the door.
On this, the deceased switched on the light and opened the door.
This appellant and the other accused entered his room.
Gulab Chand and Gulab Singh whipped up their knives and gave stab wounds; one on the chest, another on the back while bending.
These two appellants slapped and fisted the deceased.
It is fur ther stated that the second appellant herein, namely, Binda Singh caught hold of the deceased and banged him against the wall repeatedly.
PW 19 tried to save her husband but she was pushed aside.
During the course of the occurrence, a gold 'PUTRI ' which PW 19 was wearing, was attempted to be snatched away from her.
PW 1 who was sleeping in a room on the first floor, on hearing the cry, got down and saw these appellants and the other accused leaving her father 's room.
It is alleged that the appellant while running away took with them a box con taining some clothes and other articles belonging to PW 1.
According to the prosecution, the appellants had chained the doors in such a way that the other inmates of the house could not reach the spot.
430 After the appellants had fled away, PW 1 opened the doors.
PW 3 who was sleeping in another room reached the spot.
PW 15 was a tenant in an adjoining room and he on hearing the distress cry of PW 19, wanted to come out of his room but he could not do so as the house was chained from outside.
Therefore, PW 15 shouted for opening the latches of the door.
He came to the spot after the door was opened.
One Ramji Dayal who seemed to have played an important role in the prosecution, also reached the spot but he has not been examined by the prosecution as a witness.
All the witnesses saw bleeding injuries on the body of Keshav Singh (the deceased herein) who was unable to speak.
PW 3, at the instance of his deceased father brought a pen and a piece of paper on which the injured Keshav Singh wrote 'Gulab Chand ' and thereafter became unconscious.
The injured Keshav Singh was then taken to the Government hospital at Bilaspur where he succumbed to his injuries.
The medical officer sent a requisition exhibit P 14 to the police station.
PW 19, by then, lodged the first information report Exh.
P 43 at about 3.00 a.m. on 6.12.75 before PW 21.
PW 21 held inquest and pre pared the inquest report Exh.
During the course of the investigation, he has seized exhibit P.50, the paper on which the deceased had written the name 'Gulab Chand ' on being produced by PW 3.
PW 9, the medical officer who conducted autopsy on the dead body of the deceased, found two stab wounds and one incised wound on the person of the deceased.
PW 8, another medical officer examined accused Gulab Singh and found on his person a small incised wound at the base of the index finger on the palmer aspect.
After completing the investigation, the charge sheet was laid against all the accused persons.
As aforementioned, the trial court convicted the four accused inclusive of these two appellants which conviction was confirmed by the High Court.
Hence, this appeal by these two appellants.
Of the witnesses examined, PWs 1, 2 and 19 speak about the participation of the appellants in the perpetration of this heinous crime.
No doubt both the Courts below have concurrently found that these two appellants and the other two accused 1 and 2 were responsible for causing the death of the deceased and consequently convicted and so, the question would be whether this Court while exercising its jurisdiction under Article 136 of the Constitution of India, will be justified in interfering with the concurrent find ings of fact.
This Court in Balam Ram vs State of U.P. 11975] 3 SCC 219 at 227 held, that the powers of the Supreme Court under Article 1.36 of the Constitution are wide but in criminal appeals, this Court does not interfere with the concurrent findings of fact save in exceptional circumstances.
The 431 scope of interference by this Court under Article 136 of the Constitution of India in a case of concurrent findings of fact arose in Arunachalam vs PSR Sadhanathan, ; wherein this Court has held that "Article 136 of the Constitution of India invests the Supreme Court with a plenitude of plenary appellate power over all Courts and Tribunals in India.
The power is plenary in the sense that there are no words under Article 136 itself qualifying that power.
But, the very nature of the power has led the Court to set limits to itself within which to exercise such power.
It is now the well established practice of this Court to permit the invocation of the power under Article 136 only in very exceptional circumstances, as when a question of law of general public importance arises or a decision shocks the conscience of the Court.
But, within the restrictions im posed by itself, this Court has the undoubted power to interfere even with findings of the fact, making no distinc tion between judgments of acquittal and conviction, if the High Court, in arriving at those findings had acted "per versely or otherwise improperly".
(See State of Madras vs
A. Vaidyanatha Iyer ; and Himachal Pradesh Admin istration vs Om Prakash, We think that it is not necessary to swell this judgment by citing all the decisions relating to this principle of law.
When the facts and circumstances of the case are scruti nised, in our considered opinion, they do compel this Court to interfere on the ground that the findings of the Courts below suffer from the vice of perversity.
I1 is the admitted case that the deceased was a petition writer and so in that capacity he was very well conversant as to how to draft a complaint.
He asked for a pen and paper, and wrote the name, 'Gulab Chand ', evidently thereby saying that Gulab Chand was the assailant.
The deceased had not written any other name except the name of Gulab Chand.
Now the explana tion given by the prosecution is that the deceased became unconscious after writing this one name Gulab Chand, thereby saying had he not become unconscious, probably he would have written the names of other assailants also.
But we have to test this evidence in the background of the evidence given by other witnesses namely PWs '1, 2 and 19.
PW 19 who is none other than the wife of the deceased, was sleeping in the same room in which the deceased was sleeping and, there fore, she must be the proper and natural witness and her evidence has to be given credence.
PW 19 admittedly did not inform either PW 1 or PW 2 the names of the assailants but she gave the names only to PW 3, her son.
It transpires from the evidence of PW 19 that after PW 1 went to fetch the rickshaw, PW 3 asked his father as to who had assailed him 'and that it was only thereafter the injured Keshav Singh wrote the name of Gulab Chand on a piece of paper.
The relevant portion of the evidence of PW 19 reads as follows: 432 Then Ram Kumar asked my husband as to who had assaulted and he asked for a pen and paper.
Ram Kumar brought a paper and pen and my husband could write on it the name of Gulab Chand.
In this connection, evidence of PW 2 may also be re ferred to which is as follows: "Then at this stage, my brother asked him as to who had assaulted him.
My father asked by a sign of hand for a pen and paper, whereupon my brother brought the pen and paper and gave that to my father.
My father wrote on it by his hand; he wrote the name of Gulab Singh and thereafter he became unconscious. ' This dearly indicates that before the deceased wrote the name of Gulab Chand on the paper given by his son, PW 3, no one including PW 19 came forward with the names of the assailants but it is only thereafter, PW 19 gave the names of the assailants.
Here also, the prosecution is not con sistent because PW 2 says that her father also gave the name of all the assailants to Ram Kumar (PW 3).
The relevant part of PW 2 's evidence reads thus: "Then my mother and father both mentioned the names of the assailants.
At that time my brother, Ram Kumar was also there.
After Ramji had enquired, my brother also enquired them.
My father asked for by a sign of hand for pen and a copy.
" The above extracted pieces of evidence of PWs 2 and 19 indicate that PW 3 was not informed of the names of the assailants before his father (the deceased herein) wrote the name of Gulab Chand.
Had PW 3 informed by his mother (PW 19) of the names of the assailants, he might not have asked his father as to who the assailants were.
In other words, till the deceased wrote the name of Gulab Chand on a piece of paper evidently PW 3 did not know as to who assailant or assailants was/were.
It seems that both the Courts below have not approached this significant aspect of this salient feature in the proper perspective.
On the other hand, it has conveniently omitted this significant factor from consideration which gives the death knell to the prosecution case so far as the alleged participation of these two appellants in this brutal crime.
In the inquest report Exh.
P 24, it is stated that all the relatives of the deceased 433 Keshav Singh were examined and the following conclusion was arrived at: ". . the conclusion was reached that the death of deceased Keshav Singh by Gulab Singh, Gulab Chand etc.
was due to knife wounds.
" This 'etc. ' in the present case has no relevance because there is a specific averment that the two assailants namely, Gulab Singh and Gulab Chand stabbed the deceased with knives which case alone fits in with the earlier statements of PWs 2 and 19 as well as the version of the deceased in Exh.
If really the names of these two appellants had been mentioned by the witnesses, those names also would have been specifically mentioned in Exh.
P :24.
At this juncture, the learned senior counsel appearing on behalf of the State referred to a decision of this Court reported in ; Pedda Narayana vs State of Andhra Pradesh wherein this Court has held that the question regarding the details as to how the deceased was assaulted or who assaulted him or under what circumstances, he was assaulted is foreign to the ambit and scope of the proceedings under Section 174.
This decision will not be of any help to the prosecution because only two names are mentioned in the inquest report as as sailants, leaving the names of these two appellants who are now rightly attempting to take advantage of this conspicuous omission in Exh.
P. 24.
Though PW 19 is said to be the author of Exh.
P 43, she before the Trial Court does not claim to be the author of the entire averments.
She states that the police who record ed the report, asked only her name and her husband 's name and nothing further was asked from her and she did state anything more than that.
PW 19 further had deposed that she did not give the names of the accused who assaulted, that she did not know whether her husband was then dead or alive, that at Thana (Police Station) she came to know about the death of her husband, that even then she did not mention the names of the assailants, and that before going to the Thana, she did not give the names of any of the assailants to any person.
It is in evidence that both these appellants were present at the scene of occurrence when the police constable came, but none pointed out to the police that these two appellants also participated in the crime.
Now the explana tion offered by the prosecution is that these two appellants took the constable aside and whispered something and there fore, PW 1 suspecting that the police constable was taking side with the appellants did not come forward with a state ment that these two appellants were also the participants in the crime.
This explanation seems to have been offered only before the Trial Court.
Both the Courts below have conven iently over 434 looked and ignored all the above glaring infirmities appear ing in the case and as such the concurrent findings recorded by both the Courts are not proper but perverse.
After meticulously and scrupulously analysing the evi dence, we are left with an impression that the prosecution has not satisfactorily established the guilt of these two appellants beyond all reasonable doubt.
Hence, we are unable to agree with the findings of the lower Courts that these two appellants also participated in the crime with the other two accused.
In the result, the conviction of these two appellants u/s 302 read with 34 IPC and the sentence of imprisonment for life imposed therefore are set aside and both of them are acquitted.
The appeal is thus allowed.
V.P.R Appeal al lowed. | According to the prosecution, when the deceased a peti tion writer, was sleeping in a room with his wife (PW.19) on the iII fated night, he heard someone knocking at the door.
The deceased switched on the light and opened the door.
The accused (A.1 and A.2) entered his room.
They whipped up their knives and gave stab wounds; one on the chest, another on the hack while bending.
They also slapped and listed the deceased.
It was further stated that the second appellant (A 5) caught hold of the deceased and banged him against the wall repeatedly.
PW19 tried to save her husband but she was pushed aside.
During the course of the occurrence, a gold 'PUTRI ' which PW 19 was wearing, was attempted to be snatched away from her.
The eldest daughter of the deceased, PW 1, who was sleeping in a room on the first floor, on hearing the cry, got down and saw the appellants and the other accused leav ing her father 's room.
The appellants while running away took with them a box containing some clothes and other articles belonging to PW 1 and chained the doors in such a way that the other inmates of the house could not reach the spot.
The deceased 's son, PW 3, who was sleeping in another room reached the spot.
PW 15, a tenant in an adjoining room on hearing the distress cry of PW 19, wanted to come out of his room but he could not do 426 so as the house was chained from outside.
He came to the spot after the door was opened.
All the witnesses saw bleeding injuries on the body of the deceased who was unable to speak.
PW 3, at the instance of his deceased father brought a pen and a piece of paper on which the injured deceased wrote 'Gulab Chand ' and thereaf ter became unconscious, and he was then taken to the Govern ment hospital where he succumbed to his injuries.
The two appellants (A4 and A5 before the Trial Court) along with three others were tried section 302 IPC or section 302/149 and section 396, for causing the death of the deceased, accused No. 2 stabbing the deceased with a knife and the rest of the accused assaulting him and for committing the offence of dacoity.
The Trial Court found the third accused not guilty of any of the charges and acquitted him but convicted others section 302 read with 34 IPC and sentenced each of them to undergo imprisonment for life, and acquitted them of the offence section 396 IPC.
The High Court confirmed the conviction.
The present two appellants (A4, A5) filed the present appeal against the judgment of the High Court through special leave.
The other two accused (A1 and A2) preferred a separate special leave petition, which was dismissed by this Court.
Allowing the appeal of the two accused (A4, A5), this Court, HELD: 1.
The powers of the Supreme Court under Article 136 of the Constitution are wide but in criminal appeals, this Court does not interfere with the concurrent findings of fact, save in exceptional circumstances.
[430 H] 2.
Within the restrictions imposed by itself, this Court has the undoubted power to interfere even with findings of the fact, making no distinction between judgments of acquit tal and conviction, if the High Court, in arriving at those findings has acted perversely or otherwise improperly.
[431 C] Arunachalam vs PSR Sadhananthan, ; ; State of 427 Madras vs
A. Vaidyanatha Iyer; , ; Himachal Pradesh Administration vs Om Prakash, [1972]1 SCC 249, referred to. 3.01 The deceased was a petition writer and so in that capacity he was very well conversant as to how to draft a complaint.
He asked for a pen and paper, and wrote the name, 'Gulab Chand ', evidently thereby saying that Gulab Chand was the assailant.
The deceased had not written any other name except the name of Gulab Chand.
Now the explanation given by the prosecution is that the deceased became unconscious after writing this one name Gulab Chand, thereby saying had he not become unconscious, probably he would have written the name of other assailants also.
[431 E F] 3.02.
PW 19 the wife of the deceased, was sleeping in the same room in which the deceased was sleeping did not inform either PW 1 or PW 2 the names of the assailants but she gave the names only to PW 3, her son.
It transpires from the evidence of PW 19 that after PW 1 went to fetch the rickshaw, PW 3 asked his father as to who had assailed him and that it was only thereafter the injured deceased wrote the name of Gulab Chand on a piece of paper.
Before the deceased wrote the name of Gulab Chand on a piece of paper given by his son, PW 3, no one including PW 19 came forward with the names of the assailants.
[431 F G] 3.03.
The evidence of PW 2 and 19 indicated that PW 3 was not informed of the names of the assailants before his father (the deceased) wrote the name of Gulab Chand.
Till the deceased wrote the name of Gulab Chand on a piece of paper evidently PW 3 did not know as to who the assailant or assailants was/were.
The Courts below have not approached this signifi cant aspect of this salient feature in the proper perspec tive.
[432 G] 3.05.
In the inquest report there is a specific averment that the two assailants namely, Gulab Singh (A.2) and Gulab Chand (A.1) stabbed the deceased with knives which case alone fits in with the earlier statements of PWs 2 and 19 as well as the version of the deceased in Exh.
P. 50.
If really the names of the two appellants had been mentioned by the witnesses, those names also would have been specifically mentioned in Exh.
P. 24, the inquest report.
[433 B C] 428 3.06.
It is in evidence that both the appellants were present at the scene of occurrence when the police constable came, but none pointed out to the police that these two appellants also participated in the crime.
The prosecution has not satisfactorily established the guilt of the two appellants beyond all reasonable doubt. |
Appeal No. 1677 of 1984.
From the Judgment and Order dated 7.7.1983 of the Rajasthan High Court in S.B. Civil Misc.
Appeal No. 6 of 1983.
S.K. Jain, Mrs. Pratibha Jain and Sudhanshu Atreya for the Appellant.
C.K. Sucharita, Y. Prabhakara Rao (N.P.) and Ganpathi Iyer Gopalkrishnan for the Respondents.
544 The following Order of the Court was delivered: This appeal by special leave under article 136 of the Constitution is against the order of the High Court of Rajasthan dated July 7, 1983.
The appellant a partnership firm consists of nine partners of which Satya Narain is one of the partners.
On July 2.5, 1973 Satya Narain submitted a tender to the respondents offering to supply 1000 quintals of Gram Dal at the rate of Rs. 185/ per bag.
This was accepted by the respondents by letter dated August 28, 1973 followed by confirmation letter by the firm on August 31, 1973.
It is the case of the respondents that the appellant committed breach of the contract and as a result, the re spondents filed an application under sec.
20 of the Arbitra tion Act, 1940 (for short as the 'Act ') before the District Court for making reference for arbitration in terms of the contract.
The Addi.
District Judge after considering the evidence and the objections allowed the application and referred the dispute for arbitration.
Against that order, the appeal was filed and the High Court confirmed the order of the Addi.
District Judge.
The contention raised by Sri Sushil Kumar Jain, learned counsel for the appellant is that by operation of Sec.
19(2)(a) of the (for short as the 'Partnership Act ') there is no implied authority given to one of the partners to refer the dispute relating to the business of the firm for arbitration and therefore the reference made by the court, pursuant to a contract entered into by Satya Narain on behalf of the firm, is without jurisdiction.
The High Court found as a fact that none of the partners have entered into the witness box to deny the validity of the contract nor raised any objection that they had not authorised Satya Narain to enter into the contract nor that they were bound by any acts done by him.
It is also found that Satya Narain signed the tender and at that time no other .partners raised objection regarding the signing of the tender by Satya Narain on behalf of the firm.
In view of these facts it is clear that they ratified the contract.
It is also further to be noted that.
in terms of the contract, the corporation had appropriated the security deposit made by the appellant firm and that was not objected to at any time.
This itself would fortify.
the conclusion that the firm had entered into a binding contract with the corpora tion and contract contained the arbitration clause which binds the partners.
The contention raised that the contract is void and that in terms of the contract, making a refer ence is without jurisdiction bears no substance.
The High Court found that Satya Narain has implied power to con duct business on behalf of the partnership firm and the implied authority 545 binds all the partners.
18 of the Partnership Act postulates that "subject to the provisions of the Act a partner is the agent of the firm for the purposes of the business of the firm".
19(1) adumbrates that "subject to the provisions of Sec.
22 the act of the partners which is done to carry on in the usual way the business of the kind carried on by the firm, binds the firm".
Thus, Satya Narain has implied authority to enter into the contract with the corporation to supply the Dal of 1000 quintals at the contracted rate which is the usual course of the business of the appellant.
But it is settled law that the operation of Sees.
18 & 19(1) is subject to the exceptions engrafted in sub sec.
(2) of Sec. provides that in the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration.
Satya Narain has power to do business on behalf of the firm and in exercise thereof he entered into the contract with the corporation during the usual control of business to supply the Dal.
Then crucial question is whether a valid contract which was not repudiated as per law, binds the other partners? Our answer is yes.
It is not in dispute that the contract engrafts an arbitration clause and in terms thereof the dispute is to be referred to the arbitra tion.
Therefore, the reference made by the Addi.
District Judge under Sec.
20 of the is perfectly within the jurisdiction and in terms of the contract.
It is not the case of the partners that the firm is not carrying on the business of the supply of Dal and that Satya Narain, as found by the Trial Court, was authorised to do business on behalf of the firm.
Under those circumstances, the reference is clearly valid.
We do not find any illegality to interfere with the order of the High Court.
In this view, the decisions in Gopal Das vs Bail Nath & Ors., AIR 1926 Allahabad 238; Finn Radhakishan Chunnilal vs Finn Ashamal lshardas, AIR 1926 Lahore 91; Rajendra Prasad vs Pannalal Champalal & Ors.
AIR 1932 Calcutta 343; Mansab dar Khan vs
M.T. Allah Devi & Ors., AIR 1934 Lahore 48S; Sohanlal vs Finn Madhoram Banwarilal, AIR 19S2 Punjab 240; and M/s Alazappa Cotton Mills vs Indo Bunna Trading Corpora tion, ; cited by learned counsel are of little assistance to the appellant.
In M/s Alazappa Cotton Mills case the original contract does not contain arbitra tion clause.
In a separate letter with a rubber stamp (facsimile) of the firm one of the partners agreed for reference to arbitration.
On those facts it was held that the reference does not bind the other partners.
The appeal is accordingly dismissed.
Since we do not call upon the respondents to argue, there will be no order as to costs.
V.P.R. Appeal dismissed. | The appellant a partnership firm consisted of nine partners.
One Satya Narain was one of the partners.
He submitted a tender to the respondents on July 25, 1973 on behalf of the firm offering to supply 1000 quintals of Gram Dal at the rate of Rs.185/ per bag.
Tender was accepted by the respondents.
The appellant committed breach of the contract and as a result, the respondents filed an applica tion under sec.
20 of the before the District Court for making reference for arbitration in terms of the contract.
The application was allowed and the dispute was re ferred for arbitration.
Against the order of the Addl.
District Judge, an appeal was filed before the High Court and the High Court confirmed the order of the Additional District Judge.
This appeal by special leave under article 136 of the Constitution is against the order of the High Court.
The appellant contended that by operation of Sec.19(2)(a) of the Partnership Act, 1932, there was no implied authority given to one of the partners to refer the dispute relating to the business of the firm for arbitration and therefore the reference made by the court, pursuant to a contract entered into by one of its partner, Satya Narain on behalf of the firm, was without jurisdiction and that the original con tract did not contain arbitration clause.
In a separate letter with a rubber stamp (facsimile) of the firm, one of the partners agreed for reference to arbitration and there fore the reference did not bind the other partners.
Dismissing the appeal, this Court, 543 HELD: 1.
The operation of Secs.
18 & 19(1) is subject to the exceptions engrafted in sub sec.
(2) of Sec. 19.
19(2)(a) provides that in the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration.
[545B C] 2.
None of the partners have entered into the witness box to deny the validity of the contract nor raised any objection that they had not authorised the partner (Satya Narain) to enter into the contract nor that they were bound by any acts done by him.
When the partner signed the tender, at that time no other partners raised objection regarding the signing of the tender by the partner on behalf of the firm.
In view of these facts it is clear that they ratified the contract.
[544 E F] 3.
The firm had entered into a binding contract with the corporation and contract contained the arbitration clause which binds the partners.
[544 G] 4.
The contract engrafts an arbitration clause and in terms thereof the dispute is to be referred to the arbitra tion.
Therefore, the reference made by the Addl.
District Judge under Sec.
20 of time is within the jurisdiction and in terms of the contract.
[545 D] Gopal Das vs Brij Nath & Ors., AIR 1926 Allahabad 238; Firm Radhakishan Chunnilal vs Firm Ashamal Ishardas, AIR 1926 Lahore 92; Rajendra Prasad vs Pannalal Champalal & Ors, AIR 1932 Calcutta 343; Mansabdar Khan vs M.T. Allah Devi & Or3 '.
, AIR 1934 Lahore 485; Sohanlal vs Firm Madhoram Ban warilal, AIR 1952 Punjab 240; and M/s. Alazappa Cotton Mills vs Indo Burma Trading Corporation, , referred to. |
Appeal No. 2383 of 1988.
From the Judgment and Order dated 1.4.1988 of the Hima chal Pradesh High Court in Civil Revision No. 29 of 1988.
N.S. Hegde and Ms. Madhu Moolchandani for the Appellant.
469 Ms. Asha Jain Madan for the Respondent.
The Judgment of the Court was delivered by R.M. SAHAI, J.
The short but interesting question of law that arises or consideration in this appeal, directed against judgment of the Himachal Pradesh High Court, is if possession given to competent authority under Himachal Pradesh Requisition and Acquisition of Immovable Property Act, 1972 (for brevity 'Requisition Act ') is vacation of premises without sufficient cause within second proviso to sub section (3) of Section 14 of Himachal Pradesh Urban Rent Control Act, 1987 deemed to have come into force with effect from 17th November 1971 (hereinafter referred to as the Act ').
Sub section (3) of Section 14 is extracted below: "(3) A landlord may apply to the Controller for an order directing the tenant to put the landlord in possession (a) in the case of a residential building, if (i) he requires it for his own occupation: Provided that he is not occupying another residential building owned by him, in the urban area concerned: Provided further that he has not vacated such a building without suffi cient cause within five years of the filing of the application, in the said urban area;" It enables a landlord to obtain an order for eviction of the tenant if he requires the building for his own occupa tion and he has no other building in the area concerned.
This right however stands deferred under second proviso for a period of five years if the landlord has vacated a build ing in his use without sufficient cause.
The question is how the expression he has not vacated such building without sufficient cause ' in the second proviso should be construed.
It has two aspects one whether the proviso applies to volun tary vacation only or it extends to vacating under pressure of legal proceedings such as requisition order by competent Authority.
Second even assuming that the expression 'vacate such building ' is given wide interpretation does giving up possession in consequence of a requisition order amounts to vacation without sufficient cause? Vacate, normally, means to go away, to leave.
The setting or context in which the word has been used does not indicate ,my different meaning.
Nor it is 470 necessary to decide if it applies to voluntary vacation only as it was urged that even assuming that giving up possession in pursuance of requisition order is included in the proviso can it be said to be without sufficient cause Sufficient cause is an expression which is found in various statutes.
It has been construed liberally in keeping with its ordi nary dictionary meaning of adequate or enough.
That is any justifiable reason resulting in vacation has to be under stood as sufficient.
cause.
For instance economic difficulty in financial stringency or family reasons may compel a land lord to let out building in his occupation.
So long it is found to be genuine and bona fide and would amount to vacat ing a building for sufficient cause.
And the bar of second proviso stands lifted.
In other words if the vacation of the building was not a pretence or pretext the proviso could not frustrate the right of landlord to approach the controller for necessary direction to tenant to hand over possession to him.
Vacation of a building by landlord in pursuance of an order of requisition by the competent authority could not be characterised as, 'not without sufficient cause '.
A landlord has no option.
He is required to vacate under constraint of law.
Therefore the statutory restriction created by second proviso would not apply in such a case.
Does it make any difference in law or the action of the landlord is rendered without sufficient cause as he did not file any objection in requisition proceedings either under mistaken advice or ignorance of law? For this it is necessary to narrate facts in brief.
The appellant is owner of Kennilworth house/Simla and its annexure He was in occupation of first floor of Kennilworth house.
Second floor was let out to the District Judge, who, later was elevated to the Bench.
For his occupa tion the entire house was requisitioned.
The appellant did not file any objection.
After vacating, the building he applied for eviction to respondent from the annexe.
His application was rejected as it would found to be in teeth of the second proviso.
It was held that the order of requisi tion was passed because the appellant did not show any cause be filing any objection under sub section (2) of Section 3 of the Requisition Act even though proviso to the sub sec tion precluded any property or part from being requisitioned if it was in bonafide use by the owner.
The explanation of the appellant that he was advised by his lawyer not to file an objection as the building was required for a High Court judge, was not accepted.
Validity or invalidity of an order under Requisition Act could not adversely reflect on sufficiency of cause under Rent Control Act.
Reason for either arises in different circumstances.
Vacating a building, even under an incorrect order passed by a competent authority under Requis 471 tion Act would be for sufficient reason.
The Rent Control authorities could not examine merit of the order under Requisition Act.
Therefore it could not be a valid consider ation for holding that the building was vacated without sufficient cause.
The courts below thus committed an error of law in applying second proviso to reject the application filed on behalf of the appellant.
Even the finding on requirement of the appellant to occupy the building is not well founded.
The inference drawn by the two courts below that the appellant being a rich man would not occupy the annexe or that he would use it occa sionally is not well founded.
It being undisputed that the appellant has no other building in the urban area and it having been found that he vacated the other building for sufficient reason there was no fetter on the right of appel lant to seek eviction of the tenant.
In the result this appeal succeeds and is allowed.
The orders of all the courts below are set aside.
The applica tion of appellant shall stand allowed.
He shall approach the Rent Control authorities for appropriate directions.
Parties shall bear their own costs.
T.N.A Appeal allowed. | "Vacation " "Sufficient Cause" Meaning of.
Section 14(3) of the Himachal Pradesh Urban Rent Control Act 1987 enables a landlord to obtain an order for eviction of the tenant if he requires the building for his own occu pation and he has no other building in the area concerned.
This right however stands deferred under second proviso for a period of five years if the landlord has vacated a build ing in use without sufficient cause.
The appellant, an owner of a house, was in occupation of first floor of the house, while the second floor was let out to a Judge.
His entire house is requisitioned for occupation of a Judge.
The appellant did not file any objection under section 3(2) of the Requisition Act.
However, after vacating the building he applied for eviction of respondent.
The Courts in view rejected his application by applying the second proviso to section 14(3) of the Himachal Rent Control Act.
468 Allowing the Landlord 's appeal and setting aside the order of Courts below, this Court, HELD: 1. 'Sufficient cause ' is an expression which is found in various statutes.
It has been construed liberally in keeping with its ordinary dictionary meaning as adequate or enough.
That is any justifiable reason resulting in vacation has to be understood as sufficient cause.
For instance economic difficulty or financial stringency or family reasons may compel a landlord to let out a building in his occupation.
So long it is found to be genuine and bona fide it would amount to vacating a building for suffi cient cause.
And the bar of second proviso stands lifted In other words if the vacation of the building was not a pre tence or pretext the proviso could not frustrate the right of landlord to approach the controller for necessary direc tion to tenant to hand over possession to him.
[470 B C] 1.1 Vacation of a building by landlord in pursuance of an order of requisition by the competent authority could not be characterised as 'not without sufficient cause '.
A land lord has no option.
He is required to vacate under con straint of law.
Therefore the statutory restriction created by second proviso would not apply in such a case.
[470 D] 2.
Validity or invalidity of an order under Requisition Act could not adversely reflect on sufficiency of cause under Rent Control Act.
Reason for either arises in differ ent circumstances.
Vacating a building, even under an incor rect order passed by a competent authority under Requisition Act would be for sufficient reason.
The Rent Control author ities could not examine merit of the order under Requisition Act Therefore it could not be a valid consideration for holding that the building was vacated without sufficient cause.
The courts below thus committed an error of law in applying second proviso to reject the application filed on behalf of the appellant.
[470 H, 471 A B] |
peaINo. 4235 of 1991.
From the Judgment and Order dated 5.6.1987 of the Cal cutta High Court in original order No. 129 of 1985 and/915 of 1983.
A.K. Ganguly, A.K. Chakraborty, A.D. Sikri and Ms. Mridula Ray for the Appellants.
D.N. Mukherjee and Rathin Das for the Respondents.
The Judgment of the Court was delivered by PUNCHHI, J.
We are required in this matter to interplay some of the provisions of the Urban Land (Ceiling and Regu lation) Act, 1976 to determine whether the appellant herein had any excess vacant land.
Probhavati Poddar (Proforma respondent herein) was the owner of two properties in the city of Calcutta being (i) premises No. P 290, C.I.T. Road, comprising 414.56 sq.
of land of which 321 sq.
was covered by a build ing, constructed thereon long before the coming into force of the Urban Land (Ceiling and Regulation) Act, 1976 (hereafter referred to as 'the Act '), with a dwelling unit therein, and (ii) property No. P 210, C.I.T. Scheme VII(M), Calcutta comprising 339.65 sq.
of vacant land.
Hereaf ter these would be referred to as the 'built up property ' and 'vacant property ' respectively.
The exact date/period of the construction of the built up property is not available on the present record but the litigation has proceeded on the footing that it was constructed long before February 17, 1976, the day when the Act came into force in the State of West Bengal.
The State 1egislatures of 11 States, including the State of West Bengal, considered it desirable to have a uniform legislation enacted by Parlia 506 ment for the imposition of ceiling on urban property for the country as a whole, and in compliance with clause (1) of Article 252 of the Constitution, passed a Resolution to that effect.
Accordingly, the Urban Land (Ceiling and Regulation) Bill, 1976 was introduced in the Lock Sabha on January 28, 1976 covering all the Union Territories and the 11 resolving States.
After the passing of the Bill by the Parliament, the Act came into force on February 17, 1976 at once.
Later from time to time, the Act was adopted by some other States after passing Resolutions under Article 252(1) of the Constitu tion.
The Act now apparently is in force in 17 States and all the Union Territories in the country.
The primary object and purpose of the Act was to provide for the imposition of the ceiling on vacant land in urban ag glomerations, for the 'acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to sub serve the common good, and in furtherance of the directive princi ples of Articles 39(B) & (C) of the Constitution.
These features were .spelled out by this Court in Union of India etc.
V.B. Chaudhary etc.
[1979]3 SCR 802.
That it is valid piece of legislation, save and except Section 27(1), and had received the protective umbrella of Article 31 C as it stood prior to its amendment by 42nd Amendment Act was held by this Court in Maharao Sahib Shri Bhim Singhji etc.
vs Union of India & Others.
[1981]1 SCC 166. "Appointed day" has been defined in Section 2 A of the Act.
It means (i) in relation to any State to which the Act applies in the first instance, the date of introduction of the Urban Land (Ceiling and Regulation) Bill, 1976 in Par liament, and (ii) in relation to any State which adopts the Act under Clause (1) of Article 252 of the Constitution, the date of such adoption.
In relation to the State of West Bengal, in which the town of Calcutta is situated, the "appointed day" is January 28, 1976.
It is thus evident that between the appointed day and the date of enforcement of the Act, there is a 20 day 's gap.
The Act ordains a ceiling limit of 500 sq. mtrs.
for the urban agglomeration of Calcutta, as per item 15 of Category A in .Schedule
I of the Act.
Both the properties of Smt.
Poddar,.
the proforma respondent herein, thus became liable to be screened by the Authorities under the Act.
Before hand on July 8, 1978, Smt.
Poddar entered into an agreement with Smt.
Meera Gupta, the appellant herein, to sell the vacant property on 507 terms entered.
On November 23, 1978, the proposed vendor and the proposed vendee gave notice under Section 26 of the Act to the Competent Authority, appointed for the purpose of the proposed sale.
On August 7, 1980, the competent authority in exercise of powers under Section 6(2) of the said Act, issued a notice under Section 6(1) thereof to Smt.
Poddar directing her to file a statement in Form No. 1 on the basis that she held vacant land in the Calcutta Urban Area in excess of the ceiling limit of 500 sq. mtrs.
Having got no response, a reminder was sent to her, but in vain.
The Competent Authority thereafter initiated suomo to proceed ings against Smt.
Poddar and sent her a draft statement on September 18, 1979, exercising powers under Section 8(1) of the Act intimating that she could submit her objection, if any, to the draft statement.
It was specified in the said statement that she was tentatively required to surrender 254.21 sq.
of land (figure arrived by totalling .414.56 sq. mtrs.
of the built up property and 339.65 sq. mtrs.
of the vacant property to 754.21 sq. mtrs, are substracting therefrom 500 sq.
resulting in 254.21 sq. mtrs.).
The objections of Smt.
Poddar filed to the draft statement were rejected by the Competent Authority, who published the final statement under section 9 of the Act vesting the said 254.21 sq.
of excess land in the State, and the same was communicated to Smt.
Poddar on June 22, 1981.
She preferred an appeal under Section 33 of the Act before the Special Secretary, Land and Land Reforms Department, Government of West Bengal, the Appellate Author ity under the Act, but the same was dismissed in default on January 18, 1983.
Before hand the appellant herein filed suit No. 121 of 1981 against Smt.
Poddar in the Calcutta High Court claiming specific performance of the agreement dated July 8, 1978.
On August 21, 1981, a decree for specific performance was passed in favour of the appellant in the usual terms.
Pursu ant to the said decree, the deed of conveyance in respect of the vacant property was executed in favour of the appellant on November 19, 1981 for a consideration of Rs.1,26,000/ paid over to Smt.
Poddar.
Possession of the vacant property was delivered to the appellant and necessary entries were made in the municipal and revenue registers.
The appellant then got scent of the dismissal of the appeal of Smt.
Poddar in default on July 2, 1983.
The appel lant then filed a Review Petition before the Appellate Authority stating, inter alia, that she had become the owner of the vacant property and prayed for retrieval of the same from being treated as excess land in the hands of Smt.
Podar.
The Review Petition was rejected on August 10, 1983, which occasioned a petition under Article 226 of the Consti tution being filed by the appellant in the Calcutta 508 High Court on a variety of grounds.
The Writ Petition was opposed on each and every ground.
The learned Single Judge, before whom the writ petition was placed, taking aid from some observations in two decisions of this Court in Maharao Sahib Shri Bhim Singhji 's case (supra), and State of U.P. & Others vs L J. Johnson & Others, allowed the writ petition on November 27, 1984.
On appeal by the State of West Bengal and its responding officers, a Division Bench of the High Court reversed the judgment and order of the Single Judge on June 5, 1987 in Appeal No. 129 of 1985, leading to this appeal by special leave at the instance of the appellant.
The matter having come before a two Judge Bench of this Court, of which one of us was a member, on 28.7.1988, it was felt that lohnson 's case (supra) may have to be tested, and thus the matter was ordered to be heard by a larger Bench at least of three Judges.
This is how the matter stands placed before us.
As said at the outset, we have to interplay some of the provisions occurring in Chapter 3 titled as "Ceiling on Vacant Lands" in the Act.
We shall presently set out those provisions which have a bearing in the case.
But before we do that we do not wish to leave the impression that we have not viewed the statute as a whole.
The endeavour on our behalf to construe the provisions has not left any part thereof altogether.
So we proceed thenceforth to the interpretative process.
Section 3 of the Act provides that except as otherwise provided in this Act, on and from the commencement of this Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of Section 1.
Ceiling limit of vacant land in case of every person like the prece dessor in interest of the appellant is 500 sq.
as set up under Section 4.
Clauses (g) and (q) defining "vacant land" and "land appurtenant" and sub sections (9) and (11) of Section 4 which have precedence in engaging our attention are set out below, but without the Explanation to sub sec tion (11), for it is not relevant for our purpose: "2(g) "Land appurtenant", in rela tion to any building means (i) in an area where there are building regulations, the minimum extent of land required under such regulations to be kept as open space for the enjoyment of such building, which is no case shall exceed five hundred square meters; or (ii) in an area where there are no building regulations, an extent of five hundred square metres contiguous to the land oc 509 cupied by such building, and includes, in the case of any building constructed before the appointed day and with a dwelling unit therein, an additional extent not exceeding five hundred square metres of land, if any, contiguous to the minimum extent referred to in subclause (i) or the extent referred to in sub clause (ii), as the case may be; 2(q) "Vacant Land", means land, not being land mainly used for the purpose of agricul ture, in an urban agglomeration, but does not include (i) land on which construction of a building is not permissible under the building regula tions in force in the area in which such land is situated; (ii) in an area where there are building regulations, the land occupied by any building which has been constructed before, or is being constructed on, the appointed day with the approval of the appropriate authority and the land appurtenant to such building; and (iii) in an area where there are no building regulations, the land occupied by any building which has been constructed before, or is being constructed on, the appointed day and the land appurtenant to such building.
4(9) where a person holds vacant land and also holds any other land on which there is a building with a dwelling unit therein, the extent of such other land occupied by the building and the land appurtenant thereto shall also be taken into account in calculat ing the extent of vacant land held by such person.
4(11) For the removal of doubts it is hereby declared that nothing in sub sections (5), (6), (7), (9) and (10) shall be construed as empowering the competent authority to declare any land referred to in sub clause (ii) or sub clause (iii) of clause (q) of section 2 as excess vacant land under this Chapter.
" To begin with "vacant land" as per the definition given in clause (q) of Section 2 means land as such, not being land mainly used for the put 510 pose of agriculture, but situated in an urban agglomeration. "Vacant Land", however, does not include, as per the defini tion, land of three categories.
The first category is land on which construction of a building is not permissible under the building regulations in force in the area in which such land is situated.
But this is a category with which we are not concerned in the instant case.
Johnson 's case (supra) is of this category.
The second category is of land occupied by any building in an area, where there are building regula tions, which has been constructed upon, or is under con struction on the appointed day, with the approval of the appropriate authority, and the land appurtenant to such building.
This means that if the building stood constructed on the land prior to January 28, 1976, the land occupied under the building is not vacant land.
It also covers the land on which any building was in the process of construc tion on January 28, 1976 with the approval of the appropri ate authority.
That too is not "vacant land".
Additionally, the land appurtenant to these two kinds of buildings is also not "vacant land".
The third category likewise conditioned is of land occupied by any building in an area where there are no building regulations, which has been constructed before January 28, 1976 or is in the process of construction on such date, and the land appurtenant to these two kinds of buildings.
The aforesaid three categories of lands would otherwise be "vacant land" but for the definitional exclusion.
The specific non inclusion of these three categories of land is by itself an integral part of the definitional and function al sphere.
The question that arises what happens to lands over which buildings are commenced after the appointed day and the building progresses to complete thereafter.
On the appointed day, these lands were vacant lands, but not so thereafter because of the surface change.
Here the skill of the draftsman and the wisdom of the legislature comes to the fore in cognizing and filling up the gap period and covering it up in the scheme of sub section (9) of Section 4.
The visible contrast between "vacant land" and "any other land" held by a person on which there is a building with a dwell ing unit therein becomes prominent.
The said "any other land" is reckoned and brought at par with the "vacant land" for the purpose of calculating the final extent of vacant land.
It seems to us that the expression "vacant land" in the first portion of the provision connotes land minus land under buildings constructed or in the process of construc tion before and on the appointed day, and the expression "vacant land" in the latter portion of the provision con notes the sum total of "vacant land" of the first order and distinctly the "other land" on which is a building with a dwelling unit therein of which construction commenced after the appointed day, and the land appurtenant thereto.
Such an interpretation is required by the conext 511 as otherwise the concept of the appointed day and the gap period would be rendered otiose.
The legislature cannot be accused to have indulged in trickery or futility in giving something with one hand and taking it away with the other.
"Any other land"in the sequence would thus mean any other built upon land except the one excluded from the expression "vacant land" on account of it being occupied by a building which stood constructed, or was in the process of construc tion, on the appointed day.
Such interpretation of ours finds support from Section 5 of the Act which pursues and does not leave alone transfer of vacant land in the gap period.
It provides as follows: "5.
TRANSFER OF VACANT LAND (1) In any State to which this Act applies in the first in stance, where any person who had held vacant land in excess of the ceiling limit at any time during the period commencing on the appointed day and ending with the commencement of this Act, has transferred such land or part thereof by way of sale, mortgage, gift, lease or otherwise, the extent of the land so trans ferred shall also be taken into account in calculating the extent of vacant land held by such person and the excess vacant land in relation to such person shall, for the pur poses of this Chapter, be selected out of the vacant land held by him after such transfer and in case the entire excess vacant land cannot be so selected, the balance, or, where no vacant land is held by him after the trans fer, the entire excess vacant land, shall be selected out of the vacant land held by the transferee: Provided that where such person has trans ferred his vacant land to more than one per son, the balance, or, as the case may be, the entire excess vacant land aforesaid, shall be selected out of the vacant land held by each of the transferees in the same proportion as the area of the vacant land transferred to him bears to the total area of the land trans ferred to all the transferees.
(2) Where any excess vacant land is selected out of the vacant land transferred under sub section (1), the transfer of the excess vacant land so selected shah be deemed to be null and void.
(3) In any State to which this Act applies in the first instance and in any State which adopts this Act under clause (1) of Article 252 of the Constitution, no person holding vacant land 512 in excess of the ceiling limit immediately before the commencement of this Act shall transfer any such land or part thereof by way of sale, mortgage, gift, lease or otherwise until he has furnished a statement under Section 6 and a notification regarding the excess vacant land held by him has been pub lished under sub section (1.) of Section 10; and any such transfer made in contravention of this provision shall be deemed to be null and void." [Underlining ours].
The underlining is reflective of the scheme of the Act in as much as transfers of vacant land within the gap period are ignorable, and likewise, in our view, vacant land brought under construction of building by a person within the gap period is also ignorable for the purposes of calcu lating the extent of vacant land, so that the provisions of law are not defeated by human ingenuity.
At this juncture, sub section (11) of Section 4 may be noticed.
It provides removal of doubts declaring.
inter alia, that nothing in sub section (9) shall be construed as empowering the competent authority to declare any land referred to in sub clause (ii) or sub clause (iii) of clause (q) of Section 2 as excess vacant land under this Chapter.
Though this provision is not happily worded, yet when mean ingfully construed in the context, it means that a building which gets excluded by virtue of the definition of "vacant land" gets clothed with the protective cloak for not being reckoned again as any other land, over which there is a building with a dwelling unit therein.
Sub section (11) of Section 4 means to convey that what is not vacant land under sub clauses (ii) and (iii) of clause (q) of Section 2 cannot go to add up as "vacant land" under sub section (9) of Section 4 by descriptive overlapping.
If we wipe out the distinction of "vacant land" and "any other land" as demon strated in sub section (9) of section 4, we strangulate and destroy the spirit and life blood of the "appointed day" and the gap period.
We would loathe giving such a construction and would rather opt for a construction which carries out the objectives of the Act, primary of which is to fix a ceiling limit on the holding of vacant lands, conditioned as they are on the appointed day, and as held on the date of the commencement of the Act.
It would be worthwhile at this stage to take note of the expression "land appurtenant" as defined in Section 2(g).
When related to any building in an area where there are building regulations, as well as in an area where there are no building regulations, the additional extent as permitted is based on the principle of contiguity.
The expression applies to buildings constructed before the "appointed day" as well as to buildings, construction of which commenced before the "appointed day", and was in progress on that day.
It, no doubt, applies to buildings, constructed thereafter too.
513 When we import this understanding to sub section (9) of Section 4, two different results discernably follow, based on the commencement of the construction.
If the construction of a building with a dwelling unit therein had begun after the appointed day, then it is all the same "any other land" to be reckoned for calculating the extent of vacant land held by a person.
And if the construction of a building with a dwelling unit therein on land had been completed or was in progress by and on the appointee day, then is not "any ' other land" to be reckoned for calculating the extent of vacant land held by a person.
This is the interpretation which commends to us of sub section (9) of Section 4 as also of sub section (11) of Section 4 and the definitive expres sions used therein as explained and highlighted earlier.
Applying that interpretation on the facts found by the High Court we hold that the built up property, which in any event had been built up prior to the commencement of the Act, and it is nobody 's case that construction thereof had begun after the "appointed day", is outside the purview of "vacant land".
If that is excluded from being reckoned towards calculating the extent of vacant land held by the predeces sor in interest of the appellant, the vacant land in the vacant property cannot be declared excess for that is within the permissible limits.
Even if no land is left as land appurtenant to the built up area, then 93.56 sq. mtrs, the remainder plus 339.65 sq. mtrs, of the unbuilt property would total up to the figure less than 500 sq.
; again within the permissible limit.
Therefore, interpretation to the contrary of the dealt with provisions by the Division Bench of the High Court, bereft as it is of the concept of the appointed day and the gap period, would have to give way, meriting the acceptance of this appeal and setting aside of the judgment of the Division Bench of the High Court by issuing the necessary writ, direction and order so as to quash the entire proceedings towards declaring excess land in the hands of the appellant and her predecessor in title.
We order accordingly.
The interpretation we have put to the provisions pertinently relate to sub clause (ii) and (iii) of clause (q) of Section 2.
This interpretation in express terms cannot apply to sub clause (i) of clause (q) of Section 2.
Johnson 's case (supra) as said before, is a case under sub clause (i) of clause (q) of Section 2.
In the instant case, there appears to be no occasion to test its correctness or even to dilate upon the judgments of the High Courts reported in AIR 1981 Madhya Pradesh 17, AIR 1984 Bombay 122 and AIR 1987 Allahabad 272, cited at the bar.
As a result, this appeal is allowed.
The appellant shall have her costs throughout.
T.N.A. Appeal allowed. | The appellant 's predecessor in interest, respondent herein, was the owner of two properties consisting of a 'built up property ' and a 'vacant property ' in the city of Calcutta.
The built up property comprised of 414.56 sq. mtrs.
of land of which 321 sq.
was covered by a build ing with a dwelling unit therein and the said property was constructed long before the Urban Land (Ceiling and Regula tion) Act, 1976 came into force.
The second property com prised of 339.65 sq.
of vacant land.
The Act came into force on February 17, 1976 but under Section 2A of the Act the appointed day in relation to State of West Bengal was 28th January, 1976.
Thus between the appointed day and the date of enforcement of the Act there was a 20 days ' gap.
On 8th July, 1978 the respondent entered into an agree ment with the appellant to sell the vacant property.
Since both the properties were covered by the Urban agglomeration as specified in category 'A ' in Scheduled 1 to the 1976 Act, under which the ceiling limit prescribed was 500 sq.
, the appellant and the respondent gave a notice of the pro posed sale under Section 26 of the Act to the competent authority.
The competent authority held that the respondent was holding 25421 sq.
of land in excess of the ceiling limit.
The excess land was determined by totalling 414.56 sq.
of the built up property and 339.65 sq. mtrs.
of vacant property to 754.21 sq.
, and substracting 502 therefrom 500 sq.mtrs.
resulting in 254.21 sq. mtrs.
in excess of the ceiling limit.
Accordingly the competent authority issued order vesting the excess land in the State.
Against the decision of the competent authority the respond ent preferred an appeal before the Appellate Authority which was dismissed in default.
In the meantime the appellant filed a suit against the respondent for specific performance of the agreement dated 8th July, 1978 which was decreed and consequently a deed of conveyance was executed in favour of the appellant and the possession of the property was also given to her.
Subsequently the appellant came to know of the dis missal of the respondent 's appeal.
Thereupon she filed a Review Petition before the Appellate Authority stating that she had become the owner of the vacant property and prayed for retrieval of the same from being treated as excess land in the hands of respondent which was dismissed.
The appel lant filed a writ petition in the High Court and a Single Judge allowed the same.
On appeal by State a Division Bench of the High Court reversed the judgment of the Single Judge.
Against the decision of the Division Bench, appeal was filed in this Court.
Setting aside the judgment of the Division Bench of the High Court and allowing the appeal, this Court, HELD: 1.
The primary objective of the Urban Land Ceiling and Regulation Act, 1976 is to fix a ceiling limit on the holding of vacant lands, conditioned as they are on the appointed day, and as held on the date of commencement of the Act.
[512 F] 2.
Under Section 3 of the Urban Land (Ceiling and Regulation) Act, 1973 no person is entitled to bold any vacant land in excess of the ceiling limit.
Ceiling limit of vacant land in case of every person like the predecessor in interest of the appellant is 500 sq.
as set up under Section 4.
[508 E F] 2.1 However, as per Section 2(g), 'Vacant land ' does not include land of three categories.
The first category is land on which construction of a building is not permissible under building regulation in force in the area in which such land is situated.
The second category is of land occu pied by any building in an area, where there are building regulations, which has 503 been constructed upon, or is under construction on the appointed day, with the approval of the appropriate authori ty, and the land appurtenant tO such building.
Thus if the building stood constructed on the land prior to January 28, 1976, the land occupied under the building is not vacant land.
It also covers the land on which any building was in the process of construction on January 28, 1976 with the approval of the appropriate authority.
Additionally, the land appurtenant to these two kinds of buildings is also not "vacant land".
The third category likewise conditioned is of land occupied by any building in an area where there are no building regulations, which has been constructed before January 28, 1976 or is in the process of construction on such date, and the land appurtenant to these two kinds of buildings.
[510A D] 2.2 The expression "land appurtenant" as defined in Section 2(g) when related to any building in an area where there are building regulations as well as in an area where there are no building regulations reveals that the addition al extent as permitted is based on the principle of conti guity.
The expression applies to buildings constructed before the "appointed day" as well as to buildings, con struction of which commenced before the "appointed day", and was in progress on that day.
Therefore, if the construction of a building with a dwelling unit therein had begun after the appointed day, then it is all the same "any other land" to be reckoned for calculating the extent of vacant land held by a person.
And if the construction of a building with a dwelling unit therein on land had been completed or was in progress by and on the appointed day, then it is not "any other land" to be reckoned for calculating the extent of vacant land held by a person.
[512G H, 513A B] The built up property in question had been constructed prior to the commencement of the Act.
Therefore, it is outside the purview of "vacant land".
If that is excluded from being reckoned towards calculating the extent of vacant land held by the predecessor in interest of the appellant, the vacant land in the vacant property cannot be declared excess for that is within the permissible limits.
Even if no land is left as land appurtenant to the built up area, then 93.56 sq. mtrs.
the remainder plus 339.65 sq.
of the unbuilt property would total up to the figure less than 500 sq.
; which is again within the permissible limit.
Accordingly the entire proceedings towards declaring excess land in the hands of the appellant and her predecessor in title are quashed.
[513C E] 504 State of U.P. & Or3.
L.J. Johnson & Ors. , held inapplicable.
Union of India etc.
V.B. Chaudhary etc.
; ; Maharao Sahib Shri Bhim Singhji etc.
vs Union of India & Ors., , referred to.
Eastern Oxygen vs State AIR 1981 M.P. 17; Prabhakar Narhar Pawar vs State, AIR 1984 Bom.
122; State vs Radha Raman Aggarwal, AIR 1987 All. 272, cited.
In the scheme of sub section (9) of Section 4 of the Act the visible contrast between "vacant land" and "any other land" held by a person on which there is a building with a dwelling unit therein is prominent.
The said "any other land" is reckoned and brought at par with the "vacant land" for the purpose of calculating the final extent of vacant land.
The expression "vacant land" in the first portion of the provision connotes land minus land under buildings constructed or in the process of construction before and on the appointed day, and the expression "vacant land" in the latter portion of the provision connotes the sum total of "vacant land" of the first order and distinctly the "other land" on which is a building with a dwelling unit therein of which construction commenced after the appointed day, and the land appurtenant thereto.
Such an interpreta tion is required by the context as otherwise the concept of the appointed day and the gap period would be rendered otiose.
The legislature cannot be accused to have indulged in trickery in giving something with one hand and taking it away with the other.
"Any other land" in the sequence would thus mean any other built upon land except the one excluded from the expression "vacant land" on account of it being occupied by a building which stood constructed.
or was in the process of construction, on the appointed day.
[510F H, 511A B] 4.
Section 5 is reflective of the scheme of the Act in as much as transfers of vacant land within the gap period are ignorable, and likewise, vacant land brought under construction of building by a person within the j gap period is also ignorable for the purposes of calculat ing the extent of vacant land, so that the provision of law are not defeated by human ingenuity.
[512 BC] 5.
Though Sub section (11) of Section 4 is not happily worded, yet when meaningfully construed in the context, it means that a building which 505 gets excluded by virtue of the definition of "vacant land" gets clothed with the protective cloak for not being reck oned again as any other land, over which there is a building with a dwelling unit therein.
This provision means to convey that what is not vacant land under sub clauses (ii) and (iii) of clause (q) of Section 2 cannot go to add up as "vacant land" under sub section (9) of Section 4 by descrip tive overlapping.
To wipe out the distinction of "vacant land" and "any other land" as demonstrated in sub section (9) of section 4 is to strangulate and destroy the spirit and life blood of the "appointed day" and the gap period.
[512 D F] |
iminal Appeal No.404 of 1979.
From the Judgment and order dated 19.4.79 of the Punjab High Court in Criminal Appeal No.843 of 1976.
A.N. Mulla, N.D. Garg and T.L. Garg for the Appellants.
Ms. Amita Kohli and R.S. Suri for the Respondents.
The Judgment of the Court was delivered by PUNCHHI, J.
This appeal by special leave is directed against the judgment and order of the Punjab and Haryana High Court at Chandigarh dated April 19, 1979 passed in Criminal Appeal No. 843 of 1976.
The appellants herein are five in number.
They along with four others were sent up for trial before the Court of Session, Faridkot on various charges as detailed in the judgment under appeal.
Those four co accused of the appel lants were acquitted by the learned Sessions Judge, and the matter seems to have rested there because apparently the State of Punjab did not rake up the issue against those four accused.
On the basis thereof, the principle plea of the appellants through their counsel herein is that when four accused have been acquitted, the prosecution story itself has lost credence, entitling the appellants to acquittal.
It is this plea which has engaged our attention.
579 The parties belong to village Talwandi Bhagerian, Distt.
Faridkot, Punjab.
Thereat was a vacant plot belonging to Karnek Singh, Jagatjit Singh and Wasakha Singh sons of Partap Singh, who were living abroadAdjoining thereto was the outer house of Balwant Singh P.W.15.
According to the prosecution, Balwant Smgh P.W.15 had put up a boundary wall around it as also a structure thereon storing wheat chaff therein, besides putting cotton sticks and dung manure in the unbuilt space.
Mohinder Singh son of the said Balwant Singh P.W.15 moved the Civil Court through a suit on Decem ber 10, 1975 seeking a decree for permanent injunction restraining his co villager Jiwan Singh, his sons Naib Singh appellaht herein and Mohinder Singh an acquitted co accused, as also the minor sons of the aforesaid two accused from interfering in his possession over the suit land.
The Court on December 10, 1975 granted interim injunction restraining the impleaded defendants from interfering with the posses sion of the plaintiff over the disputed plot.
Later on the request of the defendants, the Civil Court on 29 1 1976 identified the suit property being in Khasra No.345, 346 and 356 and out of the same vide Order exhibit
D 16, vacated the temporary injunction in respect of Khasra No. 345 and 346 confirming the same in respect of Khasra No.356.
Besides there had been security proceedings between Mohinder Singh aforesaid and his brother Ginder Singh (one of the victims) on the one hand and Nirmal Singh and Darshan Singh acquitted co accused and some others, on the other.
However, both parties were ultimately discharged by the Court.
The occurrence took place in that integral on 16 12 1975 when the temporary injunction was in force.
The complainant party except for P.Ws. 18 and 19 are members of one family.
This relationship is disclosed in the judgment of the learned Sessions Judge as also by the High Court.
We would not burden this judgment with details thereof.
The fact remains that on the night intervening 15th and 16th Decem ber, 1975, Jugraj Singh P.W.14, Balwant Singh P.W.15, Ginder Singh, since deceased and Assa Singh had slept in a room in their outer house, and where they were keeping their cattle also.
At about 8.00 a.m. on December 16, 1975, all the inmates of the outer house, and others having joined them having come from their residential house, at that ' time were busy doing their assigned chores.
At that juncture, the five appellants namely, Hoshiar Singh, armed with SBBL gun, Jalaur Singh, armed with a 12 bore DBBL gun, Ex.M.O/5, Sardara Singh, armed with a gandasa, Ex.M.O./2, Ram Singh alias Ram Charan Singh, armed with SBBL gun, exhibit
M.O./6 and Naib Singh son of Jiwan Singh, armed with a DBBL gun, exhibit
M.O./7 entered the house accompanied by five other men.
They were the four acquitted co accused namely, Thamman Singh, unarmed, Darshan Singh, armed with a gandasa, 580 Mohinder Singh, son of Jiwan Singh (brother of Naib Singh, appellant) armed with a spear, Nirmal Singh, armed with a rifle and Major Singh, the fifth man, armed with a DBBL gun, who was lately injured during the occurrence.
Thamman Singh acquitted co accused raised an exhortation challenging Ginder Singh that he would not be spared.
Tham man Singh, then caught hold of the long hair of Ginder Singh and thereupon Nirmal Singh acquitted co accused fired a shot with his rifle hitting Ginder Singh on his left flank.
On Ginder Singh falling down by the side of the manger, Sardara Singh appellant gave two successive gandasa blows on the head of Ginder Singh deceased while he was in the process of failing down.
This was the first casualty.
It was followed by Naib Singh appellant firing at Balwant Singh P.W.15 hitting him in the abdomen reflective of at tempt to murder.
Dhanna Singh alias Shinghara Singh a member of the complainant 's family also happened to reach the scene of the occurrence having come from the residential house and while in the door way was fired at by Jalaur Singh appellant with his gun followed by a gun shot by Ram Singh alias Ram Charan Singh appellant hitting Dhanna Singh.
This was the second casualty.
Sukhminder Singh, P.W.16 also reached there and was fired at by Hoshiar Singh appellant hitting him on the left arm and blank, where upon he fell down.
This was the second case reflecting attempt to murder.
The female folk Bhagwan Kaur P.W.17 and Raj Kaur present at the place of occurrence while raising alarm laid themselves over Ginder Singh and Sukhvinder Singh respectively.
Darshan Singh acquitted co accused gave blows from the reverse side of his gandasa to Bhagwan Kaur P.W.17, and Mohinder Singh co accused to Raj Kaur with the blunt side of his spear.
Apart from the members of the family involved Sukhdev Singh P.W.18, Pritam Singh P.W,19, neighbours, had occasion to see the occurrence while standing in their respective houses.
On the side of the accused party, so claimed the prosecution, a Barchha(spear) blow of Mohinder Singh meant to hit Raj Kaur accidently hit the abdomen of Naib Singh appellant.
Like wise, a shot fired by Jalaur Singh appellant accidently caused injury to Major Singh the co culprit, but that injury later proved fatal.
The accused persons took away not only their weapons but a licensed rifle of Ginder Singh and revolver of Mohinder Singh son of Balwant Singh P.W.15 from inside the room (baithak) while going away.
This is the whole prosecution case with regard to the motive and the actual occurrence.
To complete the picture the deceased persons were taken to the Civil Hospital, Moga wherefrom Dr.
A.C. Gupta P.W.I sent intimation to Police Station, Moga Sadar.
Avtar Singh, ASI.
P.W.20 reached the spot and recorded the statement of Jugraj Singh P.W.14 at 11.00 a.m., within three 581 hours of the occurrence, formal F.I.R. of which was recorded at the Police Station at 11.15 a.m.
In that statement vivid details of the occurrence are given.
The injured persons were examined and given medical aid.
The bodies of the deceased persons were subjected to post mortem.
The accused were arrested and weapons were recovered, either from them, or at their instance, on statements made under Section 27 of the Evidence Act.
The accused at the trial pleaded denial to the occurrence but Naib Singh appellant gave written state ment, exhibit
D 6 as his counter version.
The trial resulted in the acquittal of four persons but so far as the appellants were concerned, all of them were held guilty and convicted under Sections 148, 449 IPC awarding them various terms of sentences.
Substantively, Sardara Singh appellant was con victed under Section 302 IPC for having caused the death of Ginder Singh by giving him two fatal gandasa blows.
The remaining appellants were convicted constructively under Sections 302/149 IPC.
All of them were given life sentence.
Jalaur Singh and Ram Singh appellants were substantively convicted under Section 302/149 IPC for causing the death of Dhanna Singh and the remaining appellants under Sections 302/149 IPC, and all were awarded life sentence.
Naib Singh appellant was substantively convicted under Section 307 IPC for murderously attacking Balwant Singh P.W.15, as also Hoshiar Singh appellant under Section 307 IPC for murderous ly attacking Sukhminder Singh P.W.16.
The remaining four appellants in each case were convicted constructively under both counts under Sections 307/149 IPC and awarded various terms of imprisonment.
All the sentences imposed were or dered to run concurrently.
Appropriate orders of disposal with respect to the weapons recovered were passed by the learned Sessions Judge.
As indicated above, the main plea of the appellants is that four accused having been acquitted, despite the eye witnesses deposing to their participation, no credence should be given to the prosecution witnesses in order to maintain the convictions.
The maxim falsus in uno falsus in omnibus has been pressed into service.
It appears that the argument as such was not raised before the High Court.
Rather it appears that the High Court 's attention was not invited to the reasoning of the learned Sessions Judge in acquitting the four co accused.
It would be apt therefore to scrutinize that reasoning and see whether the prosecution case has lost credibility on such reasoning.
Thamman Singh acquitted accused was empty handed.
The role attributed to him is that he gave an exhortation chal lenging Ginder Singh deceased to be ready and that he would not be spared.
He then caught hold of the long hair of Ginder Singh.
Thereafter Ginder Singh was as 582 saulted.
At the end of the occurrence, he is blamed of having taken away the licensed rifle of Ginder Singh.
The learned Sessions Judge tended to go in generalities in terming that the evidence of exhortation, in the very nature of things, is a weak piece of evidence and there was quite often a tendency to implicate some person besides the actual assailant.
For this he took the cue from a reported decision of this Court in Jainul Haque vs State of Bihar, AIR 1974 SC 45 as well as a decision of the Punjab and Haryana High Court to that effect in support.
Then without coming to the specifics the learned Sessions Judge abruptly came to the conclusion that when Thamman Singh acquitted co accused had come to the spot empty handed, the exhortation appears to have been introduced in the prosecution case and that the witnesses apparently were out to rope him in.
The two roles attributed to him, namely, of catching the long hair of Ginder Singh and to have carried away the rifle of Ginder Singh went in the same sweep to hold that this was part of the over doing.
The fact that the rifle was being carried by Thamman Singh at the time of his arrest was considered by the learned Sessions Judge to be abnormal as otherwise in the normal course of events, it was expected to have been kept concealed somewhere.
His finding thus in his own words is "the fact remains that I have not been satisfied about the criminality of Thamman Singh." The only comment worth making is that exhortation is necessarily not a padding or over doing and has to be viewed in the correct perspective, in the facts and circumstances of each case.
In the instant case, besides the exhortation, there were other factors available enumerated herein, which could lead the learned Sessions Judge to take the view that he has, and that was a possible view which any cautious Judge could have taken.
But that per se does not mean that the witnesses which had deposed to the participation of the accused at the time of occurrence have to be dubbed as liars.
With regard to Darshan Singh acquitted accused, the role assigned to him is that he gave gandasa blows to Bhagwan Kaur P.W.17 from the reverse side and that he took away the licensed revolver of Mohinder Singh from the room (baithak) of the outer house.
The learned Sessions Judge opined that though the eye witnesses account was that Bhagwan Kaur had received injuries from the reverse side of the gandasa from Darshan Singh, still in the First Information Report given by Jugraj Singh P.W.14, the use of the weapon was mentioned but not of the manner in which it was used.
The learned Sessions Judge took the view that it was normally expected of Darshan Singh to have given at least one gandasa blow to someone from the sharp side as well.
Besides his taking away the revolver from Mohinder Singh after the occurrence did not inspire confidence, like the case of Thamman Singh.
Besides if these two weapons namely the rifle and the 583 revolver were available with the complainant party when the occurrence started it was expected of them to have used those, which had not appeared to have been used.
In that light the act of removing the revolver was viewed with suspicion, more so, when its recovery was made as a result of the disclosure statement after a span of eight days from the date of arrest of Darshan Singh.
The learned Sessions Judge then concluded with these words, "The case against Darshan Singh, accused does not again stand beyond reasona ble doubt".
Now such a view of the learned Sessions Judge was a possible view taken on a cautious approach, without telling on the veracity of the prosecution witnesses.
So far as Mohinder Singh acquitted accused is concerned, he is said to have used a spear blunt wise on Raj Kaur.
Raj Kaur was not found to have any stab or punctured wound.
Further the spear was recovered after seven days of the arrest of Mohinder Singh and that recovery was viewed with suspicion due to the time lag.
The version in F.I.R. was pressed into service about the omission of the specific manner in which the weapon had been used.
The learned Ses sions Judge then held, "I would accordingly give the benefit of doubt to Mohinder Singh accused and acquit him." This finding could be given by the learned Sessions Judge without causing the least dent to the prosecution case.
Shifting the grain from the chaff does not mean loss of grain and gain of chaff.
Such a view of the learned Judge cannot caste a reflection on the case as a whole.
Lastly Nirmal Singh acquitted accused was described in the F.I.R. to be armed with a "pakki banduq" which descrip tion the learned Sessions Judge translates as "rifle".
Since Nirmal Singh is accused to have begun the occurrence by firing at Ginder Singh and Ginder Singh had pellets seen in his dead body, such description of the weapon sowed the seeds of suspicion in the mind of the learned Sessions Judge.
It was at best either a case of a mistaken perception or flash impression that Nirmal Singh, undisputably being a licensee of a rifle, had that rifle.
Finding the description of the weapon being in discord with medical evidence, the learned Sessions Judge found the prosecution case not proved against Nirmal Singh acquitted accused.
Here even though the learned Judge did not extend the benefit of doubt to Nirmal Singh in so many words, his approach is an exercise in that direction.
The acquittal of Nirmal Singh too would cause no affectation to the prosecution case as a whole.
For the views afore expressed and the totality of the circumstances, we do not think that in the instant case the maxim falsus in uno falsus in omnibus is attracted.
The large number of participants in the occurrence would, at some place or the other, leave a place for entertaining some 584 doubt.
But here the prosecution case as a whole remains strong supported as it is by the independent evidence of P.Ws 18 and 19, the neighbours, and the occurrence having taken place in the house of the complainant party.
It was next contended that the prosecution has cocealed its own guilty part and has not explained the way the in juries were caused to Major Singh Deceased and to Naib Singh appellant.
The argument ' is barely to be noticed and reject ed.
Significantly Jugraj Singh in the First information Report specifically mentioned that the injuries to Major Singh deceased and Naib Singh appellant were as a result of the doings of accused persons themselves and in the circum stances narrated above all the eye witnesses have cogently and consistently deposed to that effect.
The findings of both the courts below are that the occurrence took place in the courtyard of the outer house of the complainant party.
Blood stained earth was collected from four places therein during investigation.
Time of the occurrence being 8.00 a.m. and the inmates of the house being busy with their daily chores leaves one to pose the question as to why should the complainant party anticipate an assault and be ready with fire arms to put them to use.
It does not stand to reason that the complainant party having licensed weapons, if anticipating an assault, to hhave not kept the same ready for use.
The fact that these licensed weapons of the com plainant party are not shown to have been used by itself goes a long way to establish that the injuries received by Major Singh deceased and Naib Singh appellant were acciden tal and suffered in the manner as suggested by the prosecu tion.
On this score also we remain unconvinced of the argu ment.
Having examined the prosecution case as finally estab lished at the level of the High Court and having seen the reasoning of the Court of Session in acquitting the four accused, and also for the reasons set out above, we go to hold the appeal to be devoid of merit and accordingly dis miss the same.
The appellants are on bail.
They are required to surrender to their bail bonds forthwith .
R.P. Appeal dis missed. | A litigation regarding possession of a certain plot of land was pending in the civil court between the complainants and the accused persons.
On 16.12.1975 at about 8 a.m. the accused, armed with fire arms and sharp edged weapons, reached the outer house of the complainants and attacked them.
According to the prosecution case, accused No. 4 who was unarmed, raised an exhortation challenging deceased 1l, and caught hold of his long hair while accused 1 fired a rifle shot at him and accused No.7 gave two successive gandasa blows on his head.
Accused No.9 fired a shot at PW 15.
Accused nos.6 and 8 fired one shot each at deceased 2 who also succumbed to his injuries.
PW 16 was fired at by accused No. 2 hitting him at the left arm and flank.
Accused No. 3 and 5 gave blows from the reverse side of gandasa and spear to PW. 17 and another woman respectively.
On the side of the accused, a spear blow of accused No. 5 accidently his accused No. 9 and a shot fired by accused No. 6 accidently hit another man on the side of the accused who later on died.
Besides the members of the complainant 's family, the neighbours, PWs, 18 & 19 also witnessed the occurrence.
The accused were alleged to have run away taking a rifle and revolver belonging to the complainants.
The police investi gation culminated in the trial of the 9 accused.
576 The Trial Court acquitted four accused (nos.1 and 3 to 5 ) but convicted the appellants (accused nos.
2 and 6 to 9) of offences punishable under sections 148, 149, 302, 302/149, 307 and 307/149 and sentenced them to various terms of imprisonment.
The appeal filed by the appellant having been dis missed by the High Court, an appeal by special leave to this Court was filed.
It was contended on behalf of the appellants that the four accused having been acquitted despite the eye witnesses deposing to their participation in the alleged incident, no credence should be given to the prosecution witnesses in order to maintain the convic tion; and that the prosecution failed to explain the way the injuries were caused to the persons on the accused side.
Dismissing the appeal, this Court, HELD :1.
The large number of participants in the occurrence would, at some place or the other leave a place for entertaining some doubt.
But in the instant case the prosecution case as a whole remained strong supparted as it was by the independent evidence of P.Ws.18 and 19, the neighhours.
The occurrence took place in the Courtyard of the outer house of the complainant party.
Blood stained earth was collected from four places therein during investi gation.
In the totality of circumstances it cannot be said that the maximfalsus in uno falsus in omnibus was attracted.
[583 H; 584A,C] 2.
Exhortation is necessarily not a padding or over doing and has to be viewed in the correct perspective, in the facts and circumstances of each case.
[582E] In the instant case, the roles assigned to accused No. 4 who was acquitted, that he gave [an] exhortation, caught hold of the long hair of deceased 1 and carried away his rifle after the incident, were, according to the Sessions Judge, part of the overdoing.
The fact that the rifle was being carried by the accused at the time of his arrest was considered by him to be abnormal as otherwise in the normal course of events it was expected to have been kept con cealed.
The Sessions Judge held that he was not satisfied about the criminality of accused No. 4.
[582 C D] 577 Besides the exhortation, there were other factors avail able which could lead the Sessions Judge to take the view that he had, and that was a possible view which any cautious Judge could have taken.
But that per se does not mean that the witnesses who had deposed to the participation of the accused at the time of occurrence have to be dubbed as liars.
[582 E F] Jainul Haque vs State of Bihar, AIR 1974 SC 45, referred to.
3.1 With respect to acquitted accused No. 3, the SeS sions judge held that though PW 17 had received injuries from the reverse side of the gandasa from the accused still in the FIR the use of weapon was mentioned but not the manner in which it was used; and that it was normally ex pected of the accused to have given at least one gandasa blow to someone from the sharp side.
Besides his taking away the revolver from the victim after the occurrence did not inspire confidence.
In the circumstances, the act of remov ing the revolver was viewed with suspicion, more so, when its recovery was made as a result of the disclosure state ment after a span of eight days of the arrest of the ac cused.
The view of the Sessions Judge that the case against acquitted accused No. 3 did not stand beyond reasonable doubt was a possible view taken on a cautious approach, without telling on the veracity of the prosecution witness es.
[582 G H; 583 A B] 3.2 Acquitted accused No. 5 was said to have used a spear bluntwise but the concerned victim was not found to have any stab or punctured wound.
The recovery of the spear taking place after seven days of arrest of the accused was viewed with suspicion due to the time lag.
There was omis sion in the FIR of the specific manner in which the weapon had been used.
The finding of benefit of doubt to accused No.5 could be given by the Sessions Judge without causing least dent to the prosecution case.
Shifting the grain from the chaff does not mean loss of grain and gain of chaff.
Such a view of the learned Judge cannot cast a reflection on the case as a whole.
[583 C E] 3.3 As regards acquitted accused No.1, finding the description of the weapon being in discord with the medical evidence the Sessions Judge held the prosecution case not to have been proved against the accused.
Even though the Ses sions Judge did not extend the benefit of doubt to the accused in so many words, his approach was an exercise in that direction.
The acquittal of accused No.1 too would cause no affectation to the prosecution case as a whole.
[589 F G] 578 4.1 The first information report specifically mentioned that the injuries to the persons on the side of the accused were as a result of the doings of accused persons them selves; and all the eye witnesses cogently and consistently deposed to that effect.
[584 B C] 4.2 The time of the occurrence being 8.00 a.m. and the inmates of the 'house being busy with their daily chores, the complainant party would not anticipate an assault and be ready with fire arms to put them to use.
The fact that the licensed weapons of the complainant party were not shown to have been used by itself established that the injuries received by the persons on the side of the accused were accidental and suffered in the man ner as suggested by the prosecution.
[584 D E] |
Appeal No.1865 of 1975.
From the Judgment and Decree dated 7/10.2.1975 of the Gujarat High Court in First Appeal No. 291 of 1967.
566 A.S. Qureshi, N.K. Sahoo, P.H. Parekh, and Ms. Chetna Anand for he Appellant.
Dushyant Dave, Mrs. Nandini Gore for Mrs. M. Karanjawa la, R. Karanjawala (N.P), Anip Sachthey and Rajesh for the Respondents.
The plaintiffs Nos. 2 to 4 were Dumaldars of village Nalej of erstwhile State of Chhota Udepur (hereinafter referred to as the jagirdars).
The jagirdars vide exhibit 58 dated 9.1.1954 sold all the teak trees in favour of plaintiff no.1 (hereinafter referred to as the contractor) for a sum of Rs.6,001/ and received a sum of Rs. 101/ as earnest money.
By another agreement exhibit 59 dated 29th July, 1954, the jagirdars sold all the Mahuda trees in favour of the con tractor for a sum of Rs. 5001/and received sum of Rs. 600/ as earnest money.
On 1st August, 1954 Bombay Merged Territo ries and Areas (Jagirs Abolition) Act, 1953 (hereinafter referred to as the 'Jagir Abolition Act ') was applied to village Nalej.
The compensation in lieu of trees was not awarded to the Jagirdars as the same had already been sold by the Jagirdars in favour of the contractor.
The contractor made an application to the Collector of Baroda under sou rashtra Felling of Trees Act for permission to cut the trees in question.
The Collector forwarded the application to the Mamlatdar of Chhota Udepur who granted the permission vide order dated 25th September, 1961.
The contractor then start ed cutting the trees in question.
However, the Prant Offi cer, Chhota Udepur prevented the contractor from cutting the trees.
The contractor then made representations to the Divisional Forest Officer and the Government.
In reply the contractor was told that the Jagirdar had no right to the trees standing in the reserved forest area and in the waste land.
Thereupon the contractor 's authorisation to cut the trees and his transit passes to transport the goods were withheld.
The Government invited tenders for the sale of the trees already cut and sold the same on 30th July, 1962 for a sum of Rs.15786/ .
The Government also sold other trees to other persons and realised from them some amounts.
The Jagirdars and the contractor filed a suit against the Gov ernment of Gujarat and the Divisional Forest Officer, Chhota Udepur, District Baroda for rendition of account, for a declaration of the plaintiffs title of the trees in question and for a declaration of the right of the contractor to cut the trees in question and to remove the cut materials.
567 A declaration was also sought that the impugned action of the Government was illegal, ultra rites and unlawful and to give a direction to the Government to issue the necessary authorisation and transit passes for cutting and removing the trees in question in favour of the contractor.
It was also prayed that out of the sale proceeds of the cut materi als on 30th July, 1962 for Rs.15786/ an amount of Rs.1267.82 having paid by the Divisional Forest Officer, a decree for the balance of Rs.14518.18 may be passed against the Government.
The Trial Court by judgment dated 31st March, 1967 partly decreed the suit.
It was declared that the jagirdars were the full owners of the trees and as such the contractor had also become the full owner of the trees.
It was also declared that the contractor was entitled to cut and remove these trees and the State of Gujarat, its officers, servants and agents were ordered to issue necessary permit, authori sation and transit passes to plaintiff no.1 (contractor) for removal of the trees.
The state was also ordered to pay Rs.14518.18 together with proportionate costs and interest at 4% per annum on this amount from the date of decree till realisation.
The State of Gujarat, its officers, servants and agents were also restrained by perpetual injunction not to interfere with the rights of ownership of the plaintiffs except in due course of law.
Prayer for rendition of ac counts was dismissed.
The State of Gujarat, aggrieved by the Judgment and decree of the Trial Court filed an appeal in the High Court.
The Division Bench of the High Court allowed the appeal, set aside the decree passed by the Trial Court and dismissed the suit.
The cross objections filed by the plaintiffs were also dismissed.
It would be necessary to state some events which have a material bearing with the case.
The Jagir Abolition Act came into force on 1.8.54 as already mentioned above.
The Govern ment issued a notification dated 15th February, 1955 under Sec. 4 of the and constituted cer tain survey numbers of the village Nalej into a reserve forest.
Thereafter another notification was issued under section 20 of the constituting survey No.102 alone into a reserve forest.
It may be noted that in the present case we are concerned with the Teak and Mahuda trees standing on survey No.102 of village Nalej.
Learned counsel appearing on behalf of the State of Gujarat had raised the following contentions before the High Court: 1.
Under the Forest Rules of Chhota Udepur State, Chhota Udepur State had exercised rights over three kinds of forest 568 reserved, protected and open.
These rights devolved upon the State of Gujarat.
Therefore, the State of Gujarat can exercise those rights and issue under section 4 of the the impugned notification.
Under the Forest Rules of Chhota Udepur State 21 kinds of trees including teak and mahuda trees were reserved trees and they were prohibited from being cut.
The interest which Chhota Udepur State had in those trees de volved upon the State of Gujarat and, there fore, under Section 4 of the it was within the power and authori ty of the State of Gujarat to issue the im pugned notification.
Under section 5 of the Jagir Abolition Act the soil vested in the Jagirdars and not the trees.
Therefore, the jagirdars could not have sold away to the contractor the trees in question.
Since the trees in question had vested in the State it was within the power and authority of the State to issue the im pugned notification.
The agreement executed by the Jagirdars in favour of the contractor were not valid and, therefore, not enforceable at law.
They did not confer any title upon the contractor.
Alternatively, if the contractor had acquired any rights under the said agreements, his remedy lay in claiming compensation in respect of his rights which were hit by the impugned notification.
The High Court dealt with the above four contentions in seriatim.
While dealing with the first contention the High Court considered that the decision of the appeal largely turned upon the forest Rules of Chhota Udepur State.
The High Court after considering the matter in detail held that survey No.102 of village Nalej was a reserved forest during the days of Chhota Udepur State.
The High Court referred to the forest Rules of Chhota Udepur State in order to find out the position in relation to survey no.102 of Nalej.
Schedule 'A ' of the Rules contained the detailed discription of areas which was declared as reserved forest.
At serial No.11 Village Nalej has been mentioned amongst other villages.
Columns 7 and 8 showed that an area of 250 acres and 14 gunthas of village Nalej was declared as reserved forest.
No survey number of that area had been mentioned therein.
According to the High Court this Entry in Schedule 'A ' lends support to the fact that there was one reserved forest admeasur 569 ing 290 acres and 14 gunthas in village Nalej of Chhota Udepur State.
Survey No.102 of Village Nalej as a reserved forest was not mentioned but this was on account of the reason that Chhota Udepur State made its forest Rules in 1934 which were published in 1938 when the reserved forest area of village Nalejj did not bear any survey number.
However, it was mentioned in the Rules that there was one reserved forest in village Nalej to the extent of 290 acres and 1.4 Gunthas.
The plaintiffs themselves admitted in agreement exhibit 59 that survey No.102 was a reserved forest.
It was then held that in respect of a reserved forest Jagirdars did not have the right to cultivate any land nor to cut any trees.
The only right he had was a right to graze cattle and to remove some forest produce in accord ance with Regulations made by Chhota Udepur State in that behalf.
The Jagirdar did not have any right to any trees situated in reserved forest.
With the merger of Chhota Udepur State with the then State of Bombay the property belonging to Chhota Udepur State in the reserved forest devolved upon the State of Bombay and subsequently upon the State of Gujarat.
The High Court thus accepted the first contention raised on behalf of the State of Gujarat.
The High Court then considered the second contention and in this regard observed that Rule 4 of the Forest Rules of Chhota Udepur State contained the list of reserved trees.
21 kinds of trees had been listed as reserved trees which included the teak and Mahuda trees which formed the subject matter of the two transactions between the Jagirdars and the contractor.
The High Court then held that the right to forest produce which Chhota Udepur State had in respect of such trees in the "open forest" devolved upon the State of Bombay, on merger of Chhota Udepur State with it and there after upon the State of Gujarat.
It was thus held that the second contention raised on behalf of the State was right and the same was upheld.
The High Court found no substance in the third conten tion and rejected the same.
However, the High Court observed that in the light of the finding recorded on the second contention it was quite clear that the trees which vested in the Jagirdars vested in them subject to such right or inter est in them which the State had under the Forest Rules of Chhota Udepur State.
In the 4th and last contention challenging the validi ty of the two agreements exhibits 58 and 59, the High Court observed that there are two aspects of this contention.
The first aspect is that agreements exhibits 58 and 59 were compulsorily registerable and that since they were not registered, they did not convey any title to the contractor in respect of the 570 subject matter of the agreements.
The High Court in this regard held that what was transferred was the standing timber and not any interest in soil.
Therefore, the two agreements were not compulsorily registerable.
The High Court then considered the second aspect of the 4th conten tion.
It was argued on behalf of the State that all the survey numbers to which agreements exhibits 58 and 59 relat ed were waste lands and as such under section 8 of the Jagir Abolition Act they vested in the State.
The High Court in this regard held that forest lands are not waste lands.
Therefore, if they have not vested by virtue of the provi sions of section 8 of the Jagir Abolition Act in the State of Gujarat.
The High Court in view of the findings recorded above on the first and second contentions in favour of the state, allowed the appeal and dismissed the suit filed by the plaintiffs.
Learned counsel for the plaintiffs appellants raised altogether new line of argument before us.
It was submitted that the appellants did not challenge the existence or the legality of the Chhota Udepur Forest Rules but their submis sion was that the said Rules did not apply to the facts and circumstances of this case.
It has been contended that the aforesaid forest Rules, together with all other laws of Chhota Udepur State, stood repealed on 28.7.48 when the Indian States (Application of Laws) Order 1948 came into force.
On and from 28.7.1948 the , and the Rules made thereunder became applicable.
The two agreements were made on 9.1.1954 and 29.7.1954 long after the Chhota Udepur Forest Rules were repealed and before the issuance of the notification by the Government dated 12.5.55 declaring its intention to make a part of survey No. 102 of Nalej as reserved forest under Sec.4 of the .
It has thus been submitted that so far as the impugned contracts are concerned the same are not adversely affected either by the Forest Rules of Chhota Udepur State or by the Notifica tion issued under section 4 of the .
It has been contented that the High Court was wrong in holding that the impugued contracts dated 9.1.1954 and 29.7.1954 could not pass any right on the contractor as the same were hit by the provisions of Chhota Udepur State Forest Rules, when in fact those forests Rules had already been repealed.
It was also argued that the High Court 's decision about reserved forests is based on surmises and so called admis sion in the contract exhibit 59.
The words used in the plaint are "alleged jungle bhag" which does not amount to an admission that it is a reserved forest.
In the agreement exhibit 59 the words used are "So called reserved forest" and subsequently in the same agreement the words used are "reserved Padtar (vacant)".
It has thus been submitted that the earlier use of words 'so called ' is not repeated subse quently and as such it means that the plaintiffs had denied 571 the same to be reserved forest.
As regards Entry No.11 in the Schedule to the Forest Rules of Chhota Udepur State, the High Court itself has observed that no survey number is mentioned.
This itself goes to prove that survey No.102 was not intended to be covered by the said Entry No.11.
Thus it was not proved that survey No.102 was a reserved forest.
It was further argued that assuming that survey No.102 in village Nalej was a reserved forest under the Forest Rules of Chhota Udepur State, it ceased to be so from 28.7.48.
It is an admitted position that the Notification under Section 4 of the was published on 12.5.55 and in case survey No.102 of village Nalej was already continuing as reserved forest under the Forest Rules of Chhota Udepur State, then there was no necessity at all of issuing a fresh Notification under Section 4 of the .
The fact that such Notification was issued on 12th May, 1955 clearly goes to show that survey No.102 did not constitute reserved forest in between the period 28.7.48 to 12.5.55.
We do not find any force in the above submission made on behalf of the appellants.
So far as the legality of the Chhota Udepur State 's Forest Rules is concerned, it was nowhere challenged by the plaintiffs.
In the written submis sions filed before us on behalf of the appellants the point made at 1.1 itself reads as under: "The appellants do not challenge the existence or the legality of the Chhota Udepur Forest Rules (hereinafter the Forest Rules).
The appellants merely submit that those Rules do not apply to the facts and circumstances of this case".
Apart from the above stand taken by the appellants themselves, Judgment of the High Court of Gujarat in Special Civil Application No. 404/61 State of Gujarat vs Kumar Shri Ranjit Singhji Bhavani Singhji, Shn C.M. 7halair Jagir Abolition Officer, Baroda and others decided on 22nd April, 1965 has been placed on record by the Learned counsel for the appellants.
In the aforesaid judgment Shelat, C.J., and Bhagwati, J. (as he then was) have observed that in 1934, the State of Chhota Udepur promulgated amended Forest Rules under Notification of August 1, 1934.
The Notification was issued under the signature of the Ruler himself.
These Rules, therefore,.
became and constituted the law of the State.
The High Court in the impugned order before us has also placed reliance on such Rules.
The High Court has rightly held that at serial No.11 an area of 290 acres and 14 gun thas of village Nalej was declared as reserved forest.
No survey number on that area could have been mentioned because the reserved forest area of village Nalej did not bear any survey number at that time.
However, it cannot disputed be that there 572 was one reserved forest in village Nalej admeasuring 290 acres and 14 gunthas and the plaintiffs themselves have admitted in the plaint that the trees in question were in the alleged jungle bhag.
In the agreement exhibit 59 also the words used are "so called reserved forest".
Thus apart from the above admissions, the entire case has been contest ed in the trial court as well as in the High Court on the assumption that the trees in question were standing on the area of reserved forest declared by the Chhota Udepur State.
In case the plaintiffs wanted to show that the trees in question were not inside the reserved forest area they should have taken such stand in a clear manner and it .would have been very easy for them to succeed in the suit without going through all the various legal submissions made by the parties.
Thus we see no reason to take a different view from the High Court and we affirm the finding of the High Court in this regard that the trees in question stood on the area which was declared as reserved forest under the Forest Rules framed by the Chhota Udepur State.
In order to appreciate the other submission made by the learned counsel for the appellants we would refer to the Indian States (Application of Laws) order, 1948 (hereinafter referred to as 'Application of Laws order ' 1948).It would be necessary to reproduce Section 5 which repeals the enact ments in force in Indian States.
Section 5: Repeal of enactments in force in Indian States: All enactments in force in the Province of Bombay and extended to any such State under paragraph 3 shall stand repealed: Provided that the appeal by this Order of any such enactments shall not affect the validity, invalidity, effect or consequence of any 'thing already done or suffered or any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceed ing in respect thereof, of any release or discharge of or from any debt, penalty, obli gation, liability, claim or demand or any indemnity already granted, or the proof of any past act or thing; Nor shall the repeal by this order of any enactment affect any principle or rule of law, or established jurisdiction, form or course of pleading, practice or procedure, or existing usage, custom, privilege, restriction, exemp tion, office or appointment, in so far as the same respectively is not in any way inconsist ent with any of the enactments extended under paragraph 3 of this order, notwithstanding that the same respectively may have been in any manner affirmed, recognised or derived by, in or from any enactment hereby repealed; 573 Nor shall the repeal by this order of any enactment revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not now existing or in force immediately before the date on which this order comes into force.
There is no doubt that Chhota Udepur State, has been mentioned in Schedule 1 of the Application of Laws order and all enactments in force in Chhota Udepur stood repealed and the mentioned in Schedule 11 became applicable, but the proviso to section 5 clearly provides that the repeal by this order shall not affect any right, title, obligation or liability acquired, accrued or in curred.
Thus the Jagirdars had already acquired accrued or incurred a liability in respect of the trees in question which were part of the reserved forest as declared under the Forest Rules of Chhota Udepur State.
There is nothing on the record to show that the Jagirdars were cutting trees from the part of village Nalei which was declared reserved forest during the time of erstwhile Chhota Udepur State.
Jagirdars could not have given a better title to the contractot in respect of the trees, which the jagirdars themselves did not possess.
The repealing of the Forest Rules of Chhota Udepur State on 28th July, 1948 did not furnish any additional or increased rights to the Jagirdars which they did not have before the merger of Chhota Udepur State.
It has been vehemently contended on behalf of the appel lants that it was a case of full proprietorship right in the Jagir and the Jagirdars had full and complete rights of ownership in the soil, as well as the trees.
Reliance is placed on the definition of proprietary jagir under Clause XVIII as conternplated in section 2 of the Jagir Abolition Act which reads as under: "Proprietary Jagir" means a Jagir in respect of which the Jagirdar under the terms of a grant or agreement or by custom or usage is entitled to any rights or interest in the soil".
It has been contended that the Jagirdars in the present case had not only a right over the trees but also interest in the soil and as such they had full right to sell the trees to the contractor.
It was submitted that even if there were any restrictions on cutting of trees so long as forest rules of Chhota Udepur State remained in force that restric tion was removed on 28.7.48 when such rules were repealed by the Application of Laws order.
After the forest rules of Chhota Udepur State were repealed, the Jagirdars got full right to alienate the trees as such right was inherent in the right of proprietary Jagir.
It was also submitted that the Government of Bombay had itself taken policy decision that all contracts made by the Jagirdars prior to the aboli tion of jagits on 1.8.54 shall be honoured.
It cannot be considered the intention of the Government to take away such vested rights 574 in the jagirdar having come into force on 28.7.48, after a lapse of seven years by issuing a Notification on 12.5.55 under Section 4 of the .
It has also been contended that the Government has recognized that right of full ownership in the trees in favour of other jagirdars similarly situated and there was no justification for taking such arbitrary and discriminatory action against the plain tiffs alone.
The above submissions are based on a total misconcep tion.
As already mentioned above, there is no question of taking away any rights.
It is no doubt correct that it is a case of proprietary jagir, but it does not confer any right in respect of trees standing in a reserved forest.
Once it is established that during the time of existence of erst while State of Chhota Udepur an area admcasuring 290 acres and 14 gunthas in village Nalej was declared as reserved forest and Jagirdars had no right at all in the trees stand ing in such area of reserved forest, the Jagirdars cannot be considered to have acquired a greater right on 28.7.48 when the Forest Rules of Chhota Udepur State were repealed by the Application of Laws order.
There is another insurmountable difficulty for the plaintiffs in as much as the trees had not been cut and removed prior to 12.5.55 when admittedly a notification has been issued under Sec. 4 of the also.
That being so no relief can be sought for cutting and removing the trees in question after 12.5.55 as the survey No.102 has been constituted as reserved forest under the provisions of The tree in question are teak and Mahuda trees which were out of 21 kinds of trees declared as reserved trees which were prohibited from being cut under the extent of forest rules of Chhota Udepur State.
Such trees even if standing in forest were not allowed to be cut.
Thus examining the matter from any angle, we are already of the opinion that the plaintiffs are not entitled to any relief as claimed in the suit.
So far as the ground of discrimination is concerned, it is well settled that in order to establish the same it is necessary to make out such case in the pleadings.
In the present case no such ground was taken in the plaint nor any facts or material were placed on record during the trial of the suit or before the High Court and the same cannot be considered for the first time before this Court, specially when the defendants were not given any opportunity to meet the same.
In our view the High Courts was right in dismissing the suit.
In the result we find no force in this appeal and the same is dismissed.
In the facts and circumstances of the case we direct no order as to costs.
Y.L. Appeal dismissed. | This appeal by the plaintiffs is against an order of rever sal dtd.7/10th February, 1975 passed by the Gujarat High Court.
Plaintiff No.1 first appellant is the contractor and Plaintiffs Nos.
2 to 4, the other appellants.
are the jagir dars of the farmer State of chhota Udepur.
The Jagirdars sold some teak trees to plaintiff No.1, contractor.
With effect from 1.8.1954, the Bombay Merged Territories and Areas (Jagirs Abolition) Act, 1953 was made applicable to village Nalej,and no compensation was awarded to the Jagir dars in lieu of the trees, as they had sold them to appel lant No.1 (since dead) and now represented by his legal representatives.
The contractor made an application to the Collector of Baroda under Sourashtra Felling of Trees Act for permission to cut the trees in question, which was forwarded to Mamlatdar of Chhota Udepur who granted the same on 25.9.1961 as a consequence whereof the contractor started cutting the trees.
The Prant Officer, Chhota Udepur however, prevented the contractor from cutting the trees whereupon the contractor represented the matter before the Divisional Forest Officer and the State Government but was told that the Jagirdars had no right to the trees standing in the reserved forest area and in the waste land.
The Government sold the trees already cut for Rs. 15786 and also sold the other trees to some other persons.
The Jagirdars and the contractor filed a suit against the State of Gujarat and the Divisional Forest Officer.
Chhota Udepur, District, Baroda for rendition of accounts, for declaratio of the plaintiffs ' title to the trees, for a declaration of the right of the contractor to cut the trees and to remove the same, and for direction to the State to issue the necessary authorisation and transit passes for cutting and removing the trees in question in favour of the contractor.
Decree for the balance of the amount of Rs. 14518.18 after adjusting Rs. 1267.82 already received was also sought.
The trial court partly decreed the suit holding that the jagir dars were the full owners of the trees and as such the 564 565 contractor had also become the full owner thereof.
The State was also ordered to pay Rs. 14518.18 with proportionate costs and interest at 4 per centum per annum on this amount from the date of decree till realisation.
The State of Gujarat appealed against that order to the High Court of Gujarat contending (i) that under Forest Rules of Chhota Udepur State, Chotta Udepur State had exercised rights over three kinds of forest reserved, protected and open, the State of Gujarat was thus competent to issue notification under sec.
4 of the Indian Forest Act, 1947.
(ii) under the rules, Mahuda and teak trees were reserved trees and they are prohibited from being cut; (iii) under the Jagir Abolition Act, Section 5, the solid vested in the jagirdar and not the trees; hence Jagirdars could not have sold the trees and (iv) the agreement executed between the contractor and the Jagirdars was not enforceable at law; the contractor could not claim any right/interest under the same.
The High Court negatived all the contentions and the rights accruable to the contractor under the agreement and allowed the appeal of the State and dismissed the suit filed by the appellants.
Hence this appeal by the appellants.
Dismissing the appeal, this Court HELD: The trees in question stood on the area which was declared as reserved forest under the forest rules framed by the Chhota Udepur State.
[512 B] Once it is established that during the time of existence of erstwhile State of Chhota Udepur an area admeasuring 290 acres and 14 gunthas in village Nalej was declared as re serve forest and jagirdars had no right at all in the trees standing in such area of reserved forest, the Jagirdars cannot be considered to have acquired a greater right on 28.7.48 when the Forest Rules of Chhota Udepur State were repealed by the Application of Laws Order.
[514 C D] |
vil Appeal No. 1204 (NT) of 1979.
From the Judgment and Order dated 3.2.1978 of the Madras High Court in Tax Case Petition No. 271 of 1977.
WITH Civil Appeal No. 4371 (NIT) of 1991.
Ms. A. Subhashini for the Appellant.
Ms. Janaki Ramchandran and A.T.M. Sampath for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
Both these matters raise the same ques tion viz. whether the act of a member of a joint family by which he impresses his individual property with the charac ter of joint family property or "throws" it into the hotch potch of the joint family or "blends" it with the joint family property is a "disposition" within the meaning of the ( 'the ', for short).
Civil Appeal No. 1204/79 is an appeal from an order of the High Court declining to call upon the Income tax Appel late Tribunal to refer the above question for the decision of the High Court in view of certain earlier decisions of the Court.
The Madras High Court also declined to direct a reference on the above issue in T.C.P. No. 478 of 1977 and that is the subject matter of SLP (C) No. 335 of 1979.
In view of the pendency of Civil Appeal No. 1204/79, we grant special leave in SLP (C) No. 335/79 also.
Before discussing the correctness of the above conclu sion, it may be convenient to set out the background of facts in Civil Appeal No. 1204/79.
170 That appeal arises out of the estate duty assessment conse quent on the death of one Natesan Chetty, who died on 1.3.72.
He was the Karta of a Hindu Undivided Family (HUF) consisting of himself and his four sons.
He was also the owner, in his individual capacity, of five house properties in Madras.
On 18.6.1970 and 16.9.1970 he made declarations by which he impressed the above mentioned properties with the character of joint family properties and declared that they would thereafter belong to HUF of which he was the karta.
Subsequently, a partition was effected in the family in March 1971 in which two of the above mentioned properties came to the share of the deceased.
Sri Natesan Chetty had also borrowed a sum of Rs. 46,800 from the HUF out of the rental income from the above mentioned properties for being invested in the business earned on by him.
These borrowings were made between March 1970 and April 1971 and they were repaid in April 1971.
In completing the assessment to estate duty of the estate passing on the death of Natesan Chetty, the Assistant Controller of Estate Duty held that the declarations made by the deceased on 18.6.1970 and 16.9.1970 were "dispositions" within the meaning of the said expression as defined in the second explanation to section 2(15) of the .
These dispo sitions having been made for no consideration within the meaning of section 27 (1), amounted, according to him, to gifts and since the gift had been made within two years of the date of death, the subject matter of the gift was liable to be assessed as pan of the estate passing on death under section 9 of the .
As already mentioned, two of the properties had been allotted to the share of the deceased in the partition of 1971 and it is common ground that they passed on the death of the deceased as they belonged to him on the date of his death.
The question, however, was whether the other three properties which went to the other members of the family as a result of the declarations and partition were also liable to be included as pan of the estate deemed to pass on the death of the deceased by the application of section 9 read with S.27 (1) and section 2(15) of the .
The Assistant Controller answered this question in the affirmative and included their value, taken at Rs. 1,22,500, in the princi pal value of the estate.
As a consequence of his conclusion that the properties were liable to be included in the es tate, the officer ,,I so took the view that the sum of Rs. 46,800 being the loan taken by the deceased from the HUF and discharged within two years prior to the death should be added hack in computing the principal value of the estate by reason of the provisions of section 46 (2) of the .
It is not in dispute before us that though two points were thus involved in the assessment one regarding the inclusion of the value of 171 three items of property as part of the estate of the de ceased passing on his death and the other regarding the addition or disallowance of the debt of Rs. 46,800 they are inter connected and that, if the first question is answered in favour of the assessees, the second question will also stand answered likewise.
Dissatisfied with the conclusion of the Assistant Con troller, the accountable person preferred an appeal to the Appellate Controller of Estate Duty which was successful.
Thereupon the Department preferred an appeal to the Tribunal which, following a decision of the Madras High Court in Rajamani Ammal vs Controller of Estate Duty.
held that the sum of Rs. 1,22,500 could not be included in the value of the estate passing on the death and, consequentially, that the add back of Rs. 46,800 was also not justified.
Thereupon the Controller of Estate Duty applied, under section 64 (1) of the , for a reference to the Madras High Court, for its decision, of the following two questions: "1 Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the trans action by which a Hindu impressed his separate properties [as] with joint family character could not be considered as a disposition under the second explanation to section 2(15) and section 27 of the ? 2.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the addition of Rs. 1,22,500 made under section 9 and Rs. 46,800 made under section 46(2) could not be sus tained in the case of the deceased ?" The Madras High Court was of the opinion that the basic question at issue was covered by the earlier decisions of the Court in Rajamani Ammal vs Controller of Estate Duty, as well as a subsequent decision in Con troller of Estate Duty vs Smt.
Mookammal, The Court found no substance in the attempt, on behalf of the Revenue, to distinguish the above decisions on the strength of a decision of the Court in Ranganayaki Ammal vs CED, which had been confirmed by the Supreme Court in CED vs Kantilal Trikamlal, In this view of the matter the High Court de clined to call for a reference on the two questions above mentioned and dismissed the application for reference.
Hence the present Civil Appeal.
It is not necessary to set out the facts in SLP No. 335 of 1979 where the question involved is the same except that there was no subsequent partition after the blending and that no question regarding the deductibili ty of debts also arose in this case.
172 It will be seen that both these appeals are directed against the orders of the High Court declining to call for a reference.
It is fairly clear that the questions whether Rajamani Ammal was rightly decided and whether, if so, it needed reconsideration in the light of Kantilal Trikamlal are questions of law.
But, in view of the long lapse of time, we have considered the issues on merits and since we are satisfied that the High Court 's conclusion was correct, we dispose of the appeals straightaway without going through the formality of asking the Tribunal to make a reference to the High Court and then awaiting the High Court 's decision on the question of law referred.
The has ceased to be enforceable since 16.3.1985.
In the circumstances we need not elaborate ly set out the provisions of the and the principles behind them.
An outline of the provisions necessary for the determination of the issue before us will suffice.
The levies a duty on the aggregate market value of the proper ties passing on the death of any person (statutorily termed the 'principle value of the estate ').
It is manifest that the statute could be easily circumvented if duty were re stricted only to properties which actually pass on a death, for, various of devices could be thought of by which the property of such person could ostensibly be transferred to others sometime before the death, although it continues to be really under the domain and control of the deceased till the time of his death.
The statute therefore contains elabo rate provisions deeming certain properties to pass on death even though their beneficial enjoyment may not actually change hands at the time of his death.
One such item of properties which are deemed to pass on the death of a person are those which formed the subject matter of a gift made by him within a specified period preceding his death.
S.9 of the , which contains this deeming provision reads thus: "9.Gifts within a certain period before death (1) Property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death".
In short, the provision enabled the Revenue to ignore any gift of property made by the deceased within two years of his death by creating a statutory fiction that properties so gifted passed on the death of the deceased, 173 although, in fact and in law, they ceased to be his a short time before his death.
This is the first fiction.
The legislature next proceeded to enact a second fic tion.
This was in order to bring into the net of taxation transactions which may not be comprehended within the legal concept of a gift because they are ostensibly made for some consideration.
It provided in section 27 that: "27.
(1) Dispositions in favour of relatives Any disposition made by the de ceased in favour of a relative of his shall be treated for the purposes of this as a gift unless (a) the disposition was made on the part of the deceased for full consideration in money or money 's worth paid to him for his own use or benefit; or (b) . . ; and references to a gift in this shall be construed accordingly: . . " Resort to this provision in the present case is needed for a purpose.
Admittedly, the deceased received no consideration for impressing the property with the character of joint family property.
If this amounted to a transfer, then S.9 alone would be sufficient to bring the properties within the net of taxation.
But it could be argued that a gift involves a 'transfer ' without consideration but the act of blending does not constitute a 'transfer ' [vide: Stremann vs CI.T., and a host of other cases under the Income tax ].
Section 27 helps the Department in the present case only in that it uses a much wider word, 'dispo sition ', and treats dispositions in favour of relatives as gifts.
The statute had to make provision for a third fiction as well as it could still be contended that the word 'disposi tion ' would not be sufficient to comprehend certain types of transactions.
To be on the safe side, therefore, the statute proceeded to enact a special definition of the word 'dispo sition ' in section 2(15) of the wide enough to rope in various kinds of acts in respect of property.
This provi sion, insofar as it is material for our present purposes, reads as follows: "2(15) '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 con verted from one species into another by any method; Explanation I The creation by a person or with his consent 174 of a debt or other right enforceable against him personally or against property which he was or might become competent to dispose of, or to charge burden for his own benefit, shall be deemed to have been a disposition made by that person, and in rela tion to such a disposition expression 'proper ty ' shall include the debt or right created.
Explanation 2 The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposi tion made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation to such a dispo sition the expression 'property ' shall include the benefit conferred by the extinguishment of the debt or right; The short case of the department now is this; the de ceased in these cases was the full and exclusive owner of the immovable properties in question.
By the act of blending he has convened them into HUF propertieS.
The properties no longer belong to him as an individual; they belong to the family thereafter with certain rights qua them in the other members of the HUF.
In other words, there 'has been an extinguishment, at the expense of the deceased, of a part, at least, of his rights in the properties with a correspond ing benefit to the others.
There has also been the creation, by the deceased, of a right in the others enforceable against the deceased and the properties e.g. the right to demand a partition.
The deceased, therefore, has made a disposition in favour of his relatives for no consideration within two years of his death.
The value of the properties, in respect of which he made the disposition in favour of the family, are, therefore, liable to be included in the principal value of the estate passing on his death under section 9 read with section 27 read with the Explanations to section 2(15).
This is quite apart from the fact that the value of the two properties, which subse quently fell to the share of the deceased at the partition in March 1971, are liable to be included as his own property actually passing on his death.
The question that we have to consider is, therefore, whether the legal incidence of the act of blending an be brought within the four corners of the two Explanations to section (15) of the .
It was precisely this question which had been considered by the Madras High Court earlier in Rajamani Ammal vs Controller of Estate Duty in deciding the issue, The High Court had the benefit of two earlier decisions of this Court in Goli Eswariah vs C G.T., and CG.T, vs Getti Chettiar., , 175 where this Court had held, in the context of the Gift Tax , that the act of blending and the act of a coparcener receiving, on partition of a HUF, less than the share he was entitled to receive would not constitute gifts.
The details of this decision need to be set out at some length.
Three contentions had been urged in Rajamani: (a) The first was that the act of blending constituted a 'disposi tion ' within the general meaning of that word.
Repelling this contention, the Court observed: "The learned counsel for the revenue placed strong reliance on the word "disposition" in section 27 (1) of the and contended that even an act of throwing of the self acquired property into the common stock of a joint Hindu family is included in that expression.
In a case arising under the Gift tax , the word "disposition" came up for consideration in the decision in Goli Eswariah vs Commis sioner of Gift tax, The Supreme Court held that the word "disposition" refers to a bilateral or a multilateral act and it does not refer to a unilateral act.
This decision of the Supreme Court approves the decision of this court in Commissioner of Gift tax vs
P. RangasamiNaidu, (F.B).
It is true that these decisions are under the Gift tax .
It is also true that the word "disposi tion" was considered in these decisions, with particular reference to the definition of "transfer of property" under that .
We are of the view that the word "disposition" in section 27(1) of the also refers to a bilateral or multilateral act.
The section refers to a disposition by the de ceased in favour of a relative and also speaks of partial failure of consideration.
Section 9 also refers to property "taken under a dispo sition".
Therefore, in our opinion the word "disposition" in section 27(1), however wide its ambit may be, would not include the uni lateral act of a person by which he throws his self acquired property into the common stock of the joint family.
" (b) It had been next contended, on behalf of the Revenue that, by throwing the self acquired properties into the common stock of the joint family, the deceased had created a right enforceable against him in favour of the sons or the other coparceners viz. the right to demand partition of the properties in question which they could not have exercised earlier.
This contention was rejected by the learned judges by applying the principle enunciated in an earlier Full Bench decision of the Court in CIT vs Rangasami Naidu, , where a similar contention had been repelled in the context of the Gift Tax .
The Court had there observed: 176 "With the father having absolute power of disposition inter vivos or testamentary in respect of his self acquisition and with no power in the son to interdict any alienation or disposition or call for partition, the son 's interest is next to nothing.
But the right is real.
It lies dormant.
It is this dormant right which the undivided sons have in their father 's property that entitles them to take the self acquired property of the father as coparceners to the exclusion of a divided son.
Juridically, it must be this dormant birth right that enables the father at his pleasure, without formalities, to deny to himself his independent power or predominant interest and look upon the property as the property of the family.
In our view, it is this birth right imperfect and subordinate to the special power and predominant interest of the father that comes into play and makes the interest of the son real and an interest in praesenti, when the father chooses to waive his rights.
At his pleasure and without reference to his son, if the father abandons or determines once for all not to exercise his independent power over the property, the son 's interest therein becomes a real and full fledged coparcenary right.
There is no vesting of rights here by the father on the son, but what is dormant springs to life but irrevocably at the pleasue of the father.
" (c) A third contention raised on behalf of the Revenue was that throwing the self acquired property into the common stock of the joint family would amount to "extinguishment at the expense of the deceased of a debt or other right" within the meaning of Explanation 2 to section 2 (15).
This conten tion was also repelled by the learned Judges.
They observe: "We are also of the opinion that throwing the self acquired property into the common stock of the joint family will not amount to "extin guishment at the expense of the deceased of a debt or other right" within the meaning of Explanation 2 to section 2 (15).
As seen from the judgments cited above, after the act of throwing into the common stock, it is the joint family or the coparcenary that owns the property.
The person who converted his indi vidual property into joint family property is a member of the Hindu joint family or the coparcenary and contines to be a member of the joint family.
His interest in 177 the erstwhile separate property would extend to the whole of the property even as of the other coparceners, for the interest of every coparceners extends over the whole of the joint family property.
There is community of interest and unity of possession between all the coparceners.
On the death of any one of the coparceners the others take the proper ty by survivorship.
It may be, the ultimate survivor is the person who threw the self acquired property into the common stock.
It, therefore, follows that there was no extinguishment of the right of the deceased and creation of a right in favour of another, in these of throw ing the self acquired properties into the common stock.
The decision in Valliammal Achi vs Controller of Estate Duty, relied on by the learned counsel for the revenue, and the decision in Kantilal Trikamlalv.
Controller of Estate Duty, , relied on by the learned counsel for the accountable person,related to what we may term as "unequal partitions".
They do not deal with cases of throwing the self acquired properties into the common stock.
We are not concerned with the case as to whether an unequal partition would amount to an extinguishment of a right and creation of a benefit within the meaning of Explanation 2 to section 2(15), which was the point that was considered in those cases.
" The above decision is clearly against the Revenue.
The Revenue, however, strongly relies upon a later decision of the same High Court in Ranganayaki Ammal & Ors.
vs Controller of Estate Duty, It is sub mitted that Ranganayaki Ammal has been af firmed by this Court in CED vs Kantilal Tri kamlal, a common judgment reversing Kantilal Trikamlal vs CE.D., and affirming Ranganayaki Ammal (Mad) and, therefore, Rajmani is no longer good law.
It is therefore, necessary to refer to these cases though the question involved there was somewhat different.
In Ranganayaki Ammal, the deceased Bheema Naidu and his widow and children constituted a Hindu undivided family.
A little within the period of two years prior to the death of the deceased, a partition was effected of the joint family properties and in that partition he took a smaller share instead of his legal half benefiting the other to the extent of the difference.
The same thing had happened in the case of Kantilal Trikamlal also.
Trikamlal Vadilal and his son Kantilal constituted a Hindu undivided family.
On 16th November, 1953, and instrument styled a "release deed" was executed between the two persons.
Under this instrument, a sum of rupees one lakh out of the joint family properties was taken by 178 the deceased m lieu of his share in the joint family properties and he relinquished his interest in the remaining properties of the joint family which were declared to belong to Kantilal as his sole and absolute properties and Kantilal also relinquished his interest in the amount of rupees one lakh given to the deceased and declared that the deceased was the sole and absolute owner of the said amount.
Trikamlal Vadilal died on 3rd June, 1955, that is within two years of the release deed.
The Assistant Controller found that, as on November 16, 1953, the deceased was enti tled to a one half share in the joint family properties, the value of which was Rs. 3,44,058, but had relinquished his interest in the joint family properties by receiving only a sum of rupees one lakh.
The officer, there fore, held that the difference between Rs.3,44,058 and Rs, 1,06,724 (being the amount received by the deceased together with inter est) was includible in the principal value of the estate of the deceased, being the value of a disposition by the deceased in favour of a relative for partial consideration.
This assessment was upheld eventually by the Su preme Court.
Both these decisions, thus, raised the question whether there was "gift" within the meaning of S.9 read with S.27 read with the Explanations to S.2(15) of the where a coparcener in a HUF, at the family parti tion, voluntarily agrees to accept properties of a value less than what he is entitled to claim, as a matter of right, at such partition.
This Court as did the Madras High Court in Ranganayaki Ammal, the Andhra Pradesh decision in Cherukuru Eswaramma vs C.ED., and the Punjab & Haryana High Court judgment in C.E.D.v.
Jai Gopal Mehra, answered the question in the affirmative.
This Court distinguished Go[i Eswariah, , S.C. and Getti Chettiar, , S.C. on the ground that the defi nition of 'disposition ' in Explanation 2 Sec tion 2(15) of the is much wider than the scope of that expression used in the Gift Tax Act.
We do not consider it necessary to set out here the full and de tailed reasoning of this Court in Kantilal Trikamlal 's case.
Before proceeding further, we may refer to a few later decisions of High Court relevant to the issue before ns.
The Allahabad High Court, in C.E.D.v.
Laxmi Bai, , a decision rendered after Kantilal Trikamlal, thought that the act of blending would not be a 'disposition ' within fie mean ing of:the .
In C.E.D vs Babub hai T. Panchal, (1982) 133 I.T.R.455, the Gujarat High Court had occasion to consider the question whether a transaction of release by a member of a Hindu Undivided family, within a period of two years of his death, of his interest in the family properties would amount to a 'disposition ' within the ' meaning of Explanation 2 to Section 2(15) of the .
The 179 question was answered in the negative.
In CE.D vs Satyanarayan Babulal Chaurasia, , the Bombay High Court, without touching the issue in detail, merely held, applying Goli Eswarian vs C G.T., (1970)76 I.T.R. 675 S.C, that the act of blending does not involve a transfer.
The question that falls for our considera tion now is whether, despite the extended definition in S.2(15) of the , as explained in Kantilal Trikamlal, the act of blending, unlike the voluntary acceptance of an unequal partition, fails outside the purview of the deeming part of the definition contained in the explanations.
We think the answer to this question has to be in the affirmative, Revert ing once again to the contentions of the Revenue in Rajamani (which are also the con tentions reiterated before us for the Revenue), it will be remembered that Rajamani specifically dealt with the language of the two explanations 10 S.2(15) and that its decision rested on three grounds: (i) a 'disposition ', as held on Goli Eswariah, S.C., has to be a 'bilateral ' or 'multilateral ' act or trans action, not a unilateral act; (ii) the act of blending does not create any right enforceable against the blender or his property but only brings to the surface rights already latent and inherent in the others; and (iii) the act of blending does not result in the extinguishment of any right of the blender with a correlative conferral of benefit on others.
our view.
Kantilal Trikamlal does not affect the validity of any of the three grounds set out above.
So far as the first ground is concerned, it does not touch upon the reasoning of Goli Eswariah, not to say doubt or dissent from it.
It refers to C.E.D. vs Kancherla Kesava Rao, , S.C. hinting at possible distinction and to Getti Chettiar (but without any hint of dis sent) and points out that the conventional construction of disposition ' has to submit to the larger sweep of hypothetical extension by definition" and that, unlike under the Gift Tax , "there is no limitation, environmen tal or by the society of words, warranting the whittling down of the unusually wide range of Explanation 2 to S.2 (15)".
In other words, the cumulative effect of Goli Eswariah, Getti Chettiar and Kantilal Trikamlal is that 'blending ' or 'partition ' will not be a 'disposition ' within the ordinary connotation of the expression but will be one if either of the Explanations to S.2(15) are attracted.
This takes us to the other two contentions dealt with in Rajamani as to the scope of the two explanations.
On this aspect, Rajamani has held that, unlike an 180 equal partition, the act of blending will not amount to a 'disposition ' attracting Ss.9 and 27 of the .
It distinguishes cases of unequal partition dealt 'with in Valliammal Achi, vs
C.E.D., and the High Court 's decision in Kantilal Trikam lal cited before it which have now received the imprimatur of this Court in Kantilal Trikamlal.
We are inclined to think that the distinction has been made on sound lines.
We do not consider it necessary to repeat or elaborate the rea soning in Rajamani on these two points as it succinctly epitomises well settled principles of Hindu Law.
Suffice it to say that we en dorse this reasoning and think that the High Court was right in holding, in the present cases, that the acts of blending did not result in the 'gift ' of immovable properties within the meaning of the statute and that Rajamani required no reconsideration because of Ranganayaki Ammal/Trikamlal.
This disposes of the question sought to be referred in these cases.
We should however like to advert to another aspect which may arise for consideration at some future date.
It may, perhaps, be possible to contend that, though a declaration of blending does not amount to a 'gift ', where the act of blending is followed up by a subsequent partition, the two transactions taken together do result in the extinguishment, at the expense of the deceased, of his rights in the properties which go to the share of other coparceners at the subsequent partition and that, if the two can be treated as parts of the same transac tion, Explanation 2 to S.2(15) may be attract ed.
But this, apart from being a totally new question of law not raised at any stage and not debated before us, would also require not only a closer look from the legal angle but also investigation into facts, particularly as to whether the act of blending and the subse quent partition can be treated, in law and on facts, as parts of a single transaction.
We, therefore, express no opinion on this issue.
For the reasons discussed above, these appeals fail and are dismissed.
But we make no order regarding costs.
Y.L. Appeals dismissed. | A common question of law that arises for determination in these appeals by special leave is whether the act of a member of a joint family by which he impresses his individu al property with the character of joint family property or "throws" it into the hotch potch of the joint family or "blends" it with the joint family property is a 'disposi tion ' within the meaning of the .
In Civil Appeal No. 1204 of 1979 the facts are: One Natesan Chetty who died on 1.3.1972, was the Karta of a Hindu Undi vided Family, consisting of himself and his four sons.
He owned five house properties in Madras, On 18.6.70 and 16.9.1970, he made declarations by which he impressed the properties with the character of joint family properties and further declared that they would thereafter belong to HUF of which he was the Karta.
Thereafter a partition was effected in the family in March 1971 in which two of the properties came to his share.
Sri Chetty had also borrowed Rs. 46,800 from HUF out of the rental income from the properties for his business purposes.
These borrowings were duly repaid in April, 1971.
In completing the assessment to estate duty of the estate passing on the death of Natesan Chetty, the Assistant Controller of Estate Duty held that the declarations made by the deceased on 18.6.70 and 16.9.70 were "dispositions" within the meaning of the said expression as defined in the second explanation to section 2(15) of the .
He further held that since the declarations were made with out consideration, they amounted to gift which had been made within two years of the date of death and hence liable to be assessed as part of the estate passing on death under sec tion 9 of the Act.
The two properties which had fallen to the share of the deceased passed on the death of the de ceased.
He accordingly included Rs. 1,22,500 the value of the other three properties also in 168 the principal value of the estate.
The Asstt.
Controller further held that a sum of Rs. 46,800 being the loan taken and discharged by the deceased should also be added back in computing the principal value of the estate by virtue of section 46(2) of the Act.
Dissatisfied with the conclusion of the Asstt.
Control ler, the accountable person preferred an appeal to the Appellate Controller of Estate Duty which was successful.
Thereupon the Department preferred an appeal to the Tribunal which, following the decision of the Madras High Court in Rajamani Ammal vs Controller of Estate Duty, held that the sum of Rs. 1,22,500 could not be included in the value of the estate passing on the death and consequently, that the add back of Rs. 46,800 was also not justified.
Thereupon the Controller of Estate Duty applied under Section 64 (1) of the Act for a reference to the Madras High Court for its opinion on the two questions.
The Madras High Court was of the opinion that the basic question at issue was covered by the earlier decisions of the Court in Rajamani Ammal vs Controller of Estate Duty and Control ler of Estate Duty vs Smt.
Mookammal, The High Court declined to call for a reference and dis missed the application for reference.
Hence the appeals by the Department.
Dismissing the appeals, this Court, HELD: "Blending" or "partition" will not be a 'disposi tion ' within the ordinary connotation of the expression but will be one if either of the Explanations to Section 2(15) are attracted.
[179 G] Unlike an unequal partition, the act of blending will not amount to a 'disposition ' attracting Ss. 9 and 27 of the Act.
[179 H 180 A] The High Court was right in holding that the acts of blending did not result in the 'gift ' of immovable proper ties within the meaning of the statute.
[180 C] Though a declaration of blending does not amount to a 'gift ' where the act of blending is followed up by a subse quent partition, the two transactions taken together do result in the extinguishment, at the expense of the de ceased, of his rights in the properties which go to the share of other coparceners at the subsequent partition and, if the two can be treated as parts of the same transaction the Explanation to Section 2 (15) may be attracted.
[180 D E] 169 Rajamani Ammal vs Controller of Estate Duty, ; Controller of Estate Duty vs Smt.
Mookammal, ; Rangabayaki Ammal vs CED, ; CED vs Kantilal Trikamlal, ; Stremann vs CIT, SC; Goli Eswariah vs CGT, ; C.G.T.v.
Getti Chettiar, ; Cherukuru Eswaramma vs
C.E.D, ; CED vs Jai Gopal Mehta, ; C.E.D., vs Laxmi Bai, ; C.E.D.v.
Babubhai T. Panchal, ; and C.E.D.v.
Satyanaravan Babulal Chaurasia, , referred to. |
ivil Appeal Nos.4554 to 4556 of 1991.
From the Judgment and Order dated 18.2.91 of the Madhya Pradesh High Court in Misc.
Petition Nos.
1707, 1746 and 1797 of 1986.
D.D. Thakur, C.S.Chazed, V.Gambhir, Surinder Kamail, S.K.Gambhir and N.N.Bhatt for the Appellants.
K.K. Venugopal, P.P.Rao, G.L.Sanghi, K.K. Sharma, Ashok K. Mahajan, L.R. Singh, D.Mehta, A.Vachher, R.N.Mittal and S.K.Mehta for the Respondents.
The Judgment of the Court was delivered by 249 RANGANATH MISRA, CJ.
Special leave granted.
Ujjain Development Authority is in appeal challenging the judgment of the Madhya Predesh High Court, Indore Bench, rendered in an application under Article 226 of the Consti tution annulling the notification issued under section 4 of the Land Acquisition Act of 1894 (hereinafter referred to as 'the Act ') by holding that scheme No.23 flamed under Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 does not operate against certain specified lands of the respondents.
It would appear that there was a similar notification under section 4(1) of the Act for acquisition of the self same properties along with some 600 hectares for the purpose of development of Ujjain, a historical town of Kalidas fame within Madhya Pradesh.
On 17.9.80 for different reasons the notification had been quashed.
In 1985 the impugned notifi cation was issued afresh under section 4(1) of the Act.
The High Court found that the requirements of the stat ute for completing the scheme for the purpose of which the acquisition had been made had not been complied with and, therefore, no action for acquisition under the scheme could be taken.
We have heard learned counsel for both the sides and must state that the reasoning given by the High Court is difficult to find fault with.
There are, however certain features which lead us not to sustain the decision of the High Court.
Admittedly there has been a notification under section 50(2) of the Adhiniyam.
Gazette Notification in respect of Scheme No. 23 has also been produced.
Though there is a finding that the pre conditions had not been complied with strictly under the statutory provisions, the High Court has not found any mala fides.
The Development Authority in question consisted of only one person.
His own order was perhaps taken by him and the governmental authori ties as the requisite resolution.
The respondents did not take the ground that there was no valid authority behind the scheme.
In the earlier petition also such a ground had not been raised.
The High Court called for the record and dis covered for itself that the statutory pre condition had not been complied with for the said scheme to operate.
If this question had been raised when the earlier writ petition was filed about 12 years back, the defect could have then been rectified.
It is the admitted case before us that the undisputed huge patch of land has been substantially improved upon under the scheme.
Cancellation of the notification does not bring the matter to an end.
Obviously fresh proceedings would be taken after complying with the defect if the judg ment of the High Court is allowed to stand.
If the acquisi tion is not made the respondents should enjoy usual benefits of their land on account of the 250 development of the neighbouring area and if the re acquisi tion is made there would be claim for higher compensation.
Looking at the matter from these different angles, we have thought it appropriate to allow the appeal, vacate the judgment of the High Court and allow the acquisition to remain subject, however, to the condition that the notifica tion under section 4(1) of the Act issued in 1985 shall be deemed to be one dated 1.1.88 and the market value of the land for the acquisition shall be determined with reference to that date.
We would like to point out that the potential value of the land has substantially enhanced on account of the improvements made pursuant to the notification which had been assailed.
We have directed the deemed date of the notification under section 4(1) to be postponed by almost three years and during this period the appellant has brought about the bulk of the improvements in the neighbourhood.
We direct that 25 per cent of the potential value of the land relatable to the improvements made by the appellant would only be available to the respondents, but in fixing market value all other legitimate considerations shall be taken into account.
We make it clear that we have no intention to extend the benefit under section 28A of the Act to the owners of the lands already acquired under the notification of 1980 or 1985 on the basis of our direction that the respondents ' lands shall be deemed to have been notified under section 4(1) of the Act on 1.1.
In fact our order must be deemed to be a separate notification for acquisition and, therefore, it would not be a common notifi cation for the purpose of section 28 A of the Act.
The respondents should, therefore, be entitled to this benefit that instead of the notification under section 4(1) of the Act being of 1985, it shall be treated to be of 1.1.1988.
The appellate authority is now entitled to take position in accordance with law subject to the valuation of the compen sation in the manner indicated.
There will be no order as to costs.
V.P.R. Appeals dis posed of. | A notification u/s.4(1) of the Land Acquisition Act, 1894 was issued for acquisition of the questioned lands along with some other lands for the purpose of development of the town.
On 17.9.80 the same was quashed.
In 1985 another similar notification was issued u/s 4(1) of the Act, for acquisition of the same lands for the Scheme No.23 framed under Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973.
The respondents challenged the notification before the High Court under Article 226 of the Constitution.
The High Court allowed the writ petitions annulling the notification and holding that the Scheme No.23 did not operate against certain specified lands of the respondents.
It also found that the statutory requirements for completing the scheme were not complied with and therefore, no action for acquisition under the Scheme could be taken.
These appeals were filed by the Development Authority against the High Court judgments by special leave.
Disposing of the appeals, this Court, HELD: 1.
The pre conditions had not been complied with strictly under the statutory provisions.
The High Court has not found any malafides.
The Development Authority in ques tion consisted of only one person.
His own order was perhaps taken by him and the gov 248 ernmental authorities as the requisite resolution.
The respondents did not take the ground that there was no valid authority behind the scheme.
[249 E F] 2.
The huge patch of land has been substantially improved upon under the scheme.
Cancellation of the notifi cation does not bring the matter to an end.
Obviously, fresh proceedings would be taken after complying with the defect if the judgment of the High Court is allowed to stand.
If the acquisition is not made the respondents should enjoy usual benefits of their land on account of the development of the neighbouring area and if the re acquisition is not made there would be claim for higher compensation.
[249 G250 A] 3.
It is directed that the acquisition remain to subject, to the condition that the notification under sec tion 4(1) of the Act issued in 1985 shall be deemed to be one dated 1.1.88 and the market value of the land for the acquisition shall be determined with reference to that date, and that as the deemed date of the notification under sec tion 4(1) to be postponed by almost three years and during this period since the appellant has brought about the bulk of the improvements in the neighbourhood, 25 per cent of the potential value of the land relatable to the improvements made by the appellant would only be available to the re spondents, but in fixing market value all other legitimate considerations shall be taken into account.
There is no intention to extend the benefit under section 28 of the Act to the owners of the lands already acquired under the noti fication of 1980 or 1985 on the basis of court 's direction that the respondents ' lands shall be deemed to have been notified under section 4(1) of the Act on 1.1.1988.
[250 B D] |
Civil Appeal NO 900 of 1987 From the Judgment and order dated 12.2.1987 of the Calcutta High Court in Matter No. 676 of 1978.
Dr. Y.S. Chitale, Anil Mitra, P.H. Parekh, D. Chandfachud, S.C. Ghosh and R.K. Dhil1on for the Appellants.
K. Parasaran Attorney General for Union of India.
498 K.N. Bhat, A. Subba Rao and Miss Madhu Moolchandani for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
I had the advantage of reading in draft the judgment proposed to be delivered by my learned Brother Ranganathan, J.
It is, however, necessary to add a few sentences.
I was reluctant to take up this matter as it arises out of a decision of the Division Bench of the High Court of Calcutta.
That decision was occasioned by a reference made by the Chief Justice of that High Court on a reference made by me to the Chief Justice sitting singly in that Court.
In the High Court I had not expressed any view on the contentions urged.
In those circumstances both the parties requested me to take up the matter.
It was in these circumstances that I became a party to this judgment.
I agree with my learned Brother that the appeal should be dismissed and the order he proposes to make as to costs.
It is not necessary in view of the facts and circumstances of the case to refer in detail to the reasons.
I would, however, make it clear that I prefer the view of the Division Bench of the Madhya Pradesh High Court in the case of L.S. Nair vs Hindustan Steel Ltd. Bhilai, AIR 1980 MP 106.
I would prefer this view in preference to that of the F. Iearned Single Judge of the Bombay High Court in Miscellaneous Petition No. 458/79 Elliot Waud Hill (P) Ltd. vs Life Insurance Corpn.
Further, it is necessary to reiterate that in this case we have proceeded on the short question canvassed before the Division Bench of the High Court out of which this appeal arises, i.e., whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it has been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Govt.
is ultra vires or beyond the legislative power of the Parliament to extend the applicability of the Act to such premises.
It is only this question which was mooted before the High Court and required consideration by us under Article ,136 of the Constitution.
It is, therefore, not necessary to express any view on any other aspect of the matter.
Furthermore, as has been emphasised by my learned Brother there was no dispute as to whether the premises in the present appeal is a public premises.
Therefore, the question whether the premises in question or of this type is a public premises is not an aspect into which we were required to go.
499 For the purpose of this appeal once it is held that the Public Premises (Eviction.
Of Unauthorised occupants) Act, 1971 is intra vires the Parliament, no further issue between the parties survive because no other contention was raised before the Division Bench of the High Court and also in this appeal under Article 136 of the Constitution, no other issue can be canvassed.
It is, therefore, not necessary, in my opinion, to consider whether the provisions of 1971 Act even if intra vires would prevail upon the provisions of the State legislation.
Hence, for the purpose of this appeal it is unnecessary to express any view on the amplitude and scope of Article 254 of the Constitution.
Indu Bhusan Bose vs Rama Sundari Devi & Anr., ; is a decision of five learned Judges of this Court affirming the Calcutta view which held that the legislation in question in that case was to be found in Entries 6, 7 & 13 of List III of the 7th Schedule of the Constitution and neither in Entry 18 of II Schedule nor in Entry 3 of II Schedule of the Constitution.
It rejected the Bombay view expressed in ,4.
C. Patel vs Vishwanath Chadda, ILR Respectfully, it has to be taken that the legislation in question must be understood in its pith and substance and so understood the Act in question in the instant case, is in respect of transfer of property other than agricultural land and, as such, falls in Entry 6 of List III of the 7th Schedule to the Constitution.
It is clear from the said decision and the subsequent decision reaffirming the same view in V. Dhanapal Chettiar vs Yesodai Ammal, ; that the subject matter of housing accommodation and control thereof falls within the purview of concurrent list.
In that view of the matter, it cannot in my opinion, be canvassed that the 197 1 legislation in question was beyond the competence of the legislature.
With these observations I agree with respect with my learned Brother that the appeal should be dismissed without any order as to cost section RANGANATHAN, J. The first appellant is a private limited company.
The company is occupying a portion of premises No. 18, Russel Street, Calcutta.
The premises belong to the United Commercial Bank, a statutory corporation constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970.
The appellant company claims to be the tenant of the Bank but this is not admitted by the respondent Bank.
The Bank alleges that the appellant company, when somewhat differently constituted, had been allowed to occupy a portion of the Bank 's premises as licensee in consideration of 500 certain accountancy and secretarial services which it was required to render to the Bank.
It appears that sometime in 1975 the respondent Bank issued a notice of eviction to the appellant company under Section 13(6) of the West Bengal Premises Tenancy Act, 1956 (hereinafter referred to as 'the 1956 Act ').
Subsequently, however, the Bank issued a notice dated 4.2.1977 to the appellants under the Public Premises (Eviction of Unauthorised occupants) Act, 1971 (hereinafter referred to as 'the 1971 Act '), which is an Act of Parliament.
The appellants thereupon filed a writ petition in the Calcutta High Court being Matter No. 676 of 1978.
Though several contentions appear to have been raised in the writ petition, the judgment of the Division Bench of the Calcutta High Court dated 12th February, 1987, (which is the one presently under appeal) records that "the only question which has been mooted and agitated before us is whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it has been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government is ultra vires as it was beyond the legislative power of the Parliament to extend the applicability of the said Act to such premises." Though the appellants are interested only in denying the legislative power of Parliament in so far as it purports to extend the applicability of the 1971 Act to premises belonging to or taken on lease by what may be described as public sector corporations, the contention as urged is somewhat broader.
The argument goes to the extent of urging that only the State legislatures, and not Parliament, is competent to legislate on the topic of landlordtenant relationships in respect of land and buildings.
This has been the principal contention addressed to us by Dr. Chitale appearing on behalf of the appellants.
The 1971 Act received the assent of the President on 23rd August, 1971 but it is deemed to have come into force on the 16th day of September, 1958 for certain 'historical ' reasons which are not relevant for our purposes.
The Act provides for the eviction of 'unauthorised occupants from public premises and for certain incidental matters.
section 2(c) defines premises ' to mean 'any land or any part of a building and to include garden, grounds and outhouses appurtenant to the building or fittings affixed thereto '.
The expression 'public premises ' has been defined in Section 2(e) of the Act.
This definition is in three parts.
Sub clause ( 1) of clause (e) takes in premises belonging to, or taken on lease or requisitioned by, or on behalf of, the Central Government, as well as premises placed by that Government under the control of either House of Parliament for providing residential 501 accommodation to the members of the staff of the Secretariat of either House of Parliament.
Sub clause (3) of clause (e) takes in premises belonging to certain local authorities in the Union Territory of Delhi.
Sub clause (2) of clause (e) brings in premises belonging to or taken on lease by, or on behalf of, various kinds of bodies, such as Universities, Institutes of Technology, Board of Trustees of Major Port Trusts and the Bhakra Management Board.
It takes in any premises belonging to or taken on lease by, or on behalf of, a Government company or its subsidiary.
It also takes in and this is what we are concerned with here premises of "any corporation (not being a company as defined in section 3 of the or a local authority) established by or under a Central Act and onwed or controlled by the Central Government".
There is no dispute that the premises in question in the present appeal is "public premises" within the meaning of the Act.
The Act contemplates the appointment of an Estate officer who is a high placed officer of the Government or of the relevant statutory authority in respect of public premises controlled by that authority.
The Act enables the Estate officer to call upon "unauthorised occupants" of public premises (meaning persons occupying such premises without authority or continuing in occupation after the authority to do so has expired or has been determined for any reason) to show cause why they should not be evicted and to proceed to evict them, if need be, after considering the cause, if any, shown by the persons concerned in response to a notice served on them.
It also contains powers to remove unauthorised constructions, demolish unauthorised constructions, dispose of property left on public premises by unauthorised occupants, require payment of rent or damages in respect of public premises and so on.
An order passed by the estate officer, under the provisions of the Act, is appealable, the appellate authority being the District Judge or such other judicial officer of not less than 10 year 's experience as a District Judge and subject to the above right of appeal, the orders passed by the estate officer are final.
Section 15 bars the jurisdiction of Courts to entertain any suits or proceedings in respect of, inter alia, the eviction of any person who is in unauthorised occupation of public premises.
This, broadly, is the outline of the 1971 Act.
Before proceeding to deal with the contentions urged before us, it is necessary to refer to two more enactments, which have a bearing on the topic of discussion before us.
It has been mentioned earlier that the Bank had served a notice on the appellants under the 1956 Act.
This Act, which received the H 502 assent of the President on 30th March, 1956, is on the pattern of the lease and rent control legislation prevalent in various States.
It regulates, inter alia, the matter of eviction of tenants of buildings situated in Calcutta and certain important cities and localities of the State where there is scarcity of housing accommodation.
It is not necessary to set out the provisions of this Act except one.
Under the second proviso to section 1(3) the Act is not to apply to (a) any premises belonging to any local authority, (b) any premises belonging to or requisitioned by Government and (c) any tenancy created by Government in respect of any premises taken on lease by Government.
The premises in the present case does not fall within any of these categories and, according to the appellants before us, the provisions of 1956 Act were squarely applicable and should have been resorted to by the Bank for evicting them.
This is one.
The other relevant statute is the West Bengal Public Land (Eviction of Unauthorised occupants) Act, 1962, (hereinafter referred to as 'the 1962 Act ').
This legislation is on the same pattern as the 1971 Act, a pattern which appears to have been in existence in various States, conferring special powers on statutorily named officers to evict unauthorised occupants of public premises.
The definitions of 'land ', 'public land ' and 'unauthorised occupation ' contained in sections 2(2), 2(7) and 2(8) are so wide as to leave no doubt that the premises belonging to the Bank would be within the scope of the said Act and that proceedings for eviction of the appellants could also be initiated by the Collector under that Act.
It thus appears that the procedure for the eviction of the petitioners will be governed by the 1971 Act as well as either or both of the State Acts and the question is, which of these will prevail? The appellants urge that a legislation of this type will fall within the legislative field exclusively open to the State legislatures and that the 1971 Act is ultra vires Parliament in so far as it purports to affect the appellants ' rights.
It will be convenient, at this stage, to set out all the relevant entries in the Seventh Schedule of the Constitution that may have a bearing on the discussion before us along with the corresponding entries under the 7th Schedule to the Government of India Act, 1935.
These are: CONSTITUTION 1935 ACT List I Union List List I Federal List ENTRY 3 ENTRY 2 Delimitation of cantonment Naval, military and air force works; 503 areas, local self government local self government in cantonment in such areas, the consti areas, the constitution and powers tution and powers within within such areas of cantonment such areas of cantonment authorities, the regulation of house authorities and the regula accommodation in such areas, and the tion of house accommodation delimitation of such areas.
including the control of rents in such areas.
ENTRY 10 ENTRY 32 Works, lands and buildings vested Property of the Union and in, or in the possession of, His the revenue therefrom, but Majesty for the purposes of the as regards property situated Dominion (not being naval, military in a State* * * subject to or air force works), but? as regards legislation by the State, save property situate in a Province, in so far as Parliament by law subject always to Provincial otherwise provide.
legislation, save in so far as Dominion law otherwise provides, and, as regards property in an Acceding State held by virtue of any lease or agreement with that State, subject to the terms of that lease or agreement.
ENTRY 43: ENTRY 33: Incorporation7 regulation Corporations, that is to say, the and winding up of trading incorporation, regulation and corporations, including winding up of trading corporations, banking, insurance and including banking, insurance and financial corporations hut financial corporations, but not not including co operative including corporations owned or societies.
controlled by an Acceding State and carrying on business only within that State or co operative societies, and of corporations, whether trading or not, with objects not confined to one unit, ENTRY 44: but not including universities.
Incorporation, regulation and winding up of corpora tions, whether trading or not, with objects not confined to one State, but not including universities.
504 LIST II STATE LIST LIST II PROVlNClAL LIST ENTRY 18: ENTRY 21: Land, that is to say, rights Land, that is to say, rights in or over land, land tenun in or over land, land tenures, including the relation of including the relation of landlord and tenant, and the landlord and tenant, and the collection of rents; transfer collection of rents; transfer, and alienation of agricultural alienation and devolution of land; land improvement a agricultural land; land agricultural loans; improvement and agricultural colonization.
loans; colonization; courts of Wards; encumbered and attached estates; treasure trove.
List 111 CONCURRENT LIST LIST 111 CONCURRENT LIST ENTRY 5: ENTRY 7: Marriage and divorce; infants, Wills, intestacy, and succession, and minors; adoption; wills save as regards agricultural intestacy and succession; land.
joint family and partition; all matters in respect of which parties in judicial proceedings were immedia tely before the commencement of this Consti tution subject to their personal law.
ENTRY 6: ENTRY 8: Transfer of property other Transfer of property other than agricultural land; than agricultural land; regis registration of deeds and tration of deeds and documents.
documents.
ENTRY 7: ENTRY 10: Contracts, including part Contracts, including partnership, ship, agency, contracts of agency, contracts of carriage, carriage, and other special and other special forms of forms of contracts, but not contracts,but not including including contracts relating contracts relating to agricultural land.
to agricultural land.
505 One thing may be made clear at the outset.
The present argument may not have been open to the appellants if the premises of the bank could be said to be premises belonging to the Union Government.
In that case, the legislation to the extent it governs such premises can be said to fall under entry 32 of List I as one covering the "property of the union".
Though, the premises being situated in Calcutta, any legislation under that entry in regard thereto would be subject to State legislation, the State legislation can only govern "save in so far as Parliament by law otherwise provides".
Parliament having provided otherwise by the 1971 Act, that Act will, it can be said, prevail over the 1956 and 1962 Acts.
It is, however, common ground before us that though the Bank is a corporation wholly owned and controlled by the Government, it has a distinct personality of its own and its property cannot be said to be the property of the Union.
The position, indeed, is beyond the pale of controversy after the decisions of this Court in Bacha.
F.Guzdarv.
C. r. T.; , ; State Trading Corporation of India Ltd. vs C.T.O.,[1964] 4 S.C.R. 99; A.P. State Road Transport Corporation vs I.T.O. [1964] 7 S.C.R. 17; Heavy Engineering Mazdoor Union vs State, ; Vidarbha Housing Board vs I. T. O.,[1973] and Western Coalfields Ltd. vs Special Area Development Authority, ; It is, therefore, not possible for the respondents to support the legislation, qua the premises in question, under Entry 32 of List I. Entry 32 of List I being out of the way, Dr. Chitale, appearing on behalf of the appellants, contends that the legislation squarely falls under Entry 18 of List II.
He points out that judicial decisions have given the word `land ' in Entry 18 a very wide interpretation so as to comprehend not only land of all types rural or urban, agricultural or non agricultural, vacant or built up but also `buildings ' put up thereon.
Since the entry specifically includes the relationship of landlord and tenant, there can be no doubt that tenancy legislations pertaining to land and buildings derive their authority from Entry 18.
He referred in this context inter alia, to Manohar vs C. Desai, AIR 1951 Nag 33; A. C. Patel vs Vishwanath Chadda, ILR , Raman Doss v State, AIR 1954 ALL 707; Darukhanawala vs Khemchand, ILR ; M. Karuna vs State, AIR 1955 Nag.
153; Kevalchand vs Dashrathlal, I.L.R. ; Sukumar Dutta vs Gauriskanker, ; Raval & Co. vs Ramackandran, AIR 1967 Mad. 57 and a detailed and comprehensive judgment of Parekh J. in Elliot Waud and Hill P. Ltd. vs L.I.C., [1980] Bom.
C.R. 590 Which we are informed is pending consideration on appeal, before a Full Bench of the Bombay High Court.
We do not, however, propose to discuss 506 these cases at length firstly, because there is a contrary line of decisions also vide Mangtulal vs Radheshyam, AIR 1953 Pat.
14; Milap Chand vs Dwarakadas, AIR 1954 Raj. 252; Nawal Mal vs Nathu Mal, AIR 1962 Raj 193, Rama Sundari vs Indu Bhushan, AIR 1967 Cal 355; L.S. Nair vs Hindustan Steel Ltd., AIR 1980 M.P. 106 and Bapalal & Co. vs Thakur Das, AIR 1982 Mad. 309 and the judgment presently under appeal and secondly, because a question as to the interpretation of Entry 18 (or its predecessor, Entry 21 of the Provincial List under the Government of India Act, 1935, (hereinafter referred to as 'the 1935 Act ') had arisen before the Federal Court and the Privy Council and some of the above judgments have also been considered in certain earlier decisions of this Court.
It would, therefore, be appropriate to refer to these decisions: (1) The earliest of the decisions relevant in this context is the decision of the Federal Court in United Provinces vs Atiga Begum, That case was concerned with the interpretation of Entry 21 of List II in the Seventh Schedule to the Government of India Act, 1935.
It raised the issue of the validity of the United Provinces Regularisation of Remissions Act (14 of 1938).
In view of an unprecedented fall in the prices of agricultural produce, the United Provinces Government directed a remission in the rents payable by tenants to their landlords.
But this remission was declared by the High Court to be unauthorised and inoperative as being in contravention of the provisions of the Agra Tenancy Act, 1926.
The Provincial Legislature, therefore, passed the impugned Act which precluded any question as to the validity of the orders of remission being raised in courts.
This Act was held by a Full Bench of Allahabad High Court to be ultra vires the Legislature.
The Provincial Government appealed to the Federal Court.
The Federal Court held that the legislation was clearly governed by Entry 21.
The learned Chief Justice observed: "The subjects dealt with in the three legislative lists are not always set out with scientific definition.
It would be practically impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every other item in that List, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import.
In the case of some of these categories such as "Local Government", "Education", "Water", "Agriculture" and "Land", the general word is amplified and explained by a number of example or illustrations, some of 507 which would probably on any construction have been held to fall under the more general word, while the inclusion (of) others might not be so obvious.
Thus "Courts of Wards" and 'treasure trove ' might not ordinarily have been regarded as included under the head "Land", if they had not been specifically mentioned in item no 21.
I think, however, that none of the items is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
I deprecate any attempt to enumerate in advance all the matters which are to be included under any of the more general descriptions; it will be sufficient and much wiser to determine each case as and when it comes before this Court.
" The Court then proceeded to hold that, if the Provincial Legislature could legislate in respect of collection of rents, it must also have the power to legislate with respect to any limitation on the power of a landlord to collect rents, that is to say, with respect to the remission of rents as well as to their collection.
(2) The next decision, on certain observation in which Dr. Chitale placed considerable reliance is that of the Privy Council in Megh Raj vs Allah Rakhia, AIR 1947 PC 72.
In that case the question was whether the Punjab Restitution of Mortgaged Lands Act, an Act of the Punjab Legislature, was void as being ultra vires of the Punjab Legislature.
The Act applied to mortgagees in possession of certain lands.
The expression 'land ' was defined as "land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture" and included, inter alia, "the sites of buildings and other structures on such lands.
" The object of the impugned Act was the relief of mortgagors by giving them restitution of the mortgaged premises on conditions more favourable than those under the mortgage deed and by providing for a procedure before the Collector which was more summary than that before the ordinary Courts.
The contention before the Privy Council, on behalf of the Punjab Province, was that the provisions of the impugned Act were traceable to item 21 supplemented, it need be, by item 2 of the Provincial Legislative List of the 1935 Act.
The appellants, on the other hand, contended that the impugned Act went beyond the limits of the Legislative powers of the Province under list II and could not be supported by invoking the 508 powers of the Province under List III (i.e. Entries 4, 7, 8 and 10 corresponding to Entries 13, 5, 6 and 7 of List III under the Constitution).
It was pointed out that certain provisions of the impugned Act were repugnant to the provisions of the Indian Contract Act and the Code of Civil Procedure.
The Judicial Committee came to the conclusion that the legislation was clearly covered by Entry 21 in List III.
In so holding, they observed: "The key to item 21 is to be found in the opening word "land".
That word is sufficient in itself to include every form of land, whether agricultural or not.
Land indeed is primarily a matter of provincial concern.
The land in each Province may have its special characteristics in view of which it is necessary to legislate, and there are local customs and traditions in regard to land holding and particular problems of provincial or local concern which require provincial consideration.
It would be strange if the land in a province were to be broken up into separate portions some within and some outside the legislative powers of the province.
Such a conflict of jurisdiction is not to be expected.
Item 21 is part of a constitution and would on ordinary principles receive the idest construction, unless for some reason, it is cut down either by the terms of Item 21 itself or by other parts of the constitution which has to be read as a whole.
As to Item 21 "land", the governing word is followed by the rest of the item, which goes on to say, "that is to say".
These words introduce the most general concept "rights in or over land." "Rights in land" must include general rights like full ownership or leasehold or all such rights.
"Rights over land" would include easements or other collateral rights, whatever form they might take.
Then follow words which are not words of limitation but of explanation or illustration, giving instances which may furnish a clue for particular matters; thus there are the words "relation of landlord and tenant and collection of rents.
" These words are appropriate to lands which are not agricultural equally with agricultural lands.
Rent is that which issues from the land.
Then the next two sentences specifically refer to agricultural land, and are to be read with item 7, 8 and 10 of List 3.
These deal with methods of transfer or alienation or devolution which may be subject to federal legislation but do not concern the land itself, a sphere in which the provincial and federal powers are con 509 current, subject to the express exception of the specific head of agricultural land which is expressly reserved to the provinces.
The remainder of Item 21 specifies important matters of special consequence in India relating to land.
The particular and limited specification of agricultural land proves that "land" is not used in Item 21 with restricted reference to agricultural land but relates to land in general.
Item 2 is sufficient to give express powers to the provinces to create and determine the powers and jurisdiction of Courts in respect of land, as a matter ancillary to the subject of item 21.
It is next necessary to consider the terms of the impugned Act, which it is said is ultra vires of the Province, and compare them with the terms of the constitution just quoted.
But before that is done, it may be observed that there is no express provision in the constitution referring by name to mortgages, though mortgages are of particular importance in India as a subject of ordinary business life and of litigation and of legislation.
But a constitution does not generally deal with particular transactions or types of transactions, and mortgages of land would, in their Lordships ' judgment, as a matter of construction, properly fall under Item 21 in so far as they are mortgages of land, though in certain aspects they include elements of transfer of property and of contract.
But they form a type of transaction which may properly be regarded as sui generis, incidental to land and included within Item 21 except in so far as they fall within Items 8 and 10 of List 3 which again contain an express exception in the case of agricultural land.
Their Lordships cannot accept the view that so important a subject as mortgages was left out of the Constitution and merely left to the Governor General 's powers under section 104, Constitution Act as a residual subject.
So far as land at least is concerned, Item 21 would include mortgages as an incidental and ancillary subject.
The impugned Act, as already explained, has the main purpose of giving relief to mortgagors by enabling them to obtain restitution of the mortgaged lands on terms less onerous than the mortgage deeds require.
It is limited to existing mortgages of land as defined in section 3, effected prior to 8.6.1901.
That definition restricts it to land "occupied or 510 let for agricultural purposes or for purposes subservient to agriculture or for pasture".
The addition of the word "pasture" has been relied on as extending the scope of the Act beyond agriculture, but pasture is certainly "land" within Item 21 or Item 3.
It may have been mentioned ex abundanti cautela but in any case it is sufficiently allied to agriculture generally to be treated as a species of agricultural land or at least as land occupied or let for purposes subservient to agriculture and as such within the general scope of an Act dealing with agricultural land.
Section 3 of the Act goes on, it is true, to give a number of specific types of land which are included, but they are all governed by the controlling words of sub.s.(1) which limits the whole Act to agricultural land in the sense already stated.
Thus head (b) of sub s (1) of section 3, must be read as referring to an estate or holding in the only class of land with which the Act deals.
The same is true of all the other heads in the sub section, dues, rent, water rights, occupancy, trees, all come within the category of rights in or over land within Item 21 List 3, and all are governed by the same controlling reference to agriculture or agricultural purposes.
This reading of the section is supported by the qualification of trees as trees standing on such land, that is agricultural land.
Section 7 and 8 of the impugned Act embody its main substantive provisions for the refief of mortgagors and need not be repeated here.
The rest of the Act deals with ancillary matters like procedure which fall within the powers given by Item 2 and also by Item 21.
If, as their Lordships think, the impugned Act is limited to agricultural land, items, 7, 8 and 10 of List III do not affect the position at all since agricultural land is excluded in these entries.
But, in any event, the Act does not deal with wills or transfer of property at all; it does certainly deal with mortgages but, as their Lordships have already stated, mortgage though not expressly mentioned in the Constitution, are properly to be classed not under the head of contracts, but as special transactions ancillary to the entry of "land" (3) The next decision of this court to which our attention is drawn is the decision of this court in Atma Ram vs State of Punjab, [1959] (Suppl.
1) SCR 748.
The poini in controversy in this decision 511 was the constitutional validity of the Punjab Security of Land Tenures Act (10 of 1953) as amended by Act 11 of 1955, which sought to provide for the security of land tenure and other incidental matters.
The impugned Act admittedly dealt with holdings as defined in the Punjab Revenue Act, 1887.
It limited the area which might be held by a land owner for the purpose of self cultivation and released surplus area to be utilised for resettling ejected tenants.
Section 18 conferred upon tenants the right to purchase from the land owners the lands held by them and thus themselves to become the land owners at prices which would be below the market value.
The land owners affected by the impugned Act contended that under Entry 18 of List II of the Seventh Schedule to the Constitution the State Legislature was incompetent to enact a law limiting the extent of land to be held by a land owner and that the provisions of the impugned Act contravened their fundamental rights.
On the question of the legislative competence the Court made the following observations: "At the outset, it is necessary to deal with the question of legislative competence, which was raised on behalf of some of the petitioners, though not on behalf of all of them.
This argument of want of legislative competence goes to the root of the impugned Act, and if it is well founded, no other question need be gone into.
It has been argued that Entry 18 of List II of the Seventh Schedule to the Constitution, should not be read as authorising the State Legislature to enact a law limiting the extent of the land to be held by a proprietor or a landowner.
Entry 18 is in these words:" " 18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization." "It will be noticed that the Entry read along with article 246(3) of the Constitution, has vested exclusive power in the State to make laws with respect to "rights in or over land, land tenures including the relation of landlord and tenant . ".
The provisions of the Act set out above, deal with the landlord 's rights in land in relation to his tenant, so as to modify the landlord 's rights in the land, and correspondingly, to expand the tenant 's rights therein.
Each of the expressions "rights in or over land" and "land 512 tenures", is comprehensive enough to take in measures of reforms of land tenures, limiting the extent of land in cultivating possession of the land owner, and thus, releasing larger areas of land to be made available for cultivation by tenants.
Counsel for some of the petitioners who challenged the legislative competence of the state Legislature, were hard put to it to enunciate any easily appreciable grounds of attack against Entry 18 in List II of the Seventh Schedule.
It was baldly argued that Entry 18 aforesaid was not intended to authorise legislation which had the effect of limiting the areas of land which could be directly held by a proprietor or a land owner.
It is difficult to see why the amplitude of the words "rights in or over land" should be cut down in the way suggested in this argument.
" In support of its conclusion, the Court referred to the decisions United Provinces vs Mst.
Atiqa Begum, and Megh Raj vs Allah Rakhia, AIR 1947 PC 72.
We may next refer to the decision in Manaklal Chhotalal vs M.G. Makwana & Ors. ; The question here arose in the context of the Bombay Town Planning Act.
A scheme drafted by the Ahmedabad Municipal Corporation after following the procedure prescribed under the Act was sanctioned by the State Government.
As a result of this the petitioners were allotted a much smaller extent of land than they originally owned within the city of Ahmedabad and they were also directed to pay certain sums as their share of contribution.
The petitioners challenged the competence of the State Legislature to enact the legislation in question.
The Court upheld the legislation by reference to Entry 18 of List II as well as Entry 20 of List III ("Economic and Social planning").
Reviewing the provisions of the Act in question, the Court came to the conclusion that the legislation in question could be said to be a legislation in regard to land.
Various aspects dealt with in the Act, according to the Court, could be considered to deal with land and accordingly, competence of the State Legislature to enact the measure in question could be found in Entry 18.
Indu Bhusan Bose vs Rama Sundari Devi, ; is a decision of five Judges of this Court and was rendered on an appeal from the Calcutta case cited earlier.
The question for consideration 513 was whether the act of a rent controller in fixing fair rent for certain premises within the cantonment area of Barrackpore was valid.
The claim of the respondent owner was that the appellant was not entitled to the protection of 1956 Act since "regulation of house accommodation including the control of rents" in cantonment areas was the subject matter of Entry 3 of the federal list under the 1935 Act.
The State legislature, it was therefore argued, could not competently extend the 1956 Act (applicable in other parts of the State) to the cantonment areas.
This plea was upheld.
However, one of the contention raised on behalf of the appellants was that the power of Parliament under Entry 3 of List I does not extend to regulating the relationship between landlord and tenant as that power vests in the State Legislature either under Entry 18 of List II or Entries Nos. 6, 7 and 13 of List III.
In support of this contention reliance was placed on a decision of the Bombay High Court in A.C. Patel vs Vishwanath Chada, ILR 1954 Bombay 434, referred to earlier.
In that case, the Bombay High Court was concerned with the applicability of the Bombay Rent Restriction Act (No. 57) of 1947 to contonment areas.
The Court first expressed the opinion that Act was referrable to Entry 21 of the List II of the 1935 Act.
Relying upon the English Interpretation Act applicable to interpret the 1935 Act, the Court held that the word 'land ' in that entry would include buildings also so as to confer jurisdiction on the Provincial Legislature to legislate on relations between landords and tenants of buildings.
Then the Court expressed the view that the legislation could not be said to be one dealing with house accommodation.
The Supreme Court was, however, clear that the legislation was covered by the language of Entry 2 of the Federal List.
However, appropos the first aspect of the High Court 's decision, the Supreme Court observed: "We have felt considerable doubt whether the power of legislating on relationship between landlord and tenant in respect of house accommodation or buildings would appropriately fall in Entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, or in the corresponding Entry.
18 of List II of the Seventh Schedule to the Constitution.
These Entries permit legislation in respect of land and explain the scope by equating it with rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents.
It is to be noted that the relation of landlord and tenant is mentioned as being included in land tenures and the expression "land tenures" would not, in our opinion, appropriately cover tenancy of buildings or of house accommodation.
That expression is 514 Only used with reference to relationship between landlord and tenant in respect of vacant lands.
In fact,.
leases in respect of non agricultural property are dealt with in the Transfer of Property Act and would much more appropriately fall within the scope of Entry 8 of List III in the Seventh Schedule to the Government of India Act read with Entry 10 in the same List or within the scope.
Entry 6 of List III in the Seventh Schedule to the Constitution read with Entry 7 in the same list leases and all rights governed by leases, including the termination of leases and eviction from property leased, would be covered by the field of transfer of property and contracts relating thereto.
However, it is not necessary for us to express any definite opinion in this case on this point because of our view that the relationship of landlord and tenant in respect of house accommodation situated in cantonment areas is clearly covered by the Entries in List I.
In the Constitution, the effect of Entry 3 of List I is that Parliament has exclusive power to make laws in respect of the matters contained in that Entry, notwithstanding the fact that a similar power may also be found in any Entry in List II or List III.
Article 246 of the Constitution confers exclusive power on Parliament to make laws with respect to any of the matters enumerated in List I, notwithstanding the concurrent power of Parliament, and the State Legislature, or the exclusive power of the State Legislature in Lists III and II respectively.
The general power of legislating in respect of relationship between landlord and tenant exercisable by the State Legislature either under Entry 18 of List 11 or Entries 6 and 7 of List 111 is subject to the overriding power of Parliament in respect of matters in List I, so that the effect of Entry 3 of List I is that, on the subject of relationship between landlord and tenant insofar as it arises in respect of house accommodation situated in cantonment areas, Parliament alone can legislate and not the State Legislature .
In the view, we are unable to affirm the view of the Bombay High Court in A. Patel 's case, which is based on the interpretation that Entry ' in List I of the Seventh Schedule to the Government to India Act only permitted laws to be made for requisitioning of property, acquiring of property and allocation of property only.
" The Court then proceeded to consider the decision in Darukhanawala 515 v Khemchand, ILR ; Kewalchand vs Dashrathlal, ILR ; Babu Jagtanand Sri Satyanarayanji ILR 40 Patna at 625 and expressed the view that all these cases had placed a narrow interpretation on the expression "regulation of house accommodation" used in the relevant entry of the Union List.
Having said this, the Court concluded: "On the other hand, the Rajasthan High Court in Nawal Mal vs Nathu Lal, ILR II Rajasthan 421; held that the power of the State Legislature to legislate in respect of landlord and tenant of buildings is to be found in Entries, 6, 7 and 13 of List lll of the Seventh Schedule to the Constitution and not in Entry 18 of List ll, and that power was circumscribed by the exclusive power of Parliament to legis late on the same subject under Entry 3 of List I.
That is also the view which the Calcutta High Court has taken in the judgment in appeal before us.
We think that the decision given by the Calcutta High Court is correct and must be upheld." (6) Dr. Chitale also placed considerable reliance on Union of India vs Valluri B. Chaudhary, ; which dealt with the validity of the Urban Land (Ceiling & Regulation) Act, 1976.
Counsel for the appellant relied, in particular, upon the procedure adopted by Parliament in enacting this piece of legislation.
The legislatures of eleven States considered it desirable to have a uniform legislation enacted by Parliament for the imposition of a ceiling on urban property for the country as a whole.
They passed resolutions under article 252(1) of the Constitution authorising Parliament to legislate on this topic.
Parliament, accordingly, enacted the Urban Land (Ceiling and Regulation) Act, 1976.
In the first instance, the Act covered the eleven States which had passed the above resolutions.
Subsequently, the Act was adopted by resolution passed by the legislatures of six more States.
The primary object and purpose of the Act was the imposition of a ceiling on vacant land in 'urban agglomerations ', the acquisition by the Government of such land in excess of the prescribed ceiling, the regulation of construction of buildings on such land and matters connected therewith.
All this was done with a view to prevent the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bring about an equitable distribution of land in urban agglomeration to subserve the common good in furtherance of the Directive Principles enunciated in article 39(b) and (c) of the Constitution.
The controversy before the Court 516 turned mainly on the construction of Articles 251 and 252 of the Constitution and certain allied questions.
Dr. Chitale, however, laid em phasis on three important aspects of this legislation and decision.
The first was the language of the resolutions passed by the States in this context, which appear to have been on the same lines and one of which is set out in the judgment.
They contained the following paragraphs: "Whereas this Assembly considers that there should be a ceiling on Urban Immovable Property And whereas the imposition of such a ceiling and acquisition of urban immovable property in excess of that ceiling are matters With respect to which Parliament has no power to make law for the State except as provided in Articles 249 and 250 of the Constitution of India" (underlining added) The second was the preamble to the legislation in question.
After setting out the long title to the Act and the object and purpose of the legislation in terms already described, the preamble to the Act contains the following para: "And whereas Parliament has no power to make laws for the State with respect to the matters aforesaid except as provided in Articles 249 and 250 of the Constitution.
" The third was the following passage from the judgment: "We are afraid this contention cannot be accepted.
It is not disputed that the subject matter of Entry 18 List II of the Seventh Schedule i.e. land covers 'land and buildings ' and would, therefore, necessarily include vacant land.
The expression 'urban immovable property ' may mean 'land and buildings ' or 'buildings or land '.
It would take in lands of every description i.e. agricultural land, urban land or any other kind and it necessarily includes vacant lands." (underlining added) Stopping here for a brief review of the above decisions, it will be seen that except for Indu Bhushan 's case which will be discussed later, the other rulings are not helpful in deciding the issue before us.
Atiqa Begum and Atma Ram concerned a legislation that clearly pertained to 517 land in fact, land governed by systems of land tenure prevalent in the States of Uttar Pradesh and Punjab.
In Allah Rakhia, the impugned Act was limited to agricultural land and, since the items in the concurrent list excluded such land, was covered by Entry 21.
In Maneklal, the legislation primarily concerned land, though not agricultural land, for, as observed in State vs Peter, ; at p. 292, "land is at the base of all development".
It is not quite certain that the provisions of the Act also affected buildings, but if indeed any buildings were affected, that was only incidental.
As pointed out by the Court, the primary target of the legislation was only urban land, the ways and means of developing it and proper utilisation of land situate within the municipal limits.
These decisions no doubt establish two propositions: ( 1) The opening word 'land ' in entry 18 is not restricted to agricultural land as are the latter portions of it.
It would cover all types of land rural or urban, agricultural or non agricultural, vacant fallows or pastures.
(2) The words which follow 'land ' only make it clear that the legislative entry takes in not merely the tangible immovable property one normally describes as land but also all kinds of intangible rights or interests, in or over, land in the broad sense explained above.
The phrases which follow the words "rights in or over land" in the entry are illustrative and are not restrictive.
They only make it clear that the legislative entry takes in not merely the tangible immovable property one describes as land but also all kinds of intangible rights or interests, in or over, land in the broad sense explained above.
But none of the decisions contain any support for the further proposition that the legislative entry should be so interpreted as to cover houses and buildings as well as the relationship of landlord and tenant in regard thereto or the collection of rents therefrom.
We are unable to agree with Dr. Chitale that this further proposition emerges from the decision in Union of India vs Valluri B. Chaudhary, ; The Urban Land Ceiling Act also was a legislation primarily intended to deal with vacant lands.
If one scans the provisions of the Act it is clear that the theme of the Act was only to place a ceiling on vacant lands in cities or what we call urban agglomerations and to ensure equitable distribution of such urban vacant lands.
The pith and substance of the legislation was with regard to urban land and its provisions in respect of buildings were incidental to the main objective of the urban land ceiling.
In this context, it is perhaps not without significance that as against the proposal of the States for a ceiling on 'urban immovable.
property ' Parliament restricted the legislation to vacant land.
In the light of these circumstances the declaration in the preamble to the Act is basically correct that the pith and substance of the legislation was 'land ' and this is exclusively within the State 's legislative domain by 518 virtue of Entry 18 of List II.
We do not also agree with the counsel that the passage extracted from the judgment reflects a decision of the Court that land includes 'lands and buildings '.
It proceeds on a concession to that effect.
That apart, the context of the above observation is also interesting.
The Court was dealing with a contention that the resolution of the States had authorised Parliament to impose a ceiling on urban immovable property and that the legislation imposing a ceiling on urban land was on a different subject and thus contrary to the resolution.
The Court, rejecting this argument, pointed out that since 'urban immovable property ' was a wider expression which also included 'land ', there was no contradiction between the resolution and the legislation.
It is in this context that a reference, on admission, regarding the scope of Entry 18 finds a place in the passage.
Neither was the scope of the entry in issue in the case nor can the isolated sentence, on admission, be treated as a decision by the court.
We now come to Indu Bhushan 's case.
While the counsel for the respondents would have it that this ruling has concluded the present issue in their favour, Dr. Chitale contends that this is not so.
He points out that the court has been careful to say that "it is not expressing any final opinion" regarding Entry 21.
It has, at another place, referred to the framing of house tenancy legislation "either under Entry 18 of List II or Entries 6, 7 and 13 of List III" which also indicates that the Court had not made up its mind as to whether this type of legislation will fall under List II or List III.
It is submitted also that an analysis of the Calcutta and Rajasthan decisions approved by it would show that they had not at all been considering any conflict between entries in Lists II and III and were concerned only with the interpretation of Entry 2 in List I and Entry 21 of List II.
Dr. Chitale, therefore, urges that Indu Bhushan cannot be taken as a decision that house tenancy legislation cannot come under Entry 18 of List II.
We are not, however, persuaded that Indu Bhushan 's case is capable of being brushed aside so easily.
It is true that, ultimately, the decision in that case turned on the wider interpretation of Entry 2 of List I favoured by the Supreme Court in preference to the narrower one preferred by Bombay.
Nevertheless the judgment contains a specific discussion of the terms of Entry 21.
This is because the Bombay High Court had first discussed the terms of this entry and expressed an opinion thereon.
The Supreme Court considered the High Court 's interpretation of the entry and disagreed therewith.
The view of the Supreme Court on the entry has been set out in some detail and cannot be ignored.
Not only this, in the last para of its judgment the Court has 519 reaffirmed the earlier discussion and interpretation.
We have extracted earlier this concluding para of the judgment.
In our view the effect of this para cannot be explained away by trying to analyse the Calcutta and Rajasthan decisions to see what they had actually decided.
The important thing is how the Supreme Court understood what the two High Courts had decided.
This is set out in the two sentences of the last paragraph of the judgment, which have been underlined in the extract set out earlier.
The Supreme Court then specifically affirmed this to be the correct ratio.
We are, therefore, of the opinion that Indu Bhushan must be taken to have expressed a view that premises tenancy legislation in so far as it pertains to houses and buildings is referable not to entry 18 of List II but to entries 6, 7 and 13 of List III.
As pointed out by the learned Attorney General, Indu Bhushun has been understood, as above, in the subsequent decision of the Supreme Court in Jaisingh Jairam Tyagi vs Maman Chand; , The decision of the larger Bench of the Supreme Court in V. Dhanpal Chettiar vs Yesodai Ammal, ; , also re inforces the same line of thinking.
The question for consideration in this case was whether, in respect of a tenancy governed by Tamil Nadu Buildings (Lease and Rent Control) Act, it was necessary for the landlord to issue a notice under section 106 of the Transfer of Property Act terminating the tenancy before he could obtain an order of eviction against the tenant.
This question was answered in the negative.
In the course of its discussion the Supreme Court observed as follows: "Under the Transfer of Property Act the subject of "leases of Immovable Property" is dealt with in Chapter, V. Section 105 defines the lease, the lessor, the lessee and the rent.
Purely as a matter of contract, a lease comes into existence under the Transfer of Property Act.
But in all social legislations meant for the protection of the needy, not necessarily the so called weaker section of the society as is commonly and popularly called, there is appreciable inroad on the freedom of contract and a person becomes a tenant of a landlord even against his wishes on the allotment of a particular premises to him by the authority concerned.
Under section 107 of the Transfer of Property Act a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
None of the State Rent Acts has abrogated or affected this provision.
Section 520 108 deals with the rights and liabilities of lessors and lessees.
Many State Rent Acts have brought about consider able changes in the rights and liabilities of a lessor and lessee, largely in favour of the latter, although not wholly.
The topic of Transfer of Property other than agricultural land is covered by Entry 6 of List III in the Seventh Schedule to the Constitution.
The subject being in the Con current List, many State Rent Acts have by necessary implication and many of them by starting certain provisions with non obstante clause have done away with the law engrafted in section 108 of the Transfer of Property Act except in regard to any matter which is not provided for in the State Act either expressly or by necessary implication.
" The above passage clearly proceeds on the view that the subject matter of housing accommodation falls within the purview of the Concurrent List.
It would have strengthened the landlord 's contention in Dhanpal Chettiar 's case to urge that the terms of the house control legislation being traceable to List II and not to List III, the provisions of the Transfer of Property Act could not affect the same at all.
If Indu Bhushan had been understood as having left the question open, it is difficult to imagine that, before the larger Bench of the Court, counsel would not have raised the issue again.
The discussion and ratio of Dhanpal Chettiar fall into place only on the view that by that time it was taken as settled law that State House control legislations were referable to the legislative powers conferred by the Concurrent List.
So much in regard to precedents.
But, leaving precedents aside, let us proceed to consider the terms of the legislative entry itself, treating the observations in Indu Bhushan as merely of persuasive value.
We agree that entry 18 should be given as wide a constriction as possible consistent with all the other entries in all the three legislative lists.
The entry deals with four main topics: land, transfer and alienation of agricultural land, land improvement and agricultural loans and colonisation.
The second and third of these clearly pertain to agricultural land.
Perhaps the last also does, because, usually, by colonisation we mean conversion into buildings and industrial sites of what was previously agricultural land but, may be, it is wider and includes colonisation of vacant non agricultural land as well.
Any way, as the decisions have unanimously held there is no reason why the first topic viz. land should be narrowly interpreted.
It should be understood as including all types of land rural or urban, agricultural or non agricultural, arid, cultivated, fallow or vacant.
But, what is 'land '? This can 521 be gathered from the other words of the entry which attempt a paraphrase.
They say in effect that legislation in regard to 'land ' will comprise of legislation in regard to three things, that is to say, (i) rights in or over land; (ii) land tenures, including the relationship of landlord and tenant; and (iii)collection of rents.
In our opinion, the true import of the word 'land ' can be gathered if we try to ascertain the proper interpretation and ambit of these three phrases, particularly, the first two among them, in the context of other entries in the Union List.
Doing so, is it possible to interpret this entry as encompassing within its terms legislation on the relationship of landlord and tenant in regard to houses and buildings? That is the question.
After careful consideration, we have reached the conclusion that the answer to this question has to be in the negative for a number of reasons: 1.
As pointed out in Megh Raj, there was good reason for placing land ' in the Provincial List.
Land indeed is primarily a matter for provincial concern.
It is well known that land in each Province had its special characteristics.
There were local customs and traditions in regard to landholding and particular problems of local concern which required provincial consideration.
There are no such special features that require placing buildings also in the State list.
The problem of scarcity of house accommodation is a general feature all over the country thanks to India 's post independent industrial development involving large influxes of population into towns, big and small, from the villages.
Urban housing problems are almost the same throughout the country despite minor differences here and there and uniform nationwide legislation in regard thereto, atleast on same common aspects, is also a necessary desideratum.
In other words, the subject is appropriate for an entry in the Concurrent List.
Such a need for a uniform legislation by the Centre was felt even in respect of vacant urban land, (where unlike agricultural land, there are no special features which need varying provincial treatment) despite its being on the State List.
It is all the more imperative in respect of public premises, i.e., buildings belonging to the Union or to public sector corporations which have all India operations.
It is, therefore, only appropriate that 'buildings ' should be an item in the Concurrent Legislative List.
522 2.
A scrutiny of the Legislative lists would show that the Constitution uses different expressions in different places, appropriate to the context and these entries indicate an awareness on the part of the Constitution of the distinction between various kinds of property.
Entries 32, 87 and 88 of List I and Entry 6 of List III use the word 'property ', a word of the widest connotation, which takes in not merely land, buildings and other immovable properties but also all kinds of rights and interests in tangible and intangible properties.
There are Entries 35 and 49 of List II which make specific reference to 'lands and buildings '.
The expression 'land ' is used, therefore, obviously where reference to land only is intended.
Even the width of this expression is cut down and reference is confined only to 'agricultural land ' as in Entries 47 and 48 of List II, 6 and 7 of List III and even 18 of List II.
In this scheme of the entries, it would be inappropriate to interpret the word 'land ' in Entry 18 as including buildings also.
The Bombay case, in interpreting Entry 21 of the 1935 Act, was bound to take into account the terms of section 3 of the (English) Interpretation Act, 1889 which specifically defined 'land ' in the widest sense as including all 'messages, tenements and hereditaments, houses, and buildings of any tenure".
The assistance of the Interpretation Act cannot be invoked to interpret the entries in the Constitution.
The entry in question specifically refers to the relationship of landlord and tenant but this is in the part of the entry which reads: "land tenures including the relationship of landlord and tenant".
The words "land tenures", are not followed by a comma in some of the editions though the 1935 Act and some of the other editions and text books on the Constitution have a comma in between.
But this makes no difference.
The words "tenant" and "tenure" have a common derivation and the expression 'tenure ' no doubt comprehends within it the relationship of landlord and tenant.
But this had to be specified and clarified because in India, the expression "land tenures", as pointed out in Indu Bhushan, has acquired a special significance.
It connotes various types of holdings of land, involving the King or the Government, the zamindar, the inamdar and various other types of holders, lessors, sub lessors, lessees and sub lessees under or through them and evolved at various stages of Indian history by various rulers, nawabs and chieftains Hindu, Muslim and British differently in different parts of the country.
Sir Baden Powell has written a vast treatise on such law systems prevalent in India.
The Constitution in section 31A contains a clue that expression like "estate" and "land tenures" have a special meaning in relation to land, connoting the relationship among 523 its owner, holder and other intermediary for the time being, be it on tenancy or otherwise and the collection of rents therefrom.
Section 31A also describes some of these relationships.
The system had developed so many complications and nuances that a determined liquidation of all these special types of relationships had to be achieved by special provisions in the chapter on fundamental rights.
Viewed in this background, the words "relationship of landlord and tenant and the collection of rents" cannot impart a wider meaning to the words "land" and "land tenure" used in the entry.
While, on the one the hand, the words in Entry 18 have to be given the widest meaning possible, it has to be borne in mind that the entries in the various lists have to be read together and construed in such a manner as to give a meaning and content to all of them.
We need hardly say that the Constitution should be so interpreted as to reconcile all concerned and relevant entries (See: Hoechst Pharmaceuticals vs State, ; and the Dhillon case: ; If we give the word "land" a meaning so as to include buildings and also give the words "rights in or over land" a wide interpretation as we have to, in view of the discussion and ratio in Megh Raj vs Allah Rakhia, AIR 1947 P.C. 72 this entry will be seen to cover almost all kinds of not only transfer but also alienation and devolution of, or even succession to, lands and buildings.
The interpretation thus placed will affect not merely leases and, therefore, a small part of the contents of the item regarding 'transfer of property '; it will apply equally to sales, mortgages, charges and all other forms of transfer of all kinds of interests in land and buildings and this make such a substantial inroad into the scope of Entry 6 in the concurrent list as to denude it of all application except to property other than land and buildings.
The word "property" used in Entry 6 will thus lose even its normal meaning not to speak of its being given the widest meaning possible appropriate to a legislative entry.
It will mean that though transfer of property other than agricultural land is in the Concurrent List, the State will have exclusive power to legislate in respect of transfer of all property in the nature of land and buildings; in other words, for the words "transfer of property other than agricultural land", we will be substituting "transfer of property other than lands and buildings".
It will mean that though wills, intestacy and succession are in item 5 of the Concurrent List, the State can legislate exclusively in respect of devolution of land and buildings of all description.
It will render Entry 35 of List 11 a surplusage in so far as it refers to "lands and buildings".
We do not think that such an interpretation should be favoured.
The more harmonious interpretation would be that any sub 524 ject matter that involves the element of transfer or alienation of any property (other than agricultural land) or of devolution (on testamentary or intestate succession) of any property or contract (other than one in relation to agricultural land) will fall in the Concurrent List and not in the State List even though it may relate to land or buildings.
Another feature of the entries in the Lists also lends support to our view.
Reference has been made to Entry 3 of List I by which, inter alia, Parliament has been given exclusive power to enact lease and rent control legislation in cantonment areas.
Entry 5 of List II is the corresponding entry regarding local self government in areas of States excluding cantonment areas.
Had it been the intention to confer legislative power on the State Legislature in regard to housing and rent control accommodation in the States, one would have expected a repetition in Entry 5 of List Il or, at least, in entry 18 of List II of the words of entry 3 of List I.
We do not think that the omission of those crucial words in Entry S or 18 can be attributed to more inadvertance.
We have earlier referred to Dr. Chitale 's reference to the Urban Land Ceiling Act, 1971 and pointed out how the preamble to the Act does not support counsel 's interpretation of Entry 18.
We may point out, on the other hand, that quite a few (though not all) State Legislations on house and rent control (including the 1956 Act) have been enacted after obtaining the President 's assent.
This indicates a legislative recognition that such legislation stems from the Concurrent List and not the State List.
The learned Attorney General sought to derive some support for his contention also from the wording of Entry 32 of List I which deals with the 'property of the Union ', an expression wide enough to comprehend all kinds of property, essentially lands and buildings.
It does three things at the same time: (a) it enables Parliament to legislate exclusively with respect to all property belonging to the Union; (b) it, however, subjects such power, in so far as property situated within the territory of any State is concerned, to any legislation of the State in regard thereto; (c) it nevertheless authorises Parliament to provide otherwise by law.
525 This language is somewhat analogous to that of article 254(2) and is consistent with a special provision for an item, which, otherwise, would primarily be covered by the Concurrent List on which both Parliament and State Legislature can legislate.
It may be usefully contrasted with Entries like Nos. 23 and 24 of List ll where the language of the entry clearly grants primacy to Parliamentary legislation in regard to a part of the field occupied by an entry in the State List.
There is some force in this contention which, effectively, is that if land and buildings were so clearly covered by Entry 18 of List II, either the wording of entry 32 would have been made subject to List Il of Entry 18, in this regard, like nos.
23 and 24 would have been made subject to List 1. 9.
It is also a relevant consideration that, while the interpretation suggested by appellants completely denies power to Parliament to legislate on the subject matter under consideration, the interpretation preferred by us does not exclude the States ' power to legislate with respect to the topic.
It recognises a concurrent power in Parliament and State Legislatures.
For the reasons discussed above, we are of opinion that all the legislations coming up for consideration in the present case are referable to entries in the Concurrent List and the topic of legislation is not referable to Entry 18 List II.
The provisions of the 1971 Act, in so far as they are made applicable to the premises of the respondent bank are, therefore, intra vires and valid.
Once it is held that the 1971 Act is intra vires Parliament, no further issue between the parties would seem to survive for consideration for, as we have already pointed out, no other contention was raised before the Division Bench of the High Court.
However, there was some discussion before us as to whether the provisions of the 1971 Act, even if intra vires, would prevail against the provisions of the State legislations.
In this context, Dr. Chitale invited our attention to Jain Ink Manufacturing Co. vs LIC, ; where this Court held that the provisions of the 1971 Act will prevail against the provisions of the Delhi Rent Control Act, 1956 and the Delhi Slum Areas (Improvement & Clearance) Act, 1956 on the grounds that it was both a later Act and a special Act.
He submitted that the decision in the case is the subject matter of reference to a larger Bench and that we should, therefore, defer our decision in the present case to await the result of the reference.
We do not think this is called for.
In our opinion, that decision has no reference to the issues before us.
In that 526 case, all the three legislations were Parliamentary legislations (Delhi being a Union Territory) and the question was regarding the inter se overlap among the three Acts touching upon the same subject matter viz. eviction of a tenant by a landlord.
Here the legislations which are said to occupy this, same field are one of Parliament of 1971 and two of the State of West Bengal of 1956 and 1962, all passed in exercise of the powers conferred with respect to matters contained in the Concurrent List.
The resolution of a conflict, if any, between the two will have to be in terms of Article 254 of the Constitution.
This article reads: Inconsistency between laws made by Parliament and laws made by the Legislatures of States (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provisions repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent,.
prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
It will be convenient, before applying the provisions of the article to the facts of the present case, to refer to the elucidation of the scope of its provisions by decisions of this Court.
In Zaverbhai Amaidas vs State, [1955] SCR 799 the question whether a provision in Central Act 527 XXIV if 1946 as amended by the Act LII of 1950 would prevail against a provision in Bombay Act XXXVI of 1947.
Both legislations were referable to the Concurrent List and the State law had been passed after obtaining the assent of the Governor General.
Referring to article 254(2), the Court said: "This is, in substance, a reproduction of section 107(2) of the Government of India Act, the concluding portion thereof being incorporated in a proviso with further additions.
Discussing the nature of the power of the Dominion Legislature, Canada, in relation to that of the Provincial Legislature, in a situation similar to that under section 107(2) of the Government of India Act, it was observed by Lord Watson in Attorney General for Outario vs Attorney General for the Dominion, that though a law enacted by the Parliament of Canada and within competence would over ride Provincial legislation covering the same field, the Dominion Parliament had no authority conferred upon it under the Constitution to enact a statute repealing directly any Provincial statute.
That would appear to have been the position under section 107(2) of the Government of India Act with reference to the subjects mentioned in the Concurrent List.
Now by the proviso to Article 254 (2) the Constitution has enlarged the powers of Parliament.
and under that proviso, Parliament can do what the Central Legislature could not under section 107(2) of the Government of India Act and enact a law adding to, amending, varying or repealing a law of the State, when it relates to a matter mentioned in the Concurrent List.
The position then is that under the Constitution Parliament can, acting under the proviso to article 254(2), repeal a State law.
But where it does not expressly do so, even then, the State law will be void under the provision if it conflicts with a later "law with respect to the same matter" that may be enacted by Parliament.
" Later, the Court observed: "It is true, as already pointed out, that on a question under article 254( 1) whether an Act of Parliament prevails against a law of the State, no question of repeal arises; but the principle on which the rule of implied repeal rests, namely, that if the subject matter of the later legislation is identical 528 with that of the earlier, so that they cannot both stand together, then the earlier is repealed by the later enactment, will be equally applicable to a question under Article 254(2) whether the further legislation by Parliament is in respect of the same matter as that of the State law.
We must accordingly hold that section 2 of Bombay Act No. XXXVI of 1947 cannot prevail as against Section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 as amended by the Act No. LII of 1950.
" It is sufficient to cite certain observations from one more judgment on this aspect: Hoechst Pharmaceuticals vs State, ; which had to consider an alleged conflict between a provision of a State sales tax law and a provision of an order made under the Essential Commodities Act of Parliament.
The case dealt with several points with which we are not here concerned.
Expatiating on the scope of Article 254, the Court observed: "article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State law with regard to the subjects enumerated in the Concurrent List and secondly, for resolving such conflict.
article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter.
(1) lays down that if a State law relating to a concurrent subject is 'repugnant ' to a Union law relating to that subject, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void.
To the general rule laid down in cl.
(1), cl.
(2) engrafts an exception, viz. that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a con current subject.
In such a case, the Central Act will give way to the State Act only to the extent of inconsistency between the two, and no more.
In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concur rent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to the State only.
The predominance of the State law may however be taken away if Parliament legis 529 lates under the Proviso to cl.
The proviso to article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter '.
Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law ill become void as soon as the subsequent law of Parliament creating repugnancy is made.
A State law would be repugnant to the Union law when there is direct conflict between the two laws.
Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together.
" The present case is clearly governed by the primary rule in Article 254(1) under which the law of Parliament on a subject in the Concurrent List prevails over the State law.
article 254(2) is not attracted because no provision of the State Acts (which were enacted in 1956 and 1962) were repugnant to the provisions of an earlier law of Parliament or existing law.
The fact that the 1956 Act was enacted, after being reserved for the President 's assent is, therefore, immaterial.
Even if the provisions of the main part of Article 254(2) can be said to be somehow applicable, the proviso, read with Article 254(1) reaffirms the supermacy of any subsequent legislation of Parliament on the same matter even though such subsequent legislation does not in terms amend, vary or repeal any provision of the State Legislation.
The provisions of the 1971 Act will, therefore, prevail against those of the State Acts and were rightly invoked in the present case by the respondent Rank.
Dr. Chitale, while initially formulating his contentions, outlined an argument that the provision in the 1971 Act appointing one of the officers of the respondent bank as the Estate officers is violative of Article 14.
We do not see any substance in this contention.
In the very nature of things, only an officer or appointee of the Government, statutory authority or Corporation can be thought of for implementing the provisions of the Act.
That apart, personal bias cannot necessarily be attributed to such officer either in favour of the bank or against any occupant who is being proceeded against, merely because he happens to be such officer.
Moreover, as pointed out earlier, the Act provides for an appeal to an independent judicial officer against orders passed by the Estate officer.
These provisions do not, therefore, suffer from any infirmity.
In fact, Dr. Chitale did not pursue this objection seriously.
530 No other contention was urged.
The appeal, therefore, fails and is dismissed.
We would, however, make no order as to costs as it is the existence of a multiplicity of statutory provisions that enabled the appellant to come to Court.
S.L. Appeal dismissed. | The first appellant in this appeal, a private limited company, occupying a portion of the premises belonging to the United Commercial Bank, claimed to be the tenant of the Bank, but this was not admitted by the respondent Bank.
The Bank alleged that the appellant company had been allowed to occupy a portion of the Bank 's premises as licensee in consideration of certain accountancy and secretarial services rendered to the Bank.
The Bank had issued a notice of eviction to the appellant company under the West Bengal Premises Tenancy Act, 1956 ( 'the 1956 Act ').
Subsequently, the Bank issued a notice to the appellants under the Public Premises (Eviction of unauthorised occupants) Act, 1971 ( 'the 1971 Act ') which is an Act of the Parliament.
The appellants filed a writ petition in the High Court, agitating the question whether the impugned Act which provides for eviction of unauthorised occupants from public premises belonging to or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government was ultra vires as it was beyond the legislative power of the Parliament to extend the applicability of the said Act to such premises.
The appellants were interested in denying the legislative power of Parliament in so far as it purported to extend the applicability of the 1971 Act to the premises belonging to or taken on lease by public sector corporations.
Their argument went to the extent of urging that only the State legislatures and not Parliament were competent to legislate on a topic of landlord tenant relationship in respect of land and buildings.
According to the appellants, the provisions of 1956 Act were squarely applicable and should have been resorted to by the Bank for evicting them.
494 The appellants contended that a legislation of the type of West A Bengal Land (Eviction of unauthorised occupants) Act, 1962 (1962Act), which was on the pattern of the 1971 Act, would fall within the legislative field exclusively open to the State Legislatures and that the 1971 Act was ultra vires the Parliament in so far as it purported to affect the appellants ' rights.
Dismissing the appeal, the Court, ^ HELD: Per Sabyasachi Mukharji, J.
His Lordship agreed with Ranganathan, J. that the appeal should be dismissed.
His Lordship preferred the view of the Madhya Pradesh High Court in L.S. Nair vs Hindustan Steel Ltd. Bhilai, A.I.R. 1980 M.P. 106 to the view of the Bombay High Court in Miscellaneous Petition No. 458/79 Elliot Waud Hill (P) Ltd. vs Life Insurance Corpn.
This Court had in this Case proceeded on the short question whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it had been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government, was ultra vires or beyond the legislative power of the Parliament to extend the applicability of the Act to such premises.
[498D G] There was no dispute, as emphasised by Ranganathan, J., as to whether the premises in question or of this type was a public premises.
For the purpose of this appeal, once it was held that the Public Premises (Eviction of Unauthorised occupants) Act was intra vires the Parliament, no further issue between the parties survived.
It was not necessary to consider whether the provisions of the 1971 Act even if intra vires would pervail upon the provisions of the State Legislation.
For the purpose of this appeal, it was unnecessary to express any view on the amplitude and scope of Article 254 of the Constitution.
[498H; 499A B] It had to be taken that the legislation in question must be under stood in its pith and substance, and so understood, the Act in question in this case is in respect of transfer of property other than agricultural land and as such falls in Entry 6 of List III of the 7th Schedule to the Constitution.
It is clear from the decision of this Court in Indu Bhusan Bose vs Rana Sundari Devi and Anr., ; and the subsequent decision in V. Dhanapal Chettiarv.
YesodaiAmmal; , that the subject matter of housing accommodation and control thereof falls within the purview of concurrent list.
In that view 495 of the matter, it could not be convassed that the 1971 legislation in question was beyond the competence of the legislature.
[499C E] Per section Ranganathan, J.
The present agrument of the appellants might not have been open to them if the premises of the Bank could be said to be premises belonging to the Union Government In that case, the legislation to the extent it governs such premises can be said to fall under Entry 32 of List I as one covering the "property of the Union".
Though, the premises being situated in Calcutta any legislation under that entry in regard thereto would be subject to State Legislation, the state Legislation can only govern "save in so far as Parliament by law otherwise provides." Parliament having provided otherwise by the 1971 Act, that Act will prevail over the 11/56 and 1962 Acts.
Though the Bank was a corporation wholly owned and controlled by the Government, it had a distinct personality of its own and its property could not be said to be the property of the Union.
The position was beyond the pale of controversy after the decision of this Court in Bacha F.Guzdar vs C.I.T., ; ; State trading Corporation of India Ltd. vs C.T.O., [1964] 4 S.C.R. 99, and many other cases.
lt was not possible for the respondents to support the legislation qua the premises under Entry 32 of List I. [505A D] Entry 32 of List I being out of the way, the appellants contended that the legislation squarely regularly fell under Entry 18 of List II.
A question as to the interpretation of Entry 18 (or its predecessor, Entry 21 of the Provincial List under the Government of India Act, 1935) had arisen before the Federal Court and Privy Council, and also was considered in some decisions of this Court, which, except in the case of Indu Bhusan Bose vs Rama Sundari Devi, ; , were not helpful in deciding the issue before the Court.
In respect of Indu Bhushan 's case, while the respondents contended that the ruling concluded the issue in their favour, the appellants urged that it could not be taken as a decision that the house tenancy legislation could not come under Entry 18 of List II.
[505E; 506B C; 513C] It was true that the decision in Indu Bhushan 's case ultimately turned on the wider interpretation of Entry 2 of List I favoured by this Court, nevertheless, the judgment contains a specific discussion of the terms of Entry 21.
Indu Bhushan must be taken to have expressed a view that premises tenancy legislation in so far as it pertains to houses and buildinYs is referable not to Entry 18 of List II but to entries 6,7 496 and 13 of List III.
The decision of the larger Bench of this Court in V. Dhonpal Chettier vs Yesodai Ammal, ; , also reinforced the same line of thinking.
The discussion and ratio of Dhanpal Chettier fall into place only on the view that by that time it was taken as settled law that State house control legislations were referable to the legislative powers conferred by the Concurrent List.
[513C; 520D E] Entry 18 should be given as wide a construction as possible consistent with all the other entries in all the three legislative Lists.
There is no reason why the first topic dealt with by the entry, viz. land, should be narrowly interpreted.
lt should be understood as including all types of land, rural or urban, agricultural or non agricultural, arid, cultivated, fallow or vacant, What is 'land ' can be gathered from the other words of the entry which attempt a paraphrase.
It is not possible to interpret this entry as encompassing within its terms legislation on the relationship of landlord and tenant in regard to houses and buildings.
All the legislation coming up for consideration in the present case are referable to entries in the concurrent List and the topic of legislation is not referable to Entry 18 of List II.
The provisions of the 1971 Act, in so far as they were made applicable to the premises of the respondent Bank, are intra vires and valid.
[520F H; 525E] Once it was held that the 1971 Act is infra vires the Parliament, no further issue between the parties survived.
There was some discussion r. before this Court as to whether the provisions of the 1971 Act, even if intra vires, would prevail against the provisions of the State legislations.
This case is clearly governed by the primary rule in Article 254(1) of the Constitution under which the law of Parliament on a subject in the concurrent List prevails over the State Law.
Article 254(2) of the Constitution is not attracted because no provision of the State Acts (enacted in 1956 and 1962) were repugnant to the provisions of an earlier law of Parliament of existing law.
Even if the provision of the main part of Article 254(2) can be said to be somehow applicable, the proviso, read with Article 254(1), reaffirms the supremacy of any subsequent legislation of Parliament on the same matter even though such subsequent legislation does not in terms amend, vary or repeal any provision of the State Legislation.
The provisions of the 1971 Act will, therefore, prevail against those of the State Acts and were rightly invoked in this case by she respondent Bank.
[525F; 529C E] There was no substance in the appellants ' contention that the provision in the 1971 Act appointing one of the officers of the respondent Bank as the Estate officers was violative of Article 14.
[529F] 497 The appeal failed.
L.S. Nair vs Hindustan Steel Ltd. Bhilai, A.I.R. 1980 M.P. 106; Elliot Waud Hill (P) Ltd. vs Life Insurance Corporation Miscellaneous Petiton No. 458/79 before Bombay High Court; Indu Bhusan Bose vs Rama Sundari Devi and Anr. ; ; A.C. Patel vs Vishwanath Chadda, ILR 1954 Bombay 434; V. Dhanapal Chettiar vs Yasodai Ammal, ; ; Bacha P. Guzdar vs C.I.T., ; ; State Trading Corporation of India Ltd. vs C.T.O [1964] 4 SCR 99; A.P. State Raod Transport Corporation vs I.T.O.; , ; Heavy Engineering Mazdoor Union vs State, ; Vidarbha Housing Board vs I.T.O., ; Western Coalfields Ltd. vs Special Area Development Authority; , ; Manohar vs C.G. Deasi, AIR 1951 Nag. 33; Raman Dass vs State, AIR 1954 All.
707; Darukhanawala vs Khemchand, ILR ; M. Karuna vs State, AIR 1955 Nag 153, Kewalchand vs Dashrathlal, ILR ; Sukumar Dutta vs Gaurishankar, ; Raval & Co. vs Ramachandran, AIR 1967 Mad. 57;Mangtulal vs Radhey Shyam, AIR 1953 Pat.
14; Milap Chand vs Dwarakadas, AIR 1964 Raj 252; Rama Sundari vs Indu Bhusan, AIR 1967 Cal. 355; Nawal Mal vs Nathu Mal, AIR 1962 Raj. 193; Bapalal & Co. vs Thakur Das, AIR 1982 Mad. 309; Vnited Province vs Atiga Begum, ; Megh Raj vs Allan Rakhia, AIR 1947 PC 72; Atma Ram vs State of Punjab, [1959] Supp.
1 S.C.R. 748; Manaklal Chhotalal vs M.G. Makwana & Ors., ; ; Babu Jagtanand Sri Satyanarayanji, ILR 40 Patna 625; Union of India vs Valluri section Chaudhary, ; , State vs Peter; , , 292; Jaisingh Jairam Tyagi vs Maman Chand, ; ; Hoechst Pharmaceuticals vs State; , ; Dhillon 's case, [1972] 2 S.C.R. 33; Jain Ink Manufacturing Co. vs LIC, ; and Zaverbhai Amaidas vs State, [1955] S.C.R. 799, referred to. |
on (Civil) No. 1022 of 1989.
(Under Article 32 of the Constitution of India).
Sri Ramulu, A.T.M. Sampath, A.K. Srivastava and Raju Ramchandran for the Petitioners.
Tapas Ray, R.N. Sachthey, P.S. Poti, Yogeshwar Prasad, V.C. Mahajan, U.N. Bachswat, A.S. Nambiar, Kailash Vasudev, Ms. A. Subhashini, Hemantika Wahi, Vasudata Talib, Anip Sachthey, T.T. Kunhikannan, Ms. Rachna Gupta, Mrs. section Dik shit, Ms. section Janani, Ms. Urmila Kapoor, M. Veerappa, K.H. Nobin Singh, Ashok Singh, S.K. Agnihotri, Aruneshwar Gupta, K.C. Bajaj, Ms. Renu George, K. Chaudhary, A.S. Bhasme, H.S. Munjral, G.K. Bansal, R. Mohan, P.K. Manohar, Ms. section Vasude van, B. Parthasarthy, V. Krishnamurthy, A.K. Panda, J.R. Das, D.K. Sinha, D.N. 210 Mukherjee, Gopal Singh, P. Chowdhary, Indra Makwana and K. Swamy for the Respondents.
The Judgment of the Court was delivered by/1 RANGANATH MISHRA, CJ.
This application under Article 32 of the Constitution is by the All India Judges, Association and its working President for reliefs through directions for setting up of an All India Judicial Service and for bringing about uniform conditions of service for members of the subordinate judiciary throughout the country.
Rule having been granted, notice was issued to the Union of India and all the States and Union territories.
Most of them have responded by making returns to the Rule.
A few of the States have taken the stand that they would accept whatever this Court ultimately decides while others have placed their view points and yet some others have objected to the reliefs claimed.
Mr. Sri Ramulu, Chairman of the All India Judges, Asso ciation personally appeared at the hearing.
Mr. Raju Ram chandran on our request appeared to support the petition as amicus curiae.
At the hearing the standing Counsel for the several states and Union Territories have also been heard.
The plea for setting up of an All India Judicial Service was not seriously pressed and reliefs on the following heads were claimed: 1.
Uniformity in the Judicial cadres in the different States and Un ion Territories; 2.
An appropriate enhanced uniform age of retirement for the Judicial Officers throughout the country; 3.
Uniform pay scales as far as possible to be fixed; 4.
Residential accommodation to be provided to every Judicial Officer.
Transport facility to be made available and conveyance allowance provided.
Adequate perks by way of Library Allow ance, Residential Office Allowance and Sump tuary Allowance to be provided.
Provision for inservice training to be made.
Administration of justice and orgamsation of courts was a provincial subject under the Government of India Act, 1935.
The Constitution adopted 211 the same scheme by providing in Entry 3 of List 11 of the Seventh Schedule the subject of administration of justice, constitution and organisation of all courts excepting the Supreme Court and the High Courts as a State subject.
It was only under the 42nd Amendment in 1977 that Entry 3 from List I1 was deleted and the subject as such was taken as Entry 11 A in the Concurrent List.
This had become necessary on account of the recommendation of the Law Commission that an All India Judicial Service should be set up.
Prior to independence, the District Judge used to be invariably a Member of the Indian Civil Service and his position in the district was superior to that of the Dis trict Magistrate.
This position continued until the Indian Civil Service came to be abolished around 1946 47.
This long association of the Civil Service with the judicial manning had led to service conditions of both to be tied up.
Crimi nal justice at that time was handled by Magistrates who belonged to the Executive.
Under the Constitution, the concept of Rule of Law came to be accepted and developed.
Article 50 prescribed the guideline of separating the judiciary from the executive in the public services of the State.
This position is the outcome of recognition of the fact that the judiciary is a class separate from the executive.
The control over the subordinate judiciary has been vested in the High Court and the administrative control has been construed to be complete and exclusive.
Yet, in certain aspects, and particularly in regard to service conditions, the distinction has not been maintained; That is why very often when any specific aspect relating to conditions of service is taken up or benefits for judicial service is considered, comparative basis between the two is adopted for review.
It is high time that this aspect is appreciated and the administrative authorities remain alive to it.
We shall first deal with the plea for setting up of an All India Judicial Service.
The Law Commission of India in its 14th Report in the year 1953 said: "If we are to improve the personnel of the subordinate judiciary, we must first take measures to extend or widen our field of selection so that we can draw from it really capable person.
A radical measure suggested to us was to recruit the judicial service entire ly by a competitive test or examination.
It was 212 suggested that the higher judiciary could be drawn from such competitive tests at the all India level and the lower judiciary can be recruited by similar tests held at State level.
Those eligible for these tests would be graduates who have taken a law degree and the requirement of practice at the Bar should be done away with.
Such a scheme, it was urged, would result in bringing into the subordinate judiciary capa ble young men who now prefer to obtain immedi ate remunerative employment in the executive branch of Government and in private commercial firms.
The scheme, it was pointed out, would bring to the higher subordinate judiciary the best talent available in the country as a whole, whereas the lower subordinate judiciary would be drawn from the best talent available in the Slate".
The Commission proceeded to further state: "Recruitment to the higher judiciary at the all India level in the manner suggested would be a powerful unifying influence and serve to counteract the existing growing regional tendencies.
In this connection, attention may be drawn to the observations made by the States Reorganisation Commission in regard to the creation of the All India Services as a major compelling necessity for the nation.
The Commission observed:. "The raisond"etre of creating All India Services, individually or in groups, is that officers on whom the brunt of responsibility of administration will inevitably fail, may develop a wide and all India outlook .
The present emphasis on regional languages in the Universities will inevitably lead to the growth of parochial attitude, which will only be corrected by a system of training which emphasises the all India point of view . .
It has not been very easy for us to balance these consid erations, but we are definitely of the view that proportion of the higher judiciary should be recruited by competitive examination at the all India level so as to attract the best of our young graduates to the judicial service.
This measure will enlarge the field of selec tion and bring into file higher judicial service a leaven of brilliant young men who will set a higher tone and level to the subor dinate judiciary as a whole.
The personnel so recruited will be subjected to . 'm intensive training.
The rest of the higher judiciary should, in our view, be recruited in part directly from senior members of the Bar, and partly by promotion from the lower subordinate judiciary".
213 Dealing with the same subject from a different angle, the Commission proceeded to say: "The great advantage that the Indian civilian had, was the intensive and varied course of training which he had to undergo.
At the time of his first entry into service, his training was confined to matters pertaining to the revenue and criminal administration alone, but when he was taken over to the judicial side, generally an equally intensive training in civil law was given to him for a period of not less than eighteen months.
There can be no doubt that a similar intensive judicial train ing given to a judicial officer who possesses a law degree can be of the greatest value . .
Indeed, it can be claimed that a planned and systematic training such as is contemplated by us for the judicial officer selected for the Indian Judicial Service may be more effective than the uncertain and spasmodic training which may be received during the course of a few years practice at the Bar.
These and the other considerations referred to earlier have led us to the conclu sion that in the interests of the efficiency of the subordinate judiciary, it is necessary that an All India Service called the Indian Judicial Service should be established.
This will need action being taken in the manner provided by Article 312 of the Constitution".
The Law Commission has reiterated this view in subse quent reports.
It took nearly 20 years for the Government to take follow up action on the basis of the recommendation and that led to the amendment of the legislafive entries as already referred to.
This proposal of the Law Commission and the follow up governmental action led to consultation and dialogue in the Conference of Chief Justices of the High Courts but many of the High Courts were of the view that setting up of an All India Judicial Service would affect the constitutional scheme of control of the High Courts over the subordinate judiciary and in particular Article 235 of the Constitution.
Article 233 makes provision for appointment of District Judges and requires that appointment to such posts has to be made by the Governor of the State in consultation with the appropriate High Court.
Article 234 provides for recruitment of persons other than District Judges to judicial service by prescribing that appointments shall be made by the Governor of the State in accordance with the Rules made by him in that behalf after consulting the State Public Service Com mission and the High Court exercising the jurisdiction in relation to such State.
The post of District Judge has ordinarily been equated with the senior scale status in the All India Services.
It was 214 perhaps not contemplated by the Law Commission that on appointment members of the proposed All India Judicial Service were to hold the post of District Judge.
Like all other All India Services the initial recruitment could be to a lower rank equal to civil judge and after serving in such post for a reasonable time appointment to the post of Dis trict Judge could be made.
Since the Law Commission itself was of the view that a percentage should be filled up by direct recruitment from the Bar, the scheme envisaged by the Law Commission would not require amendment of Article 233.
It is to be examined whether any alterations in Article 234 would be necessary or recruitment to All India Service could be made by appropriate amendment of the State Rules contem plated under that Article.
Control over the subordinate courts under the constitu tional mechanism is vested in the High Court.
Under Article 235, the provision is that the control over District Courts and courts subordinate thereto vests in the High Court.
The main objection against implementation of the recommendation of the Law Commission relating to the setting up of the All India Judicial Service was founded upon the basis that control contemplated under Article 235 of the Constitution would be affected if an All India Judicial Service on the pattern of All India Services Act, 1951, is created.
We are of the view that the Law Commission 's recommendation should not have been dropped lightly.
There is considerable force and merit in the view expressed by the Law Commission.
An All India Judicial Service essentially for manning the higher services in the subordinate judiciary is very much necessary.
The reasons advanced by the Law Commission for recommending the setting up of an All India Judicial Service appeal to us.
Since the setting up of such a service might require amendment of the relevant Articles of the Constitution and might even require alteration of the Service Rules operating in the different States and Union Territories, we do not intend to give any particular direction on this score par ticularly when the point was not seriously pressed but we would commend to the Union of India to undertake appropriate exercise quickly so that the feasibility of implementation of the recommendations of the Law Commission may be examined expeditiously and implemented as early as possible.
It is in the interest of the health of the judiciary.
throughout the country that this should be done.
II The Law Commission in the 14th Report also referred to the various designations provided for judicial officers working in the different States and Union Territories It observed: 215 "In view of the more or less uniform functions performed by the judicial officers so various ly designated, it would, we think, be advisa ble to aim at a uniformity of designation.
There is, however, a fundamental difference in the general scheme of distribution of judicial business between the tower grade of officers (munsifs) on the one hand, and the higher grade of officers (subordinate judges) on the other.
The first has limited pecuniary juris diction while the second, generally speaking, has unlimited pecuniary jurisdiction.
We would, therefore, suggest that the State Judi cial Service Class II should consist of civil judges who should be designated as civil judges of the senior and junior divisions.
Officers corresponding to munsifs would be designated as civil judges (junior division) and those corresponding to subordinate judges would be designated as civil judges (senior division)".
If reference is made to Article 236 of the Constitution, it would be noticed that the expression "District Judge" has been defined to include Judge of a City Civil Court, Addi tional District Judge, Joint District Judge, Assistant District Judge, Chief Judge of a Small Causes Court, Chief Presidency Magistrate, Additional Chief Presidency Magis trate, Sessions Judge, Additional Sessions Judge and Assist ant Sessions Judge.
This definition in Article 236 covers the higher section of the State Judicial Service both in the civil and criminal sides.
The definition is only inclusive and in implementing the recommendations of the Law Commis sion to simplify the designations by saying that the hierarchy of subordinate judicial officers would be District Judge or Additional District Judge, below him Civil Judge (Senior Division) and below him Civil Judge (junior divi sion) does not go against the constitutional scheme nor does it require any amendment of the Constitution.
If there be any laws operating in the States, perhaps the same may have to be appropriately modified or altered if the uniformity recommended by the Law Commission has to work out.
We are inclined to adopt the view of the Law Commission.
On the civil side, the State Judicial Service, therefore, should be classified as District or Additional District Judge, Civil Judge (senior division) and Civil Judge (Junior division).
On the criminal side, there should be a Sessions Judge or Additional Sessions Judge and below him there should be the Chief Judicial Magistrate and Magistrates provided for in the Code of Criminal Procedure.
Appropriate adjustments, if any, may be made of existing posts by indi cating their equivalence with any of these categories.
The process of bringing about such uniformity would require some time 216 and perhaps some monitoring.
We direct that the Ministry of Law and Justice of the Union Government would carry on the monitoring activity and all the States and Union Territories would follow the pattern indicated above by March 31, 1993.
III One of the issues debated at the hearing related to the age of retirement.
The Constitution has fixed the age of retirement of Judges in the High Courts and the Supreme Court at 62 and 65 years respectively.
There is no constitu tional prescription of the age of retirement of the members of the subordinate judiciary and in India that is controlled by the relevant rules obtaining in the different States and Union Territories and it is 58 years at present excepting in the State of Kerala where the age of superannuation is 55 years for all State Government employees including the members of the State Judicial Service.
It is the claim of the petitioners that the age of retirement of the officers of the subordinate judiciary should be fixed at 60 years inasmuch as the basic qualifica tion for recruitment to the service requires every officer to have in the minimum a bachelors degree in law which is acquirable after becoming a graduate.
Thus, while for normal civil service a graduate is eligible, for recruitment to the judicial service a minimum further period of three years becomes necessary to acquire the basic qualification.
In many of the states and the Union Territories, for recruit ment to the post in the judicial service a basic period of experience at the Bar is a pre requisite.
Thus, while for the civil service the age of recruitment varies between 25 and 28 years, for judicial service at the basic level most of the States permit entry upto the age of 32.
In some of the States where direct recruitment of judicial officers for an in between stage is permitted, the age of entry is even upto 35 years.
Article 233(2) of the Constitution provides: "A person not already in service of the Union or of the State shall only be eligible to be appointed a District Judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment".
Keeping this constitutional requirement in view in respect of direct recruitment for District judge, entrance is permitted upto a later age in many States.
Thus at the point of entry into service there is a marked distinction between civil service and the judicial service.
Notwithstanding these special features the history of the service 217 would show that no distinction has been maintained in regard to the age of retirement between officers of the civil service and the officers of the judicial service and over the years the same rule has been applied to both.
This Court in Moti Ram Deka, etc.
vs The General Manager, North East Frontier Railway, Maligaon, Pandu, etc.; , pointed out: "In regard to the age of superannuation, it may be said prima facie that rules of superan nuation which are prescribed in respect of public service in all modern States are based on considerations of life expectation, mental capacity of the civil servants having regard to the climatic conditions under which they work, and the nature of the work they do.
They are not fixed on any ad hoc basis and do not involve the exercise of any discretion.
They apply uniformity to all public servants fail ing under the category in respect of which they are framed . . " Nature of work is thus one of the considerations rele vant to fixing the age of retirement.
There is a marked distinction between the nature of work which executive officers and judicial officers are called upon to discharge.
The work of the judicial officers is usually sedantry while that of the executive officers in volves a lot of physical movement.
This is particularly so in the lower cadres of both the services.
In view of this feature physical fitness is more important for an executive officer than in case of a judicial officer while in case of judicial officers, there is thus necessarily more of a mental activity than physical.
Experience is an indispens able factor and subject to the basic physical fitness with growing age experience grows.
As already indicated, retirement age for High Court Judges is 62 years.
A sizable portion of the manning in the High Court is done by elevating District Judges and those who are elevated continue upto the age of 62 years like directly elevated members of the Bar to the High Court.
There are certain services in the States where retire ment is fixed at the age of 60 years taking into account the special type of work the officers are called upon to per form.
For instance, throughout the country teachers of universities are allowed to serve upto 60 years of age.
Employees under some of the corporations also go upto the age of 60.
Scientific Research Officers are also allowed in many cases the benefit of 60 years age of retirement.
Mr. Poti for the State of Kerala raised serious objection to raising 218 the age of retirement of judicial officers to a common level of 58 years by contending that this would lead to unrest in the other services of the State and everyone would press for the age of retirement being enhanced to 58.
In fact, Kerala had once experimented with the enhanced age for all and has reverted back to the age of 55.
The main ground raised by Mr. Poti to resist the proposal of enhancement is that in the State of Kerala the level of literacy is high and unem ployment is acute.
If the age of retirement is enhanced the scope of the unemployed to get employment would be adversely affected.
We are not impressed by the submission of Mr. Poti on this score.
The total number of judicial officers of every category in the State may not exceed 3,000 or so.
This certainly is not such a big number that might create unem ployment problem in the event of the age of superannuation being brought to the all India level of 58 or even enhanced to a higher limit.
The Law Commission in its 14th Report dealt with this aspect at page 2 13 of the report and said: "There is yet another reason why the question of the age of retirement of the subordinate judiciary should be treated differently from that in other State Services.
As noticed earlier a judicial officer enters service at a comparatively higher age than a recuit to the executive or administrative services.
It would, therefore, be proper that the retire ment age of a judicial officer should be relatively higher than that of an executive officer, so as to enable him to serve for the full number of years if he retains his fitness and capacity of work till he reaches such higher age.
We, therefore, recommend that the retirement age of the subordinate judiciary in all States should be raised to 58 years.
Such a measure will tend to raise the tone and morale of the judicial service as a whole.
It will also be consistent with our recommendation to raise the age of retirement of High Court Judges to 65 years.
" The recommendation that superannuation should be fixed at 58 for judicial officers was made at a time when in public services retirement was prescribed at the age of 55.
Considering the enhancement of the longevity of human life and taking all other relevant considerations into account, all the States and all the Union Territories have now en hanced the age of retirement to 58 years excepting, as already pointed out, in the case of the State of Kerala.
We are of the view that on the logic which was adopted by the Law Commission and for the reasons which we have 219 indicated the age of retirement of judicial officers should be 60 years.
We accordingly direct that appropriate altera tions shall be made in the Rules obtaining in the States and Union Territories in respect of judicial service so as to fix the age of retirement at 60 years with effect from December 31, 1992.
We have given a long period so that appropriate amendments may be made in the meantime.
IV We shall now deal with the claim for appropriate pay scales and on, as nearly as possible, uniform basis.
The 14th Report of the Law Commission dealt with this matter at page 163 of the report and said: "It is the matter of scales of pay and remu neration, the judiciary compares unfavourably with the executive branches of the Government.
It is true that, generally speaking, the scales of pay of the judicial officers and the corresponding executive officers are identical in many of the States.
However, it has to be remembered that the executive officers are, by and large, recruited at a much younger age than the judicial officers.
The entrant to the judicial services is required to be a graduate in law and in most of the States it is also necessary that he should have practised for a certain number of years at the Bar.
On the other hand, for recruitment to the executive branches of Government service, a degree in arts or science is, generally speaking, suffi cient.
In the result, a person entering the judicial service does so when he is about 26 or 27 years of age and at a time when his contemporaries who have entered the executive service of the Government have already ac quired a certain seniority in the service and have come to draw a higher salary.
It will thus be seen that a person joining the judi cial service starts with a lower remuneration than what he would have received if he had entered the executive service for a few years earlier.
It has also to be noted that owing to the lesser proportion of superior posts in the judicial service promotions come less quickly to the judicial officers, and a person who has entered the service as a munsif, assuming that he is fit and fully qualified, takes much longer time to become a district judge than would an equally competent deputy collector to reach the position of a collector.
Again the judicial officer, having started at a later age, has a shorter span of service than the executive officer and this affects his pension and other retirement benefits".
220 We had called for the prevailing pay scales of the different judicial cadres in the States and the Union Terri tories and the same have been made available to us.
We found that there is wide violence in the pay structure prevailing in the various States and Union Territories and for the same nature of work performed by the judicial officers they are remunerated differently.
It is difficult for us on the data now placed to get into the exercise of fixing the appropri ate pay scales.
We suffer a handicap in the absence of full details necessary for fixing the appropriate pay scales on comparative basis.
Again, we are apprehensing that if we enter into the matter and say something in a final way, it is possible that in some States benefits which are now available may be taken away or adversely affect some offi cers.
For these reasons, we do not propose to finally exam ine the propriety of the existing pay scales nor do we direct any pay scales to be fixed.
A Pay Commission for the Central Government employees was appointed about 8 years back and on the basis of its Report the revised benefits have been given effect to from January 1, 1986.
Following that pattern, most of the States have either given the Central scales or appointed their own commissions or committees and given the revised benefits to their officers.
It appears that with an interval of 10 years or so such a commission is being appointed and pay scales are being reviewed.
Such an exercise is likely to be under taken within less than three or four years.
We are of the view that the claim on this score can be better handled when the pay commissions or committees in the States are set up to review the position.
We direct that as and when such commissions or committees are set up in the States and Union Territories hereafter, they separately examine and review the pay structure of judicial officers keeping in view all relevant aspects.
V. Under this head, however, we would like to deal with the claim for various allowances.
Unlike the administrative officer, the judicial officer is obliged to work for long hours at home.
When he reserves a judgment he has usually to prepare the same at his residence.
For that purpose, he has to read the records as also the judicial precedents cited by counsel for the adversaries.
Even otherwise with a view to keeping himself uptodate about the legal position he has to read judgments of his own High Court, other High Courts and of the Supreme Court.
He has also to read legal journals.
The judicial officer very often has no provision of an officer at his residence.
Unless a reasonable allowance is provided for maintaining an office, it became very difficult for him to undertake the various aspects 221 of the exercise referred to above.
We are of the view that a residential office allowance should be admissible to every judicial officer.
The same for the civil judge (junior division) and the civil judge (senior division) be fixed at the rate of Rs. 250 per month and officers of the higher category the monthly allowance should be Rs. 300.
Law books, Law repons and legal journals are indispens able to a judicial officer.
They are in fact his tools and in case a junior officer has to discharge his duties satis factorily he has to get acquainted with these.
His ability to perform his duty to a considerable extent depends upon his reading habit and devoting a sizeable working time to reading all this literature.
Reading habit is indispensable to a judicial officer and possession of a small library of one 's own helps generation of the proper reading habit.
Law books and Law journals have in particular become very costly these days.
One standard Law journal for the decisions of the High Court, another for the decisions of this Court and one or two Standard Law journals on the average would cost about Rs. 200 a month.
There is no existing system of providing Law books and journals to the officers of the lower judiciary.
Many of the judicial officers in the lower ranks have their working places away from the district headquarters where the seat of the district judge is located.
There is perhaps at every district headquarter a small library but the number of books is small and more than one copy of many of the books would not be available.
Therefore, whether it is at the district headquarter or in areas away therefrom, effective library facility is not available.
We are of the view that a uniform pattern of small library should be provided to every judi cial officer.
We accordingly direct that such a library shall be made available by 30.6.2992 to every judicial officer and the District Judge should have provision made in his budget for the said residential library for every judi cial officer under his control.
The High Court should moni tor this aspect effectively so that without loss of time, a handy library may be at the disposal of every judicial officer.
The District Judge is the principal judicial officer of the district.
Ordinarily every revenue district has a dis trict judge and his seat is located at the headquarter.
In heavy stations, the district judge has a team of additional district judges to assist him.
There would also be a number of judicial officers of lower categories working at the headquarters.
It is the obligation of the district judge to operate as the captain of the team both under his direct supervision at the headquaters and in respect of the offi cers located in different areas within his district.
Of late, lower or subordinate courts are being established in the outlying and rural interior.
It is the 222 obligation of the district judge to inspect the outlying courts, maintain the proper judicial tempo and temper of functioning in his district and be responsible for the efficient running of the system.
In many of the States the prevailing practice is that the district judge takes a monthly meeting with the collec tor and district magistrate and the superintendent of po lice.
He also meets the members of the Bar.
Now and then he meets his judicial officers those at the headquarters as also the others who are in the interior.
It is desirable that the district judge devotes some time as frequently as possible and at least once a week to meet the judicial officers beyond the working hours, discusses working prob lems of his officers and forms his own opinion about now the work is being done.
A weekly assessment of such perform ance generates even temper of judicial activity and upholds the tempo being maintained at the appropriate level.
There is not yet any definite system of judicial training in most of the States and Union Territories.
A judicial officer with his first posting or until he acquires adequate experience requires guidance.
It should ultimately be the obligation of the district judge to provide the same, we are of the view that to the post of district judge a monthly allowance of Rs. 300 by way of sumptuary allowance should be available to enable him to extend small courtesies at such meetings.
The chief judicial magistrate does some of these activities in respect of the magistrates handling criminal work.
In our opinion he should be entitled to a sum of Rs. 200 per month by way of sumptuary allowance.
We are aware of the fact that under the conditions of Service Act of High Court Judges, a sumptuary allowance of Rs. 300 is payable to them every month.
Now that we have directed that Rs. 300 should be fixed for the district judges, we command that the sumptuary allowance fixed for the High Court Judges may be enhanced suitably.
These allowances shall be payable from 1.4.1992.
We would like to add that this allowance is intended for utilisation to the full extent for entertaining judicial officers in connection with preformance of duty and would not be considered as a perk for being included in the hands of the recipient as his income.
VI Provision of an official residence for every judicial officer should be made mandatory.
A judicial officer to work in a manner expected of him has to free himself from undue obligations of others, particularly owners of buildings within his jurisdiction who ordinarily may have litigations before him.
This is mostly the case in rural areas where outstation judicial courts are located.
We are aware of cases where a rural court is located in the building belong ing to a lawyer or a client.
Even the residential accom 223 modation of the judicial officer belongs to people of that category.
Such a situation often gives occasion to personal embarrassment to the judicial officer and it has to be avoided.
Expenditure on residential accommodation in a family budget is not ordinarily to exceed 15 per cent of the month ly income, otherwise it becomes difficult for the person concerned to make his two ends meet.
A judicial officer who is not provided residential accommodation is obliged to go in for rented accommodation.
In view of the prevailing rate of rent, the smallest accommodation that can be taken may often cost 75 per cent to 100 per cent of the monthly sal ary, a situation which cannot be contenanced by any logic.
It is absolutely necessary that appropriate conditions should be provided for the judicial officer and he should have reasonable mental peace in order that he may perform his duties satisfactorily.
Rendering justice is a difficult job.
It is actually a divine act.
Unless the judicial offi cer has a reasonable worry free mental condition, it would be difficult to expect unsoiled justice from his hands.
Very often building projects are undertaken for provid ing residential accommodation to public officers but the requirement of the judicial ofricer is not taken into ac count for one reason or the other.
Control of the State purse is in the hands of the executive.
As appropriate share of construction expenses is not being provided towards accommodation of judicial officers, they do not have any quota in the building projects.
As a result of this over the years at several places throughout the country residential accommodation for judicial officers has turned out to be scanty.
Many judicial officers dread postings in Metropoli tan towns as residential accommodation is not available and the rental would be exorbitant in respect of private accom modation.
The cost of living also becomes heavy.
We take judicial notice of the fact that the Planning Commission of the Central Government is considering accept ance of the subordinate judiciary as a plan subject.
Provid ing adequate residential accommodation should be considered as a priority.
Until adequate government accommodation is available, it should be the obligation of the State at the instance of the High Court to provide requisitioned accommo dation for every judicial officer according to his entitle ment and recovery of not more than twelve and a half per cent of salary of the officer towards rent should be made and the balance should be met by the State Exchequer.
We would emphasise the need of provision of a separate and exclusive office room as an indispensable component of every such official residence and the accommodation should take into account this feature.
As a long term measure, Govern ment accommodation should be constructed to meet the 224 need of the judicial officers at their respective stations.
This should be a matter for the Planning Commission to review and the State Governments to cooperate and undertake construction activity.
The Governments of the States and the Union Territories would take some time to implement this pan of the direction.
In case for some reason, the Planning Commission does not come forward to take up the matter before January, 1992, the Chief Justice of every High Court should set up a committee with him as Chairman where two senior Judges of the Court and the Secretaries of Finance, Law and Works should be members and annual planning of construction of residences should be made.
We accordingly fix the outer limit of December 31,1992 when this part of the direction would become fully operative.
VII We shall now deal with the claim for transport.
In most of the States the district judge has been provided a motor car and in some of the States the chief judicial magistrate is also provided with such transport, be it a car or a jeep.
There are still some States like Rajasthan, Haryana and Madhya Pradesh where provision of a car for every district judge has not yet been made.
We direct that every district judge should be provided with a car by March 31, 1992, and it shall be the obligation of the other States where such facility has not open provided to ensure the same within the time limit.
The chief judicial magistrate is a touring officer apart from doing trial work as a magistrate.
Mandate of the Code of Criminal Procedure requires him to undertake some tout ing.
The quality of criminal justice administration would very much depend upon the mobility of the chief judicial magistrate.
We, therefore, direct that in such States and Union Territories where provision of independent transport for the chief judicial magistrate has not been made, the same should be done by September 30, 1992.
We are.
further of the view that in stations with more than four judicial officers a common transport should be provided for the purpose of taking them from the residence to the court and back and meeting their other official purposes and such vehicle should be placed under the control of the seniormost officer in the pool.
The arrangement should be that for every five officers, there should be a vehicle.
Provision for this aspect should be made by March 31, 1993.
This direction has become necessary as judicial officers should not be forced to travel along with litigants and lawyers.
In many sensitive cases, records are carried by them.
Often judgments to be pronounced are also taken by them.
In some disturbed areas, instances of harassment to judicial offi cers taking advantage of their using 225 common transport have come to light.
We direct that every State and Union Territory would file a compliance report in the Registry of this Court in respect of these three aspects within one month from the expiry of the outer limit indicat ed for each of them.
There are several outlying courts where the number of officers would not be more than five.
We do not intend to provide any independent transport for them but such officers who ask for loan for purchase of a two wheeler automobile should immediately be provided the same.
Appropriate funds should be made available for such purpose.
A pool car should have 60 litres of petrol per month and a judicial officer owing a scooter would be entitled to an allowance of Rs. 200 per month.
We are alive to the fact that our directions involve a burden on the State Exchequer.
Perhaps some justification as to why these expenses should not be grudged must now be indicated.
Professor Pannick in his book entitled "Judges" has observed: "Judges do not have an easy job.
They repeat edly do what the rest of us seek to avoid; make decisions".
He further added: "Judges are mere mortals but they are asked to perform a function that is utterly divine".
Professor Harold Laski once wrote to Justice Oliver Holmes that 'he wished that people could be persuaded to realise that judges are human beings; it would be a real help to jurisprudence '.
The Trial Judge ' is the kingpin in the hierachical system of administration of Justice.
He directly comes in contact with the litigant during the proceedings in Court.
On him lies the responsibility of building up of the case appropriately and on his understanding of the matter the cause of justice is first answered.
The personality, knowl edge, judicial restraint, capacity to maintain dignity are the additional aspects which go into making the court 's functioning successful.
Krishna Iyer, J. described the scene very graphically thus: "Law is a means to an end and justice is that end.
But in actuality, Law and Justice are distant neighbours; sometimes even strange hostiles.
If law shoots down justice, the people shoot down law and lawlessness paraly ses development, dis 226 rupts order and retards progress.
This is the current scene".
It calls for serious introspection.
The Law Commission in its 14th Report said: "If the public is to give profound respect to the judges the judges should by their conduct try and observe it; not by word or deed should they give cause for the people that they do not deserve the pedestal on which we expect the public to place them.
It appears to us that not only for the performance of his duties but outside the court as well a Judge has to maintain an aloofness amounting almost to self imposed isolation".
The Commission quoted Sir Winston Churchill who had said: "A form of life and conduct far more severe and restricted than that of ordinary people is required from judges and though unwritten has been most strictly observed.
They are at once privileged and restricted; they have to present a continuous aspect of dignity and conduct".
These prescriptions for a Judicial Officer, therefore, result in a restricted life.
Austerity is a quality to be practised by every Judge personally as also in his public functioning.
This necessarily gives rise to a situation where the Judge must have patience, perseverance and pains taking habits.
In order that a Judge may be able to put in these aspects into his public functioning it is absolutely necessary that the Judge enjoys freedom from personal wor ries.
A reasonable salary, appropriate allowances and man ageable living conditions are, therefore, required to be provided.
For quite a few years the conditions of service of Judges of the superior Courts and those of the public offi cers in the Executive side had been put at par excepting such provisions as were contained in the Government of India Act, 1935 or under the Constitution.
For the first time it was accepted that separate Conditions of Service should be provided and Conditions of Service Acts for the High Court and Supreme Court Judges were separately enacted in 1954.
Those statutes and the Schedules therein even now contain provisions to the effect that matters for which provisions have not been made by the statutes are to continue to be the same as provided for the officers in the Executive wing as named.
In a democratic polity the role of the judiciary is indispensable.
The efficient functioning of the Rule of Law under the aegis of which our democratic society can thrive requires an efficient, strong and enlightened judiciary.
And to have it that way the Nation has to pay to the price.
There was a time when a 227 Judge enjoyed a high status in Society.
Very often a suc cessful Member of the Bar earning a high income favourably responded to the invitation of the Chief Justice to accept Judgeship.
Thai no more is the position.
The sense of pro fessional obligation has died down for reasons more than one; but perhaps the most eloquent one is loss of social status of the judge.
The effect of this position in respect of the higher judiciary has its impact on the subordinate judiciary too.
Half a century back a Judicial officer even of the lowest category enjoyed great social status.
He was looked upon with a sense of reverence.
He led a life in tune with the recommendations of the Law Commission in its 14th Report.
He had the training of limiting his wants and man aged to live a contented life by making his two ends meet with limited resources of small salary.
That philosophy of life has vanished or is fast vanishing.
A great social change has over taken today 's society.
Life has become competitive; demands of life have increased; and aptitudes have changed.
Therefore, today a judicial officer always looks at life in a comparative way with administrative officers of his age.
Professional income at the Bar has tremendoulsy swelled up.
Very often counsel 's fee per day equals to the salary of a judicial officer for a full month or even a longer period.
This great disparity affects peace and equilibrium in the judicial operation.
As early as 1958 the Law Commission said: "As we shall point out, later the problem has since grown in dimension because there is unmistakable testimony that the standards of the judicial officers recruited from the Bar and other sources have during recent years fallen in a substantial degree for various reasons.
This has been almost the unique view expressed by the witnesses .before us.
It is thus obvious that no scheme of review of judicial administration will be effective or worthwhile unless the basic problem of provid ing a trained and capable judicial personnel is satisfactorily solved" This was adequate and timely notice to the Government and its people.
Instead of attending to the problem then, 33 long years have been allowed to roll by and what was then said as a growing dimension has grown to devalue the system.
Its resurrection has, therefore, become more costly.
It is perhaps useful to recall here the prophetic warn ing sounded by Robert Ingersoll: "A government founded on anything except liberty and justice cannot stand.
All the wrecks on either side of the stream of time, all the wrecks of the great cities, and all the nations that 228 have passed away all are a warning that no nation founded upon injustice can stand.
From the sand enshrouded Egypt, from the marble wilderness of Athens, and from every fallen or crumbling stone of the once mighty Rome, comes a wail as it were, the cry that no nation founded on injustice can permanently stand".
Society, therefore, must understand the problem.
Solu tion to the problem would depend upon realisation of the fact that the more capable people at the Bar are not willing to accept offers of judicial appointments.
The plea that the other wings, in the States would demand inprovement in their scales of pay is not a relevant feature at all when the problem is viewed from this angle.
We hope and trust that society would generate the appropriate understanding of the matter and no Government would come forward to take the stand that if the pay scales and perks of the Judicial officers are improved similar demands would come from other wings of Government.
Even in the existing system there are some posts which carry special pay that is on account of the fact that there is more of basic equipment demanded and the nature of work is different and judicial service satisfies both and, there fore, Government can always prescribe a higher pay scale for Judicial Officers.
In 1986 there was a Conference of the Chief Justices of the High Courts, Chief Ministers and the Law Ministers of the States called by the then learned Chief Justice of India and the Ministry of Law and Justice.
The then Chief Justice of India and the Law Minister of the Central Government tried their best to make the State Governments and the Union Territories understand the basic problem.
While some improvements came as a result of the Conference for the higher judiciary, the claim of the subor dinate judiciary remained unattended.
We would like to point out that dispensation of justice is an inevitable feature in any civilised society.
Mainte nance of law and order require the presence of an efficient system of administration of criminal justice.
Under the Civil Code, Court fee is realised under the Court Fee Act.
For some time demand to abolish it has been made but the States have abandoned the idea on account of the demand by the States of compensation from the Centre in case of aboli tion of Court fee.
Court fee is not a tax and is a fee as has been ' held by a Constitution Bench of this Court in Secretary, Government of Madras, Home Department and another vs Zenith Lamps and Electrical Ltd., ; In Paragraph 29 of this 229 Judgment Sikri, CJ speaking for this Court pointed out: "It seems to us that the separate mention of 'fees taken in Court ' in the Entries referred to above has no other significance than that they logically come under Entries dealing with administration of Justice and courts.
The draftsman has followed the scheme designed in the Court Fees Act, 1870 or dealing with fees taken in court at one place.
If it was the intention to distinguish them from fees in List II Entry 66, surely some indication would have been given by the language employed.
If these words had not been separately mentioned in List I, Entry 77 and List II . . .
It seems plain that 'fees taken in court ' are not taxes, for if it were so, the word 'taxes ' would have been used or some other indication given.
It seems to us that this conclusion is strengthened by two considerations.
First, taxes that can be levied by the Union are mentioned in List I from Entry 82; mentioned in List II taxes that can be imposed start from Entry 45.
Secondly, the very use of the words 'not including fees taken in any court ' in Entry 95 List 1, and Entry 66 List II, shows that they would otherwise have fallen within these Entries.
It follows that 'fees taken in court ' cannot be equated to "Taxes".
If this is so, is there any essential differ ence between fees taken in court and other fees ? We are unable to appreciate why the word 'fees, bears a different meaning in Entry 77, List I and Entry 96 List I or Entry 3 List II and Entry 66 List II.
All these relevant cases on the nature of 'fees ' were reviewed in India Mica and Micanite Industries Ltd. vs The State of Bihar.
; at page 1186, by Hegde J. and he observed: "From the above discussion, it is clear that before any levy can be upheld as a fee, it must be shown that the levy has reasonable co relationship with the services rendered by the Government.
In other words, the levy must be proved to be a quid pro quo for the serv ices rendered.
But in these matters it will be impossible to have an exact co relationship.
The correlationship expected is one of a general character and not as of arithmetical exactitude".
It is not our intention to raise a dispute on this aspect.
We adverted to these authorities and the views of this Court to bring support for the view that what is col lected as Court fee at least be spent on the administration of Justice instead of being utilised as a source of general revenue 230 of the States.
Undobutedly the income from court fees is more than the expenditure on the administration of Justice.
This is conspicuously noticeable from the figures available in the publication in the Ministry of Law and Justice.
What we have said above should be adequate justification for making provision with a view to making judicial func tioning viable.
We would like to recall a part of the funeral oration on Mr. Justice Story delivered some 150 years back by Daniel Webster: "Justice, Sir, is the greatest interest of man on earth.
It is the ligament which holds civilised beings and civilised nations togeth er.
Wherever her temple stands, and so long as it is duly honoured, there is a foundation for social security, general happiness and the improvement and progress of our race.
And whoever labours on this edifice with useful ness and distinction.
whoever clears its foundations, strengthens its pillars, adorns its entaplateures, or contributes to raise its august dome still higher in the skies, con nects himself in name and frame and character with that which is and must be as durable as the frame of human society".
To those who control the purse what Webster said should provide the direction.
VIII One of the claims advanced before us was for provision of inservice training for judicial officers.
This we consid er as a must.
In fact, the Law Commision in one of its recent reports has advised that inservice institutes should be immediately set up.
About a year back the Union Govern ment had proposed the setting up of an All India Inservice Institute but nothing more has been done about it.
In some of the States like Uttar Pardesh and Andhra Pradesh, such inservice institutes are functioning.
We are of the view mat in service institutes are indispensable for the upkeep of the efficiency of judicial service.
We direct that an All India institute of Inservice Training for higher officers of the judiciary including the district judges and a State level institute for training of the other member, of the subordinate judiciary within each of the States and Union Territories or one common institute for more than one State or Union Territory should be set up within one year from now and at any rate nor later than December 31, 1992.
This has to be orgainised by respective High Courts.
231 Before we part, we must indicate with all the emphasis at our command that the system has to be saved as for a civilised society an enlightened independent judiciary is totally indispensable.
The High Court must take greater interest in the proper functioning of the subordinate judi ciary.
Inspection should not be a matter of casual atten tion.
The Constitution has vested the control of the subor dinate judiciary under Article 235 in the High Court as a whole and not its Chief Justice alone.
Every Judge should, therefore, take adequate interest in the institution which is placed under the control of the High Court.
We may point out that that in what Lord Aktins said in Devi Prasad Sharma and others vs The King Emperor, 70 IA 216.
And it has been approved by a Constitution Bench in Baradakanta Misra vs The Registrar of Orissa High Court and Another, ; It should be remembered by all Judges of the High Coart viz., that the administrative control of the subordinate courts of the states vest nor in the Chief Justice alone but in the Court over which the Chief Justice presides.
Surger, CJ of the American Supreme Court once said: "A sense of confidence in ,he Courts is essen tial to maintain the fabric of ordered liberty for a free people and it is for the subordi nate Judiciary by its action and the High Court by its appropriate control to ensure it".
It is useful to remember what President Lin coln often said: "If you once forfeit the confidence of your fellow citizens you can never regain their respect and esteem".
It is time we mention about society 's expectation from the Judicial Officers.
A judge ought to be wise enough to know that he is fallible and, therefore, even ready to learn and be courageous enough to acknowledge his errors The conduct of every judicial officer should be above reproach.
He should be conscientious, studious, thorough, courteous, 'patient, punctual, just, impartial, fearless of public clamor, regardless of public praise, and indifferent to private, political or partisan influences; he should administer justice according to law, and deal with his appointment as a public trust; he should not allow other affairs or his private interests to interfere with the prompt and proper performance of his judicial duties, nor should he administer the office for the purpose of advancing his personal ambitions or increasing his popularity.
232 We would like to part with the matter by recalling a statement of Edmund Burke: "All persons possessing a portion of power ought to be strongly and awfully impressed with an idea that they act in trust, and that they are to account for their conduct in that trust to the one great Master, Author and Founder of Society".
We would now briefly indicate the direc tions we have given in the judgment: (i) An All India Judicial Service should be set up and the Union of India should take appropriate steps in this regard.
(ii) Steps should be taken to bring about uniformity in designation officers both in civil and the criminal side by 31.3.1993.
(iii) Retirement age of judicial officers be raised to 60 years and appropriate steps are to be taken by 31.12.
(iv) As and when the Pay Commissions/Commit tees are set up in the States and Union Terri tories; the question of appropriate pay scales of judicial officers be specifically referred and considered.
(v) A working library at the residence of every judicial officer has to be provided by 30.6.1992.
Provision for sumptuary allowance as stated has to be made.
(vi) Residential accommodation to every judicial officer has to be provided and until State accommodation is available, Government should provide requisitioned accommodation for them in the manner indicated by 31.12.1992.
In providing residential accommodation, avail ability of an office room should be kept m view.
(vii) Every District Judge and Chief Judi cial Magistrate should have a State Vehicle, Judicial officers in sets of 5 should have a pool vehicle and others would be entitled to suitable loans to acquire two wheeler automo biles within different time limits as speci fied.
(viii)Inservice Institute should be set up within one year at the Central and State or Union Territory level.
V.P.R. Petition disposed of. | The petitioners All India Judges ' Association filed an application under Article 32 of the Constitution of India for directions of this Court for setting up of an All India Judicial Service, for bringing about uniform conditions of service for members of the subordinate judiciary, provision of residential accommodation, transport facility; library and in service training for judicial officers.
Disposing of the writ petition, this Court, HELD: 1.
For a civilised society an enlightened inde pendent judiciary is totally indispensable.
1231 A] 2.
Rendering justice is a difficult job.
Unless the judi cial officer 207 has a reasonably worry free mental condition, it would be difficult to expect unsoiled justice from his hands.
[223 C] 3.
A judge ought to be wise enough to know that he is fallible and, therefore, even ready to learn and be coura geous enough to acknowledge his errors.
The conduct of every judicial officer should be above reproach.
He should be coscientious, studious, thorough, courteous, patient, punc tual, just, impartial fearless of public clamour, regardless of public praise and indifferent to private, political or partisan influences; he should administer justice according to law, and deal with his appointment as a public trust; he should not allow other affairs or his private interests to interfere with the prompt and proper performance of his judicial duties, nor should he administer the office for the purpose of advancing his personal ambitions or increasing his popularity.
[231 F H] 4.
Under the Constitution, the concept of Rule of Law came to be accepted and developed.
Article 50 prescribed the guideline of separating "the judiciary from the executive in the public services of the State".
This position is the outcome of recognition of the fact that the judiciary is a class separate from the executive.
[211 D] 5.
The Trial Judge is the kingpin in the hierarchical system of administration of justice.
He directly comes in contact with the litigant during the proceedings in Court.
On him lies the responsibility of building up of the case appropriately and on his understanding of the matter the cause of justice is first answered.
The personality, knowl edge, judicial restraint, capacity to maintain dignity are the additional aspects which go into making the courts ' functioning successful.
[225 F G] 6.
The District Judge is the principal judicial officer of the district.
It is the obligation of the district judge to operate as the captain of the team both under his direct supervision at the headquarters and in respect of the offi cers located in different areas within his district.
Of late, lower or subordinate courts are being established in the outlying and rural interior.
It is the obligation of the district judge to inspect the outlying courts, maintain the proper judicial tempo and temper of functioning in his district and be responsible 1or the efficient running of the system.
[221 G 222 A] 7.
The High Courts must take greater interest in the proper functioning of the subordinate judiciary.
Inspection should not be a matter of casual attention.
The Constitution has vested the control of 208 the subordinate judiciary under Article 235 in the High Court as a whole and not its Chief Justice alone.
Every Judge should, therefore, take adequate interest in the institution which is placed under the control of the High Court.
The administrative control of the subordinate courts of the State vests not in the Chief Justice alone but in the Court over which the Chief Justice presides.
[231 A C] 8.
There is a marked distinction between the nature of work which executive officers and judicial officers are called upon to discharge.
The work of the judicial officers is usually sedantry while that of the executive officer involves a lot of physical movement.
This is particularly so in the lower cadres of both the services.
In view of this feature physical fitness is more important for an executive officer than in case of a judicial officer while in case of judicial officers, there is thus necessarily more of mental activity than physical.
Experience is an indispensable factor and subject to the basic physical fitness with grow ing age experience grows.
[217 D E] 9.
Today a judicial officer always looks at life in a comparative way with administrative officers of his age.
Professional income at the Bar has tremendously swelled up.
Very often counsel 's fee per day equals to the salary of a judicial officer for a full month or even a longer period.
This great disparity affects peace and equilibrium in the judicial operation.
[227 D] 10.
It is absolutely necessary that the Judge enjoys freedom from personal worries.
A reasonable salary appropri ate allowances and manageable living conditions are, there fore, required to be provided.
[226 E] 11.
An All India Judical Service should be set up and the Union of India should take appropriate steps in this regard.
[232 C] 12.
Steps should be taken to bring about uniformity in designation of officers both in civil and the criminal side by 31.3.1993.
[232 C] 13.
Retirement age of judicial officers be raised to 60 years and appropriate steps be taken by 31.12.1992.
[232 C] 14.
As and when the Pay Commissions/Committees are set up in the States and Union Territories; the question of appropriate pay scales of judicial officers be specifically referred and considered.
[232 D] 209 15.
A working library at the residence of every judicial officer has to be provided by 30.6.1992.
Provision for sumptuary allowance has to be made.
[232 D] 16.
Residential accommodation to every judicial officer has to be provided and until State accommodation is avail able.
Government should provide requisitioned accommodation for them by 31.12.1992.
In providing residential accommoda tion, availability of an office room should be kept in view.
[232 E] 17.
Every District Judge and Chief Judicial Magistrate should have a State vehicle, Judicial officers in sets of 5 should have a pool vehicle and others would be entitled to suitable loans to acquire two wheeler automobiles within different time limits.
[232 F] 18.
In service Insititute should be set up within one year at the Central and State or Union Territory level.
[232 G] The Law Commission of India 14th Report, 1958 Judges: by Professor Pannick; Law Commission of India, 1 Ith Report referred to.
Moti Ram Deka, etc.
vs The General Manager, North East Frontier Railway, Maligaon, Pandu, etc.
; , ; Secretary, Government of Madras, Home Department and ,Anoth er vs Zenith Lamps and Electrical Ltd., ; ; Devi Prasad Sharma and Others vs The King Emperor, 70 IA 216; Baradakanta Mishra The Registrar of Orissa, High Court and Another, ; , referred to. |
Appeal No. 2568 of 1991.
From the Judgment and Order dated 10.5.1991 of the Madhya Pradesh High Court in M.P. No. 2727 of 1990.
S.K. Mehta, R.D. Sharma, Dhruv Mehta, Arvind Verma and Aman Vachher for the Appellants.
Rameshwar Nath and Ravinder Nath (for Rajinder Narain & Co.) for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
The only legal question that arises for consideration, in this appeal directed against judgment of the Madhya Pradesh High Court is, if an application filed by an operator for renewal of his permit under Section 58 of , became extinct and was rendered non existent.
in eye of law, after coming into force of or it being a right within meaning of clause (c) of Section (6) of survived and continued despite repeal of 1939 Act.
The appellant, holder of a permit, for operating stage carrier on route Eklera Narsinghgarh in District Rajgarh, applied for its renewal, as required, on 18th October, 1988, 120 days before the date of its expiry on 18th February 1989 under Section 58(2) of the 1939 Act.
The application was published on 23rd June, 1989, under Section 57(3) of the Act.
But before renewal could be granted 1988 Act came into force on 1st July 1989.
The respondent who, too, had applied on 30th December 1988 for a fresh permit on the same route and on the same time schedule, withdrew his application and filed a fresh application on 18th May, 1990.
The Regional Transport Authority after considering both the applications, allowed renewal of the appellant 's permit from 18th Febru ary, 1989 to 18th February, 1994.
The application of re spondent was rejected as that could be considered only if the appellant 's existing permit was cancelled, but since the appellant was operating on the route regularly and paying taxes etc.
there was no reason to refuse renewal.
In an appeal to the State Transport Appellate Tribunal held that no appeal against renewal was maintainable against which the respondent filed writ petition which was 308 allowed and it was held that right to seek renewal of permit under a Motor Vehicle Act was not a vested right.
It was merely an incohate right with ripens into a right only on being granted.
But before this could happen the 1939 Act was repealed.
Effect of it was that the application ceased to exist.
Thus there was nothing pending which could empower the Regional Transport Authority to grant renewal.
Is this correct? Could the application for renewal be dismissed, only, because of enforcement of 1988 Act or the right of the appellant to get his application under the earlier Act decided in accordance with law subsisted and survived under the new Act as well.
The answer shall depend on construction of Section 217, 'the repealing and saving provision, in 1988 Act read with Section 6 of the .
Sub Section (1) of Section 217 of 1988 Act repeals 1939 Act.
But Sub Section (2) saves certain notifi cations, rules, regulations, Acts etc.
Clause (b) of sub section (2) reads as under: 217(1) Notwithstanding the repeal by sub section (1) of the repealed enactments, "(b) any certificate of fitness or registra tion or licence or permit issued or granted under the repealed enactments shall continue to have effect after such commencement under the same conditions and for the same period as if this Act had not been passed;" On strength of this it was urged on behalf of the respond ents that the only saving was in respect of unexpired period of a permit.
However what is relevant is sub section (4) of Section 217 which provides as follows: "S.217(4) The mention of particular matter in this Section shall not be held to prejudice or affect the general application of section 6 of the (10 of 1897), with regard to the effect of repeals.
" How such a provision should be construed was explained by this Court in The Brihan Maharashtra Sugar Syndicate Ltd. vs Janardan Ramchandra Kulkarni & Others, ; It was held that such a provision was not by way of abundant caution and any proceedings pending under repeated Act could be continued in view of Section (6) of .
Section 658 of which was a repealing and saving provision which was considered by the Court read as under: "The mention of particular matters in sections 645 to 657 or in any other provision of this Act shall not prejudice the general ap 309 plication of s(6) of the (X of 1897), with respect to the effect of repeals.
" It should be noticed that phraseology of Section 658 of the and sub section (4) of Section 217 of the is identical.
Therefore the reason ing given in the decision squarely applies for construction of sub section (4) of Section 217.
Consequently it could not be, successfully, argued that sub section (2) of Section 217 is exhaustive and sub section (4) should be read by way of abundant caution and applied only to the field which is already covered by sub section (2).
Section (6) of the may now be extracted: "S.6.
Effect of repeal Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enact ment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not: (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; ( e ) . . . . . . . . . . " The objective of the provision is to ensure protection of any right or privilege acquired under the repealed Act.
The only exception to it is legislative intention to the contrary.
That is, the repealing Act may expressly provide or it may impliedly provide against continuance of such right, obligation or liability.
The controversy thus narrows down to if the renewal of a permit under 1939 Act was a right.
In other words whether any right accrued to the appellant under the repealed Act which could be said to continue unaffected by the repeal of the Act.
A permit could be renewed under Section 58(2) of 1939 Act which reads as under: "S.58(2).
A permit may be renewed on an appli cation made and disposed of as if it were an application for a permit: Provided that the application for the renewal of a permit shall be made (a) in the case of a stage carriage permit or a public carrier 's permit, not less than one hundred and twenty days before the date of its expiry, and 310 (b) in any other case, not less than sixty days before the date of its expiry Provided further that, other condi tions being equal, an application for renewal shall be given preference over new applica tions for permits." Although the Section uses the word 'may ' but read with proviso it creates a preference in favour of a permit holder to claim renewal if other conditions were equal.
A holder of a permit thus stands on a better footing.
The preference created by sub section (2) of Section 58 for consideration of the permit and its grant cannot be said to be a mere incohate right, or a right which does not exist in law.
It may not be a vested right or a fundamental right but it certainly is civil right which could be enforced in a court of law and any authority acting in contravention of it can be forced to act in accordance with it.
For instance, if a Regional Transport Authority under the old Act refused renewal even though the person applying for renewal was in all respects similar to other new applicants then it could be corrected either by the tribunal or by way of writ peti tion under Article 226.
Therefore.
It is a right which is enforceable in law.
This right accrued to appellant as he had already applied for renewal and his application had been notified.
The legal machinery was set in motion by him.
He theretore had a right to get his application for renewal processed and considered in accordance with 1939 Act.
It would be too artificial to say that it was not a right or it had not accrued under 1939 Act.
Therefore, in our opinion, by virtue of Section 6(c) of the the right of the appellant to get his application considered and decided in accordance with law was saved by sub section (4) of Section 217 of .
In Cheran Transport Co. Ltd. vs Kanan Lorry Service & Anr, ; at 390 It was held that the setting of a legal process in accordance with law for renewal of permit was itself a right.
This principle was laid down by this Court even when a scheme under Section 68(f) had been pub lished which debarred grant or renewal of any permit yet the court was of the opinion t.b, at since there was undue delay and the applicant had done all that he could do in law he could not be deprived of his right of consideration of his application for renewal so long the scheme was not pub lished.
This was again approved in D. Nataraja Mudaliar vs State Transport Authority Madras, [1979] 1 SCR 552.
The Court pointed out that a permit holder had an ordinary right of renewal.
It is thus obvious that the High Court committed a manifest error of law in throwing out the application of renewal as the new Act had come into force.
311 Does the new Act indicate any intention to the contrary? No express provision debarring renewal of permits, applied for, under old Act could be pointed out.
Reliance was placed on absence of preferential provision under Section 81 of the Act which provides for renewal of permits.
It was urged that there was a definite departure from the old Act therefore any right under the old Act, could not be continued to under the new Act.
The submission does not appear to be sound.
The new Act is a legislation on the same subject.
Section 81 specifically provides for renewal.
It cuts across the argu ment of intention to the contrary.
Rather it is kept alive by Sub section (4) of Section 217.
The scheme of renewal having been continued even under new Act mere absence of preference clause in Section 81 of the new Act could not be construed as destroying the claim for renewal set in motion under the old Act.
In the result this appeal succeeds and is allowed.
The order passed by the High Court is set aside.
Parties shall bear their own costs.
T.N.A. Appeal allowed. | The appellant, a Stage Carriage Operator, filed an appli cation for renewal of his permit under section 58(2) of the and his application was notified.
However, before the renewal could be granted the came into force.
The respondent had also applied for a fresh permit on the same route on which the appellant was operating his carriage.
The Regional Transport Authority allowed renewal of the appellant 's permit and rejected the respondent 's application.
On respondent 's appeal the State Transport Appellate Tribunal held that no appeal against renewal was maintainable.
The respondent filed a writ petition and the High Court allowed it by holding that right to seek renewal of a permit was not a vested right but was merely an incohate right which ripened into a right only on being granted; with the coming into force of 1988 Act, the 1939 Act was repealed as a result of which the appellant 's application for renewal ceased to exist and consequently the Regional Transport Authority was not empowered to grant a renewal of permit.
Against the decision of the High Court an appeal was filed in this Court.
Allowing the appeal and setting aside the order of the High Court, this Court, 306 HELD: 1.
The High Court committed a manifest error of law in rejecting the appellant 's application of renewal on the ground that the new Act had come into force.
[310 H] 1.1 Although section 58(2) of the uses the word 'may ' but read with proviso it creates a preference in favour of a permit holder to claim renewal if other conditions were equal.
A holder of a permit thus stands on a better footing.
The preference created by sub section (2) of Section 58 for consideration of the permit and its grant cannot be said to be a mere incohate right, or a right which does not exist in law.
It may not be a vested right or a fundamental right but it certainly is civil right which could be enforced in a court of law and any authority acting in contravention of it can be forced to act in ac cordance with it.
[310 B C] 1.2 The right accrued to appellant as he had already applied for renewal and his application had been notified.
The legal machinery was set in motion by him.
He therefore had a right to get his application for renewal processed and considered in accordance with 1939 Act.
It would be too technical to say that no right had accrued to him under 1939 Act.
By virtue of Section 6(c) of the the right of the appellant to get his application considered and decided in accordance with law was saved by subsection (4) of Section 217 of .
[310 D E] The Brihan Maharashtra Sugar Syndicate Ltd. vs Janardan Ramchandra Kulkarni & Ors, [1960] 3 S.C.R.85, followed.
Cheran Transport Co. Ltd. vs Kanan Lorry Service & ,Anr, ; ; D. Nataraja Mudsliar vs State Transport Authority, Madras , referred to. 2.
The objective of Section 6(c) of the is to ensure protection of any right or privilage ac quired under the repealed Act.
The only exception to it is legislative intention to the contrary.
That is, the repeal ing Act may expressly provide or it may impliedly provide against continuance of such right, obligation or liability.
[309 E] 3.
The new Act is a legislation on the same subject and Section 81 of the said Act specifically provides for renewal of permits.
The scheme of renewal having been continued even under new Act mere absence of preference clause in Section 81 of the new Act 307 could not be construed as destroying the claim for renewal set in motion under the old Act.
[311 B C] |
minal Appeal No. 134 of 1963.
Appeal by special leave from the judgment and order dated March 5, 1963, of the Calcutta High Court in Criminal Appeal No. 156 of 1963.
D. N. Mukherjee, for the appellants.
P. K. Chakravarti and P. K. Bose, for the respondent.
173 January 7, 1964.
The Judgment of the Court was delivered by HIDAYATULLAH J.
The six appellants who have appealed to this Court by special leave were convicted by the Assistant Sessions Judge, Birbhum under section 304 Part II read with section 34 of the Indian Penal Code and sentenced to six years ' rigorous imprisonment each.
Their appeal to the High Court was summarily dismissed.
When the appellants applied for a certificate in the High Court they made it plain that the only point which was required to be considered by this Court was whether section 34 could be read in conjunction with Part 11 of section 304, Indian Penal Code.
In this Court the argument was confined to this point of law.
The High Court rejected the application for the certificate pointing out that the controversy had been settled by a Full Bench decision of the High Court reported in Ibra Akanda vs Emperor(1).
The learned Judges were of the opinion that the point was not of sufficient importance for permitting the appellants to take an appeal to this Court.
For the consideration of the point of law which has been debated before us, we may state only such facts as will bring out the controversy.
One Abdul Sheikh in the company of his son, Adut, aged 13, went to his field in village Noapara to uproot linseed plants.
This was on the morning of March 13, 1962.
While he was, so employed, two of the appellants, Afrahim and Jesed, appeared on the scene, and Afrahim asked Jesed to catch hold of Abdul Sheikh.
Abdul Sheikh took to his heels and was chased by these two appel lants, who overtook him and threw him down on the ground Immediately thereafter, there appeared on the scene the re maining appellants.
Jarahim was armed with a ballam and he started to hit Abdul Sheikh on his legs with the ballam.
The appellant, Manu, arrived with a sabal (crowbar), and began to strike Abdul Sheikh and the appellant, Mesher.
began to strike Abdul Sheikh with a lathi.
All this, while, the sixth appellant, Makid, held Abdul Sheikh by the legs and Afrahim and Jesed held him down by his head and shoulders.
The incident was witnessed by Adut and two, others, and it is on the testimony of Adut and these two (1) I.L.R.(1944) 174 other witnesses, to whom reference is unnecessary, that the learned Assistant Sessions Judge, Birbhum, came to the con clusion that the offence was committed in the manner described above.
Abdul Sheikh was seriously injured; both his legs below the knee were fractured and one arm above the wrist was also fractured.
He had also some incised wounds and some bruises.
He was examined by one Dr. Bashiruddin, who gave him first aid.
Dr. Bashiruddin stated on oath that Abdul Sheikh narrated to him the incident and named all the six appellants.
Later, Abdul Sheikh was removed to Nalhati Health Centre, and while arrangements were being made for recording his dying declaration, he succumbed to his injuries.
He had, however, made dying declarations to some of the prosecution witnesses and they have deposed to the fact that he had named the six appellants as his assailants.
In this appeal, we did not allow Dr. D. N. Mukherjee, counsel for the appellants, to argue on facts.
We assumed that the incident took place as narrated by the witnesses.
Mr. Mukherjee contends that the conviction of the appellants under section 304, Part 11 is illegal, because according to him, section 34 cannot be called in aid, as the second part of section 304 concerns itself with knowledge and absolutely excludes intention as the ingredient of the offence.
He relies upon the minority decision of Das J. (as he then was) in Ibra A kanda vs Emperor(1).
In that case, the learned Judge had expressed the opinion that section 34 was incapable of being read with the second Part of section 304.
With the view of the learn ed Judge, Lodge J. differed and the case was then placed before Khundkar J. who agreed with Lodge J., and the deci sion was that section 34 could be so read.
At the hearing Mr. Mukherjee drew our attention to three other cases in which a view supporting his contention appears to have been taken.
The first is a single Judge decision of the Allahabad High Court reported in Ramnath vs Emperor(2), and the other is a Division Bench case from Peshawar reported in Sahibzada vs The Crown(3).
He also referred to an earlier Calcutta case reported in Debi Charan Haldar vs Emperor(1), in which a division Bench had expressed some (1) 1.
L. R. (3) A.I.R. 1950 Peshawar 24.
(2) A.I.R. 1943 All. 271.
(4) 175 doubts about the applicability of section 34 to section 304, Part 1.
As against this, Mr. Chakravarti, counsel for the State relied upon a Full Bench decision of the Allahabad High Court reported in Saidu Khan vs State(1) where it has been clearly held that section 34 can be so read.
Before dealing with the point of law, we shall refer to the essential facts once again.
Apart from the fact that there is proof that there were two parties and there was enmity between the appellants and Abdul Sheikh, the facts proved in the case clearly establish that Abdul Sheikh had gone for a peaceful purpose in the company of his young son, and immediately after his arrival, he was chased by two of the appellants and caught and felled to the ground.
After this the remaining four appellants appeared and beat Abdul Sheikh with diverse weapons, while those who were not armed, held him pinned to the ground.
Mr. Chakravarti is right in contending on these facts that the act took place in furtherance of a common intention.
No doubt, as has been laid down by the Privy Council and by this Court in cases which are now very familiar, common intention must exist before the criminal act is perpetrated, and that is the essence of section 34.
Here, in our opinion, that requirement was completely satisfied, because the six accused could not but by a prior concert have appeared simultaneously at the scene, and chased and overthrown the victim, held him down and beaten him.
The facts disclosed in the evidence clearly establish a prior concert amongst the six appellants.
It has been so inhered by the Assistant Sessions Judge, and we see no reason to differ from him.
Now that the criminal act has been held by us to have been the result of a previous concert and in furtherance of the common intention, we shall proceed to examine whether section 34 I.P.C. can be made applicable for the purpose of holding that culpable homicide not amounting to murder was committed, and that each of the appellant was responsible for the offence.
Section 34 of the Indian Penal Code reads as follows: "When a criminal act is done by several persons, in furtherance of the common intention of all, each (1) I.L.R. [1952] 1 AlL. 639.
176 of such persons is liable for that act in the same , manner as if it were done by him alone." In section 33 which precedes, it is laid down that the word "act" ' denotes not only a single act but also a series of acts.
In other words, as was stated by the Judicial Committee, in Barendra Kumar Ghosh 's case(1) "a criminal act means.
that unity of criminal behaviour, which results in something, for which an individual would be punishable, if it were all done by himself alone, i.e., a criminal offence.
" Here, the beating was perpetrated not by a single individual but by three persons with whom others were acting in concert.
The criminal act resulted in the criminal offence of culpable homicide not amounting to murder.
There is no dispute as to that.
Whether all the appellants individually would be responsible for the death of Abdul Sheikh is the question to be determined, and that conclusion can only be reached if it can be said that the act which was committed was done in furtherance of a common intention.
It is argued that section 304 makes a difference in its two parts between the commission of the offence of culpable homicide with a particular intention and the commission of the same offence without that intention but with a particular knowledge.
It is urged ' that this distinction makes it impossible that section 34 which deals only with common intention can be read with it.
Section 304 reads as follows: "Whoever commits culpable homicide not amounting to murder, shall be punished with imprisonment for life, or imprisonment of either description for a term which may extend to ten years, and ' shall also be liable to fine, if the act by which the death is caused is done with the intention of causing death, or of causing such bodily injury as is likely to cause death; or with imprisonment of either description for a term which may extend to ten years, or with fine, or with both, if the act is done with the knowledge that it is likely to cause` death, but: (1) Cal.
177 without any intention to cause death or to cause such bodily injury as is likely to cause death.
" Sec. 304 does not define culpable homicide not amounting to murder.
That definition is to be found in section 299, which provides: "Whoever causes death by doing an act with the intention of causing death, or with *,he intention of causing such bodily injury as is likely to cause death, or with the knowledge that he is likely by such act to cause death, commits the offence of culpable homicide.
" Culpable homicide is the causing of the death of a person in three ways: (1) with the intention of causing death, (2) with the intention of causing such bodily injury as is likely to cause death, and (3) with the knowledge that the offender is likely by such act to cause death.
The offence of culpable homicide becomes murder when four circumstances exist.
They are mentioned in section 300.
A number of excep tions are however included, and those exceptions show extenuating circumstances on strict proof of which the offence is again brought down to culpable homicide not amounting to murder.
The causing of the death of a person by doing an act accompanied by intention in the two ways described in section 299 or with the knowledge that the act is likely to cause death also described there is thus distinguished from cases of deaths resulting from accident or rash and negligent act and those cases where death may result but the offence is of causing hurt either simple or grievous.
Once it was established, as was established in this case, that the act was a deliberate act and was not the result of accident or rashness or negligence, it is obvious that the offence which was committed was one under section 304.
In the present case however death was not the result of the act of a single individual but was the result of the act of several persons, and they shared the common intention, namely, the commission of the act or acts by which death was occasioned.
Section 34 is a part of a group of sections, of which some other sections may also be seen.
Section 35 is as follows: 134 159 S.C. 12. 178 "Whenever an act, which is criminal only by reason of its being done with a criminal knowledge or intention, is done by several persons, each of such persons who joins in the act with such knowledge or intention is liable for the act in the same manner as if the act were done by him alone with that knowledge or intention." In this section also the responsibility is shared by each offender individually if the act which is criminal only by reason of certain criminal knowledge or intention is done by each person sharing that knowledge or intention.
Indeed, this section also was applicable here.
Under section 37, "when an offence is committed by means of several acts, whoever intentionally co operates in the commission of that offence by doing any one of those acts, either singly or jointly with any other person, commits that offence." By co operating in the doing of several acts which together constitute a single criminal act, each person who co operates in the commission of that offence by doing any one of the acts is either singly or jointly liable for that offence.
Section 38 then provides: "Where several persons are engaged or concerned in the commission of a criminal act, they may be guilty of different offences by means of that act.
" That is to say, even though several persons may do a single criminal act, the responsibility may vary according to the degree of their participation.
The illustration which is given clearly brings out that point.
Viewing these sections in this manner it is obvious that two sections in this group deal with individual responsibility for a single criminal act perpetrated by a large number of persons who either share a common intention or possess the criminal knowledge (sections 34 and 35) and the third with co operation between several accused in the completion of the criminal act (section 37).
Lastly section 38 provides that the responsibility for the completed criminal act may be of different grades according to the share taken by the different accused in the completion of the criminal act, and this section does not mention anything about intention common or otherwise or knowledge.
179 Section 34, when it speaks of a criminal act done by several persons in furtherance of the common, intention of all, has regard not to the offence as a whole, but to the criminal act, that is to say, the totality of the series of acts which result in the offence.
In the case of a person assaulted by many accused, the criminal act is the offence which finally results, though the achievement of that criminal act may be the result of action of several persons.
No doubt, a person is only responsible ordinarily for what he does and section 38 ensures that; but the law in section 34 (and also section 35) says that if the criminal act is the result of a common intention, then ,every person who did the criminal act with the common intention would be responsible for the total offence irrespective of the share which he had in its perpetration.
Barendra Kumar Ghosh 's case(1), the Judicial Committee ,observed: "Sec.
34 I.P.C. deals with the doing of separate acts, similar or diverse, by several persons; if all are done in furtherance of a common intention, each person is liable for the result of them all as if he had done them himself. 'That act ' and then again 'it ' in the latter part of the section must in clude the whole of the action covered by the criminal act in the first part of the section.
" Provided there is common intention, the whole of the result perpetrated by several offenders, is attributable to each ,offender, notwithstanding that individually they may have done separate acts, diverse or similar.
Applying this test to the present case, if all the appellants shared the common intention of severely beating Abdul Sheikh and some held him down and others beat him with their weapons, provided the common intention is accepted, they would all of them be responsible for the whole of the criminal act, that is to Say, the criminal offence of culpable homicide not amounting ,to murder which was committed, irrespective of the part played by them.
The common intention which is required by the section is not the intention which section 299 mentions in its first part.
That intention is individual to the offender unless it is shared with others by a prior concert in which ,case sections 34 or 35 again come into play.
Here, the common (1) Cal.
197 180 intention was to beat Abdul Sheikh, and that common intention was, as we have held above, shared by all of them.
That they did diverse acts would ordinarily make their responsibility individual for their own acts, but because of the common intention, they would be responsible for the total effect that they produced if any of the three conditions in section 299, I.P.C. applied to their case.
If it were a case of the first two conditions, the matter is simple.
They speak of intention and section 34 also speaks of intention.
The question is whether the second part of section 304 can be made applicable.
The second part no doubt speaks of knowledge and does not refer to intention which has been segregated in the first part.
But knowledge is the knowledge of the likelihood of death.
Can it be said that when three or four persons start beating a man with heavy lathes, each.
hitting his blow with the common intention of severely beating him and each possessing the knowledge that death was the likely result of the beating, the requirements of section 304, Part II are not satisfied in the case of each of them? 'If it could be said that knowledge of this type was possible in the case of each one of the appellants, there is no reason why section 304, Part II cannot be read with section 34.
The common intention is with regard to the criminal act, i.e., the act of beating.
If the result of the beating is the death of the victim, and if each of the assailants possesses the knowledge that death is the likely consequence of the criminal act, i.e.,.
beating, there is no reason why section 34 or section 35 should not be read with the second part of section 304 to make each liable individually.
This matter has been elaborately considered in the judgment of Lodge J. and again in the Full Bench decision of the Allahabad High Court.
We do not think that we need say more on this, because we are in agreement with the decision given by the majority in the Calcutta High Court case and the Full Bench decision of the Allahabad High, Court.
It appears to us that in other cases doubt was felt because section 304 is in two parts, and first part is concerned with culpable homicide committed with two types of intention and the second part with culpable homicide committed with a particular knowledge.
It appears that it was felt that section 34, which deals with common intention, could not be read with 181 the second part of section 304.
In our opinion, the learned Judges who held that view and we say it respectfully fell into the error of viewing the second part of section 3,04 divorced from common intention whatever.
A person does not do an act except with a certain intention, and the common intention which is requisite for the application of section 34 is the common intention of perpetrating a particular act.
Previous concert which is insisted upon is the meeting of the minds regarding the achievement of a criminal act.
That circumstance is completely fulfilled in a case like the present where a large number of persons attack an individual, chase him, throw him on the ground and beat him till he dies.
Even if the ,offence does not come to the grade of murder, and is only culpable homicide not amounting to murder, there is no doubt whatever that the offence is shared by all of them, and section 34 then makes the responsibility several if there was a knowledge possessed by each of them that death was likely to be caused as a result of that beating.
This circumstance is completely fulfilled in the present case, and we are, therefore, satisfied that the conviction of the appellants was proper, and see no reason to interfere.
In the result, the appeal fails and is dismissed.
Appeal dismissed. | The six appellants were convicted under section 304 Part II with section 34 of the Indian Penal Code by the Sessions Judge add their appeal was summarily dismissed by the High Court.
On appeal by special leave, it was contended that section 304, Part 11 could not be read with section 34 Indian Penal Code because the second part of section 304 excluded intention and was concerned with knowledge and the conviction was illegal.
Held:(i) Section 34 when it speaks of a criminal act done by several persons in furtherance of the common intention of all, has regard not to the offence as a whole, but to the criminal act, that is to say, the totality of the series of acts which result in the offence.
In the case of a person assaulted by many accused, the criminal act is the offence which finally results, though the achievement of that criminal act may be the result of the action of several persons.
(ii)Knowledge in section 304 Part 11 is the knowledge of likelihood of death and the common intention is with regard to the criminal act.
If the result of the criminal act is the death of the victim and if each of the assailants possesses the knowledge that death is the likely consequence of the criminal act, there is no reason why section 34 should not be read with the second part of section 304 to make each liable individually.
lbra Akanda vs Emperor, I.L.R. and Saidu Khan vs State, I.L.R. [1952] 1 All, 639, approved.
Ramnath vs Emperor, A.I.R. 1943 All. 271, Shahibzada V. The Crown A.I.R. 1950 Peshawar 24, Debi Chand Haldar vs Emperor, and Barendra Kumar Ghosh vs Emperor, Cal.
referred to. |
ppeal No. 4447 of 1991 From the Judgment and Order dated 24.4.1991 of the Madras High Court in Civil Revision Petition No. 4769 of 1984.
E.C.Agarwala for the Appellant.
Mrs. Jayashree Ahmed for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
Special leave granted.
Appellant is the tenant of a premises located in Sivaka si within the State of Tamil Nadu to which the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act apply.
The rental of the premises is Rs. 275 per month.
Respondents initiated action for eviction on the plea that there was "wilful default" in the matter of payment of rent and change of user.
It was contended that the lease was residential but it had been used partly for commercial activity.
The appellant took the stand that rent was not being collected every month since the respondents resided away from the place where the property is situated and every two to three months they used to come and collect rent at land lord 's convenience.
Two receipts were produced to support this stand.
Rent was collected in one case for three months and in the other for two months at a time.
Admittedly at the time of filing of the petition for eviction three months ' rent had fallen due.
So far as the 205 change of user was concerned it was denied by pleading that mixed use was the basis of the tenancy.
The original authority dismissed the petition but that has been reversed in appeal and the reversal has been upheld by the High Court.
Two contentions were raised before us: (i) there is no case of wilful default particularly when the two receipts showed acceptance of rent for periods as pleaded by the tenant without demur and (ii) that the premises had been rented out also for business use and at any rate admittedly from 1973 there has been this change.
Counsel for the respondents does not dispute that from 1973 there has been change of use.
The petition for eviction is of 1980.
It follows that for seven years no objection was raised for change of use and for the first time when evic tion was sought, conversion was made the second ground.
In these circumstances, we are prepared to accept the submis sion advanced on behalf of the appellant that the landlords accepted the user to be also other than residential.
Both parties relied upon a decision of this Court in the case of section Sundaram Pillai & Ors. etc.
V.R. Pattabiraman & Ors.
; , , where default and 'wilful ' default were distinctly treated.
In the several statutes operating in the different States regulating the law relat ing to landlord and tenant 'wilful ' default has been made the ground of eviction while default is not.
We may also refer to a short but suggestive Order dated March 27,1991, of this court in Civil Appeal No. 1367 of 1991 [Premchand Banka vs A. Vasanthrai Khatod & Ors.] to support our conclu sion.
A situation where the landlord had consented to col lect rent for two to three months at a time non payment of rent for three months cannot constitute wilful default.
Since in the present case default was of three months at time of filing of the case, we are prepared on the basis of the evidence on record that it was not a case for wilful default.
Accordingly the conclusion reached in appeal and upheld by the High Court would not be sustainable.
We allow the appeal and reverse the Judgment of the High Court and dismiss the petition for eviction.
We would, however.
like to add that judicial notice can be taken of the fact that rental has escalated everywhere and appropri ate rent in the present case should be raised to Rs. 400 per month from 1.1.1992.
The tenant should have a direction to pay the rent in advance from month to month as stated by him in the Court below and it should be by the end of every month.
There will be no order as to COSTS.
V.P.R. Appeal allowed. | Appellant was a tenant under the respondents.
Action for eviction against the appellant was initiated on the pleas that there was "wilful default" in the matter of payment of rent and that the lease was residential but it had been used partly for commercial activity.
At the time of filing of the petition for eviction three months ' rent had fallen due.
The appellant 's case was that rent was not being collected every month and every two to three months the respondents landlords used to come and collect rent at their convenience, and that mixed use of the premises was the basis of the tenancy.
The original authority dismissed the petition.
In appeal it was reversed.
The High Court upheld the reversal holding that there was no case of wilful default and that the prem ises had been rented out also for business use.
In the appeal by special leave the tenant appellant contended that there was no case of wilful default and that the premises had been rented out also for business use and the change of user was since 1973.
Allowing the appeal of the tenant, this court, HELD: 1.
In the several statutes operating in the different states regulating the law relating to landlord and tenant 'wilful ' default has been made the ground of eviction while default is not.
[205 E] 204 2.
A situation where the landlord had consented to collect rent for two to three months a time, non payment of rent for three months cannot constitute wilful default.
[205 F] 3.
It is not disputed that from 1973 there had been change of use.
The petition for eviction was of 1980.
It follows that for seven years no objection was raised for change of use and for the first time when eviction was sought, conversion was made the second ground.
In these circumstances the landlords accepted the user to be also other than residential.
[205 C D] section Sundaram Pillai & Ors.
V.R. Pattabiraman & Ors.
; , ; Premchand Banka vs
A. Vasanthrai Khatod & Ors., C.A.No. 1367 of 1991, decided on 27.3.1991, referred to. |
Appeal No. 4568 of 1991.
From the Judgment and Order dated 30.1.89 of the Punjab & Haryana High Court in LPA No. 1251 of 1987.
WITH CA Nos 4569 4686/91 482 M. Chandra Sekhar, Additional Solicitor General, G.L. Sanghi, Hatbans Lal, Har Dev Singh, S.P. Goyal, Harinder Pal Singh, Ms. Naresh Bakshi, S.M. Sarin, P.N. Puff, M.K. Dua, Ms. Madhu Moolchandani, Manoj Swamp, Dr.(Ms.) Meera Agarwal, R.C. Mishra, M.N. Krislmamam, K.P. Sunder Rao, Attar Singh, S.N. Terdal, Hemant Sharma, T.C. Sharma, N.D. Garg, Ms. Kusum Chowdhary and S.P. Sarin for the appearing parties.
The Judgment of the Court was delivered by KANIA, J.
Leave granted.
Counsel heard.
As the controversy before us is a limited one and relates only to the question of granting of benefit of the provisions of Section 23(1 A) introduced into the Land Acquisition Act, 1894 (hereinafter referred to as "the said Act") by the Land Acquisition (Amendment) Act, 1984, (referred to hereinafter as "the Amendment Act of 1984") only a few facts are necessary for the appreciation of the submissions made before us.
This appeal, arising out of S.L.P. (Civil) No, 14297 of 1990 by Special Leave, is directed against the judgment of a Division Bench of the Punjab and Haryana High Court in Letters Patent Appeal No.1251 of 1987.
The other appeals before us are connected appeals filed by the Union of India or the claimants.
The respondent was the owner of a piece of land in one of the villages in District Bhatinda in Punjab.
Land admeasuring 74375 acres situated in various villages in Bhatinda District including the land of the respondent was acquired by the appellants under the said Act.
The Notifications under Sections 4 and 6 of the said Act were published on May 10,1979 and March 27, 1981, re spectively.
The Special Land Collector made and declared his award of compensation in respect of the acquisition of the said land and several other plots of land on March 31,1981.
Being aggrieved by the said award, the respondent and other landowners filed Reference applications under Section 18 of the said Act which were decided by the learned District Judge concerned in 1985 and 1986.
The land acquired was classified into various grades and compensation awarded accordingly.
In the case before us and several other similar cases the benefits under Section 23(1 A) of the said Act were granted to the land owners.
The State appealed to the High Court.
In several other cases where the land owners were not satisfied with the compensation awarded, including the cases where the benefits conferred by Section 23(1 A) were not awarded the land owners filed appeals before the High Court.
483 What is relevant for our purpose is that a learned Single Judge of the High Court confirmed the grant of bene fits under Section 23(1 A)of the said Act where such bene fits had been granted by the learned District Judge and awarded the same where that had not been done by the learned District Judge.
Letters Patent Appeals were filed by the State being dissatisfied with the judgment of the learned Single Judge.
It was submitted on behalf of the Union of India before the Division Bench deciding the Letters Patent Ap peals that the claimants/land owners were not entitled to the benefit of Section 23(1 A) of the said Act introduced by the said Amendment Act, 1984 as aforestated.
It was submit ted on behalf of the appellants that the right to get addi tional amount at the rate of 12% per annum on the enhanced amount of compensation from the date of Notification under Section 4 of the said Act and till the date of the award of the Collector or the date of taking possession whichever is earlier conferred under the provisions of Section 23(1 A) of the said Act was available only in cases where the Collector made his award after 30th day of April, 1982, being the date of the introduction of the Land Acquisition (Amendment) Bill, 1982 in the House of the People, whereas in the present case, the Collector had made his award on March 31, 1981.
Reliance was placed on the Judgment of a Full Bench of the Punjab and Haryana High Court in State of Punjab vs Krishan Lal, AIR (1987) Punjab and Haryana, 222.
The Divi sion Bench repelled this contention and pointed out that the learned Chief Justice H.N. Seth, who spoke for the Full Bench in Krishan Lal 's case (supra) had explained that judgment in the subsequent decision rendered in Maya Devi and Others vs The Union Territory of Chandigarh, Punjab Law Journal (1988) 189.
and pointed out that the land owner was entitled to the additional amount in terms of Section 23(1 A) of the Amendment Act of 1984 if the proceedings for determination of compensation were decided after September 24, 1984, and since the Regular First Appeal in respect of the proceedings for determination of the compensation was decided after September 24, 1984, the Court while adjudi cating upon the amount of compensation payable to the claim ant was bound to grant the additional amount in terms of Section 23(1 A) of the said Act.
The Division Bench in its impugned judgment gave to the claimant the benefit of the added amount referred to in Section 23(1 A) of the said Act.
The same submissions have been made on behalf of the respective parties before us.
Before discussing the submissions of the respective parties, it would not be out of place to set out the rele vant provisions of the said Act.
The said Act, namely, the Land Acquisition Act, 1894, provides for compulsory acquisition of land.
The term 'Award ' has not been defined in 484 the said Act.
Sub clause (d) of Section 3, the definition section, defines the expression 'Court ' as follows: "(d)the expression 'Court ' means a principal Civil Court of original jurisdiction, unless the appropriate Government has appointed, as it is hereby empowered to do, a special judi cial officer within any specified local limits to perform the function of the Court under this Act. ' Part II of the said Act deals with the question of acquisition of land.
Section 11 of the said Act deals with the enquiry and award of compensation by the Collector.
Section 11 A which was introduced into the said Act by the Land Acquisition (Amendment) Act, 1984 (Act No.68 of 1984) provides for the period within which the award shall be made.
Generally speaking, it prescribes that the period for making the award is limited to two years, and the section provides that, if the award is not made within that period, the entire proceedings for acquisition of land shall lapse.
There is a proviso to the said section and an Explanation, but it is not necessary to consider the same for the purpose of this case.
Sub section (1) of Section 18 which is includ ed in Part III of the said Act runs as follows: "18.
Reference to Court (1) Any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by the Collector for the determina tion of the Court, whether his objection be to the measurement of the land, the amount of compensation, the person to whom it is pay able, or the apportionment of the compensation among the persons interested." Section 23 deals with the matters to be considered by the Court for determining the compensation to be awarded for the land acquired under the said Act.
We may mention here that under the general scheme of the said Act, the landowner whose land has been acquired is entitled to be paid the market value of the land acquired as prevailing at the time of the publication of the notification under Section 4 issued together with the solatium at the prescribed rate in consideration of the compulsory nature of the acquisition.
Prior to the coming into effect of the Amendment Act of 1984 solatium was fixed at the rate of 15 per centum.
Sub section (1 A) which was introduced into Section 23 of the said Act by the Amendment Act of 1984 runs as follows: "In addition to the market value of the land, as above provided, the Court shall in every case award an amount calcu 485 lated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publi cation of the notification under Section 4, subsection (1), in respect of such land to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier.
" By the said Amendment Act of 1984 the expression "thirty per centum" was substituted in place of the expression "fifteen per centum" in sub section (2) of Section 23 of the said Act.
Sub section (2) of Section 23 now runs as follows: "(2) In addition to the market value of the land, as above provided, the Court shall in every case award a sum of thirty per centum on such market value, in consideration of the compulsory nature of the acquisition." .lmo
These amendments were effected in the Land Acquisition Act (the said Act) by the Land Acquisition (Amendment) Act, 1984, ("the Amendment Act of 1984") as set out earlier.
Sub sections (1) and (2) of Section 30 of the Amendment Act of 1984 run as follows: "30 Transitional Provisions: (1) The provisions of sub section (1 A) of Section 23 of the principal Act, as inserted by Clause (a) of Section 15 of this Act, shall apply, and shall be deemed to have applied, also to, and in relation to, (a) every proceedings for the acquisition of any land under the principal Act pending on the 30th day of April, 1982 the date of intro duction of the Land Acquisition (Amendment) Bill, 1982, in the House of the People, in which no award has been made by the Collector before that date; (b) every proceeding for the acquisition of any land under the principal Act commenced after that date, whether or not an award has been made by the Collector before the com mencement of this Act.
(2) The provisions of sub section (2) of Section 23 and Section 28 of the principal Act, as amended by Clause (b) of Section 15 and Section 18 of this Act respectively shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against 486 any such award under the provisions of the principal Act later the 30th day of April, 1982, the date of introduction of the Land Acquisition (Amendment) Bill.
1982, in the House of the People and before the commence ment of this Act.
" (emphasis supplied by us) On behalf of the appellants reliance was placed by learned Counsel on the decision of this Court in Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama, [1990] 1 SCC 277.
The respondent, on the other hand, placed strong reliance on the decision of a Full Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc.
vs Government of Goa, Daman Diu and Another etc, AIR 1987 Bombay 214.
On the basis of the aforesaid judgment of the Bombay High Court it was submitted by the respondent/claim ant that a wide and liberal interpretation should be given to the provisions of sub section (1 A) of section 23 and the amount calculated as set out in the said sub section awarded in all cases where any proceeding was pending in any court including the High Court or this Court in connection with the determination of compensation for the land acquired.
We may mention that both the parties referred us to the deci sion of a Constitution Bench of this Court in Union of India and Another etc:.
vs Raghuvir Singh (dead) by Lrs etc; , We propose to discuss these decisions a little later but before doing so, we propose to analyse the relevant provisions of the said Act and the effect thereof.
A perusal of the provisions of sub section (1 A) of Section 23 makes it clear that the said sub section deals with substantive rights and it confers a substantive right to claim the additional amount calculated as set out in the said sub section in the circumstances set out therein.
Similarly, sub section (2) of Section 23 also confers a substantive right on the claimant to a higher solatium.
Under the well settled rules of interpretation, the said provisions of the said Act, being substantive in nature, can have only prospective application unless the language in which the provisions are couched, read in the context, shows that the intention of the legislature was to give retrospec tive effect to them.
The language of sub section (lA) of Section 23 shows that a duty is cast on the court tO award an amount calculated as stated therein in addition to the market value of the land acquired for the period commencing from the date of the publication of the Section 4 Notifica tion to the date of the award of the Collector or the date of taking possession, whichever is earlier.
(Emphasis supplied) The expression "award" used in section 23 (I A) suggests that the 487 intention of the legislature was to make the provisions of the said subsection applicable to cases where the Collector had yet to make his award or the Trial Court heating the Reference under Section 18 of the Land Acquisition Act had still to make its award after the coming into force of the said sub section on September 30, 1984.
The expression "award" is to be distinguished from the expression "decree" and hence, it appears that in the absence of any contrary or inconsistent provision in the said Act the provisions of sub section would not come into play where the award had been made by the Collector earlier as well as by the Refer ence Court but ton the date of coming into effect of the said sub section, an appeal from the said award might have been pending in a court.
In that case, the Court would not be "awarding" any amount but would be making a "decree" for an amount.
By reason of the provision of section 30(1)(a) of the Amendment Act of 1984 the provisions of section 23(1 A) of the said Act were, by a deeming provision, made also ap plicable to every proceeding for the acquisition of land under the said Act where the Collector had not made his award by April 30,1982.
On a correct interpretation of the provisions of section 23 (1 A) read with section 30(1)(a) of the Amendment Act of 1984, an additional amount calculated in the manner indicated in section 23(1 A) is also payable in those cases where the Collector had not made his award on or before April 30, 1982, even in cases where the court might have made its award before September 24, 1984.
It is true that the aforesaid construction we are giving to the provisions of Section 23(1 A) and Section 30(1)(a) will, in a sense, limit the benefits strictly conferred by Section 30(1)(a) to only those cases where the Collector as well as the Court have made their respective awards between April 30, 1982 and September 24, 1984 but, in our view, that cannot be helped as that is the result of the plain grammatical construction of the clear language used in the relevant provisions.
We are of the opinion that we would not be justified in giving an unduly restricted meaning to the provisions of Section 23(1 A) unwarranted by the plain language of that sub section as appears to have been done in the case of Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama discussed more particularly hereinaf ter, in order to give a wider meaning of the provisions of Section 30(1)(a).
Section 23(1 A) refers clearly to the duties of the Court.
As we have already pointed out, the court is defined by Section 3(d) as the principal court of original jurisdiction, except in the circumstances set out in the said sub section, which would be the court having jurisdiction to decide the reference under Section 18 of the said Act.
There, is therefore, no warrant to read in the place of the word 488 "Court" in Section 23(1 A) the word "Collector".
Moreover, the decision of such a court determining compensation is regarded as an award under the said Act.
In the light of these provisions, there is no warrant to give an unduly restricted meaning to Section 23(1 A) of the said Act, as pointed out above.
Coming now to the decisions cited before us we find that in the case before the Full Bench of the Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc.
vs Govern ment of Goa, Daman and Diu and Another etc.
(AIR 1987 Bombay 214) the facts were that the Notification under Section 4 of the said Act was published on October 3, 1969, in the Gov ernment Gazette of the Government of Goa.
The Notification under Section 6 was published on June 10, 1971 The Land Acquisition Officer declared his award on August 2, 1972.
All these events undoubtedly occurred prior to April 30, 1982.
However, on a Reference made under Section 18 of the said Act on December 24, 1973, the Civil Court investigated the claim and gave its award on June 24, 1985.
The award was, therefore, made by the Court not before April 30, 1982, but after September 30, 1984, when the provisions of the Land Acquisition (Amendment) Act, 1984, had already come into effect.
It was, therefore, strictly speaking, not necessary for the court to make any observation regarding the legal position in a case where both the Collector as well as the Court in a Reference under Section 18 had made their respective awards before April 30,1982.
Moreover, we find that the judgment appears to proceed on a somewhat unwarranted assumption.
This is clear from the following observations which appear at paragraph 5 of the aforesaid Report (p 217): "It is not in dispute that where on the date of the commencement of the amending Act any proceedings for determination of compensation were pending before the Collector under Sec tion 11 of the Act or before the Court under reference under Section 18 of the Act or before the High Court in appeal under Section 54 of the Act, then the amended section 23 (I A) would be applicable to such proceedings, in absence of subsection (1) of Section 30.
" In our view, it was erroneously taken as undisputed that had the provisions of sub section (1) of Section 30 not been in existence, the provisions of the amended section 23(1 A) would have applied to a case where the Collector as well as the Court had already made their award before April 30, 1982, but an appeal was pending in the High Court on April 30, 1982, or on the commencement of the Land Acquisition (Amendment) Act.
As we have already pointed out, the cor rectness of this as 489 sumption is very much in dispute before us.
In these circum stances, we find ourselves unable to accept as correct the view taken by the Full Bench of the Bombay High Court to the extent that it extends the operation of the provisions of section 23(1 A) even to cases where the Collector as well as the Reference Court had made their awards before April 30, 11982, in the case before the Full Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc.
vs Government of Goa, Daman and Diu and Another etc., AIR 1987 Bombay 214.
As far as the decision of a Division Bench comprising two learned Judges of this Court in Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama [1990] 1 S.C.C. 277 strongly relied upon by the appellants is concerned, we find that in that case the Land Acquisition Officer made his award determining the compensation on March 5, 1969.
On a reference under Section 18 the Civil Court made its award on May 28, 1985, that is, even after Septem ber 24,1984, when the Amendment Act of 1984 came into ef fect.
The view taken by the Division Bench is that, as the Collector had made his award before April 30, 1982, then the additional amount referred to in section 23 (1 A) could not be awarded.
This view has been taken on the basis that sub section (1)(b) of Section 30 of the said Act provides that the provisions of section 23(1 A) shall be applicable to every acquisition proceeding commenced after April 3 O, 1982, irrespective of the fact whether the Collector has made the award on or before September 24, 1984, and that sub section (1) of Section 30 does not refer to court award and the court award is used only in sub section (2) of Section 30.
(See para 21 of the said report).
We find that on the plain language of section 23(1 A) itself, which we have set out earlier, the duty was cast on the Court to award an additional amount calculated as prescribed therein which would mean that it is directed to be awarded by the court, namely, the Reference Court, in all cases which are pending before that court on September 1,1984.
Sub section (1)(a) of Section 30 undoubtedly lays down that the provi sions of section 23(1 A) of the Act are also made applicable to all proceedings for the acquisition of any land under the said Act pending on April 30, 1982, where no award had been made by the Collector before that date.
At first glance this would appear to suggest that the additional amount referred to in section 23 (1 A) could not be awarded where the Col lector had made his award before April 30, 1982.
But this provision cannot be allowed to cut down the benefits avail able to the claimants on a plain reading of section 23(1 A).
This is clear from the use of the word "also" in the opening pan of section 30(1).
In our opinion, the view taken by the Bench comprising two learned Judges of this Court in that case cannot be accepted as correct as it is too narrow and unduly cuts down the operation of the benefit conferred under the 490 plain language of section 23 (1 A) of the said Act.
As far as the provisions of section 30(2) are concerned, we do not feel that we are called upon to interpret the same in this decision.
In our view, therefore, the said decision cannot be accepted as good law in so far as it lays down that in order to bring the provisions of section 23(1 A) of the said Act into play the Collector must have made his award after April 30, 1982.
Coming to the decision in Union of India and Another vs Raghuvir Singh (dead) by Lrs.
(Supra) referred to earlier, we find that it mainly concerned itself with the provisions of section 30(2) of the said Amendment Act with which we are not directly concerned here and in that connection, the Constitution Bench of this Court has made the following observations (p. 779): "In construing section 30(2), it is just as well to be clear that the award made by the Collector referred to here is the award made by the Collector under Section 11 of the parent Act, and the award made by the Court is the award made by Principal Civil Court of Original Jurisdiction under Section 23 of the parent Act on a reference made to it by the Collector under Section 19 of the parent Act.
There can be no doubt that the benefit of the enhanced solatium is intended by section 30(2) in respect of an award made by the collector between April 30, 1982, and September 24, 1984, Likewise the benefit of the enhanced solatium is extended by section 30(2) to the case of an award made by the Court between April 30, 1982, and September 24, 1984, even though it be upon reference from an award made before April 30, 1982.
" The Court went on to point out that (p.780): "Section 30(2) of the Amendment Act extends the benefit c. the enhanced solatium to cases where the award by the Collector or by the Court is made between April 30, 1982, and September 24, 1984, or to appeals against such awards decided by the High Court and the Supreme Court whether the decisions of the High Court or the Supreme Court are rendered before September 24, 1984, or after that date.
All that is material is that the award (empha sis supplied) by the Collector or by the Court should have been made between April 30, 1982, and September 24, 1984.
We find ourselves in agreement with the conclusion reached by this Court in K. Kamalajammanniavaru vs Special Land Acquisition Officer, and 491 find ourselves unable to agree with the view taken in Bhag Singh vs Union Territory of Chandigarh ; The expanded meaning given to section 30 (2) in the latter case does not, in our opinion, flow reasonably from the language of that sub section.
It seems to us that the learned Judges in that case missed the significance of the word 'such ' in the collocation 'any such award ' in section 30(2).
Due significance must be at tached to that word, and to our mind it must necessarily intended that the appeal to the High Court or the Supreme Court, in which the benefit of the enhanced solatium is to be given, must be confined to an appeal against an award of the Collector or of the Court rendered between April 30, 1982, and September 24, 1984.
" We find that this decision which was rendered by a Constitution Bench of this Court comprising 5 learned Judges runs in no way counter to the view which we have taken and, in fact, it leads some support to the view which we are taking.
In the case before us, as the Reference Court has made its award after September 24, 1984 the benefit of the provisions of section 23(1 A) was clearly available to the claimant as held in the impugned judgment.
In the result, the appeal arising out of Special Leave Petition (Civil) No.14297 of 1990 in Union of India vs Zora Singh must be dismissed with costs.
As far as the other appeals filed by the Union of India which have been heard together with the Zora Singh 's case are concerned, learned Counsel for the Union of India has not drawn our attention to any material difference in the relevant facts therein from the facts in Zora Singh 's case.
In fact, the arguments proceeded on the footing that all the relevant facts were the same as in the case of Zora Singh.
In a result, all these appeals must also be dismissed, however, with no order as to costs.
As far as the appeals before us which have been filed by the claimants are concerned, the same will have to be placed before appropriate Benches of this Court for disposal in the light of this decision.
V.P.R. Appeals dis missed. | The lands of the respondent and other land owners were acquired under the Land Acquisition Act, 1894.
Notifications under sections 4 and 6 of the Act were published on 10.5.1979 and 27.3.1981 respectively.
The respondent and other land owners filed Reference Applications u/s 18 of the Act against the award before the District Judge.
The District Judge classifying the acquired land into various grades awarded compensation and also granted bene fits u/s 23(1 A) of the Act to the respondent and other land Owners.
Hence, the State appealed to the High Court.
Those land owners, who were not satisfied with the compensation awarded and those to whom benefit u/s 23(1 A) were not granted, also appealed to the High Court.
The Single Judge of the High Court confirmed the grant of benefits u/s 23(1 A) of the Act and also granted such benefits to those cases, where such benefits were not given by the District Judge.
The State preferred the Letters Patent Appeals before the Division Bench of the High Court, contending that the respondent and 479 other land owners were not entitled to the benefit of sec tion 23(1 A) of the Act; that the section 23(1 A) was intro duced by the Land Acquisition(Amendment) Act, 1984; that as the Collector had made his award on 31.3.1981 the provisions of section 23(1 A) of the Act was not applicable to the cases of the respondent and other land owners.
The Division Bench of the High Court dismissed the Letters Patent Appeals of the State.
Hence the present appeals by special leave were filed by the State before this Court.
The parties before this Court made the same submissions which were made before the High Court.
Dismissing the appeal, (CA No.4568 of 1991) this Court, HELD: 1.
A perusal of the provisions of sub section(1 A) of section 23 makes it clear that the said sub section deals with substantive rights and it confers a substantive right to claim the additional amount calculated as set out in the said sub section in the circumstances set out therein.
Similarly, sub section(2) of Section 23 also confers a substantive right on the claimant to a higher solatium.
[486 E F] 2.
The provisions of the Act, being substantive in nature, can have only prospective application unless the language in which the provisions are couched, read in the context, shows that the intention of the legislature was to give retrospective effect to them.
The language of sub section(1 A) of section 23 shows that a duty is cast on the court to award an amount calculated as stated therein in addition to the market value of the land acquired for the period commencing from the date of the publication of sec tion 4 of the Notification to the date of the award of the Collector or the date of taking possession, whichever is earlier.
[486 F G] 3.
The expression "award" used in section 23(1 A) suggests that the intention of the legislature was to make the provisions of the said sub section applicable to cases where the Collector had yet to make his award or the Trial Court hearing the Reference under Section 18 of the Land acquisition Act has still to make its award after the coming into force of the said sub section on September 30, 1984.
[486 H 487 A] 480 4.
The expression "award" is to be distinguished from the expression "decree" and hence, it appears that in the absence of any contrary or inconsistent provision in the Act the provisions of subsection(1 A) of section 23 would not come into play where the awards had been made by the Collec tor earlier as well as by the Reference Court but on the date of coming into effect of the said sub section, an appeal from the said award might have been pending in a court.
In that case, the court would not be "awarding" any amount but would be making a "decree" for an amount.
[487 B C] 5.
By reason of the provision of section 30(1)(a) of the Amendment Act of 1984 the provisions of section 23(1 A) of the Act were, by a deeming provision, made also applica ble to every proceeding for the acquisition of land under the Act where the Collector had not made his award by.
April, 30,1982.
On a correct interpretation of the provisions of section 23(1 A) read with section 30(1)(a) of the Amendment Act of 1984, an additional amount calculated in the manner indicated in section 23(1 A) is also payable in those cases where the Collector had not made his award on or before April 30,1982, but the Court might have made its award before September 24,1984.
[487 D E] 6.
The construction that is being given to the provi sions of section 23(1 A) and section 30(1)(a) will, in a sense, limit the benefits strictly conferred by section 30(1)(a) to only those cases, where the Collector as well as the Court have made their respective awards between April 30,1982 and September 24, 1984.
That cannot be helped, as that is the result of the plain grammatical construction of the clear language used in the relevant provisions.
[487 E F] 7.
The Court would not be justified in giving an unduly restricted meaning to the provisions of section 23(1 A) unwarranted by the plain language of the sub section.
[487 F] 8.
Section 23(1 A) refers clearly to the duties of the court.
The court is defined by section 3(d) as the principal court of original jurisdiction, except in the circumstances set out in the said subsection, which would be the court having jurisdiction to decide the reference under section 18 of the Act.
There, is therefore, no warrant to read in the place of the word "Court" in Section 23(1 A) the word "Collector".
Moreover, the decision of such a court deter mining compensation is regarded as an award under the Act.
In the light of the provisions, there is no warrant to give an unduly restricted meaning to section 23(1 A) of the Act.
[487 G 488 A] 481 9.
On the plain language of section 23(1 A) itself, the duty was cast on the court to award an additional amount calculated as prescribed therein which would mean that such amount is directed to be awarded by the court, namely, the Reference court, in all cases which are pending before that court on September 1, 1984.
Sub section (1)(a) of Section 30 lays down that the provisions of section 23(1 A) of the Act are also made applicable to all proceedings for the acquisi tion of any land under the said Act pending on April 30,1982, where no award had been made by the Collector before that date.
At first glance this would appear to suggest that the additional amount referred to in section 23(1 A) could not be awarded where the Collector had made his award before April 30,1982.
But this provision cannot be allowed to cut down the benefits available to the claimants on a plain reading of section 23(t A).
This is clear from the use of the word "also" in the opening part of section 30(1).
[489 E H] 10.
In the present case as the Reference court has made its award after September 24,1984 the benefit of the provi sions of Section 23(1 A) was clearly available to the claim ant.
[491 D] Jaiwant Laxman P.Sardesai etc.
vs Government of Goa, Daman and Diu and Another etc., AIR 1987 Bombay 214(F.B.) and Union of India & Others vs Filip Tiago De Gama of lied era Vasco De Gains, [1990] 1 SCC 277, overruled.
State of Punjab vs Krishan Lal, AIR 1987 Punjab and Haryana 222(F.B.); and Maya Devi and Others vs The Union Territory of Chandigarh, , ap proved.
Union of India and ,Another etc.
vs Raghuvir Singh (dead) by Lrs.
; , ; K. Kamala Jammannia varu vs Special Land Acquisition Officer, [1985] I SCC 582 and Bhag Singh vs Union Territory of Chandigarh, ; , referred to. |
No 1 IN C.A. No 4444 of 1990 etc.
From the Judgment and Order dated 25.5.90 of the Alla habad High Court in CWP No. 5267 of 90.
Yogeshwar Prasad, Gopal Subramanium, S.K. Mehta, Dhruv Mehta, Arvind Verma, Aman Vachher, Pradeep Misra and R.B. Misra for the appearing parties.
The following order of the Court was delivered: The dispute in these cases relates to admission in post graduate courses of the medical wing.
There are seven medical colleges in the State of Uttar Pradesh.
Sometime back in a fake writ petition the High Court of Allahabad made an order that admission could be effected on the basis of the MBBS results.
That can counter to the decision of this Court and on being looked into it transpired that the proceedings before the High Court were totally fraudulent and no one by the name given in the petition as petitioner could really be identified.
This Court at that stage had clearly indicated that the prescription by this Court has been that there should be a selection test for post graduate admission as admission has become very competitive and to have compliance of Article 14 of the Constitution a broad based arrangement should be made.
On that account this Court had clearly indicated that no admission should be permitted on the basis of the MBBS results.
In view of the fact that the Allahabad High Court 's order has already been reversed, nothing more need be done.
387 SLP (C) . . of 1990 This petition is directed against the order of the learned Single Judge of the Allahabad High Court dated 25.5.1990.
U.P. Junior Doctors ' Action Committee in their special leave petition which has not yet been numbered challenge the order referred to above where the petitioner could not be identified and challenge was to the decision of the High Court dated 25.5.1990 which permitted admission on the basis of MBBS results.
Since we have already clarified the position and reiterated the requirement of a selection test the order of the High Court must be taken to have already been vacated.
11 is not necessary to entertain this special leave petition.
CA in SLP 15354/91 Special leave granted.
In this appeal by special leave Principal of the Agra Medical college along with some others is the appellant.
The High Court by the impugned order required provisional admis sion in M.S. (Surgery) and in M.D. (Medicine) to be given to respondents 1 and 2 respectively in the Medical College of Agra while the writ petition was yet to be heard.
The con ten tion raised before us is that grading admission at an interlocutory stage in a pending proceeding even by styling it as provisonal create lot of adderse consequences and leads to indicipline in the system of imparting education, Admission into post graduate degrees in the medical wing through out the country has become very competitive and it has become clear thatstrict regulation is necessary.
This Court by its judgement in Dr. Pradeep, Jain & Ors.
vs Union of India & Ors [1984] 3 sec 654 indicated that admis sion for 25 percent of the seats in post graduate courses should be regulated on the basis of all India selection and in regard to the remainder 75 per cent of the States were left to decide the procedure for admission.
Appropriate knowledge and expertise are a prerequisite for a person to be allowed to register himself as a medical practitioner.
Very often, health problems require expert treatment.
If anyone is authorised in society to practise medicine or undertake medical care without the appropriate qualification, society exposes itself to health hazards.
The prescriptions by the Indian Medical Council and the attempts made by Government for regulating the medical study are for establishing basically uniform knowledge to be imparted to the students before they can be entrusted with the nation 's medicare.
Unless there is a sincere and thorough educational discipline to be gone through as a precondition to the grant of the requisite certificate the lives of citizens would be at peril.
388 The Indian Medical Council has prescribed a reasonable period of study on expert advice and upon taking into con sideration the experience over the years as to how much study is necessary for the requisite qualification to be gathered.
This Court has also indicated the dates of admis sion and commencement of the courses of study.
These are prescriptions for a purpose and are not intended to be empty formalities to be violated.
One of the prescriptions of the Medical Council is also the ratio between the teachers and the students.
That again is a factor which cannot be brushed aside.
It is a well known rule of practice and procedure that at interlocu .
tory stage a relief which is asked for and is available at the disposal of the matter is not granted.
The writ petitioners wanted admission into postgraduate course as the main relief in the writ petition.
To have it granted at the threshold creates a lot of difficulties.
In a case where the petitioner ultimately loses in a case of this type a very embarrassing situation crops up.
If he has by then read for two to three years, there is a claim of equity raised on the plea that one cannot reverse the course of time.
In a case of this type equities should not be claimed or grained. 'Faking an overall picture of the matter we are of the view that unless there is any special reason to be indicated in clear terms in an interlocutory order as a rule no provisional admission should be granted and more so into technical courses.
On the basis of what we have said the order of the High Court should be reversed but we are not doing so on account of the fact that nine similarly placed medical graduates have already been given admission pursuant to such interloc utory orders by the respondents without even raising a challenge.
The order was made as early as in February, 1991 and for all these nine months no steps have been taken by the appellants to comply with the order and they are in fact facing a contempt proceeding.
While on principle we indicate that such provisional admission should not be granted.
We dismiss this special leave petition and sustain the order not on merits but for the reason indicated.
The interlocuto ry application in the civil appeal need not be further dealt with in view of what we have said above.
We had issued notice to the Principals of the seven medical colleges.
They have appeared and have given a writ ten undertaking to the Court by way of affidavit that there was some misunderstanding in regard to the requirement of a selection test for post graduate admission.
There were two year and three year courses running simultaneously for some period and some confusion was there as to whether the two year course 389 students were covered by the direction of this Court.
Though we are of the view that there was hardly any scope for being misled, we are prepared to give the benefit of doubt to the Principals.
The contempt proceedings are withdrawn but the undertaking are kept on record.
G.N. Appeals dismissed. | These matters relate to admission in post graduate courses in the Medical Colleges in Uttar Pradesh.
On a Writ Petition, which later turned out to be fake, the High Court had ordered that admission could be effected on the basis of the MBBS Examination.
This has been disputed in appeal before this Court.
In another Writ Petition, pending hearing, the High Court directed that provisional admission be given to two candidates, one in MS (Surgery) and another in MD (Medicine).
The Principal of the Medical college and others preferred an appeal against the High Court 's order.
It was contended that granting admission, though provi sional, at an interlocutory stage in a pending proceeding creates a lot of adverse consequences and indiscipline in the system of imparting education.
Dismissing the matters, this Court, 385 HELD: 1.1 It transpires that the proceedings before the High Court were totally fraudulent and no one by the name given in the petition as petitioner could really be identi fied.
This Court had clearly indicated that no admission should be permitted on the basis of the MBBS results.
Noth ing survives now, as the High Court 's order has already been reversed.
[386 F,G] 2.1 It is already settled that admission for 25 per cent of the seats in post graduate courses should be regulated on the basis of all India selection and in regard to the re mainder of 75 per cent the States were left to decide the procedure for admission.
[387 E] 2.2 Unless there is a sincere and thorough educational discipline to be gone through as a precondition to the grant of the requisite certificate the lives of citizens would be at peril.
The Indian Medical Council has prescribed a rea sonable period of study, on expert advice, and upon taking into consideration the experience over the years as to how much study is necessary for the requisite qualification to be gathered.
This Court has also indicated the dates of admission and commencement of the courses of study.
These are prescriptions for a purpose and are not intended to be empty formalities to be violated.
[387 G, H; 388 A] Dr. Pradeep Jain & Ors.
vs Union of India & Ors.
, [1984] 3 S.C.C. 654, relied on.
It is a well known rule of practice and procedure that at an interlocutory stage, a relief which is asked for and is available at the disposal of the matter, is not (generally) granted.
To have it granted at the threshold creates a lot of difficulties.
In a case where the petition er ultimately loses in a case of this type a very embarrass ing situation crops up.
If he has by then read for two to three years, there is a claim of equity raised on the plea that one cannot reverse the course of time.
In a case of this type, equities should not be claimed or granted.
Unless there is any special reason to be indicated in clear terms in an interlocutory order, as a rule no provisional admis sion should be granted and more so into technical courses.
[388 C, D] 4.1 The order of the High Court in the instant case should be reversed but this is not being done so, on account of the fact that nine similarly placed medical graduates have already been given admission pursuant to such interloc utory orders by the respondents 386 without even raising a challenge.
The order was made as early as in February, 1991 and for nine months no steps have been taken by the appellants to comply with the order and they are in fact facing a contempt proceeding.
[388 F] 4.2 Notice had been issued to the Principals of the seven medi cal colleges who have appeared and given written undertakings to the Court by way of affidavit that there was some misunderstanding in regard to the requirement of a selection test for post graduate admission.
Though there was hardly any scope for being misled, the benefit of doubt is being given to the Principals.
The contempt proceedings are discharged, but their undertakings are kept on record.
[388 G, H; 389 A] |
ivil Appeal No. 3552 of 1989.
From the Judgment and order dated 24.11.87 of the Allahabad High Court in Second Appeal No. 2719 of 1987.
J.P. Goyal, R.C. Verma, M.R. Bidsar and K.K. Gupta (NP) for the Appellants.
O.P. Rana and Girish Chandra for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by special leave is directed against the Judgment of Allahabad High Court dated 24.11.1987.
The plaintiff respondent filed a suit on the ground that the land purchased through 4 sale deeds dated 10.6.1968, 21.6.1968, 17.1.1976 and 23.6.1977 were purchased by him alone and he was the real owner of said land.
The name of the defendants/appellants were included in the said sale deeds only as benamidar.
The defendants appellants took the plea that they had paid their part of the sale consideration and the land was jointly purchased in the name of both the parties.
It may be noted that the defendant appellant Om Prakash and plaintiff respondent Jai Prakash are brothers and defendant appellant NO.
2 Smt.
Satyawati is the wife of appellant Om Prakash.
It has come on record that the appellant NO. 1 Om Prakash was in Government service ever since 1953 and the plaintiff respondent was looking after the entire agricultural property in the village.
Consolidation proceedings also took place in the village and during the consolidation operation partition had been effected in the revenue records and chaks had been carved out in accordance with the share of the parties.
At that time no dispute was raised by the plaintiff respondent that he was owner of the entire property and the names of defendants appellants were wrongly mentioned as benami.
The learned trial court arrived at the conclusion that the names of the defendants appellants in the sale deeds were not mentioned as benamidars and further held that the claim of the plaintiff respondent could not be accepted as no objection had been taken by him even during the consolidation proceedings.
The suit as such was dismissed by the trial court by Judgment dated 24.1.1987.
The plaintiff aggrieved against the judgment of 19 the trial court, filed an appeal.
The first appellate court reversed the Judgment and decree of the trial court and decreed the suit in favour of the plaintiff.
The second appeal filed by the defendants was dismissed by the High Court.
The defendants aggrieved against the Judgment and decree of the High Court filed special leave petition before this Court on 15th March, 1988.
During the pendency of the special leave petition, the Benami Transactions (Prohibition of the right to recover property) Ordinance, 1988 was promulgated by the President of India on 19.5.1988.
The said ordinance was replaced by the Benami Transactions (Prohibition) ACt, 1988 (Hereinafter called the `Benami Act ').
The Act received the assent of the President of India on 5.9.1988.
The defendants filed an application on 1.5.1989 for allowing them to take additional grounds made available on the basis of the aforesaid `Benami Act '.
Thereafter special leave was granted by this court by order dated 21.8.1989 and it was directed that printing of record is dispensed with and appeal will be heard on the special leave petition paper books.
The parties were given liberty to file additional documents if any within four weeks and the appeal was directed to be listed on 13.12.1989 for hearing.
Pending disposal of the appeal, the parties were directed to maintain status quo as existing on that day.
In the above circumstances, the matter came up for hearing before us.
Though there is no specific order of this Court allowing the application dated 1.5.1989 filed by the appellants for raising additional grounds, the same shall be deemed to have been allowed as the special leave petition was granted subsequently on 21.8.1989 after hearing both the parties.
In any case, we further make it clear that we had permitted the defendants/appellants to argue additional grounds made available to them under the `Benami Act ', which admittedly came into force after the filing of the special leave petition in this Court.
Learned counsel appearing on behalf of the defendants appellants had contended that the suit filed by the plaintiff respondent was not maintainable and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendants appellants.
So far as this objection under Section 49 of the U.P. Consolidation of Holdings Act is concerned, no foundations were laid in the written statement nor any issue was raised.
The High Court was thus right in holding that in the facts of this case, no foundation had been laid for the applicability of Section 49 of U.P. Consolidation of Holdings Act.
We see no error in the order of the High Court in taking the aforesaid view and we also hold that the defendants 20 appellants cannot be allowed to take such plea for which no foundation was laid in the pleadings.
The next important and formidable question which arises for consideration is whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act.
This Court in Mithilesh Kumari and Anr.
vs Prem Behari Khare, J.T. , has already held that the expression "shall lie" in Section 4 (1) and "shall allow" in Section 4 (2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only.
The expression "any property held benami" is not limited to any particular time, date or duration.
In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes.
Section 4 of the Benami Act reads as under: "(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
" In the case of Mithilesh Kumar this Court considered the 1/30th report of the Law Commission submitted to the Government on August 14, 1988.
Benami Transaction (Prohibition) Bill, 1988 was drafted after getting the report and the Bill was introduced in the Rajya Sabha on 31st August, 1988 and then the Bill was passed.
The Law Commission devoted several pages to justify retrospective legislation and its view was that the legislation replacing the Ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past.
Learned counsel appearing for the respondent was unable to convince us to take a different view from that already taken by this Court in Mithiledsh kumari 's case.
It was vehemently contended by the learned counsel for the plaintiff respondent that even if the ratio of Mithilesh Kumari 's case is applied, it can be made available only in a case where appeal was pending before the higher Court.
It was contended that in the present case, only special leave petition 21 filed on 15th March, 1988 was pending at the time when the Benami Act came into force.
It was pointed out that the Ordinance was promulgated on 19.5.1988 and the Benami Act received the assent of the President on 5.9.1988.
It was thus contended that no appeal was pending on 19.5.1988 or 5.9.1988 as the special leave was granted much after on 21.8.1989 and thus no advantage can be taken by the defendants appellants of Section 4 of the Benami Act as no appeal was pending on the date when the benami Act came into force.
We find no force in the above contention of the learned counsel for the plaintiff respondent.
Special leave petition was filed against the Judgment of the High Court on 15.3.1988 and special leave was granted on 21.8.1989 after hearing both the parties.
In the present case the defendants having lost in High Court could have approached this Court only through a special leave petition under article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard.
Though the special leave might have been granted subsequently on 21.8.1989 but it is a fact that the Judgment and decree of the High Court had already been challenged by the defendant appellants and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force.
There is a clear prohibition under Section 4 of the benami Act that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
It is well settled that an appeal is a continuation of suit and in the present case the appeal was pending before this Court.
There is no manner of dispute that the present suit had been filed by the plaintiff respondent claiming that he was the real owner of the property and the names of the defendants appellants were mentioned in the sale deeds as benami.
In our view, Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff respondent is not entitled to get any decree in such suit or in appeal.
As a result of the above discussion, we allow this appeal, set aside the Judgment and decree of the High Court and dismiss the suit.
In view of the fact that the suit is dismissed on account of legislative change brought about during the pendency of the appeal in this Court, there would be no order as to cost.
V.P.R. Appeal allowed. | The defendant appellant No. 1 and plaintiff respondent were brothers and defendant appellant No. 2 was the wife of appellant No. 1.
The appellant No. 1 was in Government service ever since 1953.
The plaintiff respondent was looking after the entire agricultural property in the village.
Partition was effected during consolidation proceedings and entered in the revenue records and chaks were carved out in accordance with the share of the parties in the consolidation proceedings.
During the consolidation operation, the plaintiff respondent did not raise any dispute that he was owner of the entire property and the names of defendants appellants were wrongly mentioned as benami.
Later, the plaintiff respondent filed a suit on the ground that the suit land was purchased by him alone through 4 sale deeds dated 10.6.1968, 21.6.1968,17.1.1976, and 23.6.1977 wherein the names of the defendants appellants were included only as benamidar and he was the real owner of the land.
The defendants appellants contended that they had paid their part 16 of the sale consideration and the land was jointly purchased in the name of both the parties.
The trial court dismissed the suit holding that the names of the defendants appellants in the sale deeds were not mentioned as benamidars and that the plaintiff respondent did not take any objection in the consolidation proceedings.
When the plaintiff respondent filed an appeal before the first appellate court, it reversed the judgment and decree of the trial court and decreed the suit in favour of the plaintiff respondent.
The second appeal filed by the defendants appellants was dismissed by the High Court.
The defendants filed a special leave petition before this Court on 15th March 1988.
During the pendency of the special leave petition the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance,1988 was promulgated on 19.5.1988.
The ordinance was replaced by the Benami Transactions (Prohibition) Act, 1988, which received the President 's assent on 5.9.1988.
The defendants filed an application on 1.5.1989 for allowing them to take additional grounds made available on the basis of the aforesaid `Benami Act '.
Thereafter special leave was granted by order dated 21.8.1989 and the parties were given liberty to file additional documents, if any, within four weeks.
The defendants appellants contended that the suit filed by the plaintiff respondent was not maintainable and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendant appellants.
The plaintiff respondent contended that if the ratio of Mithilesh Kumari 's case, JT.
1989(1) SC 275, was applied, it could be made available only in a case where appeal was pending before the higher Court and that no advantage could be taken by the defendants appellants, of Section 4 of the Benami Act, as no appeal was pending on the date when the Benami Act came into force.
17 On the question, whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act, this Court, allowing the appeal of the defendants, HELD : 1.01.
In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes.
[20C] 1.02.
The Law Commission 's view was that the legislation replacing the ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past.
[20G] 1.03.
In the present case the defendants, having lost in High Court, could have approached this Court only through a special leave petition under article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard.
Though the special leave might have been granted subsequently on 21.8.89 but it is a fact that the Judgment and decree of the High Court had already been challenged by the defendant appellants, and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force.
[21C E] 1.04.
An appeal is a continuation of suit and in the present case, the appeal was pending before this Court.
The suit had been filed by the plaintiff respondent claiming that he was the real owner of the property and the names of the defendants appellants were mentioned in the saledeeds as benami.
[21E F] 1.05.
Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff respondent is not entitled to get any decree in such suit or in appeal.
[21F] Mithilesh Kumari and Anr.
v Prem behari Khare, J.T. , referred to . 2.01.
The expression "shall lie" in Section 4(1) and "shall allow" in Section 4(2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only.
[20B] 2.02.
The expression "any property held benami" is not limited to any particular time, date or duration.
[20C] 18 3.
No foundations were laid in the written statement nor any issue was raised by the defendants appellants, on the question of applicability of Section 49 or th U.P. Consolidation of Holdings Act.
The defendants appellants cannot be allowed to take such plea.
[19H 20A] |
Appeal No. 330 of 1960.
Appeal from the judgment and decree dated March 18, 1954, of the Calcutta High Court in Appeal from Original, Decree No. 80 of 1947.
section T. Desai and B. P. Maheshwari, for the appellants.
B. Sen, N. R. Ghosh, Salil K. Datt and P. K. Ghosh, for the respondents Nos. 1 and 2.
January 13, 1964.
The Judgment of the Court was delivered by AYYANGAR J.
This is an appeal preferred, by virtue of a certificate of fitness granted by the Calcutta High Court, against its judgment, by which the decree passed by the Subordinate Judge of Darjeeling was substantially affirmed.
The plaintiffs are the appellants before this Court.
The suit out of which the appeal arises was brought by the appellants claiming title to and the recovery of possession of a property known as the Azambad Tea Estate which comprised about 378 acres of land in Touzi No. 911 of the Darjeeling Collectors.
This property was set out in Schedule A to the plaint and besides a claim was also made to certain other items of the movable and certain other tenures, but this appeal is not concerned with these others which were set out.
in Schs.
B and C to the plaint.
195 One Kazi Azam Ali was admittedly a full owner of this entire property and the proceedings giving rise to the appeal are concerned with the rights of his heirs to it.
The plain tiffs claim their title on the basis of various purchases from the heirs of this Azam Ali.
The contesting defendants were the Azamabad Tea Co. who also claim the entire property as transferees from the National Agency Co. Ltd., who too have been impleaded as defendants.
The National Agency Co. Ltd. claim to have purchased the entire 16 as.
interest in the property at a Court sale in pursuance of a decree obtained by them against Kazi Mohammed Ismail, the eldest son of Azam Ali.
Various contentions were raised by the plaintiffs in challenge of the validity of the transactions by which the defendants claimed their title.
But the learned Subordinate Judge repelled the plaintiffs ' claim and held that the purchase by the National Agency Co. Ltd. was valid and extended to the entire interest in the property and that in consequence the plaintiffs ' vendors had no title to convey to them any interest in the property.
The plaintiffs ' claim of the property in respect of Sch.
A was therefore dismissed.
The plaintiffs preferred an appeal to the High Court and the learned Judges upheld the title of the plaintiffs to an 8 pies share in the property mentioned in Sch.
A to the plaint but confirmed the decree of the Subordinate Judge as regards the rest.
The learned Judges however granted a certificate of fitness to the plaintiffs on the strength of which the present appeal has been filed.
The history of the transactions before the suit occupies a period of over 20 years and the facts in relation thereto are at once long, voluminous and complicated.
But, for the disposal of the appeal and the points urged before us it is wholly unnecessary to set these out and we shall therefore confine ourselves to a narration of the bare outlines of the case along with those facts which are necessary to appreciate the contentions raised in support of the appeal.
The property covered by the Tea Estate was granted by Government by way of lease to one Mudir and another for 30 years, the term to start on the 1st of April 1898.
The grantees effected transfers of their lease hold and after several successive transfers the property was purchased in 196 1913 by one Kazi Azam Ali who got his name registered as a proprietor.
It was Azam Ali who started the tea garden.
constructed the requisite factories as accessories thereto and named it the Azamabad Tea Estate.
Azam Ali had several children and among them 8 daughters and in consideration of gifts made to them, these daughters by a registered deed executed in 1909 relinquished their rights of succession to Azam Ali.
They thus faded away from the picture and no more notice need be taken of them.
Besides these 8 daughters, Azam Ali had 8 sons who survived him and were among his heirs, when he died on June 8, 1917.
Mohammed Ismail was the eldest of these sons.
Azam Ali also left behind him a daughter who was born after ' the relinquishment of 1909 and three widows.
Admittedly the sons of Azam Ali, his widows and his last daughters were all his heirs entitled to his estate in the shares as prescribed by Muslim Law.
On Azam Ali 's death his eldest son Ismail had his name entered in the Government records as the next in succession and at the time the thirty years term of the lease expired, the lease continued to remain in the name of Ismail alone.
We now proceed to the transactions as a result of which the contesting defendants claim to have obtained the full title to the Tea Estate.
Ismail made large borrowings and among them were some from the National Agency Co. Ltd. and for securing the loan he deposited with them the title deeds of the Tea Estate.
It may be mentioned that the deposit was on the footing that he was the full owner of the 16 as.
share of the property mortgaged.
The amount due under the mortgage was not paid in time and the mortgagee filed a suit for the enforcement of its mortgage and prayed for the sale of the property for the realisation of the mortgage money.
The suit was decreed as prayed for and the property was sold in execution of the final decree and was purchased by the mortgage decree holder on September 24, 1931.
The sale was confirmed on November 13, 1931.
This decree holder purchaser sold the property to the Azamabad Tea Estate the principal respondent before is.
There was some little controversy as regards the reality and effectiveness of the transfer of the property from the National Agency Co. Ltd. to the Azamabad Tea Estate, 197 but nothing turns on this, for even if that transfer was not effective that would not help the plaintiffs so long as they could not displace the title of the National Agency Co. Ltd. under the latter 's court auction purchase.
The case of the plaintiffs rested on the fact that Ismail who got himself registered as if he were a full proprietor of the lease hold interest in Touzi 911 was merely one of several co sharers of Azam Ali 's estate to whom it passed on his death.
The lease hold which was his property was according to them inherited by all his heirs including Ismail, the seven other sons, the three widows and the daughter born after 1909.
The term of the lease granted by the Government expired in 1928 and a renewed lease was granted in the name of Ismail alone.
Rival contentions were urged as regards the effect of this circumstance on the right of Ismail.
It was the case of the contesting respondents that the lease granted in 1928 in favour of Ismail was his sole and individual pro perty and even if for any reason the other heirs of Azam Ali had an interest in the previous lease hold, they did not have any such interest in the property covered by the fresh lease.
On the other hand, the case of the plaintiffs was that by the renewal of the lease, Ismail obtained qua his co heirs the same interest as he formerly had in the lease of 1898.
The renewal, they stated, was for the benefit not merely of Ismail but for everyone of his co heirs who still retained his or her interest in Azam Ali 's estate.
On this basis the plaintiffs raised the contentions that when by the sale in execution of the mortgage decree obtained by the National Agency Co. they purchased the property mortgaged, it was only the interest of Ismail that passed to them and not those of his co sharers who were no parties to the mortgage, There is one further transaction to which we must advert before passing on to the next stage of the proceedings.
After the mortgage by deposit of title deeds in favour of the National Agency Co., Ismail transferred his entire interest in the mortgaged property, that is, in the equity of redemption, to his wife Mst.
Nazifannessa, by a deed dated May 6, 1930.
Notwithstanding this deed and this transfer of the equity of redemption Mst.
Nazifannessa was not made a party to the 198 mortgage suit by the National Agency Co. The plaintiffs who claim to have acquired Mst.
Nazifannessa 's interest contended that by reason of the failure to implead Nazifannessa in the mortgage action, her right to redeem the mortgage was still in tact in spite of the mortgage decree and the sale in pursuance thereof, and on this footing made a claim in the alternative to redeem the mortgage in favour of the National Agency Co. and obtain possession after re demption.
To complete the narrative of the relevant facts, very soon after the purchase in Court auction in execution of the mortgage decree, the heirs of Azam Ali brought a suit (58 of 1931) to set aside the decree and the sale in favour of the National Agency Co. Ltd. on various grounds collusion, fraud, the circumstance that Ismail was merely a co sharer entitled to about 2 1/2 as.
share in the property and so could not mortgage more than that share, and that the decree could not bind a larger interest nor the sale convey anything more than that share, even if it conveyed any title to the property.
This suit however did not proceed to trial, but was dismissed for default, in that the plaintiffs did not appear in Court on the date fixed for trial.
The only other matter to be mentioned is that the plaintiffs have, by their purchases, acquired from the several co heirs, directly or mediately, the entire 16 as.
share in the property assuming that their vendors had any such right.
Armed with these purchases the plaintiffs filed this suit for the reliefs already indicated.
The defences raised to the suit were three fold: (1) That Ismail was the sole proprietor of the Tea Estate at the date of the mortgage and consequently the entire interest was the subject of mortgage and so passed at the court sale.
This was based on the provisions of the Crown Grants Act, now the Government Grants Act.
It would be recollected that the thirty years lease of Touza 911 was renewed in 1928 and this renewal was made in the name of Ismail alone.
Based on this feature a contention was raised that the grant of the lease created a new title in the grantee since the original lease in 199 which alone the heirs of Azam Ali might have had a share was extinguished by the termination of that lease by efflux of time.
(2) The second line of defence was that Ismail, even if in fact or law was not the full owner, was an ostensible owner of the entire interest in the property and that the co heirs were estopped from questioning the validity of the mortgage of the entire interest effected by him under section 41 of the Transfer of Property Act and that in conse quence the sale in execution passed the entire 16 as.
share to the purchaser.
(3) Lastly, it was urged that the plaintiffs ' suit was liable to be dismissed by reason of the provisions of 0.
IX, r. 9 of the Civil Procedure Code as the earlier Original Suit 58 of 1931 brought by the co heirs to set aside the sale under the mortgage decree had been allowed to be dismissed for default.
The learned Judges of the High Court rejected the first two of the defences but held that except to the extent of an eight pies share which represented the interest of a co heir which was not affected by the proceeding in Suit 58 of 1931, the plaintiffs were precluded by 0.
r. 9, Civil Procedure Code from disputing the sale in execution of mortgage decree by reason of the dismissal for default of Suit 5 8 of 1931.
Before proceeding to set out the arguments addressed to us by Mr. Desai, learned counsel for the appellants, it might be convenient to dispose of the submissions made to us by Mr. Sen, learned counsel for the respondents, seeking to ,sustain the first two defences which were repelled by the High Court.
The first of them was that by reason of the renewal of the lease in 1928 in the name of Ismail and the entry of his name as sole lessee in the revenue records, the leasehold became his sole property.
Apart from the arguments about Ismail being the ostensible owner of the entire 16 as.
share in the lease hold under the lease of 1898 which we shall consider a little later Mr.
Sen did not dispute that 200 Ismail 's co heirs were entitled to their fractional shares in the property under the original lease.
The acceptability of this argument regarding the renewed lease has to be determined on the basis of two factors first the intention of the parties, and here primarily of the grantor, as to the nature and quantum of the title intended to be conferred on or obtained by Ismail and, second, the provisions of the Crown, Grants Act which governed the grant on which reliance was placed as leading to that result.
First, as to the intention of the parties.
The original lease of 1898 was due to expireon March 31, 1928.
On July 20, 1928 Mohd. Ismail made a petition to the Deputy Commissioner, Darjeeling by which after drawing the latter 's attention to the date on which the lease was to expire, he "respectfully solicited the favour of ' kindly granting a further lease of the said Estate for a further period of 30 years.
" The Deputy Commissioner replied by letter dated August 10, 1928 sending Ismail the draft of the renewed lease for his approval and return adding "in the record of rights the following names have been recorded: 1.
Kazi Mohammed Ismail 2 as.; 2.
Kazi Isahaque 2 as.; 3.
Kazi Yakub 2 as.; 4.
Kazi Samoddoha 2 as.; 5.
Kazi Nurul Huda 2 as.; 6.
Kazi Badarudduza 2 as.; 7.
Kazi Insaf Ali 2 as.; 8.
Kazi Asfaque 2 as.
; Please mention the name in whose favour the lease will have to be issued." Ismail returned the draft lease with his approval but desired that the lease should be issued according to the name in the land register.
We are unable to read this request as meaning that Ismail, contradicting what the Government said, wanted that the leasehold interest should be his sole property in which his co heirs who had interest in the earlier lease were to be denied all beneficial interest.
It was thereafter that the lease was executed on February 1, 1929 in the name of Ismail to be operative from April 1, 1928 and was in terms in renewal of the previous 201 lease.
In the circumstance, we are satisfied that the Gov ernment intended to grant a lease in favour of his co sharers as well, though the lease deed was in the name of Ismail alone.
If Ismail intended to benefit himself at the expense of his co sharers and as we have said, we do not read his reply to the Deputy Commissioner as disclosing such an intention, the same was not made known to the Government.
We are therefore unable to accept Mr. Sen 's submission based on the intention of the parties.
He, however, submitted that whatever be the intention of the parties, by reason of section 3 of the Crown Grants Act Ismail 's title to the full 16 as.
share in the leasehold could not be disputed.
This section reads: "3.
All provisions, restrictions, conditions and limitations over contained in any such grant or transfer as aforesaid shall be valid and take effect according to (their tenor, any rule of law, statute or enactment of the Legislature to the contrary notwithstanding.
" If, as we have held.
it was the intention of the Government in granting the renewal that the co heirs too should have the benefit of the lease we do not see how these provisions affect their beneficial interest in the lease.
Nor are thereany clauses in the lease which preclude the existence of abeneficial interest in persons other than the lessee named.
This point is therefore without substance and is rejected.
The next point urged was based on section 41 of the Transfer of Property Act.
It was said that Ismail was by reason of the entry in the revenue registers, which the co heirs did nothing to correct, ostensibly the full owner of the property and hence the mortgage by him as full owner and the sale in court auction in execution of the decree by the National Agency Co. Ltd. passed the full title to the Tea Estate and that the co heirs were consequently estopped from disputing the defendant 's right to the full 16 as.
share in the property.
In order that section 41 of the Transfer of Property Act could be attracted, the respondents should prove that Ismail was the ostensible owner of the property with the consent of his co sharers and besides that they took reason able care 202 to ascertain whether Ismail had the power to make a transfer of the full 16 as.
interest.
Now, the facts however were that except the property being entered in the revenue records in Ismail 's name, and that the management of the property was left by the co sharers with Ismail, there is not an iota of evidence to establish that Ismail was put forward by them as the ostensible owner of the property.
It is manifest that the conduct of co sharers in permitting one of them to manage the common property does not by itself raise any estoppel precluding them from asserting their rights.
The learned Judges have also pointed out that even the least enquiry by the mortgagee would have disclosed that Ismail was not the full owner and this finding was not seriously challenged before us.
In this view it is unnecessary for us to consider the submissions made to us by Mr. Desai that section 41 was inapplicable to cases of sales in court auctions for the reason that what the court is capable of selling and what is sold in execution of a decree is only the right, title and interest of the judgment debtor and nothing more.
We, therefore, hold that the learned Judges of the High Court rightly held that section 41 of the Transfer of Property Act afforded no defence to the respondents.
The next and the only point remaining for consideration is whether the appellants ' suit is barred under the provisions of 0.
r. 9, Civil Procedure Code.
The part of this provision material for our purpose runs: "Where a suit is wholly or partly dismissed under rule 8, the plaintiff shall be precluded from bringing a fresh suit in respect of the same cause of action.
" The learned Judges of the High Court have held that this provision barred the plaintiffs ' claim in the present suit except to the extent of an 8 pies share in the estate which belonged to Azifunnessa and Najifennessa, two of the daughters of Azam Ali, who on the death of their mother became entitled to that share.
These two were not the parties to suit No. 58 of 1931 and hence the learned fudges held that their share (which was purchased 'by the plaintiffs) was unaffected by the dismissal of that suit.
203 The decision of the High Court in regard to this 8 pies share has become final and thus is outside controversy.
The ,only question is whether the plaintiffs appellants are entitled to anything beyond this share.
The suit, 58 of 1931, was instituted by 7 plaintiffs Ashfaq, Shamsuzzoha, Nurul Huda, Mohd. Yakub, these four being the sons of Azam Ali, two of his daughters Mahbuba Khatun and Habiba Khatun and one of his widows Bibi Marium.
There were two defendants the National Agency Co. Ltd. the purchaser in court sale of the property under the mortgage decree, whose title was challenged and against whom reliefs were claimed and Mohd. Ismail who was a pro forma defendant.
Ashfaq, The first plaintiff, died after the institution of the suit and certain of the parties already on record were recorded as his legal representatives.
The allegations in the plaint briefly were that the 2nd defendant Mohd. Ismail was not tile sole proprietor or owner of the Azamabad Tea Estate and that for that reason, the mortgage in favour of the 1st defendant, the mortgage decree obtained by it and the sale thereunder passed to it no title except to the extent of 2 1/2 as.
share belonging to Mohd. Ismail.
The plaintiffs therefore prayed for a decree declaring (1) that Mohd. Ismail had only 2 1/2 as.
share in the property and the remaining 132 1/2 as.
share belonged to the plaintiffs; (2) that only 2 1/2 as.
share was sold under the mortgage decree and purchased by the National Agency Co. Ltd. at the court sale.
The suit was instituted on 28th November, 1931 and after the issues were settled, the suit was posted for trial on 22nd August, 1932, on which date the plaintiffs were absent, no witnesses on their behalf were present, and their pleader reported no instructions.
The suit was therefore directed to be dismissed with costs in favour of the National Agency Co. Ltd. who was the only party present in Court.
It may be mentioned that Mohd. Ismail never appeared during the hearing of the suit.
204 Before taking up for consideration certain points urged before us by Mr. Desai regarding the construction of 0.
IX r. 9 C.P.C. we might dispose of a contention raised by him that Suit No. 58 of 1931 was filed fraudulently and collusively and the dismissal was the result of a settlement brought about collusively in order to defeat the plaintiffs ' rights.
We consider that there is no factual basis to sustain, this plea for he could point to no definite proof in support, and the most he could do was to refer us to certain suspicious circumstances.
We cannot obviously base any decision or rest any finding, on mere suspicion and we have no hesitation in saying that the submission does not deserve serious consideration.
The next submission was that even the 212 as.
share of Ismail did not pass under the sale in execution of the mortgage decree, because it was said Ismail had been, adjudicated an insolvent in Insolvency Case 38 of 1931 by the Dist.
Judge Purnia, as a result of which the properties which were the subject of the court sale had vested in the official receiver before the relevant date.
Though, no doubt, an allegation regarding this matter was made in the plaint and this was denied by the plaintiffs there is nothing in the judgments of the courts below or in the, evidence to indicate that the necessary facts were proved or that this point was urged with any seriousness at any stage of the proceedings until in this Court.
We have therefore nothing beyond the bare allegations and denials and as the full facts in relation to this matter were not placed before the Court we hold that this plea is devoid of merits and does not merit consideration.
It was next said that two of the plaintiffs in suit No. 58 of 1931, Nurul Huda and Habiba Khatun, a son and a daughter of Azam Ali were really adults but were shown in the cause title as minors represented by their respective natural guardians as their next friends and that as these adults could not in law be represented by persons purporting to act as their guardians they could not be held to be parties to the suit and hence their interests could not be affected by the dismissal of the suit.
This also is one of the matters in respect of which the plaintiffs beyond a mere pleading which was denied, made no grievance in the courts 205 below and the facts in relation to this issue, namely, the age ,,of the two plaintiffs at the date of the plaint not having been clearly proved, we do not find it possible to entertain the plea at this stage.
Mr. Desai, then submitted that Ashfaq who had figured as the first plaintiff in suit No. 58 of 1931 had already on April 18, 1931 transferred his 2 as.
13 gandas and odd share in Touzi No. 911 to one Pir Baksh from whom the plaintiff obtained a conveyance by a deed dated September 2, 1943 of what he had purchased from Ashfaq.
For this reason he urged that on the findings on the merits of the title in favour of the plaintiffs on the first two defenses we have dealt with earlier the plaintiffs should have been granted .a decree to this share of Ashfaq in addition to the 8 pies share decreed to them by the High Court.
No doubt, if this transaction were made out and was real, it would stand on the same footing as the 8 pies share in regard to which a decree was granted in favour of the plaintiffs by the judgment now under appeal.
We shall however consider this matter after dealing with the point urged as regards the construction of 0.
r. 9, Civil Procedure Code, which was his main submission and which, if upheld, would entirely eliminate the bar under this provision of law.
On this the first submission was that the rule which spoke of the "plaintiff" being precluded from bringing a fresh suit created merely a personal bar against the plaintiff in the first suit and that in the absence of words referring to the representatives of the plaintiff or those claiming under the plaintiff as in section 11 or section 47 of the Civil Procedure Code, the bar was not attracted to cases where the subsequent suit was by the heirs and assigns of that plaintiff.
In support of this submission Mr. Desai invited our attention to the observations of Das J. in Gopi Ram vs Jagannath Singh(1) where this argument was characterised as a weighty one and examined elaborately.
Though the learned Judge decided this matter on quite a different line of reasoning, he referred to various earlier decisions which appeared to him to favour the view submitted to us by Mr. Desai and expressed his hesitation in (1) L.L.R. 9 Pat. 447 at P. 454.
206 rejecting that construction.
We are not however impressed by the argument that the ban imposed by 0.
r. 9 creates merely a personal bar or estoppel against the particular plaintiff suing on the same cause of action and leaves the matter at large for those claiming under him.
Beyond the absence in 0.
r. 9 of the words referring "to those claiming under the plaintiff" there is nothing to warrant this argument.
It has neither principle, nor logic to commend it.
It is not easy to comprehend how A who had no right to bring a suit or rather who was debarred from bringing a suit for the recovery of property could effect a transfer of his rights to that property and confer on the transferee a right which he was precluded by law from asserting.
There are, no doubt, situations where a person could confer more rights on a transferee than what he possessed but those are clearly defined exceptions which would not include the case now on hand.
This argument was addressed to the High Court and the learned Judges characterised it as startling, a view which we share.
The rule would obviously have no value and the bar imposed by it would be rendered meaningless if the plaintiff whose suit was dismissed for default had only to transfer the property to another and the latter was able to agitate rights which his vendor was precluded by law from putting forward.
Aga in to say that an heir of the plaintiff is in a better position than himself and that the bar lapses on a plaintiff 's death, does not appeal to us as capable of being justified by any principle or line of reasoning.
In our opinion, the word "plaintiff ' in the rule should obviously, in order that the bar may be effective, include his assigns and legal representatives.
It was next urged that 0.
r. 9 precluded a second suit in respect of "the same cause of action" and that the cause of action on which Suit 58 of 1931 was laid and the present suit Title suit 18 of 1943 was not the same and so, the bar was not attracted.
In view of this argument it is necessary to examine them cause of action on which the present suit has been filed and compare and contrast with that in Suit 58 of 1931.
Closely analysed the material allegations to found the cause of action on which reliefs were claimed in the present suit 207 were (i) That the Tea Estate was originally the property of Azam Ali.
When he died his estate was inherited by his 8 sons, his widows and a daughter.
That the registration of the estate in the name of Md. Ismail was as a co sharer, the property belonging beneficially to all the heirs.
This position was not altered by the termination of the first lease and its renewal in 1928 for a further period of 30 years.
All the co heirs lived as a joint family with a common mess and hence there was no question of any adverse possession by Md. Ismail whose possession was not as sole proprietor or exclusive.
The suit on the mortgage was fraudulent and collusive, by Ismail colluding with the mortgagee to defraud his co heirs.
Details were mentioned as evidence of the fraud and collusion.
The sale in pur suance of the decree which was passed ex parte was also fraudulent.
On the date of the auction Ismail had no title even to the 2 1/2 as.
share because of his adjudication as an insolvent earlier.
The manner in which the 8 pies share of the daughters was obtained by the plaintiff was set out, and similarly the purchase by them through Pir Baksh of the share of Ashfaq.
The other purchases by the plaintiffs whereby they claimed to have obtained the 16 as.
share in the Tea Estate were set out.
The plaint then went on to refer to suit 58 of 1931 and set out their case as regards the nature of that litigation and its effect.
Lastly, they pleaded that they had obtained possession of the Tea gardens on October 10, 1934 and that on the next day the defendants moved the Magistrate for an order under section 144, Criminal Procedure Code and that the Magistrate had made an order against the plaintiffs restraining them from interfering with the possession of the defendants which necessitated their bringing the suit for the reliefs we have set out earlier.
We have already summarised the material allegations which were made in Suit 58 of 1931.
The material difference between the cause of action alleged in the present suit consists only in the addition of the allegations about the possession and dispossession in October, 1934.
This suit is based on the title of the plaintiffs by reason of their purchases and admittedly their vendors would have nothing to convey if the court sale conveyed, as it purported to 208 convey, the full 16 as.
interest in the Tea garden to the National Agency Co. Ltd. It was because of this that allegations were made to sustain their title and this could be done only if they established want of title to the extent of 16 as share in Ismail, the consequent ineffectiveness of the mortgage effected by Ismail and of the decree obtained in pursuance thereof and of the court sale in execution of that decree, being confined at the most to 2 1/2 as.
share belonging to Ismail.
These allegations which were fund amental to the plaintiffs ' case were identical with those which had been made in suit No. 58 of 1931.
Bearing these features in mind, the proposition that Mr. Desai submitted for our acceptance was briefly this.
A cause of action is a bundle of facts on the basis of which relief is claimed.
If in addition to the facts alleged in the first suit, further facts are alleged and relief sought ,on their basis also, and he explained the additional facts to be the allegations about possession and dispossession in October, 1934, then the position in law was that the entire complexion of the suit is changed with the result that the words of 0.
r. 9 "in respect of the same cause of action" are not satisfied and the plaintiff is entitled to reagitate the entire cause of action in the second suit.
In support of this submission, learned counsel invited our attention to certain observation in a few decisions to which we do not consider it necessary to refer as we do not see any substance in the argument.
We consider that the test adopted by the Judicial Committee for determining the identity of the cause of action in the two suits in Mohammed Khalil Khan and Ors.
Mahbub Ali Mian and Ors.
(1) is sound and expressescorrectly the proper interpretation of the provision.
In that case Sir Madhavan Nair, after an exhaustive discussion of the meaning of the expression "same cause of action" which occurs in a similar context in para (1) of O. 11 r. 2 of the Civil Procedure Code, observed: "In considering whether the cause of action in the subsequent suit is the same or not, as the cause of action in the previous suit, the test (1)75 1. A. 121. 209 to be applied is: are the causes of action in the two suits in substance not technically identical?" The learned Judge thereafter referred to an earlier decision of the Privy Council in Soorijamonee Dasee vs Suddanund(1) and extracted the following passage as laying down the approach to the question : "Their Lordships are of opinion that the term 'cause of action ' is to be construed with re ference rather to the substance than to the form of action. . .".
Applying this test we consider that the essential bundle of facts on which the plaintiffs based their title and their right to relief were identical in the two suits.
The property sought to be recovered in the two suits was the same.
The title of the persons from whom the plaintiffs claimed title by purchase, was based on the same facts viz., the position of Md. Ismail quoad his co heirs and the beneficial interests of the latter not being affected or involved in the mortgages, the mortgage decree and the sale in execution thereof.
No doubt, the plaintiff set up his purchases as the source of his title to sue, but if as we have held the bar under 0.
r. 9 applies equally to the plaintiff in the first suit and those claiming under him, the allegations regarding the transmission of title to the plaintiffs in the present suit ceases to be material.
The only new allegation was about the plaintiffs getting into possession by virtue of purchase and their dispossession.
Their addition, however, does not wipe out the identity otherwise of the cause of action.
It would, of course, have made a difference if, without reference to the antecedent want of fun title in Ismail which was common to the case set up in the two plaints in Suit 58 of 1931 and Suit 18 of 1943, the plaintiffs could, on the strength of the possession and dispossession or the possessory title that they alleged, have obtained any relief.
It is, however, admitted that without alleging and proving want of full title in Md. Ismail the plaintiffs could be granted no relief in their present suit.
(1) ,315.
134 59S.C 14 210 The question is whether the further allegations about possession in October, 1934 have really destroyed the basic and substantial identity of the causes of action in the two suits.
This can be answered only in the negative.
The learned Judges of the High Court therefore correctly held that the suit was substantially barred by O. IX.
It now remains to consider the claim of the plaintiffs to the 2 annas 13 odd gundas share of Ashfaq.
In paragraph 52 of their plaint the plaintiffs stated that by a registered sale deed executed on April 18, 1931 Ashfaq, the son of Azam Ali sold the entire interest which he possessed in the Azamabad Tea Estate to Pir Baksh in pursuance of a Bainama dated April 7, 1930 and put him in possession, and in the succeeding paragraph they set out their purchases of this share by a Kabala dated September 2, 1943.
In the joint written statement filed on behalf of the defendants 1 and 2 these allegations were controverted.
The execution of the sale deed in favour of Pir Baksh was denied and it was further stated that even if the sale deed were proved to have been executed it was a sham and nominal transaction and therefore inoperative to pass title.
Though no specific issue in relation to this sale to Pir Baksh was raised, there was a general issue (Issue No. 8) which related to the plaintiff 's acquiring title to the Tea Estate.
Ile sale deed by Ashfaq was filed and marked as exhibit 12(i) and the sale in favour of the plaintiffs by Pir Baksh as exhibit 12(c).
The effect however of this sale to Pir Baksh on the rights of the plaintiffs to relief does not appear to have been raised before the learned trial Judge.
It may be pointed out that the learned trial Judge held that Ismail was the full owner of the property under the lease granted in 1928, by reason of the provisions of the Crown Grants Act and even if this were not so, he held that his co heirs had consented to put him forward as the ostensible owner of the property with the result that they were ' estopped from impeaching the mortgage and the sale of the property in execution of the mortgage decree.
It is therefore possible that because of the view which the learned trial Judge was inclined to take of the title of Md. Ismail, the plaintiffs did not seriously put forward their rights under their purchase from Pir Baksh, because if the learned trial Judge was right, the sale by Ashfaq to Pir Baksh even if real 211 would not have helped the plaintiffs to obtain any relief.
In this connection it may be pointed that the plaintiffs claim to the 8 pies share which was allowed in their favour by the High Court, was not pressed in the trial court.
Even in the High Court, however, the point arising from the sale by Ashfaq to Pir Baksh does not seem to have been pressed.
We shall presently advert to and examine the submissions made to us by Mr. Sen as regards the merits of this claim to the share of Ashfaq, but before doing so we must refer to a point raised by Mr. Sen which necessitated a prolonged adjournment of the appeal after the main arguments were heard.
After pointing out that the plaintiffs did not agitate or press before the courts below any special right based on the purchase of Ashfaq 's share through Pir Baksh, he submitted that this might possibly have been because the property covered by the sale deed exhibit 12 (i) did not comprise Touza No. 911 the Azamabad Tea Estate.
There was scope for this submission because in the record as printed for the use of this Court, the Schedule annexed to the sale deed exhibit 12(i) was not printed but only the portion containing the description of the parties and the words of conveyance, with the result that Mr. Desai was unable to make out whether as a fact Ashfaq 's interest in the suit property was sold under exhibit 12(i).
To make matters worse the Schedule to the sale deed of 1943 executed by Pir Baksh was also not translated and printed in the record prepared for the appeal.
In view, however, of the categorical statement in the plaint as regards the indentity of the property conveyed under exhibit 12(i) with Ashfaq 's share in the Azamabad Tea Estate, we considered that the appellant 's submission could not be rejected as frivolous.
We therefore acceded to the request of Mr. Desai and called foe the original of exhibit 12(i) from the High Court so that counsel might make submissions to us as regards the identity of the property conveyed.
The document was accordingly obtained 'and translated for the use of the Court and when the appeal was again placed before us Mr. Sen admitted that the property conveyed by exhibit 12(i) was Ashfaq 's 2 as.
13 gundas odd interest in Touza No. 911.
212 Coming now to the merits of the plaintiff 's claim, it is common ground that if the sale by Ashfaq were real and intended to pass title to Pir Baksh, the plaintiffs would be entitled to a decree for a declaration that in addition to the 8 pies share granted to them by the High Court, they would be entitled to a further 2 as. 13 gundas share of Ashfaq in the plaint A Schedule property.
Mr. Sen 's submission, however, was that we should not entertain or give effect to this claim, because several circumstances throw grave suspicion on the reality of the transaction, and that in any event the claim could not be accepted without careful scrutiny of the facts.
Having regard to the definite case raised in the pleadings, we are not disposed to reject the claim merely because the same was not pressed in the courts below.
Besides we cannot ignore the circumstance that the sale deeds exhibit 12(i) and 12(c) on which the claim was based were filed in the trial court, and Pir Baksh was examined to formally prove these deeds as the 31st witness for the plaintiff.
Moreover, even though as regards certain other transfers, the trial Judge recorded findings that they were nominal, there was no such finding as regards the sale by Ashfaq.
In view of these features, we have decided not to reject the claim of the plaintiffs based on this ground.
There are, however, certain features which throw some suspicion on the reality of the transaction which Mr. Sen pressed before us which have led us to desist from ourselves passing a decree for this additional share in their favour.
The circumstances to which Mr. Sen drew our attention were these; (i) though Ashfaq executed the sale deed exhibit 12(i) on April 18, 1931, he figured as the first plaintiff in Suit 58 of 1931 which was filed on 28th November, 1931, without adverting to the sale, a piece of conduct certainly not consistent with the sale being real and intended to pass title; (2) though in the plaint the necessary averments were made regarding their obtaining the share of Ashfaq through Pir Baksh, the claim under this head was not pressed before the trial court; (3) when the plaintiffs preferred an appeal to the High Court from the total dismissal of the suit, they did not raise any specific ground touching their right to this share, nor were any argument 213 addressed to the High Court on this point; and (4) there had been no mutation in the revenue records when this sale was effected and Pir Baksh who was examined as a witness admitted this fact.
These circumstances are certainly capable of explanation, but they show that the claim of the plaintiffs cannot be accepted by us straightaway and a decree passed in their favour.
In these circumstances, we consider that the proper order to pass would be to remit the matter to the trial Court for recording a finding as regards the reality of the sale on the evidence already on the record and to pass an appropriate decree in the suit, that is, if the sale under exhibit 12(i) were held to be real, the plaintiffs would be entitled in addition to the 8 pies share decreed to them by the High Court, to a further 2 as 13 gondas odd share belonging to Ashfaq which they obtained under exhibit 12(c) through Pir Baksh, and in the event of the sale not being held to be real to no more than what the High Court has decreed.
With this modification, the appeal is dismissed with costs.
Appeal dismissed. | The property covered by the Tea Estate was granted by the Government by way of lease in 1898 for 30 years.
In 1913 it was purchased ' by Azam Ali.
When he died in 1917, he left behind 8 sons, 9 daughters and 3 widows.
The name of Ismail, his eldest son, was entered in the official records as next in succession.
Ismail borrowed considerable sums from National Agency Co. Ltd., and for securing the same, deposited the title deeds of the Tea Estate on the footing that he was its full owner.
As the amount under the mortgage was not paid, a suite was filed for realisation of the amount by sale of mortgage property.
193 The suit was decreed and in execution the property was auctioned and sale was confirmed in 1931 in favour of the decree holder who sold the same to Azamabad Tea Estate, the principal respondent in this case.
The heirs of Azam Ali brought suit No. 58 of 1931 to set aside the decree and sale in favour of the National Agency Co. Ltd., on ,various grounds but that suit was dismissed for default.
The suit out of which the present appeal has arisen was filed subsequently.
The plaintiffs appellants who claimed title under purchasers 'for the heirs of Azam Ali challenged the validity of the transactions by which the National Agency Co. Ltd. claimed to have purchased the entire 16 annas interest in the property at the court sale in pursuance ,of a decree obtained by them against Ismail.
The trial Court held that the purchase made by the National Agency Co. Ltd. was valid and extended to the entire interest in the property and hence the venders of the plaintiffs had no title to convey to them any interests in the property.
The High Court in appeal disagreed with this finding but dismissed the appeal on other grounds except to the extent of an 8 pies share in the property.
The appellants came to this Court on a certificate of fitness granted by the High Court.
The points raised before this Court were whether the High Court was right in holding that the present suit was barred by O. IX, r. 9 on the ,ground that when suit No. 58 of 1931 was dismissed in default, no action was taken to get it restored, this was raised by the respondent and whether in any event their claims to the 2 as 13 odd gundas share of Ashfaq, son of Ismail, should not have been decreed.
HELD (i) that the suit was substantially barred by 0.
TX, r. 9.
The essential bundle of facts on which the plaintiffs based their title and their right to relief were identical in the two suits the property sought to be recovered in the two suits was the same.
The title of the ,persons from whom the plaintiffs claimed title by purchase was based ,on the same facts.
The additional allegation about possession in October 1934 did not really destroy the basic and substantial identity of the ,causes of action in the two suits.
The ban imposed by 0.
IX, r. 9 does not create merely a personal bar or estoppel against the particular plaintiff suing on the same cause ,of action and does not leave the matter at large for those claiming under him.
The word "plaintiff" in the rule includes his assigns and legal representatives.
(ii)that when the Government granted the lease in 1928, the lease was granted not only in favour of Ismail but also in favour of the ,other co sharers although the name of Ismail alone was mentioned in the lease deed.
The provisions of section 3 of the Crown Grants Act did not affect the beneficial interest in the lease.
Section 41 of the Transfer of Property Act did not help the respondent as there was no evidence to show that Ismail was put forward by 134 159 S.C. 13 194 the other co sharers as the ostensible owner of the property.
The conduct of the co sharers in permitting Ismail to manage the common property did not by itself raise any estoppel precluding them from asserting their rights.
Even a cursory enquiry by the mortgagee would have disclosed that Ismail was not the full owner.
As regards the contention of the appellants that they should have been granted a decree to the extent of 2 As.
13 odd gundas share of Ashfaq in addition to the 8 pies share decreed to them by the High Court, the case was ordered to be remitted to the trial Court for giving its finding regarding the reality of the sale by Ashfaq.
Gopi Ram vs Jagannath Singh, I.L.R. 9 Pat.
447, Mohammad Khalil Khan vs Muhbub Ali Mian, 75 I.A. 121 and Soorijomonee Dasee vs
Suddanund, (1873) 12 Ben.
L.R. 304, referred to. |
Civil Appeal No. 4134 of 1991.
From the Judgment and Order dated 30.8.1991 of the Bombay High Court in Writ Petition No 3580 of 1991.
J.P.Pathak and P.H. Parekh for the Appellants.
A.M. Khanwilkar and S.K. Parshankar for the Respondents.
The Judgment of the Court was delivered by 229 KASLIWAL, J.
This appeal by grant of special leave is directed against the judgment of the Bombay High Court dated 30th August, 1991 in a suit for possession under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Act).
The suit was dismissed by the 7th Additional Small Causes Judge.
On appeal the learned 10th Additional District Judge, Pune by Judgment dated 25.4.1991 set aside the order of the trial court and decreed the plaintiff 's suit for possession.
The tenants filed the writ petition in the High Court challenging the order of the Additional District Judge, But the same was dismissed and the decree for possession passed by the Additional District Judge was affirmed.
The trial court held that the service of notice dated 7.8.1980 on the defendant tenants was not held proved.
The plaintiffs were unable to prove that the postal acknowledgement Exhibit 51 Contained the signatures of defendant no 2 or 3.
It was held that on the point of service of notice the case of the plaintiff was rather confusing and not clear.
It was held that even assuming that the notice had been served yet the case did not fall under Section 12(3) (a) of the Act.
The trial court also held that the case did not fall under Section 12(3) (b) of the Act as the defendants had paid Rs. 55,800 on 16.1.1984 and thereafter made regular payment of Rs. 600 every month.
According to the learned trial court the issues were framed on 26.8.1985 and before that the defendants had made full payment as demanded in the notice and as such no decree can be passed under Section 12(3)(b) of the Act.
Learned Additional District Judge reversed the above finding of the trial court and held that the evidence of the plaintiff showed that the copy of the notice was sent to all the defendants by registered post.
The postal receipts have been filed as exhibits 52, 53 and 54.
Learned Additional District Judge further held that when the notices are sent by registered post it is presumed to have been served and mere denial by the tenants had no value, unless they proved some extraordinary happenings or events which prevented following of usual course of business.
Learned Additional District Judge further held that the notice was sent on the address given in the plaint and it was admitted by the defendant in his statement that it contained the correct address.
A presumption of service of notice was drawn under Section 27 of the General Clauses Act and Section 114 of the Evidence Act.
Learned additional District Judge though affirmed the finding of the trial court that the case is not covered under section 12(3)(a) of the Act, but the plaintiffs were entitled to a decree under Section 12(3) (B) of the Act.
In this regard learned Additional District Judge recorded the finding that the entire arrears of rent amounted to Rs. 71,088 but the defendant tenant only 230 deposited Rs 66.000 till the first date of hearing and thus remained in arrears of Rs. 5,088.
It was also held that the provisions of 12(3)(b) of the Act are mandatory provisions and those are required to be strictly complied with by the tenants during the pendency of the suit and also appeal when the landlord claims possession of the suit premises on the ground of Section 12(3)(b) of Act.
The defendant tenant did not deposit the entire arrears on the first date of hearing and did not deposit the further rent during the pendency of the appeal.
Thus the defendant persistently committed defaults during the pendency of the suit and also the appeal in paying the rent.
We have heard learned counsel for the parties and have thoroughly gone through the record.
It is important to note that M/s Kulkarni Patterns Pvt. Ltd/. (defendant No.1) Was the tenant, defendant No 2 Shri D G. Kulkarni was the Chairman of the company and defendant No 3 Mrs M.D. Kulkarni was the wife of defendant No 2 and Director of defendant No 1.
The plaintiffs sent a notice dated 7.8.1980 to all the defendants vide postal receipts Exhibit 52,53 and 54.
Exhibit 51 is only one acknowledgement receipt which has been produced on record.
It has been contended on behalf of the appellants that the learned Additional District Judge was wrong in drawing presumption of service of service of notice in the facts of the present case.
It was submitted that the plaintiff initially stated that the acknowledgement receipt Exhibit 51 contained the signatures of defendant NO.3, but subsequently admitted that it contained the signature of defendant No. 2.
It was further argued that defendant No.2.
had appeared in the witness box and clearly denied his signatures on Exhibit 51.
It was thus contended that the presumption of service of notice was rebutted and thereafter the burden lay on the plaintiffs to prove the service of notice by examining the postman or by other evidence and the plaintiffs having failed to do so, the service of notice having not established, the suit was liable to be dismissed.
Reliance in support of the above contention was placed on a decision of this Court to which one of us was a party in Green view Radio Service vs Laxmibai Ramji And Another.
, Reliance was placed on the following observations made in the above case.
"In this connection, we may also point out that the provisions of section 106 of the Transfer of Property Act require that notice to quit has to be sent either by post to the party or be tendered or delivered personally to such party or to one of his family members or servants at his residence or if such tender or delivery is not practicable, affixed to a conspicuous part of the 231 property.
The service is complete when the notice is sent by post.
In the present case, as pointed out earlier, the notice was sent by the plaintiff 's advocate by registered post acknowledgement due.
The acknowledgement signed by the party was received by the advocate of the plaintiff.
Thus in our view the presumption of service of a letter sent by registered post can be rebutted by the addressee by appearing as witness and stating that he never received such letter.
If the acknowledgement due receipt contains the signatures of the addressee himself and the addressee as a witness states that he never received such letter and the acknowledgement due does not bear his signature and such statement of the addressee is believed then it would be a sufficient rebuttal of the presumption drawn against him.
The burden would then shift on the plaintiff who wants to rely on such presumption to satisfy the court by leading oral or documentary evidence to prove the service of such letter on the addressee.
This rebuttal by the defendant of the presumption drawn against him would of course depend on the veracity of his statement.
The court in the facts and circumstances of a case may not consider such denial by the defendant as truthful and in that case such denial alone would not be sufficient.
But if there is nothing to disbelieve the statement of the defendant then it would be sufficient rebuttal of the presumption of service of such letter or notice sent to him by registered post.
" In the present case the plaintiffs had sent a copy of the notice to all the three defendants by registered post.
Three postal receipts Exhibits 52, 53 and 54 have been filed in the present case and Exhibit 51, one acknowledgement receipt.
As regards Exhibit 51, the defendant No.2 has appeared in the witness box and has denied his signatures.
However, it has not been shown that this acknowledgement receipt was related to which of the three notices sent vide postal receipts Exhibits 52,53 and 54.
The plaintiffs have clearly proved that three notices were sent by registered post and which is clearly born out from the three postal receipts.
Admittedly the premises were taken on rent in the name of the defendant No.1 namely Kulkarni Patterns.
Pvt. Ltd. and it is proved that one of the notices by registered post was also sent to the company.
It has been admitted by the defendant No.2 in his statement that the notice was sent on the correct address.
The defendant No.2 in his statement has nowhere stated that no notice has bee received by the company.
The only denial is in respect of the acknowledgment receipt Exhibit 51 and the only inference which could legitimately be drawn is that in respect of one notice, it was not proved as 232 to who acknowledged the receipt of the notice.
We do not approve the following statement of law made by the learned Additional District Judge "that the evidence of the defendant did not show any extraordinary happenings or the events which prevented the following of usual course of business and thus, his mere denial has no value".
However, in the present case three notices were sent by registered post and one of which was sent in the name of the defendant company who was the tenant, a presumption can legitimately be drawn that the notice dated 7.8.1980 had been served on the company.
There is no rebuttal on behalf of the defendant as regards the notice served on the company and in the facts and circumstances of the present case we hold that notice dated 7.8.1980 sent by registered post was served on the defendant company, In Green View Radio Service (supra) it was held that the acknowledgement due receipt contained the signature of the addressee himself and the addressee as a witness stated that he never received such letter and the acknowledgement due did not bear his signature and such statement of the addressee if believed then it would be a sufficient rebuttal of the presumption drawn against him.
The burden will then shift on the plaintiff who wants to rely on such presumption to satisfy the court by leading oral or documentary evidence to prove the service of such letter on the addressee.
Even applying this statement of law in the facts of the present case, the rebuttal, if any, made by defendant No.2 can be related only with regard to Exhibit to Exhibit 51 for one notice but not with regard to all the three notices sent by registered post vide exhibits 52 to 54 Thus, in the facts of the case in hand before us we are fully convinced that the service of notice shall have to be presumed so far as defendant company is concerned and there is no rebuttal to such presumption by the defendant appellants.
The requirement of sending notice under Section 12(2) of the Act is to be done in the manner prescribed under paragraph two of Section 106 of the Transfer of Property Act which reads as under.
"Every notice under this Section must be in writing signed by or on behalf of the person giving it and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants, at his residence, or (if such tender or delivery is not practicable ) affixed to a conspicuous part of the property." The reading of the above provision clearly shows that the notice can be sent by post to the party who is intended to be bound by it.
Thus, the notice sent by registered post in the name of the defendant company who 233 is the tenant is fully in accordance with the requirement of section 106 of A the Transfer of Property Act.
So far as the finding recorded by the learned Additional District Judge that the defendants were defaulter in the payment of rent and full amount of rent was not paid or deposited on the first date of hearing and no rent was paid month by month during the pendency of the appeal could not be assailed by the learned counsel for the appellants.
Thus, the learned Additional District Judge as well as High Court was right in passing a decree for possession under section 12(3)(b) of the Act.
As a result of the above discussion and findings recorded by us, we find no force in this appeal and the same is dismissed with costs.
Y.L Appeal dismissed. | The Respondents landlords filed a suit for possession of the suit premises against the appellants on the ground of default in payment of rent, amongst other, The 7th Additional Small Causes Judge, dismissed the suit holding that the service of notice dated 7 8 1980 on the defendants terminating the tenancy was not proved, even though one out of the three acknowledgments due, had been received duly signed.
As regards the question of default in payment of rent, the learned Judge took the view that the case did not fall under Section 12(3)(b) of the Act, as the defendants had paid Rs. 55,800 on 16.1.1984 and thereafter made regular payment of Rs. 600 every month.
On appeal by the respondent landlords, the learned additional District Judge reversed the findings of the trial Court and decreed the suit.
The learned Additional District Judge held that when the notices are sent by registered post, it is presumed to have been served and mere denial by the tenants had no value, unless they proved some extraordinary happenings or events which prevented following of usual course of business.
On the question of default in payment of rent the learned Judge held that as the defendants did not deposit the entire arrears on the first date of hearing and did not deposit the further rent during the pendency of the appeal, they persistently committed defaults during the pendency of the suit and also the appeal.
The appellants thereupon filed a writ petition in the High Court challenging the validity of the aforesaid order of the learned Additional District Judge.
The High Court dismissed the writ petition and affirmed the order passed by the learned Additional District Judge.
Hence this appeal by the appellants, after obtaining special leave.
Dismissing the appeal, this Court, 228 HELD: The notice under Section 106 T.P. Act can be sent by post to the party who is intended to be bound by it.
Thus the notice sent by registered post in the name of the defendant company who is the tenant is fully in accordance with the requirement of section 106 of the Transfer of Property Act.[232H 233A] The plaintiffs had sent a copy of the notice to all the three defendants by registered post.
Three postal receipts Exhs.
52,53 and 54 have been filed in the present case Exh. 51, one acknowledgment receipt.
As regards Exh. 51, the defendants No.2 has appeared in the witness box and has denied his signatures.
However, it has not been shown that this acknowledgment receipt was related to which of the three notices sent vide postal receipts Exhs. 52,53 and 54.
[231E F] The rebuttal, if any, made by defendant No.2 can be related only with regard to Exh.
51 for one notice but not with regard to all the three notices sent by registered post vide Exhs.
52 to 54.[232D] The service of notice shall have to be presumed so far as defendant company is concerned and there is no rebuttal to presumption by the defendant appellants.
[232E] The finding recorded by the learned Additional District Judge that the defendants were defaulter in the payment of rent as full amount of rent was not paid or deposited on the first date of hearing and no rent was paid month by month during the pendency of the appeal could not be assailed.
[233B] Green View Radio Service vs Laxmibai Ramji and Anr., , referred to. |
DICTION: Writ Petition NO.
844 OF 1991.
(Under Article 32 of the Constitution of India) WITH S.L.P.NOS. 16475 & 17635 of 1991.
N.S. Hegde, Amrendra Bal and J.R. Das for the Petitioners.
Soresh Roy, Ms. Kirti Mishra and P.N. Mishra for the Respondents.
The Judgment of the Court was delivered by KANIA, CJ.
We have already dismissed the writ petition and special leave petitions by our order dated 5.12.1991.
We would, however, like to make a suggestion to the authorities for their consideration that some preference might be given to in service candidates who have done five years of rural service.
In the first place, it is possible that the facilities for keeping up with the latest medical literature might not be available to such in service candidates and the nature of their work makes it difficult for them to acquire knowledge about very recent medical research which the candidates who have come after freshly passing their graduation examination might have.
Moreover, it might act as an incentive to doctors who had done their graduation to do rural service for some time.
Keeping in mind the fact that the rural areas had suffered grievously for non availability of qualified doctors giving such incentive would be quite in order.
Learned counsel for the respondents has, however, drawn out attention to the decision of a Division Bench of two learned judges of this Court in Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., [1986] 3 SCC page 727 at 740.
It has been observed there that merely by offering a weightage of 15 per cent to a doctor for three years rural service would not bring about a migration of doctors from the urban to rural areas.
They observed that it you want to produce doctors who are MD or MS, particularly surgeons, who are going to operate upon human beings, it is of utmost importance that the selection should be based on merit.
Learned Judges have gone on to observe that no weightage should be given to a candidate for rural service rendered by him so far as admissions to post graduate courses are concerned (see para 12 at pate 741).
In our opinion, this observation certainly does not constitute the ratio of the decision.
The decision is in no way dependent upon these 337 observations.
Moreover, those observations are in connection with All India Selection and do not have equal force when applied to selection from a single State.
These observations, however, suggest that the weightage to be given must be the bare minimum required to meet the situation.
In these circumstances, we are of the view that the authorities might well consider giving weightage upto a maximum of 5 per cent of marks in favour of in service candidates who have done rural service for five years or more.
The actual percentage would certainly have to be left to the authorities.
We also clarify that these suggestions do not in any way confer any legal right on in service students who have done rural service nor do the suggestions have any application to the selection of the students upto the end of this year. | The writ petition and the SLPs were dismissed by this Court 's order dated 5.12.1991.
Taking judicial notice of the fact that the rural areas had suffered for non availability of qualified doctors, this Court suggested that some preference might have to be given to in service candidates who have done five years of rural service.
HELD: 1.01.
The authorities might well consider giving weightage upto a maximum of 5 per cent of marks in favour of in service candidates who have done rural service for five years or more.
The actual percentage would certainly have to be left to the authorities.
[327 B] 1.02.
This might act as an incentive to doctors who had done their graduation to do rural service for some time.
[326 E] 1.03.
The observation in Dr. Dinesh Kumar and Others vs Motilal Nehru Medical College, Allahabad and others, [1986] 3 SCC page 727 at 740 to the effect that no weightage should be given to the candidate for rural service rendered by him so far as admissions to post graduate courses are concerned is not the ratio of the judgment but a mere observation.
[336 H 337 A] 1.04.
The suggestions do not in any way confer any legal right on in service students who have done rural service nor do they have any application to the selection of the students upto the end of the year.
[337 B] Dr Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., ; at page 740, distinguished. |
Appeals Nos. 131 and 132 of 1960.
Appeals from the judgment and decree dated April 4, 1952, of the Madras High Court in Appeal No. 816 of 1947 and No. 83 of 1948.
A. V. Yiswanatha Sastri, R. Ganapathy Iyer, K. Parasaran and G. Gopalakrishnan, for the appellants.
K. Bhimassankaran, Durgabai Deshmukh, A. Narayana Swami and R. Thiagarajan, for the respondents 2 to 4.
R. Gopalakrishnan, for respondent No. 2 (In C. A. No. 132 of 1960).
November 19.
The judgment of the court was delivered by SUBBA RAO, J.
These appeals filed by a certificate issued by the High Court of judicature at Madras raise a question of Hindu Law pertaining to marriage in 'Asura form '.
The material facts may be briefly stated : To appreciate the, facts and the contentions of the parties the 247 following genealogy may be usefully extracted Muthusami Naicker | | | Senior wife Junior wife | | Konda Bommu Naicker Kamayasami Naicker (died 23.10.1873) (died 31.
7. 1901) | | | | Kandaswami Naicker Ponnuthayee Naicker (died 31.
7. 1881) (died 13.3 1938) | Banmuga Valla | Konda Bommu Naicker | (died 21.1 1901) | | | | | | | Dorairaja Muthusami Kama Parama | alias (2nd Plff) yasami sivam Married | Thanipuli (3rd Plff)(4th Plff) Errammal | chami (died 2.2.1933) | (1st Plff) | | Bangru Ammual | (died 14.12.1930) | | | married also 8 other wise of whom the last to die were: (a) Meenakshi Ammual (died 5.6. 1938) (b) Krishna Ammual (died 10.11.1938) (c) Vellayammal alias Chinathayammal (died 2.5.
1940).
248 Thevaram is an ancient impartible zamindari in Madurai District.
Shanumugavalla Konda Bommu Naicker was zamindar from 23.8.1876 to 20.1.1901.
On his death on January 21, 1901 Bangaru Ammal, his daughter, got his entire estate under the will executed by him.
To discharge the debts incurred by her father Bangaru Ammal executed on March 13, 1913 a mortgage of her properties for a sum of Rs. 2,15,000/ in favour of one Chidambram Chettiar.
On his death his son Veerappa Chettiar filed on April 16, of 1925 against Bangaru Ammal in the Subordinate judge 's Court, Dindigul for the recovery of a sum of Rs. 5,49,6338 7 being the balance of the amount due under the said mortgage.
The suit was compromised and on July 28, 1928, a compromise decree was passed therein.
Under the compromise decree the mortgaged properties were divided into three Schedules A, B & C and it was provided that if a sum of Rs. 3,75,000/ was paid by July 31, 1931, the mortgage must be deemed to have been fully discharged but in default the properties in Schedule A of the decree were to become the absolute properties of the plaintiff.
B Schedule properties i.e., some of the pannai lands and the C Schedule properties, i.e., those already alienated by Bangaru Ammal were released from the mortgage.
One K. V. Ramasami Iyer, the Manager of the estate was appointed Receiver of the A Schedule properties and he was directed to deposit the surplus income into court towards the payment of the amount due under the compromise decree.
Before the expiry of the period prescribed under the said decree Bangaru Ammal died on December 14, 1930, and her mother Errammal claiming to be her heir on the ground that Bangaru Ammal 's marriage was held in 'Asura form ' filed I.A. No. 190 of 1931 in the court of the Subordinate judge, Dindigul, for directing the Receiver to hand over the estate to her.
Veerappa Chettiar in his turn filed I.A.No.170 of 1932 for 249 directing the Receiver to deliver possession of A Schedule properties on the ground that the term prescribed under the compromise decree had expired and the balance of the amount due under the decree was not paid to him.
In the petition filed by Errammal she raised the question of the validity and the binding nature of the compromise decree on her.
After elaborate inquiry on February 1, 1933, the learned Subordinate judge, though he held that the marriage of Bangaru Ammal was in 'Asura form ', dismissed her petition for the reason that the mortgage was valid and binding on her and allowed the petition filed by Veerappa Chettiar directing the delivery of the possession of A Schedule properties to him.
On February 2, 1933, Veerappa Chettiar had taken delivery of A Schedule properties and on July 19, 1933 he was registered as proprietor of Thevaram estate by the Collector of Madura.
On February 2, 1933, Errammal died executing a will dated January 30, 1933, in favour of her nephew Thangachami Naicker.
It may also be mentioned that three of the co widows of Shanmugavalla survived Errammal.
They died one after another and the last of them Vellayammal passed away on May 2, 1940.
Thangachami Naicker along with one of the widows filed appeals to the High Court against the said judgments but those appeals were dismissed by the High Court on the ground that they were not maintainable.
As Thangachami Naicker interfered with the right of Veerappa Chettiar with regard to certain tanks and water courses in Zamindari he filed 0.
section 2 of 1934 in the Subordinate judge 's court of Dindigul against Thanchami Naicker and obtained a decree declaring his right to the said tanks.
The appeal filed by Thanchami Naicker against that decree was also dismissed with costs on April 10, 1940.
In execu tion of the decree for costs Veerappa Chettiar got the property alleged to be in possession of Thanchami 250 Naicker attached.
One section Michael (son of Thanchami Naicker) objected to the attachment of the said property on the basis of a sale in his favour by the alleged reversioners to the estate of Bangaru Ammal.
That petition was dismissed on August 23, 1944.
The said claimant section Michael filed 0.
section No. 52 of 1944 in the court of the Subordinate judge, Dindigul for setting aside the said claim order.
To that suit Veerappa Chettiar and Thangachami Naicker were made party defendants.
On January 31, 1945 the alleged reversioners to the estate of Bangaru Ammal filed 0.
section 14 of 1,945 in the Court of the Subordinate judge, Dindigul against Veerappa Chettiar, his younger brother and defendants 3 & 9 who were alleged to be the tenants in possession of some of the items of the plaint Schedule properties.
The plaintiffs in that suit are the grandsons of one Kandaswamy Naicker shown in the genealogy a paternal uncle of Shanmugavalla Konda Bommu Naicker.
They claimed that they are the reversioners to the estate of Bangaru Ammal on the ground that Bangaru Ammal was married in 'Asura form '.
It is alleged in the plaint that succession opened in their favour when Vellayammal died on May 2, 1940 and that the compromise decree passed against Bangaru Ammal was not binding on them and that in any view the property set out in Schedule C and C 1 attached to the plaint did not pass to Veerappa Chettiar under the said decree.
The contesting defendants in both the suits pleaded that the marriage of Bangaru Ammal was not in 'Asura form ', and therefore the plaintiffs in 0.
section 52 of 1944 were not the reversioners to the estate of Bangaru Ammal, that the compromise decree was binding on the estate and that C and C 1 Schedule properties also passed to the decree holder thereunder and that in any view the suit was barred by time.
251 It is seen from the foregoing narration of facts that the same questions of fact and law arise in both the suits for the title of the plaintiffs in 0.
section No. 52 of 1944 was derived under a sale deed from the plaintiffs ' in 0.
section No. 14 of 1945.
Therefore the plaintiffs ' claim in the former suit will stand or fall on the plaintiffs ' title in the latter suit.
For that reason both the suits were heard together by the Subordinate judge and appeals arising from his common judgment by the High Court.
The learned Subordinate judge held on the evidence that the marriage of Bangaru Ammal with the Mannarkottai zamindar was in Asura form as Mannarkottai zamindar had spent Rs. 300/ to Rs. 575 for Bangaru Ammal 's marriage and that circumstance was in view of certain decisions of the High Court would make it an Asura marriage.
He further held that the aforesaid compromise decree was binding on the plaintiffs.
As regards C and C. 1 Schedule properties lie held that they had passed to Veerappa Chettiar under the compromise decree as part of the Thevaram Zamindari and that the plaintiffs were not in possession within 12 years of the suit in regard to item 70 of the C Schedule.
On those findings he dismissed O.S. No. 14 of 1945 with costs.
In O.S. 52 of 1944 he held that the plaintiff therein acquired a valid title as he purchased the land in dispute therein from the plaintiffs in the other suit who are the reversioners to the estate of Bangaru Ammal and that the decree in execution of which the said property was attached was not binding on the estate of said Bangaru Ammal.
In that view he decreed the said suit.
As against the decree passed in O.S. 52 of 1944, Veerappa Chettiar filed an appeal in the High Court of Madras being A.S. No. 816 of 1947.
As against decree in O.S. 14 of 1945 dismissing the 252 plaintiffs ' suit they filed an appeal to the High Court being A.S. 83 of 1948.
Veerappa Chettiar filed cross objections therein.
Both the appeals were heard together by the High Court.
The High Court held that in Bangaru Ammal 's marriage the practice of giving Kambu or flour or what is called the taking of Mappetti (millet flour box) before the betrothal was followed and that the marriage expenses were entirely borne by the Mannarcottai Zamindar presumably in pursuance of the practice existing in the community or in pursuance of an arrangement between the parties and therefore the marriage was Asura.
The High Court further held that under the compromise decree only Melwaram right in C and C. 1 Schedule properties passed to Veerappa Chettiar but as there was no clear evidence as to who was in actual possession of the said lands and as the persons in actual occupation of the land were not impleaded in the suit, it was necessary in the interest of the parties to reserve the right of the plaintiffs to recover possession of C and C. I Schedule lands in an appropriate proceedings instituted for the purpose.
In regard to item No. 70 of C. Schedule land the High Court agreed with the finding of the Subordinate judge.
The High Court also negatived the plea of limitation, with the result A.S. No. 816 of 1947 was dismissed with costs and A.S. No. 83 of 1948 subject to the said modification was dismissed with costs.
Hence the appeals.
Both the appeals were heard together as they raised common points.
The arguments of Mr. A.V. Viswanatha Sastri, the counsel for the appellant, may be summarised thus : The marriage of Bangaru Ammal with a Mannarcottai Zamindar was not held in Asura form and therefore the plaintiffs in O.S. 52 of 1944 being her father 's uncle 's grand children were not reversioners to her estate.
According to Hindu Dharamshastras the main distinction between Brahma, and Asura form of marriages is that while in the 253 former there is a gift of the bride, in the latter there is a sale of the bride.
Except a bare allegation in the plaints that the said marriage was held in Asura form the plaintiffs did not give any particulars or set tip any custom in the community to which the parties to the marriage belonged.
They have adduced evidence to the effect that a sum of Rs. 1,000/ was paid as parisam by the Mannarcottai Zamindar to the bride 's father for taking the bride but both the courts having rightly held that the said payment was not established by the evidence erred in making out a case of a different consideration for the marriage.
The first court held wrongly that the fact that Mannarcottai Zamindar spent Rs. 300/ to Rs. 575/for the marriage expenses would make it an asura marriage while the High Court went further and erroneously held that there was a general custom in the community to pay the bride 's price by way of giving Kambu grain and Kambu flour at the time of the settlement of marriage and that for the bridegroom 's party to bear the expenditure for celebrating the marriage and that in the case of Bangaru Ammal 's marriage the said Kambu was given and that the expenditure for the marriage was incurred by the Mannarcottai Zamindar presumably in pursuance of the practice existing in the community or in pursuance of an arrangement between the parties.
Apart from the fact that no such custom was pleaded, there was no evidence to sustain the said custom.
That apart the mere giving of Kambu as a ceremonial relic of the past or the bearing of the expenditure on the marriage wholly or partly by the bridegroom 's party could not be a bride 's price as contemplated by the Sastras, for the bride 's father in those events could not be said to have received any price for the bride.
In short the learned counsel attacks both the legal and the factual findings arrived at by the High Court.
The gist of the learned counsel for the Mr. Bheemasankaran 's contention may 254 be briefly stated thus: According to Dharam Shastras there were eight forms of marriage in Hindu Law, four approved and four unapproved.
But as centuries rolled by most of them became obsolete and at present there are only two forms of marriage, Brahmu and Asura.
Whatever may have been their comparative merits in the bygone days, they have now come to be recognized as two valid 1, forms of marriage that can be followed without any sense of inferiority by all the castes.
Though in remote antiquity the Asura form of marriage night have involved a real sale transaction, at present it would be enough to constitute such a marriage if a ritual form was observed indicating the consciousness of the community or the parties contracting the marriage that it was an Asura marriage.
This consciousness may be indicated by the ceremonial giving of Kambu at the time of betrothal or by the bridegroom 's party meeting the expenses wholly or substantially of the marriage.
Thai apart in the present case there is clear evidence that the practice in the community to which Bangaru Ammal and her husband belonged that Kambu is given by the bridegroom 's party to the bride 's party at the time of betrothal and the bridegroom 's party bears the expenditure of the marriage which clearly indicate that the bride 's father or in his absence by the bride 's relatives entitled to give her away in marriage get a clear benefit for giving the bride, and further there is evidence that the said practice was followed in the case of Bangaru Ammal 's marriage.
What is more to constitute a Brahmu marriage there should be a 'Kanyadhan ' but in this case it has been found that there was no 'Kanyadhan ' and therefore if the marriage of Bangaru Ammal could not have been in 'Brahma form ' it could have been only in the alternative form, namely Asura form.
Before we advert to the arguments advanced we would like to make some general observations.
255 We are not concerned here with the relatives importance of the said two forms of marriages at the present day but only with the conditions laid down by Shastras for the said two forms of marriage and with a question as to which form was adopted in Bangaru Ammal 's marriage.
Nor are we concerned with a question whether the institution of marriage in Brahmu form is now maintained in its original purity.
We are also in these appeals not concerned with any customary form of marriage but only with a marriage sanctioned by Hindu Law, for no custom was pleaded in derogation of Hindu Law.
But there may be a custom in a community not in derogation of the Hindu Law but in regard to the manner of complying with a condition laid down by Hindu Law.
that is to say if the criterion for an Asura marriage was that there should be a sale of the bride, there may be a custom in a community in regard to the manner of paying the consideration ' for the sale.
It may be mentioned that in this case the learned counsel for the respondents does not rely upon any custom even in the later sense but only on the practice obtaining in the community in support of the evidence that the said practice was followed in Bangaru Ammal 's marriage.
The main question therefore is what are the ingredients of an Asura form of marriage.
As the Manu Samhita has always been treated by sages and commentators from the earliest time as being of a paramount authority, let us look to it for guidance.
The following verses from Manu Samhita as translated by Manmatha Nath Dutt Shastri read as follows: CHAPTER III, Verse 21: They (different types of marriages) are known as the Brahma, Daiva A 'raha, Prajapatya, A 'sura, Gandharva, Rakshasa and Paisacha, which forms the eighth.
256 Verse 24: The four forms of marriage the seers have ordained as proper for Brahmanas : only the Rakshasa form as proper for Kshatriyas, and the A 'sura form as proper for Vais 'yas and S 'udras.
Verse 25: Thus out of these five forms of marriage, three are lawful, and two are sinful (unlawful).
Let a man never marry a wife either in the Pisacha or in the A 'sura form since these two forms are prohibited.
Verse 27: The form (of marriage) in which well attired bride, decorated with ornaments, is given in marriage to an erudite, good charactered bridegroom especially invited by the bride 's father himself to receive her, is called Brahma.
Verse 31: The form, in which the bridegroom, on paying money to her father and to herself, out of the promptings, of his own desire, receives the bride in marriage, is called A 'sura.
Verse 51 : An erudite father of a girl shall not take anything by way of Sulka from her bridegroom.
By taking a dowry out of greed, he becomes the seller of his off spring.
Verse 53: Even the acceptance of abovine pair (by the father of the bride from the bridegroom) is designated as a dowry by certain authorities, (the acceptance of) 257 a dowry be it costly, or be it of insignificant value, constitutes the sale of the girl.
Verse 54 : A marriage in which the bride 's relations do accept the dowry (voluntarily presented by the bridegroom 's father, etc.) is no sale (of the bride), since such a present is but an adoration of the bride done out of love or affection.
Verse 98 (of Chapter IX) Even a S 'udra must not take any price it.
duty or pecuniary consideration) for the hands of his daughter when giving her away in marriage.
Such acceptance of money constitutes a sale of the girl in disguise.
The gist of the verses is that before Manu Smriti came into existence the A 'sura form was considered to be proper for Vaishs and Sudras but it was prohibited for the Brahmins and Kashatriyas.
But Manu was emphatic that the said form of marriage was sinful for all castes including the Shudras.
There is no ambiguity in the verses in regard to the general prohibition to all castes ' for Verse No. 98 emphasizes that even a S 'udra must not take any price for the hand of his daughter when giving away in marriage.
The next question is what is the criterion of an A 'sura marriage according to Manu.
A contrast between the terminology in the definition of Brahma marriage and that of A 'sura marriage brings out clearly his intention.
The following words stand out in the definitions.
They are 'dana ' (giving) 'Kanyapradanam ' (the taking of the bride), "Dravina ' (wealth), 'dattava ' (after having given), 'Saktitah ' (as much as he can), 'Svacchandya ' (as according to his will).
The word 'Apradana ' is used in the 258 definition of A 'sura marriage in contradistinction to the word 'dana ' in Brahmu form of marriage, while a, in the Brahmu form of marriage the father makes a gift of the bride, in the A 'sura form the bridegroom takes the bride otherwise than by a gift.
In the former the father gives the bride decorated with ornaments, while in the latter the bridegroom takes the bride after giving wealth to the father of the bride and the bride.
While in the former the father voluntarily gives the bride in the latter the bridegroom out of his own will pays as much money as he can to the father and takes his bride.
The words Saktitah ' and 'Svacchandya ' imply that the payment is made because the bridegroom can and the girl is taken because he wills that is to say a bridegroom who seeks the hand of a bride takes her as he can afford to buy her from her father.
The transaction is equated to that of a sale, for all the ingredients of sale were present.
If there is any ambiguity that is dispelled by Verse 51 and Verse 54.
In Verse 51 Manu makes it clear that by taking a dowry out of greed the father becomes the seller of his off spring. 'Sulka ' means the taking of a gratuity or price.
The expression 'dravina ' in Verse 31 is clarified by the use of the word 'Sulka ' in Verse 51.
What is prohibited is Sulka or the price for the bride.
Verse 54 brings out the distinction between 'Sulka ' or 'dravina ' paid by the bridegroom as a price for the bride and the dowry given for the bride as a present out of love or affection or in adoration of the bride.
Verse 98 further empbasizes that what Manu prohibits is the sale of a bride for price.
A 'sura marriage, according to Manu, is a transaction of sale in which the girl is sold for a price.
Practically the same meaning though expressed in different phraseology is given by other Hindu Law givers.
The following translations given by Max Muller in the "Sacred Books of the East ', of 259 the various sages may now be extracted Baudhayana text 1, II, 20 (7) '(If the bridegroom receives a maiden) after gladdening (the parents) by money (that is) the rite of the Asuras (asura). ' Verse 2 : 'Now they quote also (the following verses) It is declared that a female who has been purchased for money is not a wife.
She cannot (assist) as sacrifices offered to the Gods or the manes.
Kasyapa has stated that she is a slave. ' Baudhayana Prasad Adhyaya 11, Kandika 21 Verse 3 : 'Those wicked men who, seduced by agreed, give away a daughter for a fee, who (thus) fall (after death) into a dreadful place of punishment and destroy their family down to the seventh (generation).
Moreover they will repeatedly die and be born again.
All (this) is declared (to happen), if a fee (is taken ).
, Vasishtha Chapter I Verse 35. 'If, after making a bargain (with the father, a suitor) marries (a damsel) purchased for money, that (is called) the Manusha rite. ' Narada Chapter XII Ver8e 42.
When a price is (asked for the bride by the father and) taken (by him), it is the form termed Asura. 'Gautama, 'Chapter IV Verse 11.
The form of marriage in which a bride is purchased for money, is called the A 'suram. ' 260 Vishnu Chapter XXIV Verse 24.
If the damsel is sold (to the bridegroom), it is called an Asura marriage. 'Yagngavalkya ' : 'The asura by largely giving of money ; the Gandharva by mutual consent; the Rakshasa by forcible taking by waging war and Paisacha by deceiving the girl ' Translation of Srisachandra Vidyaamava : 1918 Edition page 126 : In the Mitakshara the said text is commented upon thus : .lm15 " The Asura marriage is that in which money is largely given (to the father and others in exchange for the girl).
'Apastamba ':"If the suitor pays money (for his bride) and marries her (afterwards) that (marriage is called) the Asura rite. ' 'Kautilya ': Arthasastra: Sulkadanat Asura ' the word used is "Sulka" Medhatithi, in his commentary on Verse 54 of Manu Samhita points out that the receipt of money or money 's worth for the benefit of the girl (Kanyarthe) does not amount to her sale, and is desirable as it tends to enhance her self esteem and also raises her in the estimation of others, and concludes with the observation that receipt of a dowry for the girl (kanyartham danagrahanam) is prescribed by thus stating the good arising from it (arthavadena) : Vide at 772.
Apte 's Dictionary : page 239 : Col. III.
Asura is explained thus : 'One of the eight forms of marriage in which the bridegroom purchase ; the bride from her father or other paternal kinsmen ' Manu 331 and Yagnayavalkya 1.61 are cited 261 The said sages and commentators accepted the view expressed by Manu and in effect described A 'sura marriage as the transaction where a bridegroom purchases a girl for a price paid to the father of the girl or to kinsmen who are en titled to give her in marriage.
The distinction between the bride 's price and the presents to the bride is also recognized.
The learned judges of the High Court relying upon the text of Apasthamba observed that 'the payment to the bride 's father is for the purpose of complying with Dharma and not as a consideration for an commercial transaction.
The interpretation may explain away on Dharmic principles the sordid nature of the transaction, but does not detract from its essential incidents.
We, therefore, hold that A 'sura marriage is nothing more than a transaction of marriage whereunder a bridegroom takes a bride for the price paid by him to the bride 's father or others entitled to give her and therefore in substance it is a sale of the bride.
It is said that the incurring of the expenditure of the marriage by the bridegroom is also a consideration for giving the bride.
In this context reliance is placed on the Law and Custom of Hindu Castes by Arthur Steel.
This book was written in 1868.
The author appears to have collected the laws and customs obtaining in the Presidency of Bombay, and had compiled them for the purpose of convenience of reference.
At page 24 the author says: 'There are eight kinds of marriages recognized in the Sastras : 1, Brahm, where the charges are incurred solely by the girl 's father; x x x x x 5, Usoor, where she is taken in exchange for wealth, and married; this species is peculiar in the Wys and Soodra castes, B.S.(Mit), See Munoo, 3.20,34.
It is considered as Uscorwiwuha, and stree soolk, and the money, if unpaid, is an unlawful debt, B 2, 199.
The definition of Asura by the author does not carry the matter further, for it is consistent with that 262 given in the Hindu law Texts but what is relied upon is his definition of Brahmu marriage as one where charges are incurred solely by the girl 's father.
From the said definition a converse proposition is sought to be drawn viz : that marriage would be Asura marriage if the charges were incurred mainly by the bridegroom 's father.
Firstly the definition of Brahmu marriage by the learned Author does not conform with the definition of the said marriage by the lawgivers.
Secondly it does not follow from the passage that if the bridegroom 's father incurs the expenditure the marriage is an Asura marriage.
If that be so, the author would have stated in his definition of Asura marriage that such incurring of the expenditure would make a marriage an Asura marriage.
This valuable compilation of the laws and customs of the day does not throw any light on the question now raised before us.
Let us now see whether there is any merit in the contention that the concept of sale for a price has by progress of time lost its content and that at the present time a mere form of sale irrespective of a real benefit to the bride 's father would meet the requirements of an Asura , marriage.
No text or commentary taking that view has been cited to us.
Indeed the case law on the subject does not countenance any such subsequent development.
The earliest decision on the subject cited to us is that ofthe Divisional Bench of the Bombay High Court "Jaikisondas Gopaldas vs Harkisondas Hulleshandas '.Green j, defines the Asura marriage at page 13 'The essential characteristic of the Asura form ofmarriage appears to be the giving of money or presents by the bridegroom or his family to the father or parental kinsmen of the bride,, or, in tact, a sale of the girl by her father or other relation having the disposal of her in marriage in (1) Bom.
9. 263 consideration of money or money 's worth paid to them by the intended husband or his family. ' In 'Vijarangam and Damodhar vs Lakshuman and Lakshmi ' (1) West j .
gives in interesting background to the origin of the institution of the Asura marriage and observes: "Of the several Shastras called by the plaintiffs and the defendants in this case, all agree that the giving and receiving of money for the bride is the distinctive mark of the Asura form of marriage.
" In 'Muthu Aiyar vs Chidambara Aiyar, the money was paid by the bridegroom 's people to the bride 's father to meet expenses of marriage.
The Subordinate judge found on the evidence that the bride 's father received the money for his own purposes and not for bride 's benefit and therefore the marriage was an Asura one.
The High Court in a short judgment accepted the finding and said.
"it being found that a money payment was made to Thailu 's father we are not prepared to differ from the courts below in their opinion as to the nature of the marriage.
" This decision is relied upon in support of the contention that where the bridegroom incurs the expenditure of the marriage such a marriage is Asura marriage.
But this decision is not a considered one.
The appeal being a second appeal, the learned judges accepted the finding of fact given by the Subordinate Judge, namely that the money payment was made to the bride 's father and were not prepared to differ from it.
The disinclination of the learned judges to interfere in the second appeal on a question of fact cannot throw any light on the point that has directly arisen before us.
Chandavarkar J. in 'Chunilal vs Surajram '(3) accepted the aforesaid definition when he said: 'Where the person who gives a girl in marriage received (1) (1871) 8 Born.
F. C. Reports 244.
(2) (3) Bom.
264 money consideration for it, the substance of the transaction makes it, according to Hindu Law, not a gift but a sale of the girl.
The money received is what is called bride price; and that is the essential element of the Asura form.
The fact that the rites prescribed for the Brahmu form are gone through cannot take it out of that category, if there was pecuniary benefit to the giver of the girl.
The Hindu law givers one and all condemn such benefit and the Shastras, regarding it as an ineradicable sin, prescribe no penance for the sale of a bride.
" The learned judge also accepted the presumption that every marriage under the Hindu Law is according to the Brahma form but it can be rebutted by evidence.
In 'section Authikesavulu Chetty vs section Ramanujan Chetty ' (1) at the betrothal ceremony a married woman of the caste to which the parties belonged proceeded from the bridegroom 's house to the house of the bride carrying certain presents consisting of cocoanuts, betel and nut, garlands, black beads, saffron red powder, etc.
in a tray.
There was also a pagoda and a fanam in it.
There was also an arrangement at that time that the bridegroom 's father had to pay certain amount to the bride and the bride 's father had also to give some jewels to the bridegroom.
It was contended that the marriage was an Asura marriage.
The learned judges said that the distinctive mark of the Asura marriage was the payment of money for the bride, and that the payment of a pagoda and 2 1/2 annas could not have been intended to be the consideration for the bride where the bride 's father spent thousands of rupees himself and gave presents of considerable value to the bride and the bridegroom.
This decision, therefore, emphasises that mere payment of small amounts as a compliment to one of the parents cannot be treated as a consideration for the sale of the bride.
It also lays down that all the circumstances of the case will have to be looked into to ascertain whether any amount was paid as price for the bride.
(1) Mad.
265 A Divisional Bench of the Madras High Court in 'Gabrielnathaswmi vs Valliammai Ammal ' (1) negatived the contention that the mere fact that a bride 's parents received what is known as 'parisam ' it would lead to the conclusion that the marriage of the girl took place in Asura form and not in Brahma form.
The learned judges observed: "It may be that parisum is a relic of what in old days was regarded as the price for the bride.
x x x x The real test is whether in the community or among the parties the payment of 'parisam ' was tacitly understood as being substantially a payment for taking the girl in marriage.
That will depend generally upon the evidence in the case.
" They also reaffirmed the presumption under Hindu Law in; the following words : 'Ordinarily the presumption is that whatever may be the caste to which the parties belong, a marriage should be regarded as being in the Brahma form unless it can be shown that it was in the Asura form '.
This decision deals with 'parisam ' with which we are also concerned in these appeals.
This is an authority for the proposition that the use of the word 'parisam ' is not decisive of the question that it is a bride 's price, but that it must be established in each case whether the payment small or large, in cash or kind, is made as a bride 's price i. c. as consideration for the bride.
In "Ratnathanni vs Somasundara Mudaliar" (2) a sum of Rs. 200/ was paid to the bride 's mother for the expenses of the marriage as a term of the contract of the marriage.
On that finding Ramesam. ' J. concluded that the payment was made for the benefit of the bride 's mother as in the absence of the payment, she would have had to find the amount in some other way, by borrowing or pledging her jewels or other properties and therefore the marriage was in Asura form.
The learned judge relied upon Steel 's observation that the parents should incur the expenditure of the marriage in the Brahma form and presumably (1) A.I.R. 1920 Mad. 884.
(2) 266 drew a contrary inference that if the bridegroom 's party met the expenditure it would be an Asura marriage.
The learned judge also relied upon that decision in 'Muthu Aiyar vs Chidambara Aiyar '(1).
Spencer, J. in a separate judgement agreed with him.
As we have pointed out we do not see any justification in the Hindu Law texts in support of the view that the bearing of the expenditure of the marriage by the bridegroom is a test of an Asura marriage.
The fact that the expenditure of the marriage is borne by bridegroom 's party cannot in any sense of the term be a consideration given to the father for taking the bride.
Ramesam J. sitting singly in 'Samu Asari vs Anachi Ammal ' (2) restated his view in a more emphatic form.
He observed: 'It seems to me immaterial whether it is the whole of the expenses of the marriage or a substantial portion of it.
To the extent the bride 's father gets contribution of that kind from the bridegroom 's father, he benefits by it; though he does not pocket it, but he spends for the marriage. .
At the same time the learned judge observed that under certain circumstances payments made to the bride 's parents which are either small or relatively small having regard to the scale in which the expenses of the marriage are incurred do not make a marriage an Asura marriage.
This decision therefore makes a distinction between courtesy presents given to the bride 's parents and whole or substantial portion of the expenditure incurred by the bridegroom 's father.
While we agree that courtesy presents to the bride 's parents cannot by themselves conceivably make a marriage an Asura one, we find it difficult to hold that the incurring of expenditure by a bridegroom satisfies the test of consideration for the bride.
In 'Kailasanatha Mudaliar vs Parasakthi Vadivanni ', (3) Varadachar J., speaking for the (1) (2) (3) Mad.
267 Court lays down the test of the Asura marriage in the following manner : "The distinctive feature of the Asura form of marriage is the giving of money or money 's worth to the bride 's father for his benefit or as consideration for his giving the girl in marriage.
" The learned judge distinguishes the case of "Samu Asari vs Anachi Ammal ' (1) on the ground that there money was held to have been paid for the father 's benefit though utilized by him to meet the expense of the marriage which he must have defrayed out of his own fund and points out also the distinction between payment to the father for his own benefit and payments to the bride received by kinsmen not for their own use.
In that case a jewel was presented by the bride 's father and placed on the bride 's neck at the time of the betrothal ceremony as ' parisam ' and the value of the jewel was not even the subject of a bargain but merely left to the pleasure of the bridegroom 's father.
The learned judge observed that such a gift could in no sense be called bride 's price.
In 'Sivangalingam Pillai vs K. V. Ambalavana Pillai, (2) the bride 's father gave a large amount and also jewels to the bride and plaintiff 's brother in law on behalf of the bridegroom gave the bride 's father a present of Rs. 1,000/ and a cloth worth Rs. 65/ .
It was also agreed that all the expenses of the marriage should be borne by the bridegroom.
It was contended that the said presents and the incurring of expenditure on the marriage was a consideration for the bride and therefore the marriage was in an Asura form.
The Divisional Bench rejected the contention.
Pandrang Row J. observed at page 481: "It is a well known fact that, whatever the custom is, the bridegroom and his people also spend a considerable sum of money in respect of the marriage whenever they can afford it.
Such expenditure obviously does not convert the marriage which is otherwise in the Brahma form into one which is in (1) (2) A.I.R. 1938.
479. 268 the Asura form.
" The learned judge proceeded to state at page 480 thus : "So far as our Presidency is concerned, all marriages among Hindus are presumed to be in the Brahma form unless it is proved that they were in the Asura form; in other words, it is incumbent on the party who alleges that a particular marriage was in the Asura form to prove that bride price was paid in respect of the marriage by the bridegroom or his people to the bride 's father" and the present given to the bride 's father the learned judge remarked that this customary present would not necessarily amount to payment of bride 's price.
Abdur Rahman J., added that 'if a party wishes to assert that the marriage was Asuric in form, he must establish that some price was paid for the bride in pursuance of either of an express or implied contract to the bride 's father or on his account.
" This judgment we may say so with respect puts the principle on a correct legal basis and brings out in bold relief the distinction between bird 's price on the one hand and the presents and the expenditure incurred in respect of the marriage by one or the other of the parties on the other hand Patanjali Sastri J., in 'V.S. Velavutha Pandaram vs section Suryamurthi Pillai ' (1) approached the case if we may say so from a correct perspective.
There a sum of Rs.500/ was paid by the bridegroom to the bride 's father for the specific purpose of making jewels for the bride in pursuance of a stipulation for such gift as a condition of giving the girl in marriage.
The learned, judge held that the said payment was not bride 's price and did not make the marriage an Asura marriage.
The learned judge in passing referred to the case of 'Samu Asari vs Anachi Ammal ' (2), and observed as follows : " 'As the father was benefitted by such contribution in that he was relieved to that extent from defraying such expenses (1) (2) 269 himself, the marriage was one in the Asura form.
This view has been criticised in the latest edition of Mayne 's Hindu Law as not really warranted by the Hindu Law texts, and the point may have to be reconsidered when it arises.
" Patanjali Sastri, J., again considered this point in Second Appeal No. 2272 of 1945.
There on the occasion of the marriage one sovereign was given along with the other presents to the bride 's father as Memmekkanoni.
The question was whether the mere adoption of this customary form per se brought the marriage within the category of an Asura or unapproved marriage.
The learned judge expressed the view that the payment of memekanom no longer signifies in substance and in truth consideration for the transfer of the girl but has survived as a token ceremonial payment forming part of the marriage ritual.
The said judgment was confirmed by a Divisional Bench of the said High Court in 'Vedakummpprath Pillai Muthu appellant vs Kulathinkai Kuppan '.
(1) Balakrishna Ayyar, J., speaking for the Bench neatly summarised the law on the subject at page 804 thus : "One essential feature of an Asura marriage, the feature which makes the form objectionable, is that the father of the bride receives a gratuity or fee for giving the girl in marriage.
Ordinarily, it would be expected of every decent and respectable father when he selects a husband for his daughter to make his selection uninfluenced by any considerations other than the welfare of the girl.
But when he receives a payment for his personal benefit, a very objectionable factor would influence his selection and it is clearly this which the ancient lawgivers took objection to and therefore relegated the form to the category we call 'disapproved '.
When the father accepts money and allows his greed or avarice to sway his judgment, he thereby converts what is intended to be a sacrament into a commercial transaction.
" With respect we are in full agreement with the observations of the learned judge.
Commenting upon the (1) 270 argument built upon the payment of one sovereign to the bride 's father the learned judge observed : "In most, though not necessarily in all cases, the payment has lost all its original significance and survives only as a ritualistic form '; it has become a ceremonial symbol devoid of any content or meaning or purpose.
x x x x Now when a father gives such a large amount as stridhanam and receives one sovereign in compliance with traditional form it would be very wrong to say that he had been selling or mortgaging the girl and that he received the sovereign from greed or love of gain.
" The foregoing discussion leads to the following results .
Under Hindu Law marriage is a sacrament and it is the religious duty of the father to give his daughter in marriage to a suitable person but if he receives a payment in cash or in kind as a consideration for giving his daughter in marriage he would be converting a sacrament into a commercial transaction.
Brahma marriage satisfies the said test laid down by Hindu Law.
But from Vedic times seven other forms of marriage were recognized based on custom and convenience.
Asura form is one of the eight forms of marriage.
The essence of the said marriage is the sale of a bride for a price and it is one of the unapproved forms of marriage prohibited by Manu for all the four castes of Hindu society.
The vice of the said marriage lies in the receipt of the price by the bride 's father or other persons entitled to give away the bride as a consideration for the bride.
If the amount paid or the ornaments given is not the consideration for taking the bride but only given to the bride or even to the bride 's father out of affection or in token of respect to them or to comply with a traditional or ritualistic form, such payment does not make the marriage an A 'sura marriage.
There is also nothing in the texts to indicate that the bearing 271 of the expenditure wholly or in part by the, bridegroom or his parents is a condition or a criterion of such a marriage, for in such a case the bride 's father or others entitled to give her in marriage do not take any consideration for the marriage, or any way benefit thereunder.
The fact that the 'bridegroom 's party bears the expenditure may be due to varied circumstances.
Prestige, vanity, social custom, the poverty or the disinclination of the bride 's father or some of them may be the reasons for the incurring of expenditure by bridegroom 's father on the marriage but the money so spent is not the price or consideration for the bride.
Even in a case where the bride 's father though rich is disinclined to spend a large amount on the marriage functions and allows the bridegroom to incur the whole or part of it, it cannot be said that he has received any consideration or price for the bride.
Though in such a case if the bridegroom 's father had not incurred the said expenditure in whole or in part, the bride 's father might have to spend some money, on that account such as indirect result could not be described as price or consideration for giving the bride.
Shortly stated Asura marriage is a marriage where the bride 's father or any other person entitled to give away the bride takes Sulka or price for giving the bride in marriage.
The test is two fold: There shall not only be a benefit to the father, but that benefit shall form a consideration for the sale of the bride.
When this element of consideration is absent, such a marriage cannot be described as Asura marriage.
As the Asura marriage does not comply with the strict standards of Hindu Law it is not only termed as an unapproved marriage, but it has been consistently held that whenever a question arises whether a marriage is a Brahmu or Asura, the presumption is that the marriage is in Brahma form and the burden is upon the person who asserts the con trary to prove that the marriage was either an Asura or any other form.
272 With this background let us look at the facts of the case.
Though in both the plaints it is stated that Bangaru Ammal had been married in Asura form, no particulars are given but in the evidence the plaintiff 's witnesses in one voice depose that the custom in the Rakambala caste to which Bangaru Ammal and her husband belonged, is to give money in the shape of 'parisam ' to the bride 's father at the time of the betrothal.
The witnesses who depose to Bangaru Ammal 's marrage say that at the time of her betrothal a sum of 1,000/ was paid as ' parisam '.
Both the Courts did not accept this evidence and they held that it had not been established that a sum of Rs. 1,000/ was paid as 'parisam ' at the time of the betrothal of Bangaru Ammal.
This finding is not attacked before us.
It is argued that the evidence discloses that there is a practice in the said caste to give Kambu as IT parisam ' to the bride 's father as a bride 's price and the said practice supports the evidence that in the case of the marriage of Bangaru Ammal also such a 'parisam ' was paid as consideration for the marriage.
On the question of the said alleged practice the evidence does not support it.
P. W. I to P. W. 10 depose.
that "parisam ' is paid in cash for marriages in their community varying from Rs. 150/ to Rs. 1,000/ .
This evidence has been rightly ' disbelieved by both the courts.
The evidence does not bear out the case of giving of 'parisam ' in Kambu.
Some of the witnesses also depose to the payment of Rs. 1000/ as 'parisam ' at Bangaru Ammal 's marriage but that was not accepted by the courts.
The evidence destroys the case that 'parisam ' was paid at her marriage in Kambu.
No witness examined in the two cases says that Kambu is paid at the marriages of the members of the community or was paid at the time of Bangaru Ammal 's marriage as a consideration for the marriage but it is said that the witnesses who had been 273 examined in the earlier suit whose evidence has been marked by consent in the present case deposes to that fact.
Errammal, the mother of Bangaru Ammal, whose evidence is marked as P. 11 (R) deposes that when Thevaram Zamindar married her the 'parisam ' was only Rs. 1,000/ and that when her daughter was married, the 'parisam ' was also Rs. 1000/ .
In cross examination she says that according to the custom of the community, it is the practice to bring a mapelli for the nischithartham (betrothal function) and it is customary also to bring cumbu and flour at the time of the marriage and sprinkle it in the marriage hall.
This evidence indicates that the 'parisam ' is only given in cash but Kambu is brought at the time of the marriage and sprinkled in the marriage hall presumably for the purpose of purification.
This evidence does not show that Kambu is given as "parisam ' for taking the bride.
Sermalai Naicker who gave evidence in an earlier suit which is marked as P. 11 (a) belongs to Rajakambala caste.
In his chief examination he says that he paid Rs. 200/ as 'parisam ' at the time of the marriage and paid Rs. 300/ as "parisam ' for the marriage of his son and received Rs. 200/ as 'parisam ' for the marriage of his daughter.
In cross examination he says that on the betrothal day only one kalam of cumbu and cash are given to the bride 's party and that the Kambu is used by the bride 's people and that at the time of the marriage 3 or 4 marakkals of cumbu are again brought which is thrown over the bride and the bridegroom byway of blessing.
He adds that throwing of the kambu is a ritual in marriage ceremonies and that Kambu and cash are called "Parisam '.
This evidence brings out the distinction between cash paid as the 'Parisam ' and Kambu brought to conform with the traditional ritual.
274 R.W. 3 in the earlier suit whose evidence is marked as D. 317 says that he was a guru of the Rajakambala caste and that he performed the marriage of Moolipatti zamindar.
He further says that Kambu is taken by the bridegroom 's party to the bride 's house when the betrothal takes place and that seven pieces of jaggery, a cloth etc. are also taken and that no money is given in the caste.
We do not see how this evidence supports the practice of paying kambu as 'parisam '.
indeed his evidence shows that Kambu is taken only as a part of the ritual and he is definite that no 'parisam ' is paid in the caste.
Ramasami Naicker Zamindar of Ammaianaickoor.
was examined in the previous suit and his evidence is marked as D 416.
He is definite in the chief examination that no 'parisam ' is paid in his community.
He says that it is rather undignified to receive 'Parisam ' and that he has not seen any parisam paid in his caste.
Whether this witness is speaking truth or not, his evidence does not support the plaintiff.
From the aforesaid evidence it is not possible to hold that either there is a practice in the Rajakambala family to give Kambu as 'parisam ' for the bride or kambu was paid as 'parisam ' at the time of the betrothal ceremony in connection with Bangaru Ammal 's marriage.
Reliance is placed upon Nelson 's Manual of the Madhura Country published in 1.865.
At page 82 of Part II in that /Manual the following passage appears : "After this, the price of the bride, which consists usually of 7 kalams of kambu grain, is solemnly carried under a canopy of white cloth towards the house of the bride 's father 275 its approach being heralded by music and dancing.
The procession is met by the friends of the bride who receive the price, and allege together to the bride 's house.
" Similarly, in Thurston 's Castes and Tribes of Southern India published in 1902 in Volume VII under the heading 'Thotti Naickers ' at page 192, the following passage is given "The bride price is 7 kalams of Kambu and the couple may cat only this grain and horsegram until the wedding is over.
" The evidence adduced in this case does not support the said statement.
Even if those formalities are observed, they are only the relics of the past.
That practice represents only a symbolic ritual which.
has no bearing upon the reality of the situation.
Indeed the witnesses in the present case realizing the ritualistic character of the said observances seek to base the case of the Plaintiffs on a more solid foundation but have miserably failed in their attempt.
These passage s therefore do not help the plaintiffs.
The next question is whether the expenditure for the marriage was incurred by the bridegroom 's party i. e. by the Mannarcottai Zamindar.
The learned Subordinate judge held on the evidence that Thevaram Zamindar spent a large amount of money for the marriage but the Mannarcottai Zamindar also spent a sum of Rs. 300/ or Rs. 575/ for the marriage expenses.
He expressed the view that if the matter was res integra, he would have held that the incurring of such an expenditure by the bridegroom 's party would not have made the marriage.
an Asura marriage but felt bound by some of the decisions 276 of the Madras High Court to come to the opposite conclusion.
The learned judges of the High Court came to the conclusion that the marriage expenses in their entirety were borne by the Mannarcottai Zamindar and it must have been either in pursuance of the custom or arrangement among the community.
The evidence as regards the custom of the bride groom 's party incurring the expenses of the marriage is unconvinc ing.
Indeed the learned counsel for the respondent does not rely upon custom but he prefers to base his case on the finding of the High Court that the entire marriage expenditure was incurred by the Mannarcottai zamindar.
Let us now consider the evidence in this regard in some detail.
P.W. 1 says in his evidence that Bangaru Ammal was the only child of the Thevaram Zamindar, that he was very affectionate to her and that he spent heavily for the marriage though he was not able to say how much he spent.
P. W. 4 also says that Thevaram Zamindar gave her lot of jewels and finally gave her his entire estate.
The evidence that Thevaram Zamindar spent large amounts on the marriage and gave lot of jewels to Bangaru Ammal must be true, for even in 1895 when the marriage of Bangaru Ammal took place it is inconceivable that the marriage would have been celebrated with a few hundred rupees that was given by the Mannarcottai zamindar.
He must have spent much larger amount than that consistent with his status and position in life and particularly when he was celebrating the marriage of his only daughter.
Now coming to the documentary evidence in support of the contention that Mannarcottai Zamindar met the entire expenditure, the respondents relied upon P. , P. and P. is a letter dated August 8, 1885, written by persons representing the Mannarcottai zamindar to the 277 Thevaram Zamindar office.
Therein he stated :"You should soon get ready there all the materials and samans for the shed and 'Panthal ' in connection with muhurtham.
We will start and come without fail".
This letter does not show that Mannarcottai Zamindar gave the money for the materials and samans for the said 'Panthal '.
It was only an intima tion that everything should be made ready for the marriage as Mannarcottai people would be coming there without fail.
Exhibit P. 23 is the account of expenditure incurred on Bangammal 's marriage from 1.9.1895 to 5.9.1895.
It is said that it represents the amount spent on behalf of Mannarcottai zamindar and the amount recouped from him.
The document is not very clear.
The account does not appear to represent the entire expenditure incurred at the time of marriage because the entry about charges for pounding 50 kalams of paddy shows that 50 kalams of paddy must have been supplied from Thevaram stores and there is nothing on the account to show that 50 kalams were purchased on Mannarcottai account.
Be that as it may this account only shows that Mannarcottai zamindar paid about Rs. 300/ but the learned counsel for the respondents argued relying upon exhibit P. 27 that even the balance of Rs. 295/14/in exhibit P. 23 shown as the excess amount spent by Thevaram Estate was paid off by the Mannarcottai zamindar to the Thevaram Zamindar.
Exhibit P. 27 is an entry dated September 30, 1885 in the account book of Thevaram Zamindar.
It show that the Maha raja meaning Thevaram Zamindar gave to Thevaram office Rs. 290.
It does not establish the respondent 's version.
The only merit of the contention is that the two figures approximate each other.
If that figure represents the amount paid by Mannarcottai Zamindar to Thevaram in full discharge of the amount due from the former to the latter, the entry would have run to the effect that the balance of the amount due from Mannarcottai under Ex.p.23 was paid and it would have been credited in Mannarcottai 278 account.
It may have been that the sum of Rs. 290/was the balance out of the amount that Thevaram Zamindar took with him when he went to Mannarcottai for meeting his expenditure.
The other accounts P. 25 and P. 26 filed in the case are neither full nor clear and no definite conclusion could be arrived at on the basis of the said account.
We therefore hold on the evidence and probabilities that Thevaram Zamindar had spent large amounts in connection with the marriage and Mannarcottai zamindar spent only about Rs. 300/ in connection with the said marriage.
Such a finding does not bring the marriage within the definition of Asura marriage as explained by us.
earlier.
The expenditure incurred by the bridgegroom 's party was not and could not have been the consideration for the Thevaram Zamindar giving his daughter in marriage.
It is contended that the High Court found that there was no 'Kanyadhan ' at the time of the Bangaru Ammal 's marriage and as 'Kanyadhan ' was necessary ingredient of Brahmu marriage, Bangaru Ammal could not have been married in that form.
The High Court relying upon the evidence of Veluchami Naicker who is stated to be the Guru of the caste held that 'Kanyadhan ' had not been observed in Bangaru Ammal 's marriage.
The learned counsel for the appellant contests the correctness of the finding and he relies upon some invitations in support of his contention that 'Kanyadhan ' was observed in Bangaru Ammal 's marriage but the documents are not clear on the, point.
The Guru only narrates some of the ceremonies held in marriages in the community but he does not expressly state that the ceremony of 'Kanyadhan ' was not observed at Bangaru Ammal 's marriage.
In this state of evidence the presumption in.
Hindu Law that the marriage was performed in Brahmu form must be invoked.
As we have pointed out under the Hindu Law whether a marriage was in Brahmu form or Asura form the Court will presume 279 even where the parties are Shudras that it was in the Brahmu form.
Further where it is proved that the marriage was performed in fact the Court will also presume that the necessary ceremonies have been performed.
See 'Mauji Lal vs Chandrabati Kumari '(1).
This presumption has not been rebutted in this case.
That apart the argument of the learned counsel for the respondents mixes up an essential ingredient of the Brahmu marriage, namely the gift of the girl to the bridegroom with a particular form of ritual adopted for making such a gift.
In both forms of marriages a girl is given by father or in his absence by any other person entitled to give away the girl to the bridegroom.
In the case of Brahmu marriage it takes the form of a gift while in the case of Asura marriage as price is paid by the bridegroom, ,it takes the form of a sale.
As we have held that in Bangaru Ammal 's marriage no consideration passed from the bridegroom to the bride 's father, the father must be held to have made a gift of the girl to the bridegroom.
To put in other words there was 'Kanyadhan ' in Bangaru Ammal 's marriage.
We therefore reject this contention.
Lastly reliance is placed on the conduct of the appellant in not questioning the correctness of the finding given by the learned Subordinate judge in his application for delivery that the marriage was in Asura form.
The learned counsel for the appellant sought to explain his conduct but in our opinion nothing turns upon it.
If the marriage was not in Asura form as we held it was not, the conduct of the appellant could not possibly make it an Asura marriage.
In this view it is not necessary to give opinion on the other questions raised in the appeals.
In the result the decrees of the High Court are set aside and both the suits are dismissed with costs throughout.
One hearing fee.
Appeals allowed (1) (1911) L.R. 38 I.A.122. | The main question involved in both the appeals was whether the marriage of Bangaru Ammal was in Asura form or in Brahma form.
The contention of the appellant was that it was not in Asura form.
Except a bare allegation in the plaint that the said marriage was held in Asura form, the plaintiffs did not give any particulars or set up any custom in the community to which the parties to the marriage belonged.
They had given evidence that 'a sum of Rs. 1000 was paid as 'Parisam ' to the father of bride but that evidence had been rejected by both the courts.
Respondents pointed out to the giving of Kambu by bridegroom 's party to the bride 's party at the time of betrothal and expenditure of Rs. 300/ by bridegroom 's party in connection with the marriage of Bangaru Ammal and maintained that it was Asura marriage.
Held, that the marriage of Bangaru Ammal was not in Asura form but in Brahma form.
There was nothing to show that there was a practice in the family to give Kambu as 'Parisam for the bride or Kambu was paid as 'parisam ' at the time of the betrothal ceremony in connection with the marriage of Bangaru Ammal.
The father of the bride had spent large amounts and the bridegroom 's party had spent only about Rs. 300/ in connection with the said marriage.
The expenditure incurred by the bridegroom 's party was not and could not have been the consideration for the father giving his daughter in marriage.
There is a presumption in Hindu Law that every Hindu marriage is in Brahma form and that pre sumption has not been rebutted in this case.
The court was entitled to presume that the necessary ceremony of Kanyadan must have been performed.
As no consideration passed from the bridegroom to the father of the bride, the father must be held to have made a gift of the girl to the bridegroom.
245 The essence of the Asura marriage is the sale of a bride for a price and it is one of the unapproved forms of marriage prohibited by Manu for all the four castes of Hindu society.
The vice of the said marriage lies in the receipt of the price by the bride 's father or other persons entitled to give away the bride as a consideration for the bride.
If the amount paid or the ornament given is not the consideration for taking the bride but only given to the bride or even to the bride 's father out of affection or in token of respect to them or to comply with a traditional or ritualistic form, such payment does not make the marriage an Asura marriage.
There is also nothing in the texts to indicate that the bearing of the expenditure wholly or in part by the bridegroom or his parents is a condition or a criterion of such a marriage, for in such a case the bride 's father or others entitled to give her in marriage do not take any consideration for the marriage, or in any way benefit thereunder.
The fact that the bridgeroom 's party bears the expenditure may be due to varied circumstances.
Prestige, vanity, social custom, the poverty or the disinclination of the bride 's father or some of them may be the reasons for the incurring of expenditure by bridegroom 's father on the marriage but the money so spent is not the price or consideration for the bride.
Even in a case where the bride 's father, though rich, is disinclined to spend a large amount on the marriage functions and allows the bridegroom to incur the whole or part of it, it cannot be said that he has received any consideration or price for the bride.
Though in such a case if the bridegroom 's father had not incurred the said expenditure in whole or in part, the bride 's father might have to spend some money on that account, such an indirect result could not be described as price or consideration for giving the bride.
Asura marriage is a marriage where the bride 's father or any other person entitled to give away the bride takes Sulka or price for giving the bride in marriage.
The test is two fold.
There shall not only be a benefit to the father, but that benefit shall form a consideration for the sale of the bride.
When this element of consideration is absent, such a marriage cannot be described as Asura marriage.
Jaikisondas Gopaldas vs Harikisandas Hulleshandas Born.
9, Vijarangam vs Lakshman, (1871) 8 Born.
H. C. Report.
244, Muthu Aiyar vs Chidambara Aiyar, , Chunilal vs Surajram, (1909) I. L.R. 33 Born.
433, section Authikesayulu Chetty vs section Ramanvjan Chetty" (1909) 1.
L. R. , Gabrielnathaswami vs Valliammai Ammal, A. 1.
R. , Ratnathanni vs Somasundara 246 Mudaliar, , Samu Asari vs Anachi Ammal, ; Kailasanath Mudaliar vs Parasakthti Vadivanni, Mad. 488, Sivangalingam Pillai vs K. V. Ambalayana Pillai, A. 1.
R. ; V. section Velavutha Pandaram vs section Suryamurthi Pillai (1941) 2 M. L. J. 770 and Vedakummapprath Pillai vs Kulathinkai Kuppan, , referred to. |
Civil Appeal No. 1389 of 1988.
From the Judgment and order dated 6.7.1987 of the Orissa High Court in C.M.C. No. 375 of 1984.
R.K. Mehta and Miss Mona Mehta for the Appellant.
G.L. Sanghi and Vinoo Bhagat for the Respondents.
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 orissa, dated 6th July, 1987.
It arises out of a contract entered into between the State and the respondent for the construction of certain projects for irrigation.
During 1973 74 the respondent was entrusted with the job of 'Construction of Ramaguda Minor Irrigation project in Kukudakhandi Block ' vide agreement No. 4 F 2.
The value of the work was Rs.9,99,510.
The work pursuant to the contract commenced on 4th May, 1973 and 4th November, 1974 was the stipulated date of com 566 pletion of the work.
However, on 30th December, 1975 the work was actually completed.
It is asserted by the appellant that the respondent contractor accepted the final payment and was duly paid a sum of Rs.23,74,001 for the work done by him including the extra work.
Thereafter, no amount was due to the respondent, according to the appellant, and he did not raise any claim whatsoever before the Department.
On 28th September, 1976 the last payment was alleged to have been made by the respondent.
On 30th October, 1976 the last bill was prepared which was nil one.
The respondent, thereafter, raised a claim and gave notice for appointment of an arbitrator.
Consequently, the Chief Engineer appointed one Shri A.N. Nanda as the arbitrator in terms of the arbitration clause.
However, on the application of the respondent the learned Subordinate Judge removed Shri A.N Nanda and appointed one Shri B. Patnaik as the arbitrator.
It may be mentioned that the application was made for removal of the arbitrator Shri B. Patnaik but the same was ultimately dismissed.
Before the arbitrator, the respondent filed the claim raising some claims which, according to the appellant, were fictitious and baseless.
These claims were for the alleged extra work in respect of which the decision of the Superintending Engineer under clause 11 of the contract was final and the same was excluded from the purview of the arbitration clause.
It was contended on behalf of the appellant that the arbitrator had no jurisdiction to deal with such claims.
The appellant filed a counter claim for Rs.2,11,400, denying all the claims of the respondent.
All the documents and relevant papers were produced before the arbitrator.
It is stated that as the application for removal of Shri B. Patnaik as arbitrator was pending, an application had been made before Shri section Patnaik to adjourn the proceeding which was refused and the award was made.
This award was claimed to have been made virtually ex parte.
This, however, was not so and it appeared that the arbitrator on hearing the parties and considering the evidence produced before him made the award.
The arbitrator made the said award on 18th March, 1983 but the same was a non speaking and nonreasoned award for a lump sum of Rs.15,23,657 plus interest @ 10% from 9.9.1975 till the date of payment or decree.
Objections to the said award were filed in the Court.
The learned Subordinate Judge upheld the objection to the award and set aside the award on 15th September, 1984.
There was an appeal to the High Court and the High Court set aside the judgment of the learned Subordinate Judge and made the award of the arbitrator, rule of the Court.
It also directed payment of further interest at 6%.
567 Being aggrieved thereby the State of Orissa has preferred this appeal.
In support of this appeal, it was submitted that the award in question was a lump sum af money and it was without any reason, in favour of the respondent.
It was also submitted that the validity of the non reasoned award is awaiting determination by a larger Bench of this Court.
Hence, it was urged that this question should await decision of the larger Bench.
In the facts and circumstances of the case, we are of the opinion that we would not be justified in acceding to this request on the part of the appellant.
In this case the submission that the award was bad being an unreasoned one, was neither mooted before the learned Subordinate Judge nor before the High Court.
This contention was also not raised in the objection to the award, filed originally.
It is only in the special leave petition that such a plea has been raised for the first time.
Arbitration is resorted to as a speedy method of adjudication of disputes.
Stale and old adjudication should not be set at naught or examination of that question kept at bay on the plea that the point is pending determination by a larger Bench of this Court.
Even if it is held ultimately that the unreasoned award per se is bad, it is not sure whether such a decision would upset all the awards in this country which have not been challenged so far.
Certainly, in the exercise of our discretion under Article 136 of the Constitution and in view of the facts and circumstances of this case, we would not be justified in allowing the party to further prolong or upset adjudication of old and stale disputes.
In that view of the matter, we think that the pendency of this point before the larger Bench should not postpone the adjudication and disposal of this appeal in the facts of this case.
The law as it stands today is that award without reasons are not bad per se.
Indeed, an award can be set aside only on the ground of misconduct or on an error of law apparent on the face of the award.
This is the state of law as it is today and in that context the contention that the award being an unreasoned one is per se bad, has no place on this aspect as the law is now.
This contention is rejected.
It was next contended that in view of clause 11 of the contract the matters upon which the arbitrator has adjudicated were excluded and these were not arbitrable.
It was submitted that clause 11 of the contract between the parties made on these matters the decision of the Engineer Incharge final and binding.
Hence, inasmuch as the arbitrator has purported to act upon this field which was only to be decided by the Engineer in charge, the award was bad.
The disputes over which the arbitrator has purported to make an award, were regarding 568 works covered by the agreement.
lt was submitted that the provision to clause 11 af the agreement categorically provided that in the event of dispute over a claim for additional work, the decision of the Superintending Engineer of the Circle would be final and, hence, the arbitrator by entertaining the additional claim of the contractor had exercised a jurisdiction not vested in him and, as such, misconducted himself.
In order to judge this contention, therefore, it is Imperative first to refer to clause 11 of the agreement.
It provides as follows: "Clause 11 The Engineer in charge shall have the power to make any alteration in or additions to the original specifications, drawings designs, and instructions that may appear to him necessary or advisable during the progress of work and the contractor shall be bound to carry out the work in accordance with any instructions which may be given to him in writing signed by the Engineer in charge and such alteration shall not invalidate the contract.
Any additional work which the contractor may be directed to do in the matter above specified as part of the work, shall be carried out by the contractor on the same conditions in all respects on which he agreed to do the main work and at the same rates as are specified in the tender for the main work.
The time for the completion of the work shall be extended in the proportion that the additional work bears to the original contract work and the certificates of the Engineer in charge shall be conclusive as to such proportion and if the additional work includes any class of work shall be carried out at the rates entered in the sanctioned schedule of rates of the locality during the period when the work being carried on and if such last mentioned class of work is not entered in the schedule of the rate of the district, then the contractor shall within 7 days intimate the rate which it is his intention to charge for such class of work and if the Engineer in charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work and arrange to carry such class of work and arrange to carry out in such manner as he may consider advisable.
No deviation from the specification stipulated in the contract or additional items of work shall ordinarily be carried by the contractor and should any altered, additional or substituted work be carried out by him unless the rates of the substituted, altered or additional 569 items have been approved as fixed in writing by the Engineer in charge.
The contractor shall be bound to submit his claim for any additional work done during any month or before the 15th day of the following months accompanied by the copy of the order in writing of the Engineer in Charge for the additional work and that the contractor shall not be entitled to any payment in respect of such additional work if he fails to submit his claim within the aforesaid period.
Provided it always that if the contractor shall commence work or incur any expenditure in regard thereof before the rates will have been determined as lastly herein before mentioned, then in such case he shall only be entitled to be paid in respect of the determination of the rates as aforesaid accordingly to such rate of rates as shall be fixed by the Engineer in Charge.
In the event of a dispute the decision of the Superintending Engineer of the Circle will be final. " This clause has to be read in conjunction with the arbitration clause i.e. clause 23, which provides as follows: "Clause 23: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right matter, or thing whatsoever in any way arising out of, or relating to the contract, designs, drawing specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of work, or after the completion or abandonment thereof shall be referred to the sole arbitration of a Superintending Engineer of the Circle.
It will be no objection to any such appointment that the arbitrator so appointed is a Government servant.
The award of the arbitrator so appointed shall be final.
conclusive and binding on all parties to this contract.
The learned Subordinate Judge was inclined to hold that the 570 arbitrator had no jurisdiction to arbitrate on disputes which he has purported to do but in view of the Bench decision of the High Court of Orissa in State of orissa vs Gokulchandra Kanungo, , he held that he was not free to decide that the dispute was not arbitrable and rejected this plea.
The High Court also did not entertain this objection.
It was canvassed before us and submitted that in view of clause 11, the matters in dispute and the amount due for the alleged additional work, were not arbitrable at all.
We have noticed clause 11 which makes the decision of the Engineer in Charge final in respect of some issues.
In this connection, it is important to refer to the proviso of Clause 11 which states that in case of dispute about the rates and time for completion of the work and any dispute as to proportion that the additional work bears to the original contract work, the decision of the Superintending Engineer of the Circle would be final.
The points upon which the arbitrator in the instant case has adjudicated are not those which are excepted or covered by Clause 11 of the agreement.
In that view of the matter, this clause has no application in the instant controversy.
Our attention was drawn to certain observations of this Court in Bombay Housing Board (Now the Maharashtra Housing Board) vs Karbhase Naik & Co., Sholapur, s ; There in view of clause 14 of the said contract, it was open to the respondent to make claim on the basis of the rates quoted.
There, Clause 14 was more or less identical to Clause 11 in the present case.
This particular contention, however, did not arise in that case.
The Court held that the respondent there being contractor, was not bound to carry out additional or altered work and there was no reply to the notice stating the rates intended to be charged and the respondent there was not free to commence and complete the work on the basis that since the rates quoted were not accepted, it would be paid at such rates to be fixed by the Engineer in charge and that if it was dissatisfied with the rate or rates fixed by the Engineer in charge, it could raise a dispute before the Superintending Engineer and that the time limit for completion would be extended in all cases.
This Court observed that only the rates were settled by the agreement.
The respondents were under no obligation to carry out the additional or altered work but that is not the dispute before us in the present case.
On the construction of Clause 11 of the contract, we are unable to accept the contention but on the points that the arbitrator has awarded in this case, were excluded by Clause 11 of the contract herein.
Shri Mehta, however, strongly relied on certain observations of a Bench decision of Madhya Pradesh High Court in case of the Chief Administrator, Dandakaranya Project, 571 Koraput, Orissa & Anr.
vs M/s. Prabartak Commercial Corpn.
Ltd. Calcutta, , wherein while considering Clause 13A of the agreement there the High Court held that the dispute whether charges for stone chips could be adjudicated, was not arbitrable.
That was a case of rates which was within the jurisdiction of the Engineer in charge by Clause 13A of the bargain between the parties.
In the instant case it is not the rate which is in dispute.
The Madhya Pradesh High Court referred to several decisions of this type and came to the conclusion on the construction of Clause 13A in that case that the dispute that had arisen between the parties in arbitration, was excluded by Clause 13A of the agreement.
In view of the Clause in the instant case and the nature of the dispute which had arisen, we are of the opinion that such decisions also cannot give much assistance to the appellant.
Reliance was also placed on certain observations of the Delhi High Court in the case of Food Corporation of India vs P.L. Juneja, AIR 1981 Delhi 43.
There the Division Bench of the High Court was concerned with the questions which were to be decided by the Court and not by the arbitration.
There also the Clause was very much dissimilar to the present one which is set out hereinbefore.
Clause 15(c) provided that the question whether a particular service is or is not to be covered by any of the services specifically described and provided for the contract, or is or is not material to any such services shall be decided by the Regional Manager whose decision shall be final and binding.
It was not the case whether any additional work was done and if so, the extent of such work.
In the aforesaid view of the matter it is not possible to hold that in view of nature of instant dispute, the matters at issue were not excluded and the arbitrator did not commit any wrong in proceeding with the arbitration.
It was next contended that an amount of Rs.15,23,657 has been granted for additional work over and above the payment of Rs.23,74,001 and this was disproportionately high and the award for this amount was per se bad.
It is well settled that when the parties choose their own arbitrator to be the judge in dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon law or on facts.
Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the documents appended to or incorporated so as to form part of it, the award will neither be remitted nor set aside.
The law on this point is well settled.
See in this connection the observations of this Court in Union of lndia vs Bungo Steel Furniture P. Ltd.; , and Allen Berry & Co. (P) Ltd. vs Union of India, 282.
It was, however, contended that the amount of the award was shockingly high that it shocked the conscience of the Court and the award must be set aside.
The fact that merely the award amount is quite high as commented by the High Court or that a large amount has been awarded, does not vitiate the award as such.
In the instant case the original award was for Rs.9,99,510.
Admittedly, additional work was done and payment for such work was determined at Rs.23,74,001 and claim for further additional work was made for Rs. 15,23,657.
One has to judge whether the amount of the award was so disproportionately high to make it per se bad in the facts and circumstances of a particular case.
It is clear from the facts that the arbitrator is a highly qualified person having several Indian and foreign Degrees and at the relevant time was acting as Chief Engineer in charge of the State Government.
Having regard to the nature of claims involved and the fact that the additional work has been done for which large amounts have been paid and in this case it is evident that all due opportunities were given to the parties to adduce all evidence, we are unable to accept the submission that the award was so disproportionate as to shock the conscience of the Court and, as such, it cannot be held that the award was bad per se.
In our opinion, the High Court was right in dismissing the challenge to the award on this ground.
In support of the submission that the award must be held to be bad in this case, Mr. Mehta drew our attention to certain observations of Orissa High Court in State of Orissa & Ors.
vs Gangaram Chhapolia & Anr., , where at page 279 the learned Judge observed the malady of the racket of arbitration was rampant in Orissa.
Though the learned Judge was apparently heeding to the observations of Justice Holmes of America observed that the Court should take note of "the felt necessities of the time".
In our opinion, the evidence of such state of affairs should make this Court scrutinise the award carefully in each particular case but that does not make the Court declare that all high amounts of award would be bad per se.
As mentioned hereinbefore, it cannot be said that the amount of award was disproportionately high to hurt the conscience of the Court in this case.
It is now well settled that the interest pendente lite is not a matter within the jurisdiction of the arbitrator.
In this connection reference may be made to the observations of this Court in Executive Engineer (Irrigation), Balimela & Ors., vs Abhaduta Jena & Ors., [1988] 1 SCC 418 where this Court held that the arbitrator could not 573 grant interest pendente lite.
In the aforesaid view of the matter this A direction in the award for the payment of such interest must be deleted from the award.
The order of the High Court is modified to the extent that the award is confirmed subject to deletion of the interest pendente lite.
We make it clear that in the facts of this case interest for the period from 26.9.81 to 18.3.83, the date of the award be deleted.
The High Court has, however, granted interest from the date of the decree.
That is sustained.
The appeal is, therefore, dismissed except to the extent indicated above.
In the facts and circumstances of the case the parties will pay and bear their own costs.
G.N. Appeal dismissed. | The construction of the Irrigation Project was entrusted to the respondent.
As per the contract the work commenced on 4th May, 1973 and was actually completed on 30th December, 1975, the stipulated date being 4th November, 1974.
According to the appellant, the respondent accepted the final payment and was duly paid a sum of Rs.23,74,001 for the work done by him including the extra work.
The last payment was alleged to have been made to the respondent in September, 1976.
A 'nil ' bill was the last bill prepared.
Thereafter, the respondent raised a claim and gave notice for appointment of an arbitrator.
One Nanda was appointed as the arbitrator by the Chief Engineer.
But on an application made by the respondent, the Subordinate Judge removed Nanda and appointed one Patnaik as the arbitrator.
Again an application for removal of the arbitrator was made, but was dismissed.
The Respondent filed his claims before the arbitrator.
These claims were for the alleged extra work in respect of which the decision of the Superintending Engineer under clause 11 of the contract was final and the same was excluded from the purview of the arbitration 563 clause.
The appellant initially contended that the arbitrator had no jurisdiction to deal with such claims but later filed a counter claim, and denied all the claims of the respondent.
While the application for removal of the arbitrator was pending, an adjournment was sought for from the arbitrator and it was refused.
After hearing the parties and considering the evidence produced, the arbitrator made a non speaking and non reasoned award for Rs.15,23,657 plus interest @ 10% in favour of the respondent.
Objections to the award were filed in the Court.
The Subordinate Judge upheld the objection and set aside the award.
On appeal, the High Court set aside the judgment of the Subordinate Judge and made the award rule of the Court, and directed payment of future interest at 6%.
In this appeal, by special leave, against the High Court judgment, the appellant State submitted that the award is without any reason.
It also suggested that since the validity of the non reasoned award is being gone into by a larger Bench of this Court, that decision should be awaited.
Dismissing the appeal, ^ HELD: 1.1 The law as it stands today is that award without reasons is not bad per se.
Indeed, an award can be set aside only on the ground of misconduct or an error of law apparent on the face of the award.
[567F] 1.2 In the instant case, the plea that the award was bad being an unreasoned one, was neither mooted before the learned Subordinate Judge nor before the High Court.
It was also not raised in the objection to the award, filed originally.
It is only in the special leave petition that such a plea has been raised for the first time.
Arbitration is restored to as a speedy method of adjudication of disputes.
Stale and old adjudication should not be set at naught, or examination of that question kept at bay on the plea that the point is pending determination by a larger Bench of this Court.
Even if it is held ultimately that the unreasoned award per Se is bad, it is not sure whether such a decision would upset all the awards in this country which have not been challenged so far.
Certainly, in the exercise of discretion under Article 136 of the Constitution, and in view of the facts and circumstances of the present case, it would not be justified in allowing the party to further prolong or upset adjudication of old and stale dispute.
[567C E] 2.
Clause 11 of the contract between the parties makes the deci 564 sion of the Engineer in Charge final in respect of some issues.
Proviso of Clause 11 stipulates that in case of dispute about the rates and time for completion of the work and any dispute as to proportion that the additional work bears to the original contract work, the decision of the Superintending Engineer of the Circle would be final.
The points upon which the arbitrator in the instant case has adjudicated are not those which are excepted or covered by Clause 11 of the agreement.
ID that view of the matter, this clause has no application in the instant controversy.
[570B D] Bombay Housing Board (now the Maharashtra Housing Board) vs Kharbase Naik & Co., Sholapur, ; ; Chief Administrator, Dandakaranya Project, koraput, Orissa & Anr.
vs M/s. Prabartak Comercial Corpn.
Ltd. Calcutta, and Food Corporation of India.
vs P.L. Juneja, AIR 1981 Delhi 43 distinguished.
State of orissa vs Gokulchandra Kanungo, referred to.
3.1 It is well settled that when the parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when this award is good on the face of it, object to the decision either upon law or on facts.
Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the documents appended to or incorporated so as to form part of it, the award will neither be remitted nor set aside.
[571F G] 3.2 The fact that merely the award amount is quite high or that a large amount has been awarded, does not vitiate the award as such.
If ' there is any evidence of malady of racket of arbitration, the Court may scrutinise the award carefully in each such case.
[572A B] 3.3 It is clear from the facts of this case that the arbitrator is a highly qualified person having several Indian and foreign Degrees and at the relevant time was acting as Chief Engineer in Charge of the State Government.
Having regard to the nature of claims involved, and the fact that the additional work has been done for which large amounts have been paid in this case, it is evident that all due opportunities were given to the parties to adduce all evidence.
It cannot be said that the award was so disproportionate as to shock the conscience of the Court leading it to hold that the award was bad per Se.
The High Court was 565 right in dismissing the challenge to the award on this ground.
[572C D] Union of India vs Bungo Steel Furniture Pvt. Ltd., ; and Allen Berry & Co. (P) Ltd. vs Union of India, ; relied on.
State of Orissa & Ors.
vs Gangaram Chhapolia & Anr., referred to.
4.1 It is now well settled that the interest pendente lite is not a matter within the jurisdiction of the arbitrator.
[572G H] 4.2 In the instant case, the order of the High Court is modified to the extent that the award is confirmed subject to the deletion of the interest pendente lite.
It is made clear that interest for the period from 26.9.1981 to 18.3.1983 (the date of the award) is deleted.
However, the interest granted by the High Court from the date of the decree is sustained.
[573A B] Executive Engineer (Irrigation), Balimella & Ors.
vs Abhaduta Jena, [1988] 1 SCC 418, followed. |
ivil Appeal No. 1351 of 1976.
From the Judgment and Order dated 24.11.
1975 of the Andhra Pradesh High Court in A.S. No. 691 of 1972.
T.V.S.N. Chari for the Appellant.
A. Subba Rao and A.D.N. Rao for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
This appeal by special leave arises against the Division Bench judgment dated November 24, 1975 in A.S. No. 691 of 1972 of the A.P. High Court fixing the market value @ Rs. I0 per square yard.
The facts lie in a short compass are stated thereunder.
By notification under section 4(1) of the Land Acquisition Act 1894 (in short 'the Act ') was published in the State Gazette on November 21, 1963 to acquire 5 acres 589 1/3 sq. yards in T.S. No. 981, Block No. 34 of Waitair Ward, Vishakapatnam for a housing scheme.
The Collector 475 awarded at Rs. 1.58 per sq. yard and on reference, the Civil Court enhanced the compensation to Rs. 10 per sq. yard with solatium at 15 per cent and interest at 4 per cent.
The respondent claimed @ Rs. 12 per sq. yard.
On appeal and cross appeals the High Court confirmed the award and dis missed the appeal as well as cross objections for enhance ment to Rs. 12 per sq. yard.
Two contentions have been raised by Shri Narsimahachari, the learned counsel for the appellant.
Under exhibit B. 6 dated August 3, 1961; under exhibit B 7 dated Sept. 5, 1961 and exhibit B 8, dated Sept. 8, 1961 the respondent purchased one acre 1936 sq.
yards in each docu ments in the same T.S. No. 981 @ 0.42 p. per sq. yard.
He sold on January 24, 1963 in an extent of one acre under exhibit B. 10 @ Rs.5 per sq. yard.
Therefore, ' the aforesaid sale deeds, exhibit B. 6, B. 7, B. 8 and B. 10 will reflect the prevailing market value of the land in question.
The Trial Court and the High Court committed grievous error in placing reliance on a decision of the High Court in A.S. No. 191 of 1967 dated November 11, 1970 awarding @ Rs. 10 per sq. yard in respect of 6,209 sq. yards in T.S. No. 1008, Block No. 39, Waitair Beach Road which was acquired under a notifica tion dated March 19, 1961 for the purpose of Caltex Oil Refinery.
The price fixed therein does not reflect the correct market value while the bona fide sale deed of pur chase and sale by the respondents relating to the acquired land are available on records and form correct basis.
The courts below committed grave error of law in completely excluding those sale transactions and relying upon that judgment.
We find force in the contention, though Shri Subba Rao, learned counsel for the respondent vehemently resisted, it.
It is settled law by catena of decisions that the market value postulated in section 23(1) of the Act designed to award just and fair compensation for the lands acquired.
The word "market value" would postulate price of the land prevailing on the date of the publication of the notification under section 4(1).
This Court repeatedly laid the acid test that in determining the market value of the land, the price which a willing vendor might reasonably expect to obtain from a willing purchaser would form the basis to fix the market value.
For ascertaining the market rate, the Court can rely upon such transactions which would offer a reasonable basis to fix the price.
The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence.
In its absence the price paid for a land pos sessing similar advantages to the land in the neighbourhood of the land acquired in or about the time of the notifica tion would supply the data to assess the market value.
It is not necessary to cite all the decisions suffice to state that in a recent judgment in Periya & Pareekanni Rubbers Ltd. vs State of Kerala, [1990] Supp. 1 SCR 476 362 a bench of this Court, to which one of us K.R.S., J., was a member surveyed all the relevant precedents touching the points.
In the light of the settled legal position let us consider whether the High Court and the Civil Court are justified in excluding the sale deeds completely and to place reliance on another judgment of the Division Bench of the High Court of A.P.
Admittedly, the claimant is a vendee in exhibit B. 6 to B. 8 @ 0.42 paise.
In a span of one year and four months, they sold @ Rs.5 per sq. yard; It is common knowledge that proposal for acquisition would be known to everyone in the neighbourhood, in particular, to the owners of the property and it is not uncommon that sale transac tions would be brought into existence before the publication of section 4(1) notification so as to form the basis to lay higher claim for compensation.
We do assume that exhibit B. 10 is a genuine and bona fide sale transaction.
In respect of one acre of the land in the self same land when sold at Rs.5 per sq. yard, would it fetch in a short period of nine months, double the market value, namely. @ Rs. 10 per sq. yard.
We have no doubt that it would not get that price for 5 acres and odd area.
It is undoubted that in respect of a notification of 1961 in which another T.S. number in the locality, namely, T.S. No. 1008, ultimately, the High Court awarded @ Rs. 10 per sq. yard.
Perhaps had there been no bona fide or genuine sale transaction relating to the self same land, the reliance placed on that judgment may be justified but exclusion of bona fide and genuine sale trans actions in respect of the same land under acquisition and to place reliance on the award of some other land is obviously illegal.
When the claimants themselves sold as a willing seller of an acre of land @ Rs.5 per sq.
yard large extent of five acres and odd under acquisition, if it is offered to be sold as a block, it would not fetch higher rate but surely be negotiated for a lesser rate if not the same market value @ Rs.5 due to time lag of nine months.
No attempt was made by the respondent to explain under what circumstances they came to sell their lands @ Rs.5 per sq. yard when they expect higher value @ Rs. 10 per sq. yard.
May be the payment of Rs. 10 per sq. yard, be wind fall to the owner of the land in T.S. No. 1008 Taking the totality of the facts and circumstance, we hold that the High Court committed grave error to completely ignore the sale transac tions of the lands under acquisition.
In view of the time lag we have no hesitation to conclude that the prevailing market value of the land as on the date of the notification would be Rs.6 per sq. yard.
It is next contended by Shri Narsimahachari that when a large extent of land was acquired for a housing scheme, at least 1/3 of the land should be deducted towards laying the roads, setting up parks, 477 drainage and other amenities.
The High Court committed manifest error in omitting to deduct 1/3 of the land.
Shri Subba Rao, the learned counsel for the respondent contended that the High Court had noted this contention of the appellant and considered that the market value of the land would be Rs. 12 per sq. yard and after giving the deduction of 1/3 it would come to Rs. 10.
The reasoning of the High Court is proper and warrants no interference.
In support thereof he placed reliance in Spl.
Tehsildar, Visha kapatnam vs Rednam Dharma Rao & Ors., C.A. No 4187 of 1982, dated July 17, 1990 wherein this Court had upheld the deduc tion of 1/5 from the market value towards developmental charges.
It is settled law that the High Court and the Reference court when made wrong application of a principle or important points effecting valuation has been over looked or misapplied, this Court would under article 136 correct the same, vide The Spl.
Land Acquisition Officer, Bangalore vs
T. Adinarayan Setty, [1959] Suppl.
1 S.C.R. 404; Dattatrayaya Shankarbhat Ambalgi and Ors.
vs The Collector of Sholapur and Anr., AiR 3 S.C.C. 431; The Dollar Co., Madras vs Collector of Madras, [1975] Supp.
SCC 403 and Padma Uppal Etc.
vs State of Punjab & Ors.
, ; In Tribeni Devi & Ors.
vs Collector of Ranchi, ; at 2 13, this Court held that "in order to devel op that area at least the value of 1/3 of the land will have to be deducted for roads, drainage and other amenities".
On this basis the value of the land at Rs.2,08,135.70 per acre would, after the deduction of 1/3 come to Rs. 1,38,757 per acre.
In Smt.
Kaushalya Devi Bogre & Ors.
vs The Land Acquisition Officer, Aurangabad; , this Court held that deduction of 1/3 was held to be reasonable.
In Vijay Kumar Motilal vs State of Maharashtra, 19 i/3rd was deducted towards developmental charges in undeveloped area.
In Vijaysingh Liladhar vs Special Land Acquisition Officer, the deduction of i/4th by the High Court which was not challenged in this court was upehld.
In Spl.
Land Acquisition Officer, Bangalore vs T. Adinarayan Setty, supra, deduction of 25 per cent was held to be reasonable.
It is to be noted that in building Regula tions, setting apart the lands for development of roads, drainage and other amenties like electricity etc.
are condi tion precedent to approve lay out for building colonies.
Therefore, based upon the situation of the land and the need for development the deduction shall be made.
Where acquired land is in the midst of already developed land with ameni ties of roads, drainage, electricity etc.
then deduction of 1/3 would not be justified.
In the 478 rural areas housing schemes relating to weaker sections deduction 1/4 may be justified.
On that basis, this court in R. Dharma Rao 's case upheld deduction of 1/5 because the owner while obtaining the lay out had already set apart lands for road and drainage.
Therefore, deduction of 1/3 would be reasonable.
In fact in The Tehsildar, Land Acquisi tion, Vishakapatnam vs
P. Narasing Rao & Ors., , a Division Bench of the High Court surveyed judgments of the High Court relating to housing schemes of Vishakapatnam upholding deduction of 1/3 to be reasonable.
Accordingly we hold that 1/3 of the market value should be deducted for development of the lands.
The High Court com mitted greivous error in giving a curious reasoning of valuing at Rs. 12 and upholding Rs. I0 to be the market value after deduction, though *.he market value was deter mined at Rs. 10.
Accordingly the appeal is allowed.
The market value is determined at Rs.6 per sq. yard and after deducting 1/3 the market value is Rs.4 per sq. yard.
The respondents are entitled to 15 per cent Solatium on market value and 4 per cent interest thereon from the date of dispossession.
But in the circumstances parties are directed to pay and receive their own costs.
N.P.V. Appeal al lowed. | The respondent 's land admeasuring 5 acres 589 1/3 Sq. yards was acquired by the State Government in 1963 for a housing scheme and compensation at Rs.1.58 per Sq. yard was awarded.
On reference, the Civil Court enhanced the compen sation to Rs. 10 per Sq. yard with solatium at 15 per cent and interest at 4 per cent.
On appeal and cross appeals, the High Court confirmed the award.
In the appeal before this Court, on behalf of the De partment, it was contended that the respondent had purchased the land in question in 1961 in three documents at Rs.0.42 p. per sq. yard and sold in 1963 one acre of the land at Rs.5 per sq. yard and, therefore, the deeds under which the transactions took place reflected the prevailing market value of the land in question, and courts below committed grave error in relying on a decision of the High Court awarding Rs. 10 per sq. yard in respect of another land acquired under a Notification of 1961, and that when a large extent of land was acquired for a housing scheme, at least 1/3 of the land should be deducted towards laying the roads, setting up parks, drainage and other amenities.
Allowing the appeal, this Court, HELD: 1.1 The market value postulated in Section 23(1) of the Land Acquisition Act, 1894 is designed to award just and fair compensation for the lands acquired.
The word "market value" would postulate price of the land prevailing on the date of the publication of the notifica 473 tion under Section 4(1).
In determining the market value of the land, the price which a willing vendor might reasonably expect to obtain from a willing purchaser would form the basis.
For ascertaining the market rate, the Court can rely upon such transactions which would offer a reasonable basis to fix the price.
The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence.
In its absence the price paid for a land pos sessing similar advantages to the land in neighbourhood of the land acquired in or about the time of the notification would supply the data to assess the market value.
[475E G] Periya & Pareekanni Rubbers Lief.
vs State of Kerala, [1990] Supp. 1 SCR 362, referred to. 1.2 In the instant case, admittedly, the claimant pur chased land at Rs.0.42 p. and in a span of one year and four months, sold at Rs.5 per sq yard.
When the claimants them selves sold as a willing seller of an acre of land @ Rs.5 per sq.
yard, if a large extent of five acres and odd under acquisition is offered to be sold as a block, it would not fetch higher rate but surely be negotiated for a lesser rate, if not the same market value of Rs.5 due to time lag of nine months.
May be the payment of Rs. 10 per sq yard to the owner of another land acquired in 1961 was a windfall.
Taking the totality of the facts and circumstances, the High Court committed grave error in completely ignoring the sale transactions of the lands under acquisition.
In view of the time lag, the prevailing market value of the land as on the date of the notification would be Rs.6 per sq. yard.
[476B, E G] 1.3 In Building Regulations, setting apart the lands for development of roads, drainage and other amenities like electricity etc.
are condition precedent to approve lay out for building colonies.
Therefore, based upon the situation of the land and the need for development, the deduction shall be made.
Where acquired land is in the midst of al ready developed land with amenities of roads, drainage, electricity etc.
then deduction of 1/3 would not be justi fied.
In the rural areas housing schemes relating to weaker sections, deduction of 1/4 may be justified.
[477G H, 478A] Spl.
Tehsildar, Vishakapatnam vs Rednam Dharma Rao & Ors., CA No. 4187 of 1982 decided on July 17, 1990; Tribeni Devi & Ors.
vs Collector of Ranchi, ; at 213; Smt.
Kaushalya Devi Bogre & Ors.
vs The Land Acquisi tion Officer, Aurangabad; , ; Vijay Kumar Motilal vs State of Maharashtra, ; Vijay singh Liladhar vs Special Land Acquisition Officer, 760; Spl.
Land Acquisition Officer, Bangalore vs
T. Adinaray an Setty, [1959] Sppl.
1 SCR 404 and The Tehsildar, Land Acquisition, Vishakapatnarn
P. Narasing Rao & Ors., , relied on. 1.4 In the instant case, 1/3 of the market value should be deducted for development of the lands.
[478B] 1.5 The market value is determined at Rs.6 per sq. yard and after deducting 1/3 for development of lands, it would be Rs.4 per sq. yard.
[478C] 2.
It is settled law that when wrong application of a principle has been made or important points affecting valua tion have been overlooked or misapplied by the High Court or Reference Court, this Court would, under Article 136 of the Constitution, correct the same.
The Spl.
Land Acquisition Officer, Bangalore vs
T. Adina rayan Setty, [1959] Suppl.
1 SCR 404; Dattatrayaya Shankarb hat Ambalgi and Ors.
vs The Collector of Sholapur and Anr., ; The Dollar Co. Madras vs Collector of Madras, and Padma Uppal etc.
vs State of Punjab & Ors.
, ; , relied on. |
N: Criminal Appeal Nos.273 74 of 1980.
From the Judgment and Order dated 19.1.1980 of the Madhya Pradesh High Court in Crl.
A. Nos.
107 of 1970 and 1 of 1971.
468 R.L. Kohli and K.C. Kohli for the Appellants.
Uma Nath Singh for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Bhagwan Swaroop was charged under Section 302 IPC for the murder of Man Singh and under Section 307 IPC for an attempt to murder Shahid.
He was further charged under section 451 IPC for committing trespass and also under section 25 A of Arms Act.
Ramswaroop, father of Bhagwan Swaroop, was charged under sections 109/302, 451 IPC and 29 of the Arms Act.
Ramswaroop was acquitted of all the charges by the trial court.
Bhagwan Swaroop was, however, convicted under section 302 IPC and was sentenced to imprisonment for life.
He was acquitted of the other two charges.
The appeal filed by Bhagwan Swaroop was dismissed by the High Court.
The High Court allowed the State appeal and further convicted Bhagwan Swaroop under section 307 IPC and section 25 A Arms Act.
He was sentenced to five years and one year rigorous imprisonment respectively for the said offences.
This appeal before us by way of special leave is by Bhagwan Swaroop against his conviction and sentence on the three counts.
Deceased Man Singh was the son of Shahjor Singh and brother of Babusingh.
They were living in the house owned by Ramswaroop and his sons.
There was dispute between the parties regarding a piece of land which according to the accused, the complainant party was forcibly occupying.
A notice had been served upon Shahjor Singh by the accused, to vacate the said encroachment.
According to the prosecution on May 11, 1969 at about 2.45 p.m. accused Ramswaroop had an altercation with Babusingh, at a place called Gauri and thereafter he rushed the complainant party and started dismantling the tin shed in the disputed land.
Shahjor Singh sent his son Babusingh to the police station to lodge a report.
Meanwhile Man Singh deceased came at the spot and gave a push to Ramswaroop who as a result fell down.
He got up immediately and shouted for his son Bhagwan Swaroop and asked him to bring the rifle and kill the complainant party.
Bhagwan Swaroop rushed to his house, brought a gun and fired a shot hitting Man Singh.
Bhagwan Swaroop fired the second shot which hit Shahid.
Man Singh fell down and thereafter complainant Shahjor Singh took out a lathi and gave breathing to Ramswaroop.
Man Singh succumbed to the gun shot injury.
Both the accused denied the commission of the crime.
Accused Ramswaroop stated in his examination as under: 469 "I found Babusingh gambling in my garden.
I asked him as to why he is doing so in the garden, he started abusing me.
I slapped him.
His father came there both of them abused me and then left the place.
I told him that I will make the report of the incident to the police station.
When I reached near the house of Shahjor Singh on my way to the Police Station he along with his sons caught me and started beating me with lathies.
Shahjor Singh brought an axe, when he was about to use his axe on me there was gun fire.
" Accused Bhagwan Swaroop took the plea of alibi which has been rejected by both the courts below.
We are of the view that the said plea was rightly rejected.
The trial court did not believe the prosecution version in toto.
The trial court found that the "prosecution tried to indulge in exaggeration, misrepresentation and at times suppression of facts without any meaning".
The trial court further concluded as under: "The defence version that Babusingh was gambling alongwith others in the garden of the accused Ramswaroop appears correct.
Ramswaroop went there and questioned Babusingh.
There was altercation and use of hot words.
Admittedly Shahjorsingh P.W. I came there and Babusingh accompanied him back to his house.
Ramswaroop further stated in his examination that he gave one slap to Babusingh.
Babusingh as P.W.9 stated that he was given three or four slaps by Ramswaroop.
Thus the fact that Babusingh was slapped, stand established in the case".
The part of the prosecution story, that the accused Ramswaroop rushed towards the house of Shahjor Singh and reached there before the arrival of Shahjor Singh, was also dis believed by the trial court.
Regarding the actual occurrence, it is not disputed that Ramswaroop was given four simple injuries by the complainant.
The prosecution case is that the injuries were given after the gun shot had been fired whereas the defence version is that the gun shot was fired while lathi injuries were being given to Ramswaroop.
Trial court considered the statements of Banne Khan, P.W.6, Shahid P.W.8, Sarfuddin P.W.11, Safaat Ahmad D.W.1 and Hamid Ahmed D.W.3 and came to the following conclusion: "Any way this one fact is clear from the evidence of these eye witnesses that Ramswaroop was put to beating, then there was gun fire and Bhagwanswaroop was seen on the spot" 470 The trial court on appreciation of the evidence produced by the prosecution and the complainants came to the conclusion that the following facts stood established from the evidence: "Ramswaroop, came near the house of Shahjorsingh.
There was exchange of abuses between Shahjorsingh and Ramswaroop.
Ramswaroop tried to remove the tin shed of Gonda.
He was pushed aside by Mansingh and then put to beating by lathies.
" It was under these circumstances that Ramswaroop asked his son to fire the gun shot.
The question for our consideration is whether on the facts of this case the appellant can claim right of private defence.
The learned trial court came to the conclusion that since minor injuries were caused by the lathi there was no basis for entertaining a reasonable apprehension that Ramswaroop would be killed or hurt grievously and as such the plea of self defence was rejected.
The High Court upheld the finding of the trial court in the following words: "No doubt the respondent Ramswaroop had injuries on his person.
There were two simple injuries caused by hard and blunt object and the other two could be caused by fall for which there is definite prosecution evidence that the respondent Ramswaroop was pushed and he fell down.
These injuries on him could not give rise to any apprehension of either grievous hurt or death.
" We do not agree with the courts below.
It is established on the record that Ramswaroop was being given lathi blows by the complainant party and it was at that time that gun shot was fired by Bhagwan Swaroop to save his father from further blows.
A lathi is capable of causing a simple as well as a fatal injury.
Whether in fact the injuries actually caused were simple or grievous is of no consequence.
It is the scenario of a father being given lathi blows which has to be kept in mind and we are of the view that in such a situation a son could reasonably apprehend danger to the life of his father and his firing a gun shot at that point of time in defence of his father is justified.
We, therefore, set aside the finding of the courts below on this point and hold that Bhagwan Swaroop fired the gun shot to defend the person of his father.
The trial court on the basis of the evidence on the record, including that of Dr. Mukherjee P.W.5, came to the conclusion that only one shot was fired by Bhagwan Swaroop.
According to the trial court Shahid was accidentally hit by the pellets spread by the gun shot.
It was on these findings that trial court acquitted Bhagwan Swaroop of the charge 471 under 307 IPC.
We agree with the trial court and hold that the High Court was not justified in reversing the same.
The High Court further grossly erred in setting aside the acquittal of Bhagwan Swaroop under section 25 A of the Arms Act.
Using the licensed gun of his father under the circumstances of this case cannot be considered possessing an arm without a licence.
We agree with the reasoning and findings of the trial court and hold that High Court was not justified in setting aside the acquittal of Bhagwan Swaroop under Arms Act.
For the reasons given above we allow the appeal, set aside the conviction of appellant Bhagwan Swaroop under section 302 IPC, 307 IPC and 25 Arms Act and acquit him on all these counts.
He is already in bail.
His bail bonds are discharged.
V.P.R. Appeal allowed. | The deceased along with his father and brother was living in the house owned by the accused appellant 's father.
There was dispute between the accused and the complainant party regarding a piece of land which according to the accused, the complainant party was forcibly occupying.
On May 11, 1969 at about 2.45 p.m. appellant 's father had an altercation with deceased 's brother.
Thereafter he went to deceased 's house and abused the complainant party and started dismantling the tin shed on the disputed land.
The prosecution 's case was that the deceased 's brother was sent to police station to lodge a report.
The deceased came at the spot and gave a push to appellant 's father.
He fell down.
Getting up, immediately, shouted for appellant and asked him to bring the rifle and kill the complainant party.
The appellant brought a gun and fired a shot hitting the deceased.
The appellant fired the second shot which hit another.
The deceased fell down and thereafter the deceased 's father took out a lathi and gave beating to appellant 's father.
The deceased succumbed to the gunshot injury.
Appellant was charged under Section 302, 307, 451 IPC and also under section 25 A of Arms Act.
The father of appellant was charged under sections 109/302, 451 IPC and 29 of the Arms Act.
The appellant and its father denied the commission of the 467 crime.
Appellant 's plea of alibi was rejected by the trial court.
It also did not believe the prosecution case in toto.
The appellant 's father was acquitted of all the charges by the trial court.
It convicted the appellant under section 302 IPC and he was sentenced to imprisonment for life, but he was acquitted of the other charges.
The High Court allowed the State 's appeal convicting the appellant under section 307 IPC and section 25 A Arms Act also.
He was sentenced to five years and one year rigorous imprisonment respectively for the offences.
The appellant filed this appeal before this Court by way of special leave.
On the question, whether on the facts of the case, the appellant accused can claim right of private defence, allowing the appeal, this Court, HELD:1.
It is established on the record that the appellant 's father was being given lathi blows by the complainant party and it was at that time that gun shot was fired by the appellant to save his father from further blows.
A lathi is capable of causing a simple as well as a fatal injury.
Whether in fact the injuries actually caused were simple or grievous is of no consequence.
It is the scenario of a father being given lathi blows which has to be kept in mind.
In such a situation a son could reasonably apprehend danger to the life of his father and his firing a gun shot at that point of time in defence of his father is justified.
The appellant fired the gun shot to defend the person of his father.
[470 E G] 2.
Using the licensed gun of his father under the circumstances of the case cannot be considered possessing an arm without a licence.
The High Court grossly erred in setting aside the acquittal of the appellant under section 25 A of the Arms Act.
[471 A B] |
Civil Appeal No. 3498 of 1991.
From the Judgment dated 17/18.7.1991 of the Bombay High Court in writ petition No. 2038 of 1991.
G. Ramaswamy, Attorney General, V.R. Reddy, Addl.
Solicitor General, Anil B. Divan, K.S. Cooper and T.R. Andyaranjina, R.F. Nariman, S.A. Divan, B.R. Agrawala, Vinod B. Agarwala, P.N. Kapadia, Pramod B. Agarwala, section Krishnachandani, Dr. Sumat Bhardwaj, Ms. Sandhaya Mehta for M/s Gagret & Co., Ms. Sushma Suri, A.M. Khanwilkar, M.P. Bharucha, R. Karanjawala, Mrs. M. Karanjawala, Mrs. V.S. Rekha, A.R. Amin, K.J. John, Dr. A.M. Singhvi and Ajit Pudussery for the appearing parities.
493 The Judgment of the court was delivered by THOMMEN, J.
The question which aries in this appeal from the judgment of the Bombay High Court in writ petition No. 2038 of 1991 is, when does a company become liable to pay interest under section 73 (2A) of the (the "Act").
The answer to it depends on the answer to the more fundamental and far more difficult question, i.e. when does a company become liable to repay the money received from applicants for shares or debentures in excess of the aggregate of the application money relating to the allotted shares or debentures.
If such excess application money is not repaid within eight days from the days on which the company and every director `who is an officer in default ' is liable to pay insterest at the specified rates.
The period of eight days has to be reckoned in accordance with section 74.
But it is not clear when exactly does the liability to repay the excess money arise.
Does it arise on the date of the allotment, as found by the High Court, or on the expiry of 10 weeks from the date of closing of the subscription lists, referred to in sub section (1A) of section 73, or, as contended by the company, on the expiry of the period mentioned in the prospectus? Whichever is the correct date, interest becomes payable by the company and its directors `in default ', if the excess money is not repaid within the period of grace of eight days from the date on which the company becomes liable to pay it.
When does that liability arise is the crucial question.
We shall presently examine the relevant provisions of the section, but before we do so, it may be of interest to refer briefly to the circumstances in which the alleged liability of the appellant company has arisen.
The appellant is a company registered under the provisions of the .
The company obtained the consent of the Government of India vide its Order dated May 31, 1990 to issue 7,20,00,000 equity shares of Rs. 10 each at par and 33, 90,000 fourteen per cent secured redeemable non convertible debentures of Rs. 100 each at par.
This Order was, made by the Government in exercise of its power under the .
One of the conditions attached to the order reads: "The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders.
" A prospectus was issued by the company on 12th July, 1990 for the issue of the aforesaid shares and debentures.
The prospectus stated, amongst 494 other things, that the company had sought the permission of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi for dealing in equity shares and debentures in terms of the prospectus; that interest at the rate of 15 % per annum on the excess application money will be paid to the applicants as per the guidelines issued by the Ministry of Finance on July 21, 1983 and September 27, 1985; that the public issue will open on August 20, 1990 and close on August 23, 1990; and that it would not be extended beyond August 31, 1990.
When the issue thus opened on August 20, 1990, it received overwhelming response as a result of which it was about 40 times over subscribed.
The company received 26,32,894 applications for equity shares together with an aggregate sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores.
In view of this public response, the share issue was close on 23rd August, 1990.
On October 15, 1990 the board of directors of the company approved the allotment of shares.
Shortly thereafter, it secured the requisite permissions of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi to deal in the shares offered in the prospectus.
These permissions were obtained prior to November 1, 1990.
The company had to despatch 25,50,604 refund orders of an aggregate value of well over Rs. 200 crores.
These orders which were printed in Bombay were meant to be despatched from Delhi.
The company despatched 8,55,226 refund orders from the Sarojini Nagar Post Office , New Delhi at the rate of approx.
1,00,000 refund orders per day.
On 26th October, 1990 a consignment of 6,69,999 refund orders had been despatched from Bombay to Delhi in a brake van of the Paschim Express.
A fire broke out on the way in the brake van as a result of which many refund orders were destroyed.
Almost 50 % of the consignment was missing after the accident.
In consultation with the Madhya Pradesh Stock Exchange and the Company 's Bank,instructions were issued by the Company to stop payment of all refund orders with a view to avoiding any possible fraud or misuse.
As a result of the countermanding of all the multi colored refund orders and the printing of new refund orders with distinctive colours etc., delay occurred in the despatch of newly printed orders.
At the request of the company, the Madhya Pradesh Stock Exchange granted it extension of time till November 30,1990 for issuing the refund orders.
Time for this purpose was further extended by that stock exchange till 19th December, 1990.
The Bombay Stock Exchange, however, refused to grant extension of time.
It further informed the company that it was bound to pay interest by reason of the delay in the despatch of refund orders.
The Securities and Exchange Board of India, the second respondent, called upon the company by its letter dated March 13,1991 to pay interest to the investors at varying rates for the period from 1st November (which is when the period of 10 weeks from the date of the closure of the subscription lists expired) till the date of posting of 495 the refund orders.
The refund orders were not despatched until 12th November, 1990.
The Government of India and the Securities and Exchange Board of India insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73.
Apprehending that the Government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest, and also initiate actions against it, the company filed a petition in the High Court under Article 226 of the Constitution, but it was dismissed by the impugned judgment.
The Bombay Stock Exchange seems to have understood that the liability of the company arose on the expiry of 10 weeks after the date of closure of the subscription lists.
Paragraph 23.2 of its publication of March 1991 quotes the condition mentioned in the Order of the Government of India dated 31.5.1990(which we have extracted above)to the effect that the liability of the company for despatch for refund orders arose only at the end of 10 weeks from the date of closure of the subscription lists.
In the High Court, the Union of India and the Securities and Exchange Board of India appeared to have taken a divergent stand on the question.
While the Government of India submitted (as disclosed in its affidavit, and as referred to by the High Court in the impugned judgment) that the liability to pay the excess amounts arose on the expiry of 10 weeks from the date of closure of the subscription lists, the Securities and Exchange Board of India contended that the liability arose on the date of allotment.
In the present appeal, however, the Union of India support the stand of the Securities and Exchange Board of India.
On the other hand, the company contended that, on the facts of this case, the liability arose only at the end of the period as extended by the Stock Exchange at Indore in terms of the prospects.
The High Court held: ".
In our judgment, there is no difficulty in fixing the date from which the liability of the company to make repayment arises.
In a case where the allotment is completed before expiry of the 10 weeks, then from the date of allotment and in case where the allotment is not completed till the expiry of ten weeks from the date of closure of the subscription list, then from the date of expiry of ten weeks. " The reason stated by the High Court for coming to this conclusion is that the company knew that the excess amount was on the date of allotment and there was no reason why the company should delay payment till the end of 10 weeks in case the allotment was made earlier.
The High Court says 496 ".
In cases where the allotment is completed before expiry of ten weeks, then the Company very well knows the excess amount, which is to be repaid and consequently the liability accrues forthwith to repay the said amount.
In case the Company fails to repay the amount within the grace period of eight days, then the Company would be liable to pay interest to the investor inspite of the fact that period of ten weeks from the date of closure of the subscription list is not over. " The High Court thus held that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for the same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date.
The High Court did not accept the contention of the company that the time having been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990 in accordance with the relevant provisions of the prospectus, the company had no liability to pay interest.
The question for consideration, therefore, is whether the High Court was right in discarding, for computation of interest, the time limit of 10 weeks running from the date of closure of the subscription lists, notwithstanding that the allotment had been made, as in the present case, prior to the date of expiry of 10 weeks.
`Listing means the admission of the securities of a company to trading privileges on a Stock Exchange.
The principal objectives of listing are to provide ready marketability and impart liquidity and free negotiability to stocks and shares; ensure proper supervision and control of dealings therein; and protect the interests of shareholders and of the general investing public.
(See para 1.1.
of the `Stock Exchange Listing ', publication of Bombay Stock Exchange of March, 1991).
A public limited company has no obligation to have its shares listed on a recognised stock exchange.
But if the company intends to offer its shares or debentures to the public for subscription by the issue of a prospectus, it must, before issuing such prospectus, apply to one or more recognised stock exchanges for permission to have the shares or debentures intended to be so offered to the public to be dealt with in each such stock exchange in terms of section 73.
We shall now read the provisions of section 73 insofar as they are material: Sub section (1) of section 73 read: 497 "section 73 (1).
Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange.
" This sub section was inserted by the Companies (Amendment) Act, 1988 with effect from 15.6.1988.
It has application only to a company intending to offer shares or debentures to the public for subscription by the issue of a prospectus.
Until this sub section was inserted, listing of public issues was not compulsory.
This original sub section (1) was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975, and substituted again and renumbered as the present sub section (1A) with effect from 15.6.1988 by the Companies (Amendment) Act, 1988.
Sub section (1A) reads: "73(1A).
Where a prospectus, whether issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
" This provision makes it necessary for the company to state in its prospectus the name of each of the recognised stock exchanges whose permission for listing has been sought by the company.
Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists.
The validity of the allotment is thus made dependent on securing the requisite 498 permission of each stock exchange whose permission has been sought.
The liability to repay the application money arises only upon refusal of the stock exchange to grant the permission sought by the company before the expiry of 10 weeks from the date of closing of the subscription lists.
This is clear from sub section (1A) read with sub section (5).
There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void.
However , from the decision of the stock exchange refusing permission, an appeal will lie under section 22 of the .
Pending the decision in appeal, the allotment made would not be void, and the decision of the concerned stock exchange is made dependent on the result of the appeal.
What is significant is that it is the legislative intent to delay the result postulated under sub section (IA), i.e., rendering the allotment void, until the said period of 10 weeks has expired or until the dismissal of the appeal.
Sub section (2), as amended in 1988, reads: "section 73(2).
Where the permission has not been applied under sub section (I) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money." This sub section requires the company to repay `forthwith ' all money received from applicants in response to the company 's prospectus either where the company has not applied for permission of the recognised stock exchange for listing or where permission has been applied for but not granted.
If the company has issued a prospectus without seeking permission for listing, it has clearly acted in violation of the mandatory provisions of the Act, and the company has no right to receive or retain any amount by way of subscription in pursuance of its prospectus.
On the 499 other hand, where permission has been sought, but has not been obtained within 10 weeks from the date of closing of the subscription lists, thereby rendering void any allotment made, the company is bound to repay all such money forthwith, but without interest.
In the event of such money not being repaid within 8 days after the liability to repay arose, the company and every director of the company who is `an officer in default ' are made jointly and severally liable to pay the principal amount as well as interest thereon from the date of expiry of the said 8 days.
The interest is payable at the prescribed rates varying from 4% to 15%, dependent on the length of the period of delay in making such repayment.
This sub section thus postulates two circumstances in which interest becomes payable, namely, where the permission has not been applied for before issuing the prospectus and the company had thus acted in violation of the law or where permission, though applied for, has not been granted.
In the former case, apart from the other consequences which may flow from the company 's disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus issued by the company in disobedience of the requirements of sub section (I).
In the latter case, the liability to pay interest does not arise until the expiry of 8 days after the company became liable to repay the amounts received by reason of its failure to obtain the necessary permission as referred to in sub section (IA).
It may be mentioned in this connection that, prior to the amendment of 1988, sub section (2) did not make the company liable to pay interest on the amounts repayable by it in terms thereof, but only the directors were liable for payment of such interest, apart from the principal amounts.
The proviso to the sub section as it stood prior to 1988 exempted a director from such liability if the default was not caused by his misconduct or negligence.
As a result of substitution of a proviso of the sub section by the Amendment Act of 1988, the company and every director of the company `who is an officer in default ' are made jointly and severally liable for payment of the principal amount as well as interest.
We shall now read the crucial provision which is sub section (2A): "S.73 (2A).
Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which 500 allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the date the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed having regard to the length of the period of delay in making the repayment of such money".
Sub section (2A) was inserted by the Companies (Amendment) Act, 1974 which came into force w.e.f. 1.2.1975.
Section 73, as it stood prior to 1975, contained no specific provision compelling the company or its directors to repay the amounts received in excess of the aggregate of the application money relating to the shares or debentures in respect of which allotments have been made.
Sub section(2A) was inserted to cover cases where permission of the stock exchange has been obtained, but the shares or debentures have been over subscribed and the company is consequently in possession of excess amounts.
The sub section, as inserted in 1975, made the company liable to repay the excess amounts forthwith, but did not make the company liable to pay interest on such excess amounts.
But a liability was cast on the directors.
If the excess amount was not repaid within 8 days from the day the company became liable to repay it, the directors were made jointly and severally liable to repay such amount with interest.
The proviso to sub section (2A), which like the proviso to sub section (2), as they stood prior to 1988, provided that a director was not liable to repay the money with interest if he proved that the default in payment of the money was not on account of any misconduct or negligence on his part.
Owing to the absence of a specific provision imposing liability on the company to pay interest on the over subscribed amounts, and also owing to the absence of any provision to exempt directors who were not directly in charge of the administration of the company and the need to make listing of public issues compulsory, further amendments to the section became necessary.
Accordingly the Amendment Act of 1988 introduced several amendments to section 73, one of them being the substitution of a part of sub section (2A) making the company and every director of the company who is `an officer in default ' jointly and severally liable to repay the excess money with interest.
A `director of a company who is an officer in default ' appearing in sub section (2A) must be understood with reference to 501 the definition of `an officer who is in default ' contained in section 2(31) read with section 5.
This definition includes the managing director or the wholetime director of a company.
So understood, the liability imposed under sub section (2A) on a director of the company falls only upon a director who is `an officer in default ', as defined under section 2(31) read with section 5(a) (b), and not upon any other director.
The nominees of the Government or financial institutions on the board of directors of the company, but not directly in charge of its administration as full time directors, are exempted from personal liability.
The rate of interest payable under sub section (2A) is, an seen above, not less than 4 per cent and not more than 15 per cent.
The sub section requires the company to repay the over subscribed amounts.
These amounts are paid by persons who have responded to the prospectus which was issued by the company after making an application for permission in accordance with sub section (1).
But when the subscription lists are closed, the excess money is ascertained with reference to the actual allotments made and so it becomes repayable as the company has no right to retain it.
The question is, for the purpose of computing interest, did it become repayable upon the date of allotment, as found by the High Court and as contended by the respondents, or on some other day.
The Additional Solicitor General, appearing for the Union of India, Mr. K.S. Cooper, for the Securities & Exchange Board of India, Mr. T.R. Andhyarujina, for the Bombay Stock Exchange and Dr. A.M. Singhvi, for one of the interveners, submit that the liability to repay the excess amount arises on the date of allotment of the shares, for the statute says that the liability arises forthwith and any delay beyond the period of 8 days from the day on which the liability arose attracts interest.
The expression `forthwith ' has to be understood as an immediate liability ascertainable with reference to the date of allotment, but subject to a period of grace of 8 days.
Mr. Anil B. Dewan, appearing for the company, on the other hand, contends that the company is entitled to retain the excess amount for the period mentioned in the prospectus and consequently no liability to pay interest can arise until the expiry of that period.
Prospectus is an instrument registered under section 60 of the Act and all statements contained in it are matters permitted to be inserted by the statue.
The terms of the prospectus are binding not only upon the company but also upon persons who deal with the company in pursuance of the prospectus.
One of those terms concerns the repayment of excess money.
It reads: ".
In case an application is rejected in full, the whole of the 502 application money received will be refunded and where an application is rejected in part, the balance, if any, after adjusting money due in the manner provided earlier in this Prospectus on Equity Shares/Debentures allotted will be refunded to the applicants within ten weeks of the date of closing of the Subscription List or in the event of unforeseen circumstances within such further time as may be allowed by the Stock Exchange at Indore" (emphasis supplied) In the present case, counsel points out, time for refund had been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990.
Accordingly the liability of the company to repay the excess amount did not arise until then.
In the circumstances, interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh Stock Exchange.
If Mr. Dewan 's argument were to be accepted, the company would have incurred no liability to pay interest, for time had been extended by the Madhya Pradesh Stock Exchange.
But this argument is clearly contrary to the provisions contained in sub section (4) of section 73 of the Act which reads:_ "section 73(4).
Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void".
In the teeth of that sub section, Mr. Dewan 's argument on the point is totally without merit.
Even if sub section (4) had not been inserted in section 73, Mr. Dewan 's argument in this respect would have been equally unsustainable, for no agreement can defeat or circumvent a mandatory requirement of the statute.
This is all the more so in view of section 9 which specifically provides that the provisions of the Act override the memorandum or articles of association of the company or any agreement executed or resolution passed by it.
The statute requires the company to pay interest in terms of sub section (2A).
That provision says that the company should pay excess money forthwith, failing which interest becomes payable at the end of 8 days therefrom.
Any inconsistent provision in the prospectus is unenforceable and it can be of no avail to the company.
It is true that the expression `forthwith ' does not necessarily and always mean instantaneous.
The expression has to be understood in the context of the statute.
Where, however, the statute prescribes the payment 503 of money and the accrual of interest thereon at certain points of time, the expression `forthwith ' must necessarily be understood to be immediate or instantaneous, so as to avoid any ambiguity or uncertainty.
The right accrues or liability arises exactly as prescribed by the statute.
Decisions such as Keshave Nilkanth Joglekar vs The Commissioner of Police, Greater Bombay, , and Salim vs State of West Bengal, ; , deal with the expression `forthwith ' in the context of preventive detention demanding a liberal or reasonable construction.
But that is not the construction which has to be adopted when `forthwith ' is used for determining the time and mode of payment of the principal and interest.
The legislature intended the expression `forthwith ' to refer to a particular day on which the liability to repay the principal amount arose, and that is the day from which the period of 8 days has to be computed, and on the expiry of that period, interest begins to accrue.
It is further contended on behalf of the company that in any view interest is payable as a penalty and, therefore, a reasonable and rational construction has to be placed upon the statute in regard to the commencement of the liability of the company to repay the excess amount.
Relevant circumstances which caused the delay must be taken into account in this regard.
There is no substance in this contention.
As stated earlier, sub section (2A) provides for the accrual of interest and the rates thereof.
Unlike sub section (2B) provides for punishment by imposition of fine or imprisonment, sub section (2A) speaks only of interest which is in contradiction to punishment and is not penal in character.
It merely provides a mode of calculation of the amounts payable.
Any consideration with reference to a penal provision is of no relevance to the liability of the company or its directors to pay interest in terms of sub section (2A).
Sub section (2B) on the other hand provides for punishment.
It reads: "S.73(2B).
If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year".
This sub section concerns solely with default of compliance with the requirement of sub section (2A) namely, repayment of excess money.
Failure to repay the excess money as required by sub section (2A) visits the company and every officer of the company who is in default (as 504 defined under section 5) with the stipulated punishment.
This is, of course, in addition to the payment of interest prescribed under sub section (2A).
Sub section (5), as it stood prior to 1.2.1975, read: "section 73(5).
For the purpose of this section permission shall not be deemed to be refused if it is intimated that the application for permission though not at present granted, will be given further consideration".
This sub section was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975 reading as follows: "S.73(5).
For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1).
" Sub section (1) referred to in sub section (5), as substituted on 1.2.1975, is in fact the present sub section (1A), for, as stated earlier, the original sub section (1) was amended and renumbered as sub section (1A) when the present sub section (1) was inserted by the Companies (Amendment) Act, 1988 w.e.f. 15.6.1988.
Consequently, the words `the time specified in sub section (1) ' appearing in sub section (5), as inserted w.e.f. 1.2.1975, denote the period of 10 weeks mentioned in the present sub section (1A).
This means that the permission for listing is deemed not to have been granted, i.e., impliedly refused, if the application for permission filed by the company has not been disposed of before the expiry of 10 weeks from the date of the closing of the subscription lists, as mentioned under sub section (1A).
Sub section (1A) postulates that any allotment made becomes void at the end of 10 weeks from the date of the closing of the subscription lists if by that time the requisite permission of the stock exchange has not been obtained.
But this consequence is postponed till the dismissal of any appeal preferred under section 22 of the (see the proviso to sub section (1A) of section 73 of the Act).
Nevertheless, the permission, if not obtained within 10 weeks, is deemed not to have been granted.
If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted.
Sub section (2) says that the liability to repay the money received from applicants arises forthwith either where the permission has not been sought or, having been 505 sought, it has not been granted.
The fact that an appeal is pending does not postpone the result contemplated in sub section (2) in regard to the liability to repay the amounts and the interest accruing thereon if the amounts are not repaid within 8 days after the liability arose.
The accrual of interest under sub section (2) is not dependent or consequent on the nullity postulated in sub section (1A).
In this connection, reference may be made to sub section (3) which reads: "S.73(3).
All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2), and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees." (emphasis supplied) This sub section refers to the obligation of the company to keep all amounts received from the subscribers in a separate bank account maintained with a Scheduled bank.
Such money must so remain in the bank until the permission has been granted by the stock exchange or until the disposal of an appeal preferred against refusal to grant permission.
Where the permission has not been sought, the company has, as seen above, acted in disobedience of the law, and the amounts received from the investors must be credited to the separate bank account and immediately returned to them together with the interest which accrued for the period.
But where permission has been sought, but not granted, the amounts so kept in the bank have to be repaid within the time specified in sub section (2).
Default of compliance with this requirement will make the company and every officer in default (as defined under section 5) liable to be punished with fine.
This will, of course, be in addition to the liability for payment of interest in terms of sub section (2).
The right or obligation of the company to keep the money in the bank is only for the period preceding the decision of the stock exchange on the company 's request for permission to list.
Once the permission is 506 expressly or impliedly refused, the money has to be returned to the applicants, notwithstanding the pendency of the company 's appeal.
The earlier part of the sub section about depositing the money in the bank is controlled by the latter provision in the sub section for returns of the money as required by sub section (2).
This is particularly so by reason of the penalty specially provided in sub section (3) in the event of default of compliance with the requirement of that sub section.
Sub section (3) may at the first blush appear to be contradictory, but it is really not so, considering the legislative intent to protect the legitimate claim of the applicants for interest on the money paid by them.
The interest provided under sub section (2) is payable to the applicants in terms of that sub section, unless the money is returned to them within the specified time, not withstanding the pendency of an appeal mentioned in the proviso to sub section (1A).
Sub section (3) has to be so understood to be in harmony with the other provisions of section 73.
This is all the more explicit from sub section (3A).
Sub section (3A) says that the company shall not utilise the amounts held in the separate bank account for any purpose other than what is permitted by sub section (3A).
Sub section (3A) provides: "S.73(3A).
Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to the dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share".
The money credited to the separate bank account can be utilised for only two purposes: (1) for adjustment against allotment of shares where listing is permitted; or (2) for repayment where listing is not permitted or the company is otherwise unable to allot shares.
The company has no right to deal with the money in any other manner or keep it longer than permitted by the section.
507 The money so kept in the separate bank account is held by the company for and on behalf of the subscribers in a fiduciary capacity.
Such amount do not form part of the general assets of the company.
The relationship between the applicants and the company in respect of the application money so held in accordance with sub section (3) is that of `bailers and bailee and not of creditors and debtor '.
See Palmer 's Company Law, 24th ed.
para 24.31; ,1085.
Interest does not begin to run under sub section (2) until 8 days have elapsed from the date of expiry of the period of 10 weeks commencing on the date of closure of the subscription lists.
The fact that the legislature has so provided in cases where permission has been refused expressly or by reason of the deeming provision is sufficient indication of the legislative intent to give the company reasonable time to repay the money.
Companies generally make allotments as soon as practicable after the necessary application has been made to the recognised stock exchange for permission for listing.
Upon the issue of the prospectus after making such application, amounts are received from the public in consideration of which allotments are made in anticipation of the requisite permission.
Greater the reputation of the company, larger are the amounts likely to be received.
If permission is not granted, the entire amounts received from the public have to be forthwith repaid.
On the other hand, if permission is obtained, but the amounts received from the public are in excess of the aggregate of the application money relating to the allotted shares or debentures, such excess amounts are forthwith repayable.
Whether or not permission will be obtained cannot be ascertained until the period prescribed for the purpose has expired namely, 10 weeks from the date of closing of the subscription lists.
Until the expiry of those 10 weeks, neither the subscribing public nor the company will be in a position to decide whether or not the allotments made are valid.
This is a period of uncertainty and it is for that reason that the legislature has, in a case of refusal to grant permission, provided that the liability to repay the application money arises upon the expiry of 10 weeks.
The possibility of an appeal being allowed is, as stated above, not a ground to delay repayment.
It should make no difference whether it is as a result of the permission having been refused, or permission having been granted and excess amounts are received by reason of over subscription, that repayment of money has to be made by the company.
In either event, the liability to repay the amounts arises forthwith on the expiry of 10 weeks from the date of closure of the subscription lists, and the interest will begin to accrue thereon on the expiry of 8 days therefrom.
This construction is, in our view, just and reasonable from the point of view of both the investor and 508 the company, and has the advantage of certainty, uniformity and easy application.
The condition attached to the Order of the Government of India dated 31st May, 1990, which we have extracted above, indicates that the time limit of 10 weeks from the date of closure of the subscription lists applied to refund orders as well as to allotment of all securities and despatch of allotment letters/certificates.
The Government of India thus understood that the liability of the company to repay the amounts in terms of section 73 arose only at the end of 10 weeks from the date of closure of the subscription lists.
This condition presumably applies to repayment under sub section (2) as well as under sub section (2A) of section 73.
This is fully borne out by the averments contained in the affidavit filed in the High Court on behalf of the Union of India as well as by the oral submissions on its behalf before the High Court on the point.
Similar appears to be the stand of the Bombay Stock Exchange, as seen from its publication of March 1991 (para 23.2).
The letter dated March 13, 1991 sent by the Securities and Exchange Board of India, the 2nd respondent, to the appellant company stating that interest was payable from 1st November, 1990, which is the date of expiry of the period of 10 weeks from the date of closure of the subscription lists, roughly indicates how the 2nd respondent construed the provision shortly before the proceedings commenced in the High Court.
The section is not free from ambiguities and doubts.
Having been amended in several respect, it has not finally emerged with the clarity that admits of easy construction.
But the contemporaneous construction placed upon an ambiguous section by the administrators entrusted with the task of executing the statute is extremely significant.
This construction is, in our view, perfectly consistent with the language and the object of the statute.
It is a practical and reasonable construction, particularly because it affords the company reasonably sufficient time to complete the formalities for despatch of the refund orders.
And the investor who has responded to the invitation contained in the prospectus is not unduly kept waiting for the return of the excess amounts due to him.
See Desh Bandhu Gupta & Co. & Ors.
vs Delhi Stock Exchange Association Ltd., ; and K.P. Varghese vs Income Tax Officer, Ernakulam & Anr., ; See also Crawford 's Interpretation of Laws, 1989 Ed.
Neither the date of allotment, as found by the High Court, nor the date specified in the prospectus, as contended by the company, is relevant to the commencement of liability for payment of interest on the excess money.
509 The liability of a company to repay the excess money under section 73(2A) of the Act arises on the expiry of 10 weeks from the date of the closing of the subscription lists, and the interest begins to accrue thereon at the end of 8 days therefrom.
Accordingly the liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub section (2A) arose on the expiry of 8 days from 1.11.1990.
MOHAN, J. I had the advantage of perusing the draft judgment of my learned brother.
I concur with him.
However, some important points require to be amplified.
The points that arises for determination are: (i) the scope of liability under Section 73 (2A) of the .
(ii) Meaning of the word "forthwith" (iii) Whether the payment of interest is penal in nature? (iv) Whether administrative inconvenience could be pleaded to avoid the statutory liability? Section 73 occurs under Para III of the (Central Act of 1/1956 hereinafter referred to as the Act).
This section deals with the allotment of shares and debenturs.
It has undergone important amendments in 1975 and 1988.
Prior to amendment in 1975, Section 73 read as under :_ "Allotment of shares and debentures to be dealt in on stock exchanges.
(1) Where a prospectus, whether issued generally or not states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of (four weeks) be notified to the applicant for permission by or on behalf of the stock exchange.
(2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from ap 510 plicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiry of the eighth day: Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank so long as the company may become liable to repay it under sub section (2) ; and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void.
(5) For the purpose of this section (it shall not be deemed that permission has not been granted) if it is intimated that the application for permission though not at present granted, will be given further consideration.
(6) This section shall have effect : (a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied, therefor in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications namely (i) reference to sale shall be substituted reference to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and reference to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there 511 shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission that the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange".
After amendment in 1975, Section 73 read as follows: "Allotment of shares and debentures to be dealt in on stock exchanges.
(1) Where a prospectus whether issued generally or not states that an application has been, or will be, made for permission for the shares or debentures offered thereby to be dealt in on one or more recognised stock exchanges, such prospectus shall state the name or the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been applied for before the 10th day after the first issue of the prospectus, or, whether such permission has been applied for before that day, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the share or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
(2) Where the permission has not been applied for as aforesaid, substituted for "or has not been granted as aforesaid" by the Companies (Amendment) Act, 1974, w.e.f. 1.2.1975 substituted for "five per cent" ibid.
(2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the applicant moneys relating to the shares or debentures 512 in respect of which allotment has been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the day the company becomes liable to pay it, the Directors of the Company shall be jointly and severally liable to repay the money with interest at the rate of twelve per cent per annum from the expiry of the said eighth day : Provided that a Director shall not be liable if he proves the the default in the payment of the money was not due to any misconduct or negligence on his part.
(2B) If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default he shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from th expiry of the eighth day, also with imprisonment for a term which may extend to one year.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank (until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2); and default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) Adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) Repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock 513 exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share.
(4) Any condition purporting to require or bind applicant for shares or debentures, to waive compliance with any of the requirement of the section shall be void.
(5) For the purpose of this section it shall be deemed that permission has not been granted if the application for permission, where made, has not been imposed of within the time specified in sub section (1).
(6) This section shall have effect (a) In relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied therefor in pursuance of the prospectus; and (b) In relation to a prospectus offering shares for sale, with the following modifications namely (i) References to sale shall be substituted for references to allotment; (ii) The persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) For the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange.
" After amendment in 1988, Section 73 reads as under: "Allotment of shares and debenture to be dealt in on stock exchange.
Every company, intending to offer shares or debentures to the public for subscription by the issue of a 514 prospectus shall before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to the so offered to be dealt with in the stock exchange or each such stock exchange.
(1A) Where a prospectus, whether is issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchange, such prospectus shall state the name of the stock exchange and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulations) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
(2) Where the permission has not been applied for under sub section (1) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company become liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen pr cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money.
(2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if 515 such money is not repaid within eight days, from the day the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money.
(2B) If default is made in complying with the provisions of sub section 2(A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayments is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2) and if default is made in complying with this sub section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely : (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus ; or (b) repayment of moneys received from applicants in pursuance of the prospectus where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share.
(4) Any condition purporting to require or bind any applicant 516 for shares or debentures to waive compliance with any of the requirement of this section shall be void.
(5) For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1).
(6) This section shall have effect (a) in relation to any shares or debentures agreed to be taken by a person under writing an offer thereof by a prospectus, as if he had applied therefore in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications, namely (i) reference to sale shall be substituted for references to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange".
As the section reads now, every company is required while it offers for public subscription issues of shares or debentures by means of a prospectus, to make an application for listing the security in one or more recognised stock exchanges.
Should the stock exchange not grant the permission for listing, before the expiry of 10 weeks from the date of closing the subscription lists, no allotment could be made.
In other words, the stock exchange has a say in the matter of listing.
It also requires to be stated that the company, besides the Director, is made liable for failure to repay the application money or the excess application money along with interest.
517 Notes on clauses read as under : "Clause 10 provides for compulsory listing of all public issues with recognised stock exchanges.
Presently, listing of public issues is not compulsory.
Further , as per the existing provisions only the directors are liable for failure to repay the application money or the excess application money within the specified time, if the company fails to pay".
"It is proposed to make the company in addition to the directors who commit the default liable to repay the application money or excess application money alongwith interest at a rate between 4% to 15% depending upon the period of delay with a view to ensuring that ordinary directors like nominee of govt.
financial institutions do not attract penal provisions, it is further proposed that only the directors who is an officer in default should be liable for prosecution".
As per provision to sub section (1), an appeal may be preferred under section 22 of the Stock Securities Contracts (Regulations) Act, 1956.
Such an appeal may be (i) against the decision of stock exchange refusing permission ; and (ii) if the stock exchange fails to dispose of the application for permission within 10 weeks from the date of closing of the subscription lists.
This 10 weeks become important because of the deemed rejection under sub section (5).
Sub section (1A) mentions the date of closing of the subscription lists.
Thus, it is a crucial date for determining the expiry of 10 weeks for the grant of permission by stock exchange.
Equally that becomes the crucial date for calculating the time for preferring an appeal under section 22 of the , as aforesaid against the refusal of permission.
No doubt, neither in this section nor elsewhere it is stated as to when the company is required to close subscription lists.
Of course, that will depend upon the facts of each case.
Section 69 of the Act states that unless minimum subscription is received, no allotment shall be made of any share capital of the company offered to the public for subscription.
In fact, sub section 5 of the said section states categorically as follows : "If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if 518 any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum from the expiry of the one hundred and thirtieth day : Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part".
One thing that is striking as far as the sub section is concerned is, the repayment without interest before the expiry of 150 days after the first issue of the prospectus and the repayment with interest within 130 days after the issue of the prospectus or specific in their terms unlike Section 73.
It cannot be gain said that the prospectus of the company is an important document provided for under the statute.
Section 2(36) defines "prospectus" as follows : "prospectus" means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchases of any shares in, or debentures of, a body corporate".
SEction 60 deals with registration of prospectus.
Under sub section (3) it is provided that the Registrar shall not register a prospectus unless the requirements of sections 55, 56, 57 and 58 and sub sections (1) and (2) have been complied with.
Section 62 deals with civil liability for misstatements in prospectus, while section 63 deals with criminal liability for misstatement in prospectus.
In the background of the legal provisions section 73 will have to be analysed with regard to the liability to pay interest.
The date of allotment, according to Mr. Andhyarujina and Mr. Cooper is the relevant date.
Therefore, according to the learned counsel, the crucial issue is the allotment.
It is also submitted that when permission is granted, it is only a categorisation.
It has already been seen that under section 69(5), specific dates have been mentioned as 120 and 130 respectively.
Sub section 2(A) of Section 73 does not mention any specific day.
It also requires to be noticed under sub section 1(A) of this very section "10 weeks from the date of closing of the subscription lists" is mentioned.
Both under sub section (2) and 2(A), no such time has been prescribed.
Prior to 1988, sub section (1) contemplated two situations (i) application to stock exchange being made after issue within 10 days of issue or (ii) 519 application made before the issue and 10 weeks for stock exchange to grant the application.
Of course, if the application is not granted within 10 weeks, there will be deemed rejection under sub section (5).
But, unfortunately, after the amendment of sub section (1) and 1(A), sub section (2) has not been amended with reference to these amended provisions.
As the law stands at present, the question of issue of prospectus without an application to stock exchange cannot arise at all.
As careful reading of sub section 2(A) will clearly disclose that the said section comes into operation only where permission has been granted by the recognised stock exchange or exchanges.
These words "where permission has been granted" are of great significance.
Therefore, the contention that on the date of allotment the liability to pay interest arises may not be correct.
Nor again, it would be correct to contend that the mechanics of refund liability to pay arises on the date of allotment since there is a failure of consideration in respect of shares not allotted.
On allotment, the money may become due.
Thereafter the money is held in a fiduciary capacity.
But the more important question is does it become payable? We will, now, refer to Black 's Legal Dictionary as to the meaning of the word "due" and "payable" (5th Ed. 448) are as under : "Due" Just; proper; regular; lawful; sufficient; reasonable, as in the phrases "due care", "due process of owing; payable; justly owed.
That which one contracts to pay or perform to another; that which law or justice requires to be paid or done.
Owed, or owing, as distinguished from payable.
A debt is often said to be due from a person where he is the party owing it, or primarily bound to pay, whether the time for payment has or has not primarily bound to pay, whether the time for payment has or has not arrived.
The same thing is true of the phrase "due and owing".
Payable.
A bill or note is commonly said to be due when the time for payment of it has arrived.
The word "due" always imports a fixed and settled obligation or liability, but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context.
It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at some time in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived.
But commonly, and in the absence of any qualifying expressions, the word "due" is re 520 stricted to the first of these meanings, the second being expressed by the term "overdue" and the third by the word "payable".
"Payable" Capable of being paid; suitable to be paid; admitting or demanding payment; justly due legally enforceable.
A sum of money is said to be payable when a person is under an obligation to pay it.
Payable may therefore signify an obligation to pay at a future time, but, when used without qualification, term normally means that the debt is payable at once, as opposed to "owing".
As a matter of fact, these words assumed great significance under section 60 of Transfer of Property Act.
The section was amended by Act 20 of 1929.
The word "due" in the section has been substituted for the word "payable" in order to make it clear that a mortgagor cannot redeem within the term of the mortgage".
"When the right of redemption arises the right of redemption arises when the principal money secured by the mortgage that has become due and may be exercised at any time thereafter, subject of course to the law of limitation.
In English law, the mortgagor cannot redeem before the time fixed for payment.
Nevertheless there were a considerable number of Indian cases in which it was held that the time fixed in the deed was fixed for the convenience of the mortgagor and that he could redeem before that time unless there was an express stipulation to the contrary.
These cases are bad law, for th view taken in other case that the mortgagor cannot redeem before the time fixed for payment is confirmed by the decision of Judicial Committee in Bhaktawar Begam vs Husaini Khanam, [1914] 36 All. 195.
41 I.A. 84, followed in Bir Mohammad vs Nagoor, , 25 I.C. 576 which treats Rose Ammal vs Rajarathnam, [1900] 23 Mad. 23 as overruled".
In in Baroda Board & Paper Mills Ltd. vs Income Tax Officer.
Circle I, Warde E, Ahmedabad and others, it is held as under : "Mr. A.L. Shah who appears for the liquidator in O.J. Appeal No. 2 of 1975 has urged before us that the legislature has used in the context of the priority of debts two distinct sets of words "debt due" and "due and payable" and proper meaning should be given to these sets of words, namely, "debt due" and "due and payable" and distinction must be made when the legislature has used two different terminologies, namely, "due" in the beginning of the clause and "due and payable" at the end of the clause.
He also wants us to dissect the phrase "due and 521 payable" and he wants to emphasize that the debt must have become due in the narrower sense of the word of having come into existence and having been payable with reference to enforceability of payment and, in this sense, relying upon the decision of D.A. Desai J., he has urged before us that the debt must be existing at the relevant date and the event which brought the debt into existence must have occurred within the twelve months preceding the relevant date and it must also have become payable, meaning thereby that its payment could have been enforced against the company, within the twelve months before the relevant date.
In view of the decisions that we have already referred to, particularly the passage from People vs Arguello as approved by the Supreme Court in Kesoram Industries ' case and in Raman Iron Foundry 's case, it is not possible for us to accept this contention of Mr. Shah.
In our opinion, the only meaning that could be attached to the word "due" occurring in section 530 is that it must be presently due and the words "due and payable" mean the same thing, namely , that it must be presently payable.
Therefore, so far as section 530(1) (a) is concerned, the revenue, taxess or rate, due from the company to the Central or State Government or to a local authority must be presently payable, that is, that the liability could be enforced as at the relevant date and, secondly, it must have so become presently payable within the twelve months immediately preceding the relevant date".
In this connection we may refer to the case in Union of India vs Air Foam Industries (P) Ltd., ; & 1271 (para 7), which reads as follows : "The first thing that strikes one on looking at Clause 18 is its heading which reads; "Recovery of Sums Due".
It is true that a heading cannot control the interpretation of a clause if its meaning is otherwise plain and unambiguous, but it can certainly be referred to as indicating the general drift of the clause and affording a key to a better understanding of its meaning.
The heading of Clause 18 clearly suggests that this clause is intended to deal with the subject of recovery of sums due.
Now a sum would be due to the purchaser when there is an existing obligation to pay it in present.
It would be profitable in this connection to refer to the concept of a `debt ' for a sum due is to be found in Webb vs Stenton, where Lindley. L. J., ". a debt is a sum of money which is now payable or will become payable in the future by reason of a 522 present obligation".
There must be debitum in presenti; solvendum may be in presenti or in future that is immaterial.
There must be an existing obligation to pay a sum of money now or in future.
The following passage from the judgment of the Supreme Court of California in People vs Arguello, [1869] 37 Calif 524, which was apporoved by this Court in Kesoram Industies vs Commr.
of Wealth Tax, ; 1966 SC 1370), clearly brings out the essential characteristics of a debt.
"Standing alone, the word `debt ' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable.
If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due".
This passage indicates that when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation is to pay a sum of money in praesenti it is a debt due.
A sum due would, therefore, mean a sum for which there is an existing obligation to pay in presenti, or in other words, which is presently payable.
Recovery of such sums is the subject matter of Clause 18 according to the heading, That is the dominant idea running through the entire Clause 18".
We will now refer to Venkataramiya 's Law Lexicon and Legal Maxims Vol, I, 713, 714.
"Due" means payable immediately or a debt contracted but payable at a future time.
In Wharton 's Law Lexicon, 14th Edn., it s meaning is stated to be "anything owing.
That which one contracts to pay or perform to another; that which law or justice requires to be paid or done.
It should be observed that a debt is said to be `due ' the instant that it has existence as a debt; it may be payable at a future time".
Therefore, it cannot be contended on the strength of Section 530 `due ' and `payable ' is one and the same even under S.732 (A).
However, as contended, if the liability to pay interest arises from the date of allotment and the grace period after eight days, what is to happen in cases where permission is refused by the stock exchange? For the grant of such permission 10 weeks are available.
Therefore, a company making allotment prior to the grant of permission cannot be mulcted with the liability when the section itself comes into play upon the grant of permission.
Therefore, some definite date is required.
It cannot be lost sight of that where permission is refused in the first instance there is also the right of appeal under Section 22 of the Securities Contracts (Regulations) Act, 1956.
This too, has got an important bearing.
It cannot be held that after allotment the mechanics 523 of refund would come into play and again after rejection of permission, the money on all applications should be refunded once over again.
Equally, the contention of Mr. Anil Divan that the stock exchange will have power to extend the time cannot be accepted.
It may be a practice to do so.
But it does not mean the stock exchange can act contrary to clear wording to this section.
More so, when Sub section (4) is clear in its terms.
Merely because the intending applicants agree to abide by the prospectus that cannot be binding in the teeth of this Sub section.
For the sake of competition, reference may be made to the corresponding provision of English Law.
Buckley on the Companies Acts, 14th Ed.
I, while dealing with Section 51 which is the corresponding provision state as follows : "The Act does not require the prospectus to fix any time for closing the subscription lists and, unless and until an issue is fully subscribed, there is nothing in law to require the company to close the lists.
It is the common practice, however, at any rate in the case of prospectuses issued generally, to state in the prospectus that the lists will be closed on or before a particular date.
In any case to which this section applies the company will, by reason of sub s(3), be unable to employ any money received from shareholders until either permission to be listed has been obtained, or the lists have been closed and the period indicated in sub section (1) has expired without the permission having been refused.
Note that the sub section does not say, 'if the permission has not been granted before the expiration of three weeks etc. ' Presumable in practice the stock exchange, when it has an application for permission to be listed under consideration and has not either granted or refused permission within the three weeks period indicated above, will notify the applicant under sub section (1) of an extension of the period.
An allotment within this section is void, not voidable as in an allotment in breach of Section 47" sub section (3) in Re Nanwa Gold Mines, Ballantyne vs Nanwa Gold Mines Ltd. applications to subscribe for shares were invited on the footing that, if a resolution for reduction of capital was not passed or not confirmed by the court, the application moneys would be refunded and meanwhile would be retained in a separate account.
The moneys were in fact put in a separate account in the names of the company and its registrars.
The conditions 524 were not fulfilled and shortly afterwards a receiver was appointed in a debenture holders ' action.
Harman J. held that the moneys in the separate account were repayable to the subscribers in full, basing his decision on the terms of the invitation and not on the provisions of this sub section; but he expressed the view that the payment into a separate account in compliance with the sub section would probably have the same effect".
Palmer 's Company Law, 1982, Vol I, 264 states as follows: "Refusal of Application to Deal Where a prospectus states that application has been or will be made for the shares or debentures to be dealt with on the stock exchange, any allotment made on an application under the prospectus shall be void.
(1) if permission has not been applied for before the third day after the first issue of the prospectus; or (2) if permission is refused before the expiration of three weeks (subject to the extension by the stock exchange to six weeks from the date of the closing of the subscription lists (Sec.
51 (1).
It should be noted that under case (2) above, the allotment is not void if the stock exchange merely defers the decision on permission to deal, or does not arrive at a decision within the stated time.
During the periods stated in cases (1) and (2) above, the application money received by the company from shareholders who applied for shares has to be kept on separate account (Sec.
51 (3) ; "that appears", as Harman J. observed in Re Nanwa Gold Mines Ltd, "to be an attempt to erect, so to speak, by statute a kind of trust for applicant", consequently, the application money thus kept on separate account does not form part of the general assets of the company which are charged by a debenture secured by a floating charge.
The relationship between the applicants and the company which holds the application moneys on separate account is that if bailers and bailee, and not of creditors and debtor".
Now, we will refer to the case in Nanwa Gold Mines Ltd. Ballantyne vs Nanwa Gold Mines Ltd., [1955] I W.L.R. 1080 @ 1085.
"Sub section (3) provides that where money is sent in on a provisional application: "All money received as "aforesaid shall 525 be kept in a separate bank account so long as the company may become liable to repay it under the last foregoing sub section; and, if default is made in complying with this sub section, the company and every officer of the company who is in default shall be liable to a fine not exceeding five hundred pounds".
That appears to be an attempt to erect so to speak, by statute a kind of trust for applicants in a case of this sort.
It is irrelevant here, because in this case the directors promised to do this very thing; No doubt that was only a compliance with the statute; but they did promise to do so and I think that their promise is of contractual effect, so I need not consider whether, if there was no promise but only the statutory obligation, the position would be the same.
I incline to think it would be so, and that the object of section 51(3) was to provide protection for persons who pay money on the faith of promises of this kind".
As to the present position with regard to the liability to refund under Sec.
73 2(A) it is important to bear in mind that two notifications have come to be issued in exercise of powers conferred under Section 642.
Notification No. GSR 614 (E) dated 3rd October, 1991, called the Companies (Central Government 's) General Rules and Forms (Second Amendment), 1991, which came into force on 1st November, 1991.
In the above notification it is stated as under: "If the company does not receive application money for at least 90% of the issued amount, the entire subscription will be refunded to the applicants within ninety days from the date of closure of the issue.
If there is delay in the refund of application money by more than 8 days after the company becomes liable to pay the excess amount, the company will pay interest for the delayed period, at prescribed rates in sub section (2) and (2A) of Section 73.
No statement made in this Form shall contravene any of the provisions of the , and the rules made thereunder".
"Signature of Directors" Again, notification No. S.O. 666(E) dated October 3, 1991 issued under sub section (1) of Section 641 with amendments in Schedule II to the said Act, under Part I General Information, stated as under: "(f) Declaration about the issue of allotment letters/refunds within a period of 10 weeks and interest in case of any delay 526 in refund at the prescribed rate under Section 73(2)/2A" Thus, the liability of the company to repay the excess amount under section 73(2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists.
The interest begins to accrue thereupon at the end of 8 days.
As the meaning of the word "forthwith", we will now refer to Bouvier 's Law Dictionary for the meaning of the word "forthwith".
"FORTHWITH.
As soon as by reasonable exertion, confined to the object, it may be accomplished.
(Approved in Dickerman vs Trust Co., ; 176 U.S. 193, , This is the import of the term; it varies, of course, with every particular cases; 4 Tyrwh. 837; Edwards vs Ins Co., See Seammon vs Ins.
Co., 101, III 621; ; Bannect vs Ins 67 N.Y. 274; Pennsylvanis R. Co. vs Reichert, ; Meriden Silver Plate Co. vs Flory , It is not as promptly as immediately; in some cases it might mean within a reasonable time; We will also refer to 193 Soutern Reporter, 339 and 16 Soutern Reporter 33 @ 35 Col I. "As regards compliance with statute requiring petition for judicial review of an executive committee 's denial of primary election contest to be filled "forthwith" the term "forthwith" is a relative one and means within such time as to permit that which is to be done, to be done lawfully and according to the practical and ordinary course of things to be performed or accomplished, and it is not to be used by way of a penalty when accidental interventions of which party is not to be charged with foresight have upset what otherwise would have been reasonable calculations regarding available time.
Laws 1035, exhibit Secs c. 10".
"Forthwith" is not susceptible of a fixed time definition, and the surrounding facts and circumstances must be taken into consideration in determining the question, and forthwith may be minutes, hours, days or even weeks".
Therefore it cannot be said that "forthwith" means E.O. instanti.
It cannot but be held that the payment of interest is only compensatory and not penal.
Merely because clause 10 to which a reference has already been made uses the word "penal" it cannot be amount to penalty.
As useful reference can be made in Mahalaxmi Sugar Mills Co. Ltd. vs Commissioner of Income Tax, Delhi, New Delhi; , "4.
Penalties if any person defaults in payment of excess imposed under sub section (1) of Sec. 3, or , contravenes any provision of any rule made under this Act, he shall without prejudice to his liability therefore under sub section (5) of Sec.
3 be liable to imprisonment upto six months or to a fine not exceeding rupees five thousand or both and in the case of continuing contravention in to a further fine not exceeding rupees five thousand or both and in the case of continuing contraventio in to a further fine not exceeding rupees one thousand 527 for each day during which the contravention continues".
It is apparent that section 3(2) requires the payment of cess on the date prescribed under the rules.
Rule 4 of the U.P. Sugarcane Cess Rules, 1956 provides that the cess due on the sugarcane entering into the premises during the first fortnight to each calendar year must be deposited in the government treasury by the twenty second day of that month and the cess due for the remainder of the month must be deposited before the seventh day of the next following month.
If the cess is not paid by the specified date, then by virtue of section 3(3) the arrear of cess will carry interest at the rate of six per cent per annum from the specified date to the date of payment.
Section 3(5) is a very different provision.
It does not deal with the interest paid on the arrears of cess but provides for an additional sum recoverable by way of penalty from a person who default in making payment of cess.
It is a thing apart from an arrear of cess and the interest due thereon.
Now, the interest payable on an arrear of cess under section 3(3) is in reality part and parcel of the liability to pay cess.
It is an accretion to the cess.
The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess.
The enlargement of the cess liability is automatic under section 3(3).
No specific order is necessary in order that the obligation to pay interest is as certain as the liability to pay cess.
As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue.
It is not a penalty for which provisions has been separately made by section 3(5).
Nor is it a penalty within the meaning of section 4, which provides for a criminal liability and a criminal prosecution.
The penalty payable under section 3(5) lies in the discretion of the collecting officer or authority.
In the case of the penalty under section 4, no prosecution can be instituted unless, under section 5(1), a complaint is made by or under the authority of the Cane Commissioner of the District Magistrate.
There is another consideration distinguishing the interest payable under section 3(3) from the penalty imposed under section 3(5).
Section 3(6) provides that the officer or authority empowered to collect the cess may forward to the Collector a certificate under his signature specifying the amount of arrears including interest due from any person, and on receipt of such certificate the Collector is required to proceed to recover the amount specified from such person as if it were an arrear of land revenue.
The words used in section 3(6) are "specifying the amount of arrears including interest", that is to say that the interest is part of the arrear of cess.
In the case of a penalty imposed under section 3(5), a separate provision for recovery has been made under section 3(7).
Although the manner of recovery of a penalty provided by section 3(7) is the same as the manner of recovery provided by section 3(6) of the arrears of cess, the Legislature dealt with it as something distinct from the recovery of the arrears of cess including 528 interest.
In truth, the interest provided for under s.3(3) is in the nature of compensation paid to the Government for delay in the payment of cess.
It is not by way of penalty.
The provision for penalty as a civil liability has been made under section 3(5) and for penalty as a criminal offence under s.4.
The Delhi High Court proceeded entirely on the basis that the interest bore the character of a penalty.
It was according to the learned Judges "penal interest".
The learned Judge failed to notice section 3(5) and s.4 and the other provisions of the Cess Act".
The last question will be that in view of the clear terms of the statute whether the administrative inconvenience could be pleaded.
This could be decided with reference to the case in Sanjeev Coke Manufacturing Co. vs Bharat Coking Coal Ltd. & Another, ; @ 1029, as follows: ".
But in the ultimate analysis, we are not really to concern ourselves with the hollowness or the self condemnatory nature of the statements made in the affidavits filed by the respondents to justify and sustain the legislation.
The deponents of the affidavits filed into Court may speak for the parties on whose behalf they swear to the statement.
They do not speak for the Parliament.
No one may speak for the Parliament and Parliament has said what it intends to say, only the Court may say what it the Parliament meant to say.
None else.
Once a statute leaves Parliament House, the Court 's is the only authentic voice which may echo (interpret) the Parliament.
This the court will do with reference to the language of the statute and other permissible aids.
The executive Government may place before the court their understanding or misunderstanding of what Parliament has said or intended to say or what they think was Parliament 's object and all the facts and circumstances which in their view led to the legislation.
When they do so, they do not speak for Parliament.
No Act of Parliament may be struck down because of the understanding of Parliamentary intention by the executive government or because their (the Government 's) spokesmen do not bring out relevant circumstances but indulge in empty and self defeating affidavits.
They do not and they cannot bind Parliament.
Validity of legislation is not to be judged merely by affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said. " 529 Therefore, it has to be held that administrative inconvenience can hardly be any ground.
Viewing the statutory provisions form the above perspective, I agree with my learned brother that the liability to repay the excess amount arose on November 1, 1990 and the liability to pay interest arose on the expiry of eight days from November 1, 1990.
ORDER For the reasons stated by us in our separate but concurring judgments dated 4.2.1992, we allow the appeal to the limited extent indicated by us and the judgment of the High Court shall stand altered accordingly.
In the circumstances of this case, we make no order as to costs.
V.P.R. Appeal allowed. | The appellant company was registered under the .
It obtained the consent of the Government of India to 482 issue 7,20,00,000 equity shares of Rs. 10 each at par and 33, 90, 000 fourteen per cent secured redeemable non convertible debentures of Rs. 100 each at per.
One of the conditions attached to the consent order was "The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders." On 12.7.1990 the company issued prospectus for the issue of the shares and debentures, stating therein that the company had sought the permission of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi for dealing in equity shares and debentures in terms of the prospects; that interest at the rate of 15 % per annum on the excess application money would be paid to the applicants as per the guidelines issued by the Ministry of Finance on July 21, 1983 and September 27, 1985; that the public issue would open on August 20, 1990 and close on August 23, 1990; and that it would not be extended beyond August 31, 1990.
The issue opened on August 20, 1990.
The company received 26,32,894 applications for equity shares together with an aggregate sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores.
The shares issue was close on 23rd August 1990.
On October 15,1990 the Board of Directors of the company approved the allotment of shares.
Prior to 1.11.1990, it secured the requisite permissions of the stock exchanges at Indore, Ahmedabad, Bombay Calcutta and Delhi to deal in the shares offered in the prospects.
The company had to despatch 25,50,604 refund order, which were printed in Bombay and they were meant to be despatched from Delhi.
The company despatched 8,55,226 refund orders from New Delhi at the rate of approx.
1,00,000 refund orders per day.
On 26th October, 1990 a consignment of 6,69,999 refund orders were despatched from Bombay to Delhi.
As a result of a fire that broke out on the way, many refund orders were destroyed and about 50 % of the consignment was missing after the accident.
In consultation with the Madhya Pradesh Stock Exchange and the Company 's Bank, instructions were issued by the Company to 483 stop payment of all refund orders with a view to avoiding any possible fraud or misuse.
As a result of the countermanding of all the refund orders and the printing of new refund orders, delay occurred in the despatch of newly printed orders.
For issuing the refund orders, at the request of the company, the Madhya Pradesh Stock Exchange granted extension of time till November 30,1990 and further extended till 19th December, 1990.
The Bombay Stock Exchange refusing the grant extension of time informed the company that it was bound to pay interest by reason of the delay in the despatch of refund orders.
The refund orders were not despatched until 12th November, 1990.
The Government of India and the Securities and Exchanges Board of India Respondents Nos. 1 and 2 respectively, insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73 of the from 1st November (the expiry date of the period of 10 weeks from the date of the closure of the subscription lists) till the date of posting of the refund orders.
The company filed a writ petition in the High Court apprehending that the Government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest and also initiate actions against it.
In the High Court, the respondent No. 1 submitted that the liability to pay the excess amount arose on the expiry of 10 weeks from the date of closure of the subscription lists.
The respondent No. 2 contended that the liability arose on the date of allotment.
The company the appellant contended that on the facts of the case, the liability arose on at the end of the period as extended by the Stock Exchanges at Indore in terms of the prospectus.
The High Court dismissed the writ petition, holding that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date.
484 This appeal was filed by the Company against the High Court 's judgment by special leave, on the question, whether the High Court was right in discarding, for computation of interest, the time limit of 10 weeks running from the date of closure of the subscription lists, notwithstanding that the allotment had been made prior to the date of expiry of 10 weeks.
The appellant contended that the company was entitled to retain the excess amount for the period mentioned in the prospectus and consequently no liability to pay interest could arise until the expiry of that period; that as the Madhya Pradesh Stock Exchange had extended time for refund till 19th December, 1990, the liability of the company to repay the excess amount did not arise until then; that the interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh Stock Exchange; and that the interest was payable as a penalty and therefore a reasonable and rational construction of the statute to be made in regard to the commencement of the liability of the company to repay the excess amount by taking into account of the relevant circumstances which caused the delay.
The respondents submitted that the liability to repay the excess amount arose on the date of allotment of the shares, that the liability arose forthwith and any delay beyond the period of 8 days from the day on which the liability arose attracted interest that the expression `forwith ' had to be understood as an immediate liability ascertainable with reference to the date of allotment, but subject to a period of grace of 8 days.
Allowing the appeal, this Court, HELD : 1.01 As per Dr. Justice T.K. Thommen : A public limited company has no obligation to have its shares listed on a recognised stock exchange.
But if the company intend to offer its shares or debentures to the public for subscription by the issue of a prospectus, it must, before issuing such prospectus, apply to one or more recognised stock exchanges for permission to have the shares or debentures intended to be so offered to the public to be dealt with in each such stock exchange in terms of section 73.
[496 G] 1.02 Sub section (1) of section 73, as amended by the 485 Companies (Amendment) Act, 1988 has application only to a company intending to offer shares or debentures to the public for subscription by the issue of a prospectus.
Until this sub section was inserted, listing of public issues was not compulsory.
[497 B C] 1.03.
Sub section (1A) of Section 73 as amended by the Companies (Amendment) Act, 1988 makes it necessary for the company to state in its prospectus the name of each of the recognised stock exchanges whose permission for listing has been sought by the company.
[497 G] 1.04.
Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists.
The validity of the allotment is made dependent on securing the requisite permission of each stock exchanges whose permission has been sought.
[497 G 498 A] 1.05.
The liability to repay the application money arises only upon refusal of the stock exchange to grant the permission sought by the company before the expiry of 10 weeks from the date of closing of the subscription lists.
[498 A] 1.06 There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void.
[498B] 1.07.
Sub section (1A) postulates that any allotment made becomes void at the end of 10 weeks from the date of the closing of the subscription lists if by that time the requisite permission of the stock exchange has not been obtained.
But this consequence is postponed till the dismissal of any appeal preferred under section 22 of the .
Nevertheless, the permission, if not obtained with 10 weeks, is deemed not to have been granted.
[504 F G] 1.08.
It is the legislative intent to delay the result postulated under sub section (1A) i.e., rendering the allotment void, until the period of 10 weeks has expired or until the dismissal of the appeal.
The liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub 486 section (2A) arose on the expiry of 8 days from 1.11.1990.
[498 C D] 2.01.
From the decision of the stock exchange refusing permission, an appeal will lie under section 22 of the Securities Contracts (Regulation)Act, 1956.
[498 C] 2.02.
Pending the decision in appeal, the allotment made would not be void, and the decision of the concerned stock exchange is made dependent on the result of the appeal.
[498 C] 2.03.
The fact that an appeal is pending does not postpone the result contemplated in sub section (2) in regard to the liability to repay the amounts and the interest accruing thereon if the amounts are not repaid within 8 days after the liability arose.
[505 A] 3.01 Sub section (1A) of Section 73 postulates two circumstances in which interest becomes payable, namely, where the permission has not been applied for before issuing the prospects and the company has thus acted in violation of the law or where permission, though applied for, has not been granted.
In the former case, apart from the other consequences which may flow from the company 's disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus issued by the company in disobedience of the requirements of subsection (1).
In the latter case, the liability to pay interest does not arise until the expiry of 8 days after the company became liable to repay the amounts received by reason of its failure to obtain the necessary permission as referred to in sub section (1A).
[499 C D] 3.02.
Section 73, as it stood prior to 1975, contained no specific provision compelling the company or its directors to repay the amounts received in excess of the aggregate of the application money relating to the shares or debentures in respect of which allotments have been made.
Sub section (2A) was inserted by the Companies (Amendment)Act, 1974 inserted to cover cases where permission of the stock exchange has been obtained, but the shares or debentures have been over subscribed and the company is consequently in possession of excess amounts.
The amended sub section made the company liable to repay the excess amounts forthwith, but did not made the company liable to pay interest on such excess amounts.
But a liability was cast on the directors.
If the excess amount was not repaid within 8 days from the day the company became liable to 487 repay it, the directors were made jointly and severally liable to repay such amount with interest.
The proviso to sub section (2A), which like the proviso to sub section (2), as they stood prior to 1988, provided that a director was not liable to repay the money with interest if he proved that the default in payment of the money was not on account of any misconduct or negligence on his part.
[500 C E] 3.03.
Owing to the absence of a specific provision imposing liability on the company to pay interest on the over subscribed amounts, and also owing to the absence of any provision to exempt directors who were not directly in charge of the administration of the company and the need to make listing of public issues compulsory, further amendments to the section became necessary.
Accordingly the Amendment Act of 1988 introduced several amendments to section 73, one of them being the substitution of a part of sub section (2A) making the company and every director of the company who is `an officer in default ' jointly and severally liable to repay the excess money with interest.
[500 F H] 3.04.
A `director of a company who is an officer in default ' appearing in sub section (2A) must be understood with reference to the definition of `an officer who is in default ' contained in section 2 (31) read with section 5.
This definition includes the managing director or the whole time director of a company.
[500 H 501 A] 3.05.
The liability imposed under sub section (2A) on a director of the company falls only upon a director who is `an officer in default ', as defined under section 2 (31) read with section 5(a) (b), and not upon any other director.
The nominees of the Government of financial institutions on the board of directors of the company, but not directly in charge of its administration as full time directors, are exempted from personal liability.
[501 A B] 3.06.
Sub section (2A) provides for the accrual of interest and the rates thereof.
Unlike sub section (2B) providing for punishment by imposition of fine or imprisonment, sub section (2A) speaks only of interest which is in contra distinction to punishment and is not penal in character.
It merely provides a mode of calculation of the amounts payable.
Any consideration with reference to a penal provision is of no relevance to the liability of the company of its directors to pay interest in terms of sub section (2A).
[503 E] 488 3.07.
Sub section (2B) concerns solely with default of compliance with the requirement of sub section (2A) namely, repayment of excess money.
Failure to repay the excess money as required by sub section (2A) visits the company and every officer of the company who is in default (as defined under section 5) with the stipulated punishment.
This is, of course, in addition to the payment of interest prescribed under sub section (2A).
[503 H 504 A] 3.08.
The interest provided under sub section (2) is payable to the applicants in terms of that sub section unless the money is returned to them within the specified time, notwithstanding the pendency of an appeal mentioned in the proviso to sub section (1A).
Subsection (3) has to be so understood to be in harmony with the other provisions of section 73.
[506 C] 3.09.
If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted.
Sub section (2) says that the liability to repay the money received from applicants arises forthwith either where the permission has not been sought or, having been sought, it has not been granted.
[504 H 505 A] 3.10.
The accrual of interest under sub section (2) is not dependent or consequent on the nullity postulated insub section (1A).
[505B] 4.01.
The expression `forthwith ' does not necessarily and always mean instantaneous.
The expression has to be understood in the context of the statue.
Where, however, the statute prescribes the payment of money and the accrual of interest thereon at certain points of time, the expression `forthwith ' must necessarily be understood to be immediate or instantaneous, so as to avoid any ambiguity or uncertainty.
The right accrues or liability arises exactly as prescribed by the statute.
[502 H 503 A] 4.02.
When `forthwith ' is used for determining the time and mode of payment of the principal and interest, a liberal or reasonable construction not to be adopted.
The legislature intended the expression `forthwith ' to refer to a particular day on which the liability to repay the principal amount arose and that is the day from which the period of 8 days has to be computed, and on the expiry of that period, interest begins to accrue.
[503 B C] 489 Keshav Nilkanth Joglekar vs The Commissioner of Police, Greater Bombay, ; and Salim vs State of West Bengal, ; , distinguished.
The right or obligation of the company to keep the money in the bank is only for the period preceding the decision of the stock exchange on the company 's request for permission to list.
Once the permission is expressly or impliedly refused, the money has to be returned to the applicants, notwithstanding the pendency of the company 's appeal.
The earlier part of the sub section about depositing the money in the bank is controlled by the latter provision in the sub section for return of the money as required by sub section (2).
This is particularly so by reason of the penalty specially provided in sub section (3) in the event of default of compliance with the requirement of that sub section.
[505 H 506 B] 5.02.
The money credited to the separate bank account can be utilised for only two purposes: (1) for adjustment against allotment of shares where listing is permitted; or (2) for repayment where listing is not permitted or the company is otherwise unable to allot shares.
The company has no right to deal with the money in any other manner or keep it longer than permitted by the section.
[506 G H] Palmer 's Company Law, 24th ed.
para 24.31; 1955(1) WLR 1080, referred to.
Interest does not begin to run under sub section (2) until 8 days have elapsed from the date of expiry of the period of 10 weeks commencing on the date of closure of the subscription lists.
The fact that the legislature has so provided in cases where permission has been refused expressly or by reason of the deeming provision is sufficient indication of the legislative intent to give the company reasonable time to repay the money.
[507 B C] 6.02.
Companies generally make allotments as soon as practicable after the necessary application has been made to the recognised stock exchange for permission for listing.
Upon the issue of the prospectus after making such application, amounts are received from the public in consideration of which allotments are made in anticipation of the requisite permission.
Greater the reputation of the company, larger are the amounts likely to be received.
If permission is not granted, the entire amounts received from the public 490 have to be forthwith repaid.
On the other hand, if permission is obtained, but the amounts received from the public are in excess of the aggregate of the application money relating to the allotted shares or debentures.
Such excess amounts are forthwith repayable.
Whether or not permission will be obtained cannot be ascertained until the period prescribed for the purpose has expired, namely, 10 weeks from the date of closing of the subscription lists.
Until the expiry of those 10 weeks, neither the subscribing public nor the company will be in a position to decide whether or not the allotments made are valid.
This is a period of uncertainty and it is for that reason that the legislature has, been is a case of refusal to grant permission, provided that the liability to repay the application money arises upon the expiry of 10 weeks.
[507 D G] 6.03.
The possibility of an appeal being allowed is, not a ground to delay repayment.
It should make no difference whether it is as a result of the permission having been refused, or permission having been granted and excess amounts are received by reason of over subscription, that repayment of money has to be made by the company.
It either event, the liability to repay the amounts arises forth with on the expiry of 10 weeks from the date of closure of the subscription lists, and the interest will begin to accrue thereon on the expiry of 8 days therefrom.
This construction is, just and reasonable from the point of view of both the investor and the company, and has the advantage of certainty, uniformity and easy application.
[507 G 508 A] 7.
The section 73 is not free from ambiguities and doubts.
Having been amended in several respects, it has not finally emerged with the clarity that admits of easy construction.
But the contemporaneous construction placed upon an ambiguous section by the administrators entrusted with the task of executing the statute is extremely significant.
This construction is, perfectly consistent with the language and the object of the statute.
It is a practical and reasonable construction, particularly because it affords the company reasonably sufficient time to complete the formalities for despatch of the refund orders.
And the investor who has responded to the invitation contained in the prospectus is not unduly kept waiting for the return of the excess amounts due to him.
[508 E G] Desh Bandu Gupta & Co. & ors.
vs Delhi Stock Exchange Association Ltd.; , and K.P. Varghese vs Income Tax Officer, Ernakulam & Anr., ; , referred to.
491 Crawford 's Interpretation of Laws, 1989 Ed.
referred to.
As per Mr. Justics section Mohan (Concurring) 1.01.
Sub section (2A) of Section 73 of the comes into operation only where permission has been granted by the recognised stock exchange or exchanges.
The words, "where permission has been granted" are of great significance.
Therefore, the contention that on the date of allotment the liability to pay interest arises may not be correct.
Nor again, it would be correct to contend that the mechanics of refund liability to pay arises on the date of allotment since there is a failure of consideration in respect of shares not allotted.
[519 B C] 1.02.
The liability of the company to repay the excess amount under Section 73 (2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists.
The interest begins to accrue thereupon at the end of 8 days.
[526 A] 2.01.
The word "due" in the section 73 has been substituted for the word "payable" in order to make it clear that a mortgagor cannot redeem within the term of the mortgage.
The right of redemption arises when the principal money secured by the mortgage has become due and may be exercised at any time thereafter, subject of course to the law of limitation.
[520 C D] 2.02. "Due", means payable immediately or a debt contracted but payable at a future time.
"A debt is said to be `due 'the instant that it has existence as a debt; it may be payable at a future time" it cannot be contended on the strength of Section 530 `due ' and `payable ' is one and the same even under section 732 (a).
[522 E F] Black 's Legal Dictionary, (5th Edition 488), Venkataramiah 's Law Lexicon and Legal Maxims Vol.
I, 713 714; Wharton 's Law Lexicon, 14th Edition; Buckley on the Companies Acts, 14th Edition, Volume I, referred to.
Bhaktawar Begum vs Husaini Khanam, (1914)36 All. 195; 41 I.A. 84; ; Bir Mohammad V. Nagoor, ; (which over ruled Rose Ammal vs Rajarathnam, ; Baroda Board & Paper Mills Ltd. vs Income Tax Officer, Circle I, Ward E, Ahmedabad and others, 1976 (46) company cases 492 25; Union of India vs Air Foam Industries (P) Ltd., ; & 1271 (Para 7) referred to.
"Forthwith ' is not susceptible of a fixed time definition, and the surrounding facts and circumstances must be taken into consideration in determining the question, and forthwith may be minutes, hours, days or even weeks.
It cannot be said that "forthwith" means E.O. instanti.
[526 E F] Dickerman vs Trust Co., ; 176 U.S. 193, , , 4 Tyrwh.
837; Edwards vs Ins.
Co., ; Seammon vs Ins.
Co., 101, III 621; ; ; Bennect vs Ins ; Pennsylvanis R.Co.
vs Reichert, 58 Md. 261; Meriden Silver Plate Co. vs Flory , 193, Soutern Reporter, 339 and 16 Soutern Reporter 33 @ 35 Col. I., Laws 1035, Ex Secs C. 10, referred to.
Bouvier 's Law Dictionary Referred to. 4.
It cannot but be held that the payment of interest is only compensatory and not penal.
Merely because clause 10 uses the word "penal" it cannot be amount to penalty.
[526 F] Mahalaxmi Sugar Mills Co. Ltd vs Commissioner of Income Tax, Delhi, New Delhi, ; , referred to.
In view of the clear terms of the statute the administrative inconvenience cannot be pleaded.
[528 B C] Sanjeev Coke Manufacturing Co vs Bharat Cooking Coal Ltd. & Another, ; 1029, referred to. |
Civil Appeal No. 350 of 1974.
Appeal by Certificate from the Judgment and Order dated 29/30 8 1973 of the Gujarat High Court in Special Civil Application No. 163 of 1973.
M.H.Baig, Rajiv Shakdhar, R.Sasi Prabhu (for M/s S.A. Shroff & Co.) for the Appellants.
P.S. Poti, Bimal Roy Jad.
Anip Sachthey and Ms. Rashmi Dhariwal for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
This is an appeal by certificate granted by the High Court of Gujarat at Ahmedabad under articles 132(1) and 133 (1)(a) of the Constitution of India.
It is directed against the judgment dated 29/30th August, 1973 in special Civil Application No. 163 of 1973.
The facts leading to this appeal are briefly as under: The Appellant is a company registered under Indian .
It is engaged in the business of manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals.
Industrial alcohol is one of the raw materials used by the appellant company.
Though, till the year 1969, the appellant was purchasing industrial alcohol from the market, it installed its own distillery from may 1970 at Bilimora, within the State of gujarat.
This was for the purpose of manufacturing industrial alcohol from molasses.
On July 3rd, 1969 the second respondent, the Director of Prohibition and excise, Gujarat State, Ahmedabad issued a licence to the appellant for manufacturing spirit.
In accordance with the conditions No. 2 and 3 of the licence, the 2nd respondent appointed a staff of 9 persons.
The said staff consisted of one Inspector, one Sub Inspector, one Nayak, one jamadar and five constables to supervise the manufacture of spirit in the 678 appellant 's distillery plant.
The appellant was also required to provide residential accommodation to the supervisory staff within the factory premises.
On July 3rd, 1969 the 2nd respondent asked the appellant to deposit the supervisory charges.
From time to time, these supervisory charges were also deposited in accordance with the directions of 2nd respondent.
It requires to be stated at this stage that the levy of supervisory charges, is traceable to section 58(A) of Bombay Prohibition Act of 1949.
The Section says: "Sec.58(A) : The State government may be general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use collection or cultivation of any intoxicant, denatured spirituous preparation, hemp, mhowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Government by person manufacturing, importing,exporting,transporting, storing,selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation hemp, mhowra flowers or molasses: Provided that the State Government may exempt any class of persons or institution from paying the whole or any part of the cost of such staff." Section 143 of the said Act confers power for making rules.
Rules have been framed called Bombay Prohibition (Manufacture of Spirit) (Gujarat)Rules, 1963.
These rules inter alia regulate the working of distilleries, manufacturing spirit.
Rule 2 provides for the licence.
Condition Nos.2 and 3 of the licence require payment of the supervisory staff and for provision of quarters for the residential accommodation of the staff respectively.
The appellant filled Civil Application No. 163 of 1973 in the High court of Gujarat challenging the constitutional validity of Section 58(A) of the Act.
By the impugned judgment,, the said petition was dismissed.
Hence, the present civil appeal.
679 The arguments of the appellant briefly stated will boil down to this.
It has been categorically laid down in Synthetics & Chemicals Ltd. vs State of U.P. & Ors., [1989] Supp. 1 SCR 623 that in respect of industrial alcohol, the states have no power to impose the impost as is sought to be done in the instant case.
The theory of privilege as adumbrated by the High court can no longer be sustained in view of the judgement.
Even otherwise, there is no quid pro quo.
In countering the submissions, it is argued on behalf of the State that Synthetics and Chemicals Ltd. etc.
(supra) dealt merely with the vend fees.
That is not the case here.
The maintenance of the Staff contemplated under Section 58(A) of the Act is primarily for the purpose of ensuring that while dealing with industrial alcohol, no attempt shall be made to divert nonpotable alcohol.
Therefore, by regulatory measures, the States sees to it that industrial alcohol is not diverted for the use as potable alcohol.
Such a regulatory measure is perfectly valid as seen from Southern Pharmaceuticals & Chemicals vs State of Kerala, ; This decision was noted with approval in Synthetics & Chemicals Ltd. Etc.
(Supra).
However, such a power was sustained though not on police power but as a regulatory measure.
As regards the services rendered, the appellants are precluded from contending that the services did not make the impost, since the High Court has noted that it was not contended before it that there was not sufficient quid pro quo between the quantum of impost and the services rendered to the manufacturer or businessman.
We are relieved of the necessity of deciding the correctness of these submissions by a detailed judgment, since identical points were raised in Civil Appeal No. 503 of 1974 (Sh.
Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. vs The State of Gujarat & Anr.) to which one of us (Mohan, J.) was a party.
The said Civil Appeal has been dismissed considering these aspects and upholding the validity of Section 58(A).
The said judgment will squarely cover this case as well.
We fully concur with the reasons contained therein.
In Synthetics & Chemicals Ltd. etc.
(supra) concerning the power to make regulations in order that non potable alcohol may not be diverted for use as potable alcohol, the following observations are found at page 681: 680 "The position with regard to the control of alcohol industry has undergone material and significant change after the amendment of 1956 to the IDR Act.
After the amendment, the state is left with only the following powers to legislate in respect of alcohol: (a) it may pass any legislation in the nature of prohibition of potable liquor referable to entry 6 of list II and regulating powers.
(b) it may lay down regulations to ensure that non potable alcohol is not diverted and misused as a substitute for potable alcohol.
(c) the State may charge excise duty on potable alcohol and sales tax under entry 52 of list II, However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (price Control) Orders, sales tax cannot be charged by the State on industrial alcohol.
(d) however, in case State is rendering any service, as distinct from its claim of so called grant of privilege, it may charge fees based on quid pro quo.
" In this connection, we may also usefully refer to southern Pharmaceuticals & Chemicals (supra).
This case related to the constitutional validity of Sections 12 A, 12 B,14(e) & (f), 68 A of Kerala Abkari Act (1 of 1077) and Rules 13 and 16 of the Kerala Rectified Spirit Rules, 1972.
One of the contentions raised was that the provision contained under Section 14 (e) of the Act for the collection of supervisory charges was clearly invalid inasmuch as: (a) They are in conflict of Rule 45 of Central Excise Rules and, (b) They could not be sustained as fee as there was no quid pro quo.
In the said judgment at page 1875, para.27 Southern Pharmaceuticals & Chemicals (supra) reads as under: " A fee may be charged for the privilege or benefit conferred, 681 or service rendered or to meet the expenses connected there with.
A fee my be, levied to meet the cost of supervision and may be, something more.
It is in consideration for the privilege, licence or service".
Again in para 29, it was stated thus: "There is a broad co relationship between the fee collected and the cost of the establishment under Section 14(e) of the Act it is provided that the commissioner, with the previous approval of the Government may prescribe the size and nature of the establishment necessary for supervision of a manufactory and the cost of the establishment and other incidental charges in connection with such supervision be realised from the licensee.
There can be no doubt that the supervisory staff is deployed in a bonded manufactory by the Government for its own protection to prevent the leakage of revenue, but there is no denying the fact that a licensee undoubtedly receives a service in return.
The cost of the establishment levied under Section 14(e) of the Act is to be collected from the licensee in the manner provided by Rule 16(4) of the Kerala Rectified Spirit Rules, 1972,relevant part of which reads: "(4) All the transactions in the spirit store shall be conducted only in the presence of an Excise Officer not below the rank of an Excise Inspector.
Such officer shall be assisted by at least two Excise Guards.
The cost of establishment of such officer and the guards shall be payable by the licensee in advance in the first week of every month as per counter signed challan to be obtained from such officer.
The rate at which the cost of establishment is to be paid by the licensee shall be fixed by the Commissioner from time to time and intimated to the licensee in writing. ." There is admittedly no provision made in the Central Rules for the recovery of supervisory charges, perhaps because as the Court observed in the Hyderabad Chemicals and Pharmaceutical 's case ; (supra) it was felt that the duty on medicinal and toilet preparations containing alcohol 682 would be sufficient to defray the cost of such supervision.
But the absence of such a provision in the Central Rules, as we have already indicated, does not deprive the State from making a provision in that behalf.
It is true that the supervisory charges are in the nature of a compulsory exaction from a licensee and the collections are not credited to a separate fund, but are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure incurred in redering the service.
However, as observed in Government of Madras vs Zenith Lamp & Electricals Ltd., ; 1973 SC 724) followed in State of Rajasthan vs Sajjanlal Panjawat,[1974] 2 SCR 741; (AIR that by itself is not decisive, by reason of ART.
266 of the Constitution.
It is equally true that normally a fee is uniform and no account is taken of the paying capacity of the recipient of the service, but absence of uniformity will not make it a tax if co relationship is established [see Commissioner H.R.E., Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt and Government of Madras vs
Zenith Lamp and Electricals Ltd., ; and ; (supra)].
The cost of supervision would necessarily vary with the nature and extent of the business carried on by a licensee.
Therefore, the supervisory charges can be sustained even if they are regarded as a fee for services rendered by the State or its instrumentalities.
" In dealing with Synthetics Chemical case (supra) the following observations were made: "Learned Advocates General for the States of Gujarat and Kerala have also made their submissions, and referred to several decision and the concept of police power, and contented that imposition of a fee would be the most effective method of regulating intoxicating liquor other than alcohol.
According to the Advocate General of Kerala, that would be justified as the reasonable measure in regard to intoxicating liquor.
According to him, it has been accepted by courts all along that the 'police power ' of the State enables regulations to be made regarding manufacture, transport, possession 683 and sale of intoxicating liquor.
Such police power could be exercised as to impose reasonable restriction as to effectuate the power.
He referred to the observations of this Court in Cooverjee B.Bharucha vs The Excise Commissioner and the Chief Commissioner, Ajmer & Ors., ; which quoted the passage from Crowley vs Christensen,(1890) 24 Lawyers ' Edn. 620.
Reference was also made to Hari Shanker 's case (supra).
Where this Court quoted Vol.
38 of the American Jurisprudence where it was stated that the higher the fee is imposed for a licence, better is the regulation.
Reliance was also placed on P. N. Kaushal 's case (supra).
It was contended that it has been accepted by this Court that the police power is excercisable for regulation of an activity of a legislature within the permissible field or impost as regulatory measure.
It may be valid though it may neither be fee nor a tax in the limited sense of the term.
See the observations of this court in Southern Pharmaceuticals & Chemicals.
Trichur & Ors., etc.
vs State of Kerala & Ors.
,etc.[1982] 1 SCR 519 at 537 .
Regarding regulatory measures in connection with medicinal preparations containing alcohol it was observed by this Court that the impugned provisions had to be enacted to ensure that the Rectified spirit is not misused under the pretext of being used for toilet and medicinal preparations containing alcohol.
Such a regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health.
The American doctrine of police power is not perhaps applicable as such in India, but power of sovereignty to regulate as part of the power of the competent legislature to effectuate its aim are there.
It is true that that in the State of West Bengal vs Subodh Gopal Bose & Ors., [1954]V SCR 587 at 601 604 and Kameshwar Prasad & Ors., vs The State of Bihar & Anr., ; the concept of police power was accepted as such, but this doctrine was not accepted in India as an independent power but was recognised as part of the power of the State to legislate with respect to the matters enumerated in the State and Concurrent Lists, subject to constitutional limitations.
It 684 was that the American jurisprudence of police power as distinguished from specific legislative power is not recognised in our Constitution and is, therefore, contrary to the scheme of the Constitution.
In interpreting the provisions of our Constitution, we should go by the plain words used by the Constitution makers and the importing of expression like 'police power ', which is a term of variable and indefinite connotation can only make the task of interpretation more difficult.
It was contended that in enacting a law with respect to intoxicating liquor as part of the legislative power measures of social control and regulation of private rights are permissible and as such may even amount to prohibition.
We are of the opinion that we need not detain ourselves on the question whether the States have the police power or not.
We must accept the position that the States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and or check industrial alcohol being used as intoxicating or drinkable alcohol.
The question is whether in the grab of regulations a legislation which is in pith and substance, as we look upon the instant legislation, fee or levy which has no connection with the cost or expenses administering the regulation, can be imposed purely as regulatory measure.
Judges by the pith and substance of the impugned legislation, we are definitely of the opinion that these levies cannot be treated as part of regulatory measures.
in this view of the matter we do not detain ourselves with examining the numerous American decisions to which our attention was drawn by learned counsel very elaborately and thoroughly.
" This is an added reasoning to uphold the validity of Section 58(A).
Turning to the second argument about the absence of quid pro quo, we need only extract the following from the judgment of the High Court: "Section 58(A) of the Bombay Prohibition Act creates a statutory duty of supervision and incidentally provides for recovering from a manufacturer or a businessman the cost of supervision which is primarily necessitated by the manufacturer 685 or businessman having been permitted under a licence to carry on lawfully a business or industrial activity which would otherwise have been unlawful.
We need not go into the details of this aspect because it has not been contended before us that if the levy under Section 58A is held to be a fee, there is no sufficient quid pro quo between the quantum of the impost and the services rendered to the manufacturer or businessman.
" In the result, the appeal fails and is dismissed with cost.
V.P.R. Appeal dismissed. | The appellant, a company registered under the Indian , was using industrial alcohol as one of the raw materials for manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals.
In May, 1970, the company installed its own distillery for the purpose of manufacturing industrial alcohol from mollasses.
The respondent No.2 on 3.7.1969 issued a licence to the company for manufacturing spirit.
In accordance with the conditions No. 2 and No. 3, the respondent No. 2 appointed a 9 member supervisory staff consisting of one Inspector, one Sub Inspector, one Nayak, one Jamadar and five constables, to supervise the manufacture of the spirit in the company 's distillery plant.
The appellant company was required to provide residential accommodation to the supervisory staff within its factory premises and to deposit supervisory charges from time to time.
The company complied the requirements.
In 1973 the appellant company filed a Civil Application in the High Court challenging the constitutional validity of the Section 58(A) of the Bombay Prohibition Act, 1949.
The High Court dismissed the petition, hence this appeal by certificate granted by the High Court under Articles 132(1)133(1)(a) of the Constitution.
The appellant company contended that this Court in Synthetics and Chemicals Ltd. case, [1989] Supp.1 SCR 623 held that in respect of 676 industrial alcohol, the States had no power to impose the impost;that in view of the judgment of this Court, the theory of privilege as adumbrated by the High Court could not be sustained, and that there was no quid pro quo.
The respondent State submitted that the Synthetics and Chemicals Ltd. case dealt merely with the vend fees, and not about supervisory charges.
Dismissing the appeal, this Court HELD: 1.01.
The States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and/or check industrial alcohol being used as intoxicating or drinkable alcohol.
This is an added reasoning to uphold the validity of Section 58(A).
[684D, F G] Synthetics & Chemicals Ltd.v.
State of U.P. and Ors., [1989] Supp.1 SCR 623 Followed.
1.02.Section 58(A) of the Bombay Prohibition Act creates a statutory duty of supervision and incidentally provides for recovering from a manufacturer or a businessman having been permitted under a licence to carry on lawfully a business or industrial activity which would otherwise have been unlawful.
[684G 685A] 1.03.The maintenance of the staff contemplated under Section 58(A) of the Act is primarily for the purpose of ensuring that while dealing with industrial alcohol, no attempt shall be made to divert non potable alcohol.
Therefore, by regulatory measures, the State sees to it that industrial alcohol is not diverted for the use as potable alcohol.
Such a regulatory measure is perfectly valid.
However, such a power was sustained though not on police power but as a regulatory measure.
[679C D] Southern Pharmaceuticals & Chemicals vs State of Kerala, ; ; Sh.
Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. vs The State of Gujarat & Anr., C.A. No. 503 of 1974 Followed.
The appellants are precluded from contending that the services did not make the impost, since the High Court has noted that it was not contended before it that there was not sufficient quid pro quo between the 677 quantum of impost and the services rendered to the manufacturer or businessman.
[679E F] |
N: Criminal Appeal No. 144 of 1992.
From the Judgement and Order dated 27.9.1991 of the Karnataka High Court in W.P. No. 113 of 1991.
WITH Writ Petition (Crl.) No. 1394 of 1991.
C.S. Vaidyanathan and P.K. Manohar for the Appellant.
K.T.S. Tulsi, Addl.
Solicitor General, P. Parmeswaran, A.K. Srivastava, M. Veerappa and Kh.
Nobin Singh (For the State of Karnataka) for the Respondents.
The Judgment of the Court was delivered by section RATANAVEL PANDIAN, J.
Leave granted.
The appellant/petitioner K.P.M. Basheer by the above appeal is challenging the correctness and legality of the order dated 27th September 1991 made by the High Court of Karnataka dismissing the Writ Petition filed by the appellant challenging the legality and validity of the order of detention dated 7.1.1991 passed by the State of Karnataka.
The first respondent in the appeal, namely, the State of Karnataka in exercise of the powers conferred by the Section 3(1) of the (hereinafter 1077 referred to as `the Act ') passed the impugned detention order on 7th January 1991 with a view to preventing him from engaging in keeping and transporting smuggled goods falling within the mischief of Section 3(1)(iii) of the Act.
The appellant was directed to be detained and kept in the custody of the central prison, Banglore.
The brief facts of the case which led to the passing of the impugned order can be summarised as follows: On 12.11.1990 the Superintendent of Central Excise on information interrogated the appellant at the Balgaum bus stand on his arrival from Bombay in the presence of some panchas and recorved two gold pellets with foreign markings each weighing ten tolas, wrapped in a paper packet from his front side right watch pocket of his pant.
The appellant was not having any valid permit and also was not able to give any satisfactory explanation for possessing the gold pellets.
Therefore, the Superintendent entertaining a reasonable belief that they were smuggled gold pellets recorded the statement of the appellant.
The State Government on the information passed on by the sponsoring authority passed the impugned order on 7.1.1991 on being subjectively satisfied of the necessity of passing the impugned order on the materials placed before it.
The detention order was served on the detenu only on 28.6.1991 from which date onwards he has been detained.
Challenging the detention order, the petitioner filed a Writ Petition No. 113/91 before the High Court of Karnataka and raised several contentions; those being (1) the order of detention is based on a solitary incident; (2) there has been an undue and prolonged delay in serving the order on the detenu; and (3) the materials placed before the detaining authority were not sufficient for drawing the requisite satisfaction for passing the impugned order.
The High Court rejected all those contentions and dismissed the Writ Petition.
Hence this appeal.
Before this Court the petitioner has filed a separate Writ Petition under Article 32 of the Constitution of India raising certain additional grounds.
Those grounds are: (1) The detenu made a request to the detaining authority to forward a copy of his representation to the Central Government and that the detaining authority has not forwarded the same to the Central Government as requested by him.
Even assuming that it has been forwarded, his represe tation has not been disposed of in time and as such there is violation of Article 22(5) of the Constitution of India.
1078 (2) The normal criminal process which would be adequate to take care of the possession of the gold has not been followed; and (3) The first respondent in the Writ Petition (Union of India) has failed in its duty to inform the petitioner regarding the Government instruction issued to the sponsoring agencies not to make an order of detention in cases where the value of the smuggled goods is less than Rs.1 lakh.
In the Writ Petition both the State Government as well as the Central Government have filed their counter affidavits refuting all the additional grounds.
Before scrutinising the additional grounds raised in the Writ Petition, we shall now examine the contentions raised in the appeal and find out whether the order of the High Court warrants interference.
Mr. C.S. Vaidyanathan, the learned counsel appearing on behalf of the appellant contends that the delay of more than five months in executing the order of detention is not only an inordinate and unreasonable one but also stands un explained and on that ground the High Court ought to have set aside the order of detention.
According to him, the High Court has not gone deep into that question but summarily disposed of the same holding "The explanation offered by the 1st respondent, in para 9 of the statement of objection is quite acceptable.
" Of course, this contention has not been specifically taken in the Memorandum of Appeal, but there can be no bar to advance a legal argument in a case of this nature and especially when such a contention has been raised before the High Court.
We want through the explanation given in para 9 of the counter affidavit filed on behalf of the first respondent by the then commissioner and Secretary to Government, Home Department.
It is not denied that the detention order was executed after a period of 5 months and 11 days.
What the first respondent states is that various efforts were taken to trace the detenu at Tellicherry at the address given in the grounds of detention as well as in the Bombay address, but he could not be secured.
Further it has been stated that though the arresting officers attempted to secure him at the Court of Chief Judicial Magistrate at Belgaum on 6.3.91, 28.3.91 and 14.5.91 on which dates the criminal case aS against him stood posted before that court, the officers could not do so as the appellant did not appear before the court for hearing.
Further it is mentioned that though COFEPOSA Section in the office of the Collec 1079 torate of Customs requested the State Government on 19.4.91 to initiate action under Section 7(1)(b) of the Act it was not done so because the seizing unit was asked to make one more attempt to trace out and detain the appellant.
This explanation is not a satisfactory and reasonable one for the following reasons : (1) No sufficient cause is shown for not taking any action under Section 7 of the Act.
(2) It appears from the paragraph 9 of the counter that the officers came to know of the correct address of the appellant at Bombay, but they could not trace him.
It may be pointed out that the Bombay address at which place the appellant detenu was attempted to be secured is not given in the counter.
Had it been given, the Court would have been in a position to verify the averments made in the grounds of detention stating that the address at Bombay given by the appellant was a fictitious one.
In paragraph 17 of the Writ Petition filed before the High Court, the appellant has asserted that he appeared before the Asstt.
Collector of Customs, Marine Lines, Bombay on 6.2.91 and 20.2.91 but no attempt was made to arrest and detain him.
This specific averment is not all denied in the counter.
This indicates that the arresting officers did not take any real and genuine effort to secure and detain the appellant.
The explanation now offered stating that the appellant was fugitive, eluding the dragnet of the detention order cannot be accepted, because during the alleged period of search he has appeared before the Assistant Collector of Customs, Bombay on two occasions during Feb. 1991, that is after passing of the detention order.
All the above points show that no serious and sincere effort appears to have been taken by the arresting officers and that there was only exchange of correspondence between the Department and the arresting officers.
It is incomprehensible as to why no effort has been made to secure the appellant/detenu during the two days, namely, on 6th and 20th February when he appeared before the Assistant Collector of Customs.
No supporting affidavits or documents are filed to substantiate the averments made in the counter.
Incidentally, it may be mentioned that though the two gold pellets (the contrabans) were seized from the appellant on 1080 12.11.90 the authorities concerned passed these orders only on 7.1.1991, i.e. nearly after two months.
Under these circumstances, we are of the view that the order of detention cannot be sustained since the `live and proximate link ' between the grounds of detention and the purpose of detention is snapped on account of the undue and unreasonable delay in securing the appellant/detenu and detaining him.
As we have now come to the conclusion that the order of detention is liable to be set aside on this ground alone we are not dealing with other contentions raised in the Memorandum of Appeal as well as in the Writ Petition.
Hence for the reasons stated above we allow the appeal, set aside the order of the High Court and quash the impugned detention order and direct the detenu to be set at liberty forthwith.
In view of the order in this present appeal, no order is necessary in the Writ Petition.
R.P. Appeal allowed. | The appellant, on 12.11.1990, was found carrying two gold pellets with foreign markings each weighing ten tolas, without any valid permit.
The order of detention under S.3(1) of the conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 was passed on 7.1.1991.
The detention order was served on him on 28.6.1991.
The Writ Petition challenging the detention order, inter alia, on the ground of undue and reasonable delay in its execution was dismissed by the High Court.
The detenu filed the appeal by special leave against the High Court 's order as also the writ petition under Article 32 of the Constitution before this Court.
Allowing the appeal and disposing of the writ petition, this Court, HELD: 1.1 The order of detention cannot be sustained since the `live and proximate link ' between the ground of detention and the purpose of detention is snapped on account of the undue and unreasonable delay in securing the appellant/detenu and detaining him.
The order of detention is liable to be set aside on this ground alone.
[p. 1080A B] 1.2 Though the two gold pellets (the contrabands) were seized from the appellant on 12.11.1990, the order of detention was passed on 7.1.1991, and the detention order was executed after a period of 5 months and 11 days.
{pp. 1078F; 1079G H; 1080A] 1076 2.1 No sufficient cause is shown for not taking any action under s.7 of the COFEPOSA Act.
The explanation that though COFEPOSA section in the office of the Collectorate of Customs requested the State Government on 19.4.1991 to initiate action under s.7(1) (b) of the Act it was not done so because the seizing unit was asked to make one more attempt to trace out the appellant is not satisfactory and reasonable one.
[pp. 1078G H; 1079A B] 2.2 No serious and sincere effort was taken by the arresting officers: There was only exchange of correspondence between the Department and the arresting officers.
It is incomprehensible as to why no effort was made to secure the appellant/detenu during the two days, namely, on 6th and 20th Feb.91, when he appeared before the Assistant Collector of Customs.
1079F G] |
: Criminal Appeal No 572 of 1981.
From the Judgment and Order dated 26.8.1980 of the Patna High Court in Criminal Appeal No. 15 of 1976.
Ranjit Kumar for the Appellants.
D. Goburdhan for the Respondent.
The Judgment of the Court was delivered by PUNCHHI, J.
This appeal by special leave is against the judgment 609 and order of the High Court at Patna dated August 26, 1980 passed in Criminal Appeal No 15 of 1976.
The facts giving rise to this appeal are that a dacoity took place at about midnight on the night intervening 5th 6th April, 1970 in the house of Dhaniram Singh, P.W.11, in village Awadhiya.
According to the prosecution 25 to 30 persons armed with guns, lathis, bhalas and gharasa etc.
committed the dacoity and apart from looting away belongings of Dhaniram Singh, his uncle Khobari Singh was shot dead and as many as 8 persons including Dhaniram Singh P.W.11 re ceived injuries.
The First Information Report was lodged by Dhaniram Singh, P.W.11, at 6.30 a.m. on April 6, 1970 at police station, Bhabhua at a distance of about 7 miles from the place of the occurrence.
In it he could name 7 persons specifically as being members of the gang of dacoits.
The remaining dacoits were left unnamed.
The investigating agency when set into motion took steps as necessary.
But at this stage, it would be sufficient to mention that neither could the investigation recover the looted property valued by the concerned P.Ws.
at about Rs. 8,000 nor could it get the particulars of a large number of other participants in the dacoity.
When the matter went to triaL before the First Additional Sessions Judge, Arrah, against the 6 named per sons and one other, the old Criminal Procedure of 1898 governed the trial and before hand there were commitment proceedings before a Magistrate in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry.
One accused named Kanhaiya Singh in the meantime died.
Two other accused Sukhari Singh and Gulab Gosain also died.
There remained 6 of the original accused named in the F.I.R. and one more, Ram Naresh Singh, not so named to face trial and bear the conviction.
The Learned Additional Sessions Judge convicted all the 7 accused under Section 396 I.P.C. and imposed on them a sentence of life imprisonment.
On appeal to the High Court two of them namely Ram Naresh Singh the one unnamed in the F.I.R. and Charittar Ahir, one of the so named, were acquitted but the convic tions of Munni Singh, Fekoo Singh, Behari Singh, Dadan Singh and Guput Singh, the appellants herein, were maintained.
The appellants are residents of village Awadhiya where the occurrence took place.
The victims of the crime and other prosecution witnesses are also from Awadhiya.
The village appears to be a small one consisting only of 26 27 houses comprising of various castes like Brahmins, Rajputs, 610 Kahars, Ahirs and Kurmis.
This is what Hira Singh, P.W.2 has deposed at the trial.
The first informant suggested that there was a simmering discontent between his family and the family of Sukhari Singh accused.
Munni Singh, appellant is the son of Sukhari Singh, Fekoo Singh and Behari Singh, appellants are the nephews of Sukhari Singh and Guput Singh, appellants, is the brother of Sukhari Singh.
Thus they are closely related.
There was a pond measuring about 3 acres in the village, which Sukhari Singh claimed, had been bestowed on him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
He had taken control of the Tank but some time before the occurrence had sown "singhara" in it and had prevented people to let their cattle come there to drink water from it.
The Panchayat of the village when approached had taken note of it and had 3/4 days prior to the occurrence suggested to Sukhari Singh that he should rather surrender the Tank in the name of the Shiva Temple.
But, he had correspondingly suggested to the Pan chayat that the place constructed and occupied by the com plainant party Khobari Singh and others for tying their cattle at the bank of the pond, which was part of unsettled lands, should also be likewise given to the shiva Temple.
The Panchayat was not agreeable to the counter suggestion because the possession and usage of that land by Khobari Singh was very old.
With such grudge in mind, it is the case of the prosecution, that the assault was masterminded and made at the house of the complainant with the sole purpose to avenge and to commit dacoity.
The details of the occurrence are provided by Dhaniram Singh, P.W.11, the first informant.
He stated that on the day of the occurrence he was in his village having come on a month 's leave from his posting as a Weapon Senior Engineer in District Kanpur.
On the night of the incident, three cots lay spread in the outer courtyard of their house.
He was sleeping on one of them, and on the remaining two individu ally were his cousin Baliram Singh, P.W.3, and his uncle Khobari Singh (deceased).
He was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, Garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
Dhaniram Singh then claims that he recognised in the torch light the accused inclusive of 5 appellants.
Munni Singh and Fekoo, appellants had guns and the remaining 5 had some other arms.
Sukhari Singh shouted kill kill.
Munni Singh then fired with his gun towards Dhaniram Singh but 611 he rolled down and by the fall hurt himself on the thigh and the gun fire did not hit him.
Then he got up and started running.
One of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he claims to have seen the remaining part of the occurrence.
He saw that when his uncle Khobari Singh had been awakened Munni Singh appellant fired at him and he fell down.
Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scold ed his brother Baliram, P.W.3 to keep lying down on his cot.
In the occurrence, however, Baliram Singh. P.W.3, received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion, other villag ers then started collecting.
The dacoits then decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
Khobari Singh and other injured persons were removed to be taken to the hospi tal but Khobari Singh died on the way and then Dhaniram Singh proceeded to the Police Station, Bhabua, taking the dead body of his uncle with him where the Office in charge, P.W.12 Ram Nagad Tiwari, recorded his statement at 6.30 a.m. on 6.4.1970.
Shri Tiwari went to the spot and saw the evi dence of dacoity in the form of things lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons.
Finally investigation was completed by another officer and the accused persons were put up for trial as mentioned earlier.
Before the High Court, as also here, it is admitted that there was commission of dacoity in the house of the first informant on the day as alleged, in which Khobari Singh was killed and others were injured.
It is also not disputed that the dacoity being a conjoint act all persons participating in the crime would be equally liable for the killing of Khobari Singh.
Thus the only exercise before the High Court, as also here, is to determine who were the persons who took part in the commission of the dacoity.
It is note worthy that prosecution had four sets of witnesses 612 which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was iden tity of the appellants established.
The first set consisted of three injured persons Ramadar Singh, Dinanath Singh and Dhirja Singh who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of Baliram Singh, P.W.3 Rambali Singh, P.W.4 and Jhuri Singh P. W. 9 .The names of P.Ws 4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Trial Judge as well as the High Court.
Even the statement of P.W.3 was left aside by the High Court.
So this set too did not further the prosecution case.
In the third set was the evidence of P.W.1 Bishwanath Chaubey, P.W. 5 Jokhan Bind and P.W. 8 Chirkut Singh who did not identify any of the da coits.
None of these witnesses was declared hostile.
Thus their evidence rather goes adverse to the prosecution.
The fourth set consisted of evidence of P.W.2 Hira Singh and P.W.11 Dhaniram Singh whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, that is, Ram Naresh Singh and Charittar Ahir were acquitted because P.W. 2 named one and excluded the other and P.W.11 named the other one and excluded the former, giving rise to a doubt about the complicity of those two.
Thus we are left to see whether the conviction of the appellants can be based on the evidence of these eye witnesses P.Ws 2 and 11.
We have already given a condensed version of Dhaniram Singh, P.W.11.
Now according to the Hira Singh P.W.2, his house is 4 5 houses away from the house of the complainant and when he became awake on hearing the noise he went to see the occur rence taking a torch which kept lighting.
According to him he hid himself behind a Bahaya tree and from where he could keep watching the activities of the dacoits whose faces he saw.
As he says he could identify 8 dacoits.
These were Munni Singh, Fekoo Singh Dadan Singh, Guput Singh and Behari Singh appellants as respectively armed.
In addition there were Sukhari Singh (since deceased), Ram Naresh Singh and Kanhiya Singh who are no longer in the picture.
After the departure of the dacoits he went close to the scene and found Khobari Singh to have been hit by gun shots and that his condition at that time was serious.
Then he went in the company of P.W. 11 firstly towards the hospital and then to the police Station.
According to this witness though he focussed the torch for 3 or 4 minutes before he went in hiding, the focus did not fall on the faces of the dacoits and after having gone in hiding he 613 had not lit his torch.
Yet he claims that he had identified the dacoits in the torch light.
He is also certain that no dacoit had muffled his face.
The appellants, according to him, had painted their faces but were not in a position to conceal their identity.
He admitted that 3 or 4 day prior to the incident, a Panchayat had been convened in which Sukhari Singh was asked to surrender the Tank but he said he would if Khobari Singh demolishes and surrenders the house built on the bank of the Tank first.
And further that when the Panchayat told Sukhari Singh that the house having been there for a long time, could not be demolished and even Khobari Singh was not agreeable to do so, all were angry with the accused persons on account of the Tank.
So far as Dhaniram Singh, P.W.11 is concerned, he too admits about the convening of the Panchayat 3 or 4 days earlier on which acount Sukhari Singh had nursed an angry feeling due to the happenings in the Panchayat.
With regard to the actual ocurrence, P.W. 11 says that when the first shot aimed at him had not hit him, and the second shot had been fired at his uncle, he then ran 25 30 steps and hid himself in the field of the wheat crop and while running he heard the firing of the third shot.
At that juncture he claimed to have kept lighting his torch now and then from the place of his hiding to see what was happening.
The point which rises for consideration is whether P.Ws2 and 11 could individually, with the aid of their respective torches, identify the dacoits which were 25 30 in number and would the dacoits let them be identified by letting them switch on their torches off and on as claimed ? Would these two wit nesses not have attracted attention of the dacoits to be taken care of in priority in their place of hiding ? It seems to us that seeing the formidable force of the dacoits and their number these two P.Ws. would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confidence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and it was like day light as said by P.W.1 Bishwanath Chaubey.
It is 614 difficult in this situation to believe P.W. 11 that he could in a split second have such a perception so as to identify all the five appellants and some others, It is obvious and natural that behind a lit torch darkness prevails hiding the identify of the torch bearer and persons situated close.
So identity of the dacoits was not possible by P.W.11 Moreover it is ununder standable that when the dacoits had chosen dark hours for committing the dacoity, obviously to take advantage of the darkness, and when they were 25 30 in number, most of them unknown persons, where was the need for the appellants to be in the forefront to risk themselves for identification.
This view we are entertaining apart from what the High Court has opined that muffling of faces and concealment of identify by dacoits is not universally parac tised.
Thus in the facts and circumstances of the case, we entertain a grave doubt about the participation of the appellants in the crime because of the failure of the prose cution to lead convincing evidence about the identity of the appellants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the particpation of the appel lants in the cirme.
It may well be that the motive asserted by the prosecution relating to the dispute about the pond may have given cause to Dhaniram Singh, P.W.11 to assume that the appellants were responsible for the dacoity commit ted in his house and for Hira Singh P.W. 2, to entertain that belief in a sweep.
For the foregoing reasons, we find it difficult to sustain the conviction of the appellants.
Accordingly, they are acquited of the charge.
The appeal is accepted. | The appellants, the victims of the dacoity and other prosecution witnesses were residents of the village, where the crime took place in the house of P.W.11.
The accused were closely related.
P.W. 11 's cousin and uncle were P.W. 3 and the deceased, respectively, and P.W. 2 was also a close relative of P.W. 11.
There was a simmering discontent between the family of P.W. 11 and the family of the accused, Sukhari Singh.
The accused Sukhari Singh claimed that a pond was bestowed of him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
As the tank was under the control of the accused, he prevented the cattle of the villagers from drinking water from it.
3/4 days prior to the occurrence of dacoity, the Pan chayat of the village suggested to the accused Sukhari Singh to surrender the tank in the name of a Shiva temple.
The accused suggested to the Panchayat the place constructed and occupied by the complainant party, (the deceased and his relatives) for tying their cattle on the unsettled lands at the bank of the pond also should be likewise given to the Shiva temple.
The Panchayat was not agreeable to the counter suggestion of the accused.
It was the case of the prosecution that the dacoity was mastermined and made at the house of the complainant with a sole purpose to avenge.
On the night intervening 5th 6th April, 1970 the P.W. 11, the first informant and his cousin, P.W.3 and his uncle, the deceased were sleeping 606 on the cots lay spread in the outer courtyard of their house.
P.W. 11 was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
P.W.11 recognised in the torch light the accused inclusive of 5 appellants.
Accused sukhari Singh shouted, "kill kill." Accused Munni Singh fired with his gun at P. W. 11 but the gun fire did not his him.
While P.W. 11 was running, one of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he saw the remaining part of the occurrence.
P.W. 11 's uncle was shot by the accused Munni Singh and he fell down Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scolded his cousin P.W. 3 to keep lying down on his cot.
In the occurrence, P.W.3 received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion of the vil lagers, the dacoits decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
P.W. 11 's uncle and other injured persons were removed to be taken to the hospital, but P.W. 's uncle died on the way.
Then P.W.11 proceeded to the Police Station, taking the dead body of his uncle with him, and lodged F.I.R. P.W.12 went to the spot and saw the evidence of dacoity in the form of thing lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons Finally investigation was completed by another officer and the accused persons were put up for trial.
The matter went to trial under the old Code of Criminal Procedure before the First Additional Sessions Judge against the 6 named persons and one other.
There were commitment proceedings before a Magistrate 607 in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry, out of which three accused died.
There remained 6 of the original accused named in the F.I.R. and one more, not so named to face trial.
The trial court convicted all the 7 accused under Section 396, IPC and imposed on them a sentence of life imprisonment.
On appeal, the High Court acquitted two of them, namely Ram Narain Singh, the one unnamed in the F.I.R. and one Charittar Ahir, one of the so named and maintained the convictions of other accused.
This appeal by special leave was by the other accused challenging the judgment of the High Court, Allowing the appeal of the accused, this Court, HELD : 1. 01.
The prosecution had four sets of witnesses which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was identity of the appellants established.
The first set consisted of three injured persons who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of P.W. 3, P.W.4 and P.W.9.
The names of P.Ws.4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Courts below.
Statement of P.W. 3 was left aside by the High Court.
In the third set was the evidence of P.W.I P.W.5 and P.W.8, who did not identify any of the dacoits.
None of these witnesses was declared hos tile.
Thus their evidence rather goes adverse to the prose cution.
The fourth set consisted of evidence of P.W.2 and P.W.11 whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, were acquitted because P.W.2 named one and excluded the other and P.w.11 named the other one and excluded the former giving rise to a doubt about the complicity of those two.
[611 612D] 1.02.
Seeing the formidable force of the dacoits and their number, the two P.Ws.2 and 11 would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the 608 dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confi dence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and its was like day light as said by P.W.1.
[613 F H] 1.03.
It is difficult in the situation to believe P.W.11 that he could in a split second have such a perception so as to identify all the five appellants and some others.
It is obvious and natural that behind a lit torch darkness prevails hiding the identity of the torch bearer and persons situated close.
So identity of the da coits was not possible by P.W.11.
[613 H614 A] 1.04.
In the facts and circumstances of the case, there is a grave doubt about the participation of the appel lants in the crime because of the failure of the prosecution to lead convincing evidence about the identity of the appel lants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the participation of the appellants in the crime.
It may well be that the motive asserted by the prose cution relating to the dispute about the pond may have given cause to P.W.11 to assume that the appellants were responsi ble for the dacoity committed in his house and for P.W.2, to entertain that belief in a sweep.
[614 C E] |
Petition (Civil No. 651 of 1986.
(Under Article 32 of the Constitution of India).
P.P. Rao, Ms. Bina Gupta, Ms. Vandana Saggar and Ms. Monika Mohil for the Petitioners.
V.C. Mahajan, K. Swamy, Ms. A. Subhashini and Ms. Niran jana Singh for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
This petition under Article 32 of the Costitution has been filed by Prahalad Singh claiming that he and other similarly placed Compositors working in the Government of India Presses all over India are entitled to the status and salary of Compositors, Grade I in the "highly skilled" category with effect from January 1, 1966, The said relief is claimed on the sole ground that one T.R. Thakur has already been given Grade I in the "highly skilled" category as a result of the judgment in his favour given by the Himachal Pradesh High Court.
The writ petition (C.W. 61/69) filed by T.R. Thakur was allowed by the learned Single Judge of the High Court on May 21,1971 and Letters Patent Appeal against the said judgment was dismissed on May 9, 1979.
The High Court held that the categorisation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
No special leave 154 petition against the judgment of the High Court was brought to this Court and as such the judgment has become final.
Prahalad Singh and others have claimed that they are entitled to the benefit of the judgment given by the High Court in Thakur 's case.
According to them the said judgment is applicable in principle to all the Compositors whether they were parties before the High Court or not.
This peti tion came for hearing before a Bench of this Court consist ing of R.S. Pathak, CJI, M.N. Venkatachalia, J.
The Bench in its order dated April 28, 1989 observed as under : "The principal objection to the grant of relief to the Petitioner and those for whom he claims to act is the gross delay with which the writ petition appears to have been bought in this Court.
To surmount that difficulty the petitioner relies upon the plea that the judgment of the High Court in T.R. Thakur 's case is a judgment operative in principle in favour of all compositors situated in the circumstances in which T.R. Thakur found himself.
There are other pleas which have been taken by the petitioner, but the substantial one is whether he and the other compositors can enforce in their favour the benefit grant ed in T.R. Thakur 's case although they were not parties to that proceeding.
At first blush it would seem that the High Court considered the particular facts of T.R. Thakur, the petitioner before it, and while granting relief it appears, in terms, to have confined it to T.R. Thakur.
It is an important point whether, as the petitioner now contends before us, the direction issued by the High Court can be regarded as a direction operative in re spect of all compositors employed in the Government of India Presses all over India, The point is important since the objection on the plea of laches seems to be a substantial one in view of the several compositors who have over the years been promoted to the category of "highly skilled" compositors, and interfering with their status now could mate rially prejudice them.
At the same time, it cannot be doubted that there can be cases where although the facts of a particular petitioner have been taken into consideration what the Court indents, when it adjudicates on the claim, is to lay down the law to be ap plied by the respondents to all similar situa tions.
There are other cases where relief may be granted or refused upon the consideration of a question involved the question being one which affects several persons of the category to which the petitioner belongs and the grant or refusal of the relief may turn on 155 the particular facts of that case.
Various possible categories of cases can be conceived in this context.
We think it desirable that in cases such as this the Court should formulate a set of appropriate guidelines indicating when directions rendered by the Court in one particular case can be regarded as operative in other cases.
As the matter will be governed both by principle and by the practice of the Court, it is appropriate that this case be referred to a larger Bench for consideration on this and the other points arising in it.
" This is how the writ petition has come before us for final heating.
It is not necessary to go into the merits of the question posed by the Two Judges Bench of this court because we are of the view that the High Court judgment in Thakur 's case does not lay down the correct law.
The facts which led 'to the filing of the writ petition by Thakur are as under: Prior to January 1, 1966, there was one grade of Compos itors (Rs. 110 Rs.
180) in the Government of India Presses.
In the year 1963 a committee called "The Committee for Categorisation of the Government of India Press Workers" was constituted to review the classification of posts of indus trial workers in the Government of India printing presses.
The said Committee, inter alia, made the following recommen dations : "There was an equally persistent and wide spread demand from the workers that the cate gory of Compositors should be treated as highly skilled instead of skilled as at present.
We have very carefully examined this case as well and were unable to subscribe to this demand.
Hand composing in the Govt.
of India presses is essentially a skilled job.
The Managers were, however, of the opinion that 10 15% of the Compositors are frequently expected to handle composition work of mathe matical or scientific discourses.
For this, a knowledge application of diacritical marks superior and inferior letters/figures, scien tific signs/symbols etc.
are essential.
This work, admittedly, involved much higher skill than originally hand composition.
The Commit tee,therefore, recommend that a suitable percentage of compositors should be upgraded to the highly skilled category with pay scale of Rs. 175 205.
This category should be given an appropriate designation to distinguish it from the ordinary grade of Compositors who should still be in the skilled group.
" 156 Accepting the above recommendations, the Government of India, by an order dated March 14, 1966, divided the exist ing cadre of Compositors Compositors Grade I (Rs. 150 Rs. 206) and Compositors Grade II (Rs. 11 O 180).
It was further decided that the Compositors Grade I would be classified as "highly skilled" and Compositors Grade II as "skilled".
The ratio of Grade I to Grade II was fixed as 20: 80.
The initial constitution of the cadre of Compositors Grade I was done by appointing 20% of the Compositors on the basis of seniority cure fitness but trade test was made obligatory for future promotions to Grade I.
While implementing the above said decision of the Gov ernment of India, 18 Compositors who were senior to Thakur were given the pay scale of Compositor Grade I. Thakur challenged the denial of higher pay scale of Compositor Grade I to him on the ground that he and the 18 Compositors who were promoted were performing the same duties and were holding similar posts which were inter changeable.
According to him all of them were performing the duties of "highly skilled" Compositors and as such the higher grade could not have been denied to him.
The learned Single Judge allowed the writ petition and held that the categorisation of the senior most persons as "highly skilled" was arbitrary and discriminatory.
The learned Judge issued the following directions: "In the light of the above I am of the view that the petitioner is entitled to the relief prayed for and direction is issued to the respondents not to enforce the revised scale of pay in such a manner as to subject the petitioner to a lower scale of pay than the one allowed to the compositors who have been so fixed in the scale laid down for the highly skill compositors.
" The Letters Patent Appeal filed by the Union of India against the judgment of the learned Single Judge was dis missed by the Division Bench of the High Court on the fol lowing reasoning: "The contention of the appellants, as raised by them in paragraph 5 of their return.
that by length of service a person acquires more and more skill and, therefore, the test of seniority for the purpose of putting a person in the higher category of Grade I was justi fied, not acceptable because it is very well known that a mere length of service does not always result in more skill in the working of the person concerned.
Seniority would have of course relevance in a situation where two persons having equal skill are to be consid ered.
But unless such a situation arose it is very much evident that initial placing of the 157 present incumbents on the post of Compositor in the higher category of Grade I could not have been done in total disregard of the degree of skill which each of these incumbents possessed.
" Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court, in our view, fell into error in quash ing the classification based on experience arising out of length of service.
It is obvious from the recommendations of the Committee quoted above that "highly skilled" category was created to handle the nature of work which involved higher skill than the original hand composition.
The Com positors with longer service and who were found fit for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
This Court in State of U. P. vs j.
P. Chaurasaia; , has upheld the classifica tion based on experience as reasonable classi fication.
Jagannatha Shetty, J. speaking for this Court observed: "Article 14 permits reasonable classification founded on different bases.
It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out.
Those qualities or characteris tics must, of course, have a reasonable rela tion to the object sought to be achieved.
In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.
He or she learns also by experience as much as by other means.
It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers.
Even in Randhir Singh case, this principle has been recognised.
O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualification or experience or length of service is sustainable.
Apart from that, higher pay scale to avoid stagna tion or resultant frustration for lack of promotional avenues is very common in career service.
There is selection grade for District Judges. 'there is senior time scale in Indian Administrative Service.
There is supertime scale in other like services.
The entitlement to these higher pay scales depends upon sen iority 158 cure merit or merit cure seniority.
The dif ferentiation so made in the same cadre will not amount to discrimination.
The classifica tion based on experience is a reasonable classification.
It has a rational nexus with the object thereof.
To hold otherwise, it would be detrimental to the interest of the service itself.
" We, therefore, hold that the judgment of the Himachal Pradesh High Court in T.R. Thakur 's case does not lay down correct law and is overruled.
The only ground on which this petition is based, having become non existent, the petition ers are not entitled to the relief claimed by them and the writ petition is liable to be dismissed.
We are, however, of the view that the cadre of Composi tors Grade I 'highly skilled ' should be enlarged.
The Com positors are persistently demanding the upgrading of the whole of the cadre.
The "Committee" also recommended that suitable percentage be upgraded.
The Government created the higher grade for 20% of them.
Keeping in view the large number of Compositors all over the country and to remove stagnation we are of the opinion that the ratio between the two cadres should be 33 1/3: 66 2/3%.
We, therefore, commend to the respondents to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 per cent with effect from April 1, 1992.
The writ petitions is disposed of in the above terms with no order as 0 costs.
V.P.R. Petition dismissed. | Petitioner claiming that he and other similarly placed Compositors working in the Government of India presses all over India were entitled to the status and salary of Compos itors, Grade I in the "highly skilled" category with effect from January 1, 1966 on the ground that the decision of the Himachal Pradesh High Court in Thakurs case was applicable in principle to all the Compositors, filed the present petition under Article 32 of the Constitution.
The High Court in Thakur 's case held that the categori sation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
As no special leave petition against the judgment of the High Court was brought to this Court the judgment became final.
Over ruling Thakur 's case and dismissing the petitions this Court, HELD: I.Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court fell into error in quashing the classification based on experience arising out of length of service.
[157 B] 2.
"Highly skilled" category was created to handle the nature work which involved higher skill than the original hand composition.
The Compositors with longer service and who were found fit 153 for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
[157 C D] 3.
Keeping in view the large number of Compositors all over the country and to remove stagnation the ratio between the two cadres should be 33 1/3: 66 2/3 %.
[158 D] 4.
The respondents are directed to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 percent with effect from April 1, 1992.
[158 D] Thakur 's Case (Writ petition C.W. No. 61/69) dated 21.5.1971; overruled.
State of U.P.v.
J.P. Chaurasia; , ; re ferred to. |
Appeal No. 104[NT] of 1979.
From the Judgment and Order dated 3.10.1978 of the Punjab and Haryana High Court in 1.]".
Reference No. 60 of 1974.
191 WITH Civil Appeal Nos. 1801 to 1804/89 & 6254 (NT)/90 Dr. V.Gauri Shankar, S.Rajappa, Ms. A. Subhashini and Manoj Arora for the Appellants.
T.A.Ramaehandran and Ms. Janki Ramachandran for the Respond ents.
The Judgement of the Court was delivered by RANGANATHAN, J. These appeals involve a common question and hence can be disposed of by a common order.
The respond ent assessees are steel rolling mills engaged in the manu facture of M.S. (Mild Steel) rods, bars or rounds.
The question for consideration is whether they are entitled to a higher rate of development rebate specified in s.33(1) (b) (B) (i)(a) and to relief under s.80 I (as it stood at the relevant time) of the Income tax Act, 1961.
The answer to this question entirely turns on whether the assessees are engaged in the manufacture or production of any one or more of the articles or things specified in the relevant Schedule to the Act.
They claim that the articles manufactured by them fail under item 1 of the list of articles and things set out in the relevant Schedule which reads: "Iron and steel (Metal), ferro alloys and special steels".
This contention was rejected by Income Tax Officer but has been accepted by the Appellate Assistant Commissioner, the Tribunal and the High Court.
Hence these appeals by the Revenue.
It has been brought to our notice that there is a dif ference of judicial opinion on this issue among the High Courts.
The Calcutta High court in Indian Steel and Wire Products Ltd. vs Commissioner of Income Tax, , and the Allahabad High Court in Commissioner of Income Tax vs Kay Charan Pvt. Ltd., have answered the question in the negative and against the assessee.
On the other hand, the Kerala High Court in C.I. T.v.
Mittal Steel Re rolling and Allied Industries (1 ') Ltd. and CIT vs West India Steel Co. Ltd. , FB.
The Madras High Court in the judgment under appeal, reported as Addl.
Commissioner of Income tax v, Trich Steel Rollling Mills Ltd., , the Punjab & Haryana High Court in C.I.T. vs Krishna Copper and Steel Rolling Mills, (1979) 119 I.T.R. 256; (hereunder appeal) C.I.T.v.
Ludhiana Steel Rolling Mills, ; and the Allahabad High Court in Singh Engineering Works Pvt. Ltd. vs C.I.T., have taken a view in favour of the assessee.
This controversy needs to be resolved.
192 It may be useful, at this stage, to refer to three decisions of this Court, the decisions or observations in which have influenced the High court.
(1) The first of these is State of Madhya Bharat vs Hiralal, (1966) 17 S.T.C. 313.
This case arose under the Madhya Bharat Sales Tax Act.
Under section 5 of the said Act, two notifications had been issued.
The first notifica tion exempted from sales tax certain listed goods, one of which was "iron and steel", while the second notification specified the rates and stages lot levy of sales tax on a number of articles, one of which was"goods prepared from any metal other than gold and silver".
Hiralal, who owned a re rolling mill, purchased scrap iron locally and imported iron plates from outside and, after converting them into bars, flats and plates in his mills, sold them in the market.
He claimed exemption under the first of the above notifications.
This claim was upheld by this Court The judgment of the Court is a short one, the relevant paragraph of which reads as follows: "Learned cournsel for the State contends that the expression "iron and steel means iron and steel in the original condition and not iron and steel in the shape of bars, flats and plates.
In our view, this contention is not sound.
A comparison of the said two Notifica tions brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel; while the former is exempted from tax, the latter is taxed.
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the re spondent was merely re rolled into bars, flats and plates.
They were processed for conven ience of sale.
The raw material were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
The conclusion arrived at by the High Court is correct." (2) The second decision referred to is Devidass Gopal Krishnan vs State of Punjab, (1967) 20 S.T.C. 430.
Here, one batch of appellants before the Court carried on business in rolling steel.
They purchased steel scrap and steel ingots and converted them into rolled steel sections.
They 193 contended that the levy of a purchase tax on the steel scrap and ingots side by side with a sales tax on the rolled steel sections constituted double taxation of the same commodity contrary to the provision of section 15 of the .
This contention was rejected.
It was held that the process by which the steel scrap (or ingot) lost its identity and became rolled steel sections was a process of manufacture and that, since the goods purchased and those sold were different, no question of double taxation arose: (3) The third decision, Hindustan Aluminium Corporation Ltd. vs State of U.P., (1981) 48 S.T.C. 411, involved the interpretation of certain notifications issued under section 3A(2) of the U.P. Sales Tax Act, 1948.
The two notifications with which the Court was concerned prescribed rates of tax at which certain goods were taxable.
item no.6 in the notification of 1973 described the goods as: "All kinds of minerals and ores and alloys except copper, tin, zinc, nickel or alloy of these metals only.
" Item No. 1 of the second notification read: All kinds of minerals, ores, metals, and alloys including sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals, copper, tin, zinc, or nickel except those included in any other notification 'issued under the Act.
" The appellant Corporation, which carried on the business of manufacturing and dealing in aluminium metal and vations aluminium products, claimed the benefit of these notifica tions for its products.
The High Court held that, while aluminium ingots, wire bars and billets would fall in the category of "metals and alloys", rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of "metals and alloys".
Such rolled products included plates, coils, sheets, circles and strips.
The extrusions were manufactured in the shape of bars, rods, structurals, tubes, angles, channels and different types of sections.
This conclusion was upheld by this Court The Court referred to the history of the notifications issued by the State Govern ment from time to time in this behalf and came to the con clusion that the inference was irresistible that when such a notification referred to a metal, it referred to the metal in the primary or original form in which it was saleable and not to any subsequently fabricated form.
The Court rejected the contention that the word "all" used in the notification in referring to 194 "all kinds of minerals, ores, metals and alloys" should be given its fullest amplitude so as to include even subse quently fabricated forms of the metal.
The Court felt that this construction was inconsistent with the scheme of the earlier notifications to which reference had been made and observed: "While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus, the distinction made between the two constitutes a dichotomy of direct significance to the con troversy before US." After referring to its earlier decisions in State of M.P.v.
Hiralal, (1966) 17 S.T.C. 313, Devi Dass Gopal Krish nan vs The State of Punjab, (1967) 20 S.T.C. 430 and State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 S.T.C. 3 19, the Court concluded: "We are of the definite opinion that the only interpretation possible is that aluminium rolled products and extrusions are regarded as distinct commercial items from aluminium ingots and billets in the notification issued under the U.P. Sales Tax Act.
" The above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder.
They, however, bring out two points.
First, they make it clear that there is a real and clear dichotomy between "iron and steel" and "products or goods made of iron and steel" and, indeed, between any metal as such and the products or goods fabri cated therefrom.
This is also clear from the various entries in the relevant schedules under the Income Tax Act itself.
For instance, item 2 in the List is: "Aluminium, copper, lead and zinc (Metal).
While ingots and sheets manufactured from scrap have been held to fall under item 2, finished commercial products like alumimum pigments, aluminium arti cles and aluminium caps have been held to tall outside it.
See C.I. T.v.
Rashtriya Metal Industries Ltd., a case under the ; Indian Aluminium Co. Ltd. vs CI.T., ; (1983)140 I.T.R 114 (Cal); Jeewanlal, (1929)Ltd.
vs CI.T. and CI.T. vs Fitwell Caps P. Ltd. 'So also, item 7 refers, inter alia, to "cables" which is only a type of thick copper wire used for the transmission of electricity.
It has been held that insulated copper wires of a type known as winding wires will not fall under item 7 as they are not used for the above purpose and that an industry engaged in its manufacture is not an industry eligible for the reliefs of the kind presently under consideration: See: Hindustan 195 Wire Products vs C.I.T., This deci sion is of no direct relevance here except to point out that no atttempt was made in the case to contend that they will fall under item 2 of the Schedule which covers "aluminium, copper, lead and zinc (metals)".
Item 11 in the Schedule refers to "steel castings and forgings and malleable iron and steel castings".
The expressions "casting" and "forging" refer to processes used in the manufacture or production of articles of iron and steel and also mean, particularly when used in the plural, the articles produced by the process (vide: Glossary of Tenns published by the Bureau of Indian Standards and relating to Iron and Steel: , "Forging").
Item 21 which refers to "Seamless Tubes" also furnishes a similar indication.
There is, therefore, a distinction between the article or thing referred to in the Schedule as "iron and steel (metal)" and articles or things manufactured from "iron and steel".
Secondly, the decision in State of MB.
vs Hiralal, (1966) 17 S.T.C. 313 shows that even the expression "iron and steel" which is wider than the expression we are concerned with as it is not further qualified by the word "metal" was held to mean iron and steel used as raw material for the manufacture of other goods.
The Court held that bars, flats and plates only represented such raw material in attractive and acceptable forms.
Sri Gauri Shankar, for the Revenue, contended that the use of the appellation "metal" in the entry we are concerned with further restricts the nature of the qualify ing industry but we are not inclined to agree.
Obviously it is not used to denote the metal in its pristine form as an ore or as an extraction from the ore.
In the context of a manufacturing industry it is used, we think, for emphasising the distinction between the metal used as a raw material in the manufacture of various articles and the commercial articles made therefrom.
We would, therefore, attach the same meaning to the expression as Hiralal (supra) did.
In that case, the Court held that the bars, flats and pieces turned out by the assessee from the scrap metal were not products manufactured from the raw material but only repre sented the raw material rolled out in attractive and accept able forms.
Per contra, in Devidass Gopal Krishnan, [1962] 20 S.T.C. 430 rolled steel sections were held to be products manufactured from steel scrap and ingots.
But that will not be conclusive here because the relevant provision here contemplates something manufactured out of iron ore or iron scrap.
The question really therefore is: having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of the articles of iron and steel or are they themselves articles made of iron and steel? For deciding the above issue, learned counsel on both sides have placed before us a good deal of literature about the iron and steel industry as well as the glossary of terms used therein: 196 (a) A succinct summary of the processes involved, illus trated by a figurative chart, is given in the very first page of "The Making, Shaping and Treating of Steel", edited by Lankford and others (10th Edition),.
page 1.
It is unnec essary to set out the process in detail here except to note that molten pig iron coming out of the blast furnace and iron scrap are fed into steel making furnaces, wherefrom by a basic oxygen process or electric process or open hearth process, molten steel is ladled out into moulds to form ingots.
There are three stages in the manufacture of the steel: (i) the first stage when ingots are obtained by Lapping and then teeming the molten steel into rectangular moulds; (ii) the second stage where semi finished steel is cast in the form of blooms, billets and slabs by reheating the ingots to an appro priate temperature and rolling or forging them into shapes; and (iii) the production from blooms, billets and slabs again by process of hot rolling, cold rolling, forging, extruding, drawing etc. of finished steel products; bars, plates, structural shapes, rails, wire, tubular products, coated and uncoated sheet steel etc.
all in the many forms required by users of steel.
The third of the processes involves heating the blooms, billets and slabs in heating furnaces and then processing them through various types of mills: (i) Structural mills : for obtaining structural shapes like beams, angles, tees, zees, channels, piling etc.
(ii) Rail mills : for producing standard rails, crane rails and joint bars; (iii) Bar mills : for producing bars which may be flat, round, halfround, triangular, square, haxagonal or octagonal; (iv) Seamless pile mills: for producing pipes and tubes and skelp mills and other tubular products; continuous Butt weld pipe mills (v) Plate mills : for manufacturing plates; and (vi) Hot strip mills : for producing sheets, strips and coils.
and cold reduction mills 197 (b)The Explanatory Not to Chapter 72 (iron and Steel) of the Harmonised Commodity Description and Coding Nomenclature (HCCN) are also on the same lines.
The chapter covers the ferrous metals (pig iron, spilgeleisen, ferro alloys and other materials) as well as certain products of the iron and steel industry (ingots and other primary products and the principal products derived therefrom) of iron or non alloy steel, of stainless steel and of other alloy steel.
It is pointed out that iron ore, waste, scrap metal, pre reduced iron ore and other ferrous waste is converted by reduction in blast furnaces or electric furnaces into pig iron or sponge iron or lump iron.
Electrolysis or other chemical processes are used only when iron of exceptional purity is required for special use.
Most of the pig iron is converted into steel in steel works but some are used in foundries (iron works) for manufacture of ingot moulds, cast iron tubes and pipes and castings and the remainder are cost into the forms of pigs or blocks, m casting machines or sand beds or produced in the form of irregularly shaped lumps (plate iron) or granulated.
Pig iron, cast iron, sponge iron waste and scrap constitute the primary steel making materials.
Steel making processes are either pneumatic or hearth proc esses and the steel produced,by these and other processes are classified in various ways.
Although molten steel may be cast (in foundries) into its final shape in,_ moulds (steel castings), most molten steel is cast into ingots in moulds.
_At the casting, pouring and solidification stages, steel is classified as 'rimming ' or effervescent, 'killed ' or:non effervescent and 'semi killed ' or balanced steel.
After they have solidified and their temperature has been equalised, the ingots are rolled into semi finished productrs (blooms, billets, rounds, slabs, sheet bars) on primary cogging or roughing mills (blooming, slabbing etc.) or converted by drop hammer or on a forging press into semi finished forg ings.
Semi finished products and, in certain cases, ingots are subsequently converted into finished products.
These may be flat products (such as wide flats, universal plates, wild coil, sheets, plates and strip) or long products (such as bars and rods, hot rolled, in irregularly wound coils, other bars, and rods, angles, shapes, sections and wire).
These products are obtained by plastic deformation, hot or cold.
The hot processes are hot rolling, forging or hot drawing and the cold processes.
, are cold rolling, extrusion, wire drawing, bright drawing, centreless grinding or precision turning.
The chapter proceeds to classify the various products in considerable detail. (c) Reference has also been made to the tariff classi fications under the and the Central Excise Tariff Act, 1975.
Our attention was also invited to the Specification and Glossary prepared for the Bureau of Indian Standards by expert Products Sectional Committees on the subject of Iron and Steel.
Extracts were also furnished 198 from the New Encyclopaedia Brittanica Macropaedia (15th Edn., Vol.21), Webster 's Third New International Dictionary, the Encyclopaedia of Chemical Technology by Kirk Othmer (3rd en., Vol.21) and a book on small scale steel making by R.D. Walker.
We do not, however, propose to discuss these ex tracts and definitions as we do not think they can assist us in coming to nay conclusion on the issue before us.
Basically the argument of counsel proceed on the following lines: Sri Ramachandran, learned counsel appearing for the assessee, contends that, in the steel making industry, the manufacture of ingots, billets, blooms, etc. represents only an intermediate stage at which the iron and steel metal becomes semi finished steel.
The semi finished steel is converted into plates, bars or rods which are described as "finished steels.
According to him, the bars, rods and rounds continue to be iron and steel_ m a finished form.
It is only finished steel that is subsequently used to manufac ture, by various processes such as rolling, cutting, shear ing, forging, hammering and so on into various kinds of products, which can be described as products of iron and steel in contrast with 'iron and steel (metal) ', the item covered under the relevant entry of the schedules.
He also draws our attention to a decision of the Calcutta High Court in Indian Aluminium Co. vs CIT, where, while following the earlier decision in Indian Steel and Wire Products Ltd. vs CIT, (1977)108 I.T.R. 802, the court observed that there is really no divergence in view between the Calcutta and Kerala views and that the real question for consideration in each case is whether the articles in ques tion constitute finished products and represent articles of iron and steel or merely represent the raw material viz. iron and steel (metal) in a different form and shape.
On the other hand, Dr. Gauri Shankar, learned counsel for the Department, submits that iron and steel ceases to be a metal when it comes out of the furnace in the primary steel mills in the form of ingots.
At the best, the next stage at which the ingots become semi finished products in the shape of billets, blooms and slabs may also be said only to convert the raw material into a different form or shape.
But, he says, by no stretch of imagination can the next stage during which the billets, blooms and slabs are heated/and passed through various types of mills enumerated earlier be considered as involving not any manufacture but only a conversion of the raw material into other forms or other shapes.
According to the learned counsel, the expres sion "iron and steel (metal)" only comprehends the iron and steel as it emerges in the form of billets, blooms and slabs from the steel mills and that all subsequent products wheth er in the form of 199 rails, rods (including wire rods), bars, angles, channels, tees, zees, pipes, tubes, sheets, strips, plates and coils turned out by the various other types of mills would consti tute articles made of iron and steel.
He also invited our attention to a clarification by the Central Board of Taxes, in response to a query from the Federation of Indian Cham bers of Commerce and Industry, that "rolling mills making bars and rods are not covered by item 1 of the Fifth Sched ule".
We have considered the arguments addressed by both counsel.
In our opinion, Sri Ramachandran is right in con tending that in interpreting the provisions under considera tion, we would do well to keep in mind the background in which concessions to certain basic industries were intro duced in the Income tax Act.
The process started with the introduction of a rebate for exporters under the Finance Act of 1963 which continued till 1966.
The Budget speech of the Finance Minister vide: (1963) 48 I.T.R. (St.) 34 indicates that the incentive was granted to assessees engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development & Regulation) Act, 1951.
Item 1 of the said Schedule reads: "1.
Metallurgical Industries: A. Ferrous: (1) Iron and Steel (Metal) (2) Feno alloys (3) Iron and Steel castings and forgings (4) Iron and Steel structurals (5) Iron and Steel pipes (6) Special Steels (7) Other products of iron and steel B. Non ferrous (1) Precious metals including Gold and Silver, and their alloys; (IA) Other non ferrous metals and their alloys; (2) Semi manufactures and manufactures.
Again, in 1964,hen the Finance Act of 1964 decided to grant a rebate in the corporation tax payable by companies in order to encourage development of certain industries which occupy an important place in our economy, the list of indus tries named in the Finance Act was similar to and included many of the items, including items 1 to 3, of the list we are concerned with now.
The reliefs were given to strengthen the reserves and augment the capacity of the corporate sector to develop.
This process was 200 continued under the Finance Act of 1965: Vide, (1965) 55 I.T.R. (St.) 57 and 122 which introduced a higher develop ment rebate for machinery or plant installed for the pur poses of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule.
The Finance Act of 1966 substituted a new concession to these priority industries basic to the commercial development of the community.
This historical background reflects the intention of the legislature to grant progressively certain exemptions, reliefs or conces sions for certain types of industries which were considered important for na tional development / The industry in iron and steel and other metals figures in all these lists_) The only relevance of this background to the issue before us is that it gives an indication that the incentive, concession or relief granted under these provi sions has to be construed in a broad and comprehensive manner so as to cover all manufacturing activities legiti mately pertaining to specified core industry with no limita tion save what may be called for by the wording of a partic ular entry.
So far as items 1 and 2 are concerned, as earli er pointed out, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
We have earlier pointed out that pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different form, the latter being referred to as "semi finished steel".
Likewise, we think, the bars, rods, rounds, wife rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like see CI.T. vs Tensile Steel Ltd., or, again, producing articles of iron like ploughs, shovels, pickaxes, lathes, blowers, surface guiders and drills as in C.I.T. vs Ludhiana Steel Rolling Mills, (1989) 180 I.T.R. 155 (P&H).
Whether the article produced is the raw material or an article made of iron and steel has to be decided on the basis of the nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry which have been referred to earlier.
The Board 's clarification, referred by Dr. Gaurishankar, that the machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not, there fore, seem to be justified if it intends to draw a distinc tion between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process 201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be classifications of stages of manufacture that may be carried away by classifi cation of stages of manufacture that may berelevant forother purposes.
We would like to emphasise, at the cost ofrepeti tion, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item no.11, which refers to "forgings and castings".
These ex pressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forg ings and castings" referred to in item 11.
We do not, howev er, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeal dismissed.
201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be carried away classi fications of stages of manufacture that may be relevant for other purposes.
We would like to emphasise, at the cost of repetition, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item No. 11, which refers to "forgings and castings" These expressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forgings and castings" referred to in item 11.
We do not, however, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10 th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeals dismissed. | The respondents assessees were engaged in the manufacture of mild steel rods, bars or rounds.
They claimed that as the articles manufactured by them fell under item 1 of the list set out in the Fifth Schedule, they were entitled to a higher rate of development rebate specified in section 33(1) (b) (B) (i) (a) and to relief under section 80 1 of the Income Tax Act, 1961.
The Income Tax Officer rejected the claim of the assessees, whereas the Appellate As sistant Commissioner, the Tribunal and High Court accepted their claim.
Hence the Revenue filed appeals before this Court.
The contentions of the appellant Revenue were that iron and steel ceased to be a metal when it came out of the furnace in the primary steel mills in the form of ingots.
In the next stage the ingots became semi finished products in the shape of billets, blooms and slabs.
It was said to be the stage where the raw materi als were converted into.
In different form or shape; that the expression "iron and steel (metal)" meant the iron and steel as it emerged in the form of billets, blooms and slabs from the steel mill and that all subse quent products whether in the form of rails, rods (including wire rods), bars, angles, channels, tees, sees, pipes, tubes, sheets, strips, plates and coils would constitute articles made of iron and steel, and that rolling mills making bars and rods were not covered by item 1 of the Fifth Schedule.
188 On the other hand, the respondents asses sees contended that in the steel industry the manufacture of ingots, billets, blooms, etc.
represented only an intermediate stage at which the iron and steel metal became semi finished steel.
When the semi finished steel was converted into plates, bars or rods, they became finished steel.
The bars, rods and rounds, which were continued to be iron and steel in a finished form, were used to manu facture the products of iron and steel by various processes, such as, rolling, cutting, shearing, forging, hammering, etc.
and that the products of iron and steel were different from that of iron and steel (metal).
Dismissing the appeals filed by the Revenue, this court, HELD: 1.
In interpreting the provisions in S.33(1)(b)(B)(i)(a), S.80 I of the Income Tax Act, 1961, the Court would do well to keep in mind the background in which concessions to certain basic industries were introduced in the Income Tax Act.
The historical background reflects the intention of the legislature to grant progressively certain exemptions, re liefs and concessions for certain types of industries, which were considered important for national development.
The industry in iron and steel and other metals figured in all the lists.
[199 C, 200 B] 2.
The incentive concession or relief granted under the provisions has to be con strued in a broad and comprehensive manner so as to cover all manufacturing activities legitimately pertaining to the specified core industry with no limitation save what may be called for by the wording of a particular entry.
So far as items 1 and 2 are concerned, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
Pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different forms, the latter being referred to as "semi finished steel".
Like wise, the bars, rods, rounds, wire rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like.
[200 C E] 3.
Whether the article produced is the raw material 01, an article made of iron and steel has to be decided on the basis of the 189 nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry.
[200 G] 4.
The departmental instructions that machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not seem to be justified if it intends to draw a distinction between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligible for the higher development rebate, it is difficult to see why the same, plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of devel opment rebate.
[200 G 201 B] 5.
In considering the issue, the court should not be carried away be classifications of stages of manufacture that may be relevant for other purposes.
What the court should examine is not the nature of the mill which yields the article but the nature of the article or thing that is manufactured and ask the question whether such articles or things can be considered as raw material for manufac ture of other articles made of the metal or is it itself an article made of the metal.
[201 B C] 6.
The goods in the present case fail in the former category.
The mild steel rods, bars or rounds which are manufactured by the asses sees are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up arti cles of iron and steel such as grills or windows by applying to them processes, such as cutting or turning.
The rod or the wire rods are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
[201 C D] 7.
Forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definite ly intended to give relief even in respect of such articles, item 11 and also item 21 were introduced.
Even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fail under the category of "forgings and castings" referred to in item 11.
[201 G H] 190 8.
The conclusion drawn by the High Court that the assessee was entitled to the higher development rebate, though, it produced arti cles only from iron scrap, does not call for any interference.
[202 C, D] C.I. T. vs Mittal Steel Re tolling and Allied Industries (P) Ltd., ; CI.
West India Steel Co. Ltd., (Kerala); Addl.
Commissioner of Income Tax vs Trichy Steel Rolling Mills Ltd., ; C.I.T.v.
Krishna Copper Steel Roll ing Mills, & Har yana); CI.T.v.
Ludhiana Steel Rolling Mills, & Haryana) and Singh Engineering Works Pvt. Ltd. vs CI.T., , approved.
Indian Steel and Wire Products Lid vs Commissioner of Income tax, and Commissioner of Income Tax vs Kay Charan Pvt. Ltd., ; over ruled.
State of Madhya Bharat vs Hira Lal, (1966) 17 STC 313 (S.C.) Devi Dass Gopal Krishnan vs State of Punjab, (1967) 20 STC 430 (SC); Hindustan A1uminium Corporation Ltd. vs State of (U.P., (1981) 48 STC 411 (S.C.) State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 STC 319 (SC); C.I.T.v.
Rashtriya Metal Industries Co. Ltd., ; Indian A1uminium Co. Ltd vs
C.I.T, Cal.
and Cal; Jeewanlal vs CI.T., ; C.I.T vs Fitwell Caps P. Ltd., ; Hindustan Wire Products vs CI.T 1 ; Indian Steel and Wire Products Lid vs C.I.T. ; C.I.T.v.
Tensile Steel Lid, and CI.
Ludhiana Steel Rolling Mills, & H) referred to.
Speci 'fication and Glossary By Expert Products Sectional Committee of Bureau of India Standards, New Encyclopedia Brittanica Macropaedia, 15th Edn. Vol.21; Websters, Third New International Dictionary; Encyclopaedia of Chemical Technology By Kirk Othmer, 3rd.
Vol.21;// Book on Small Scale Steel Making By R.D.Walker, The Budget Speech of the Finance Minister, (1968) 48 ITR [Statutes] 34; (1965) 55 ITR [Statutes] 57 and 122 referred to. |
Appeal No. 239 of 1955.
Appeal from the Judgment and Decree dated the 30th November, 1953, of the former Nagpur High Court in First Appeal No. 118 of 1947, arising out of the Judgment and Decree dated the 12th August, 109 1947, of the Court of the Additional District Judge, Wardha, in Civil Suit No. 9 A of 1946.
M. C. Setalvad, Attorney General for India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
M. Adhikari, Advocate General for the State of Madhya Pradesh and 1.
N. Shroff, for the respondent.
January 21.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This is an appeal by the widow, and the minor son of Mangilal, defendant 1, and it has been filed with a certificate by the High Court of Judicature at Nagpur.
It arises out of a suit filed by the respondent Shrimati Lilabai w/o Vrijpalji, for the specific performance of a contract to lease or in the alternative for damages and for a declaration against defendant 2, the daughter of defendant 1 that she has no right, title or interest in the property in suit.
The respondent 's case was that defendant I had executed an instrument (exhibit P 1) in favour of the respondent by which he had contracted to lease to her in perpetuity in occupany right his four khudkasht lands admeasuring 95.19 acres situated in Mouza Mohammadpur in consideration of the debt of Rs. 8,700.
According to the respondent the instrument had provided that, if defendant 1 did not repay to her the said debt on June 1, 1944, the said contract of lease would be operative on and from that date.
Defendant 1 did not repay the loan by the stipulated date and so he became liable to perform and give effect to the said contract of lease on June 1, 1944.
The respondent repeatedly called upon defendant 1 to perform the said contract, but defendant I paid no heed to her demands and so she had to file the present suit for specific performance.
The respondent had been and was still ready and willing to specifically perform the agreement and to accept a deed of lease for the lands in question in lieu of the said debt of Rs. 8,700.
Defendant 1, however, had been guilty of gross and unreasonable delay in performing his part of the con tract and that had caused the respondent the loss of 110 the benefit of the lease and consequent damage.
On these allegations the respondent claimed specific performance of the contract and an amount of Rs. 2,340 as compensation or in the alternative damages amounting to Rs. 11,080.
To this suit Mst.
Durgabai, the daughter of defendant I had been impleaded as defendant 2 on the ground that she was setting up her own title in respect of the lands in suit and a declaration was claimed against her that she had no right, title or interest in the said lands.
Defendant 2 filed a written statement contesting the respondent 's claim for a declaration against her but she did not appear at the trial which proceeded exparte against her.
In the result defend ant 1 was the only contesting defendant in the proceedings.
Several pleas were raised by defendant I against the respondent 's claim.
He denied the receipt of the consideration alleged by her and he pleaded that the document (exhibit P 1) was a bogus, sham and collusive document which had been brought into existence for the purpose of shielding his property from.
his creditors and it was not intended to be acted upon.
It was also urged by him that the said document, if held to be genuine, was an agreement to lease under section 2(7) of the Indian , and since it was not registered it was inadmissible in evidence.
The learned trial judge framed appropriate issues on these pleadings and found against defendant I on all of them.
Accordingly a decree was passed ordering defendant 1 to execute a lease deed in respect of the fields mentioned in the plaint on a proper stamp paper in occupancy right in favour of the respondent and to put her in possession of them.
A decree for the payment of Rs. 2,316 by way of compensation was also passed against him.
The declaration claimed by respondent against defendant 2 was likewise granted.
This decree was challenged by defendant 1 by his appeal before the High Court of Judicature at Nagpur.
Pending the appeal defendant I died and his widow and his minor son came on the record as his 111 legal representatives and prosecuted the said appeal.
The High Court held that the document was supported by consideration, that it was not an agreement to lease under section 2(7) of the Indian and therefore it did not require registration and was admissible in evidence.
In the result the decree passed by the trial court was confirmed and defendant 1 's appeal was dismissed.
The present appellants then applied to the High Court for leave to appeal to this Court and the High Court granted leave because it held that the basic question involved in the decision of the appeal was the legal effect of exhibit P 1 and that the construction of a document of title is generally regarded as a substantial question of law.
It is with this certificate that the present appeal has come before this Court, and it raises two questions for our decision: Is the document (exhibit P 1) an agreement to lease under section 2(7): If not, does it require registration under section 17 of the said Act ? All other issues which arose between the parties in the courts below are concluded by concurrent findings and they have not been raised before us.
Before dealing with these points, we must first consider what the expression " an agreement to lease " means under section 2(7) of the Indian , hereinafter referred to as the Act.
Section 2(7) provides that a lease includes a counterpart, kabuliyat, an undertaking to cultivate and occupy and an agreement to lease.
In Hemanta Kumari Debi vs Midnapur Zamindari Co. Ltd. (1) the Privy Council has held that " an agreement to lease, which a lease is by the sta tute declared to include, must be a document which effects an actual demise and operates as a lease ".
In other words, an agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not included under section 2, sub section
In Hemanta Kumari Debi 's case (1) a petition setting out the terms of an agreement in compromise of a suit stated as one of the (1) (1919) L. R. 46 1. A. 240.
112 terms that the plaintiff agreed that if she succeeded in another suit which she had brought to recover certain land, other than that to which the compromised suit related, she would grant to the defendants a lease of that land upon specified terms.
The petition was recited in full in the decree made in the compromised suit under section 375 of the Code of Civil Procedure, 1882.
A subsequent suit was brou ght for specific performance of the said agreement and it was resisted on the ground that the agreement in question was an agreement to lease under section 2(7) and since it was not registered it was inadmissible in evidence.
This plea was rejected by the Privy Council on the ground that the document did not effect an actual demise and was outside the provisions of section 2(7).
In coming to the conclusion that the agreement to lease under the said section must be a document which effects an actual demise the Privy Council has expressly 'approved the observations made by Jenkins, C. J., in the case of Panchanan Bose vs Chandra Charan Misra (1) in regard to the construction of section 17 of the Act.
The document with which the Privy Council was concerned was construed by it as " an agreement that, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted "; and it was held that " until the happening of that event, it was impossible to determine whether there would be any lease or not ".
This decision makes it clear that the meaning of the expression " an agreement to lease " " which, in the context where it occurs and in the statute in which it is found, must relate to some document that creates a present and immediate interest in the land ".
Ever since this decision was pronounced by the Privy Council the expression " agreement to lease " has been consistently construed by all the Indian High Courts as an agreement which creates an immediate and a present demise in the property covered by it.
It would be relevant now to refer to the observations (1) Cal.
113 of Jenkins, C. J., in the case of Panchanan Bose (1).
In that case, a solehnama by which no immediate interest in immoveable property was created was held not to amount to a lease within the meaning of cl.
(d) of section 17 of the Act but merely an agreement to create a lease on a future day.
" Such a document ", it was observed, " fell within cl.
(h) of section 17 and as such was admissible in evidence without registration ".
Jenkins, C. J., held that " on a fair reading of the document, no immediate interest was created, there was no present demise, and the document was merely an agreement to create a lease on a future day, the terms of which were to be defined by documents to be thereafter executed ".
" This being so ", said the learned C. J., " I think the appellants I rave rightly contended before us that the document was admissible in evidence as it falls within cl.
(h) of section 17 of the Indian ".
This decision would show that an agreement which creates no immediate or present demise was not deemed to be a lease under section 2(7) and so it was hold to fall within section 17(h) of the Act and this view has been specifically affirmed by the Privy Council in Hemanta Kumari Debi 's case (2).
It is true that in Narayanan Chetty vs Muthiah Servai (3) a Full Beach of the Madras High Court had held that an agreement to execute a sub lease and to get it registered at a future date was a lease within section 3 of the Indian of 1877 (III of 1877) and was compulsorily registrable under el.
(d) of section 17.
Such an agreement to grant a lease which requires registration, it was held, affects immoveable property and cannot be received in evidence in a suit for specific performance of an agreement.
The question which was referred to the Full Bench apparently assumed that the agreement in question required registration and the point on which the decision of the Full Bench was sought for was whether such an agreement can be received in evidence in a suit for specific performance (1) where possession is given in pursuance of an agreement, and (2) where it is not; and the Full Bench (1) Cal. 808.
(2) [1919] L.R. 46 I.A. 240.
(3) Mad.
15 114 answered this question in the negative. " An agreement to lease ", it was observed in the judgment of the Full Bench, " is expressly included in the definition of the lease in the while it cannot be suggested that an agreement to sell falls within any definition of sale ".
It is clear that the question about the construction of the words " agreement to lease " was not specifically argued before the Full Bench, and the main point considered was the effect of the provisions of section 49 of the Act.
In that connection the argument had centred round the effect of the provisions of cl.
(h) of section 17 of the and section 54 of the Transfer of Property Act.
The Full Bench took the view that in enacting section 49 of the Act the Legislature meant to indicate that the instrument should not be received in evidence even where the transaction sought to be proved did not amount to a transfer of interest in immoveable property but only created an.
obligation to transfer the property.
A contract to sell immovable property in writing, though it may affect the property without passing an interest in it, is exempted from registration by clause (h) (now cl. 2 (v)) of section 17 but an agreement in writing to let, falling within cl.
(d) of section 17, is not.
That is why, according to the Full Bench, such an agreement cannot be received in evidence of the transaction which affects the immovable property comprised therein.
Thus this decision does not directly or materially assist us in construing the expression " agreement to lease ".
Besides, the said decision has not been followed by the Madras High Court in Swaminatha Mudaliar vs Ramaswami Mudaliar (1) on the ground that it can no longer be regarded as good law in view of the decision of the Privy Council in Hemanta Kumari Debi 's case(2), and, as we have already pointed out, all the other High Courts in India have consistently followed the said Privy Council decision.
The learned Attorney General has, however, contended before us that the correctness of the decision of the Privy Council in Hemanta Kumari Debi 's case (2) is open to doubt and he has suggested that we (1) Mad. 399.
(2) (1919) L.R. 46 I A. 240.
115 should re examine the point on the merits afresh.
We do not think there is any substance in this contention because, if we may say so with respect, the view taken by the Privy Council in the said case is perfectly right.
Section 17(1) of the Act deals with documents of which registration is compulsory.
It is obvious that the documents falling under cls.
(a), (b), (c) and (e) of sb section
(I ') are all documents which create an immediate and present demise in immovable properties mentioned therein.
The learned Attorney General 's argument is that cl.
(d) which deals with leases does not import any such limitation because it refers to leases of immoveable properties from year to year or any term exceeding one year or reserving a yearly rent; and the Act deliberately gives an inclusive definition of the term 'lease ' in section 2(7).
This argument, however, fails to take into account the relevant provisions of the Transfer ' of Property Act.
Section 4 of the said Act provides that section 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian .
Section 107 is material for our purpose.
Under this section a lease of immoveable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only under a registered instrument.
This section also lays down that where a lease of immoveable property is made by a registered instrument, such instrument, or, where there are more instruments than one, each instrument, shall be executed by both the lessor and the lessee.
It would be noticed that if section 107 has to be read as supplemental to the Act, the definition of the word I lease ' prescribed by section 105 would inevitably become relevant and material; and there is no doubt that under section 105 a lease of immoveable property is a transfer of right to enjoy such property made in the manner specified in the said section.
Therefore, it would not be right to assume that leases mentioned in cl.
(d) of section 17, sub section
(1), would cover cases of documents which do not involve a present and immediate transfer of leasehold rights.
It would thus be reasonable to hold that, like the instruments mentioned in cls.
(a), (b) and (c) of section 17(1), leases also are instruments 116 which transfer leasehold rights in the property immediately and in presenti.
We have already referred to the requirement of section 107 of the Transfer of Property Act that a lease must be executed both by the lessor and the lessee.
It may be pertinent to point out that an instrument signed by the lessor alone which may not be a lease under section 107 may operate as an agreement to lease under section 2(7) of the Act.
The legislative history of the provisions of section 17(2)(v) may perhaps be of some assistance in this connection.
Section 17(h) of Act III of 1877 which ,corresponds to the present section 17(2) (v) did not appear in the earlier Registration Acts of 1864,1866 and 1871.
Its introduction in Act III of 1877 became necessary as a result of the decision of the Privy Council in Fati Chand Sahu vs Lilambar Singh Das (1) in which it was held that an agreement to sell immoveable property for Rs. 22,500 coupled with an acknowledgment of the receipt of Rs. 7,500 and a promise to execute a sale deed on the payment of the balance was compulsorily registrable under section 17 of the Act (2).
Section 17(h) was therefore enacted in 1877 to make it clear that a document which does not itself create an interest in the immoveable property does not require registration even if it expressly contemplates and promises the creation of that interest by a subsequent document; in other words, contracts of sale and purchase of which specific performance would be granted under certain circumstances fall within this provision and would no longer be governed by the said decision of the Privy Council in the case of Fati Chand Sahu vs Lilambar Singh Das (1).
Thus the policy of the Legislature clearly is to exclude from the application of cls.
(b) and (c) of section 17(1) agreements of the said character.
On principle, there is no difference between such agreements of sale or purchase and agreements to lease.
Under both classes of documents no present or immediate demise is made though both of them may lead to a successful claim for a specific performance.
That is why the Privy Council observed in the (1) ; 14 M. L. A. 129.
(2) Act XX of 1866.
117 case of Hemanta Kumari Debi (1) that the context and the scheme of the statute justified the view taken by Jenkins, C. J., in the case of Panchanan Bose (2).
It may also be relevant to bear in mind that the other documents which are included within the word I lease ' by section 2(7) of the Act support the same conclusion.
A counterpart, as it is usually understood, is a writing by which a tenant agrees to.
pay a specified rent for the property let to him and signed by him alone.
It is thus in the nature of a counterpart of a lease and as such it is included within the meaning of the word I lease ' under section 2(7).
Same is the position of a kabuliyat and an undertaking to cultivate or occupy.
In other words, it is clear that all the four instruments which, under the inclusive definition of section 2(7), are treated as leases satisfy the test of immediate and present demise in respect of the immoveable property covered by them.
We must, therefore, hold that the expression " an agreement to lease " covers only such agreements as create a present demise.
Let us now proceed to deal with the question as to whether the document (exhibit P 1) constitutes " an agreement to lease "It purports to be a receipt executed in favour of the respondent by defendant I and bear a four anna revenue stamp.
" I have this day giver to you ", says the document, " the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 1944.
1 will have absolutely no right thereto after the said date ".
The the document proceeds to mention the properties and describes them in detail, and it adds " all the above fields are situate at Mouza Mohammadpur, mouz No. 312, tahsil Arvi, district Wardha.
The estat described above has been given to you in lieu of you Rs. 8,700 due to you, subject to the condition that case your amount has not been paid to you on date 1 6 1944, you may fully enjoy the estate describe, (1) (1919) L.R. 46 I.A. 240.
(2) Cal.
118 above in any way you like from generation to generation ".
The question for our decision is: Does this document amount to an agreement to lease under section 2(7) of the Act ? In construing this document it is necessary to remember that it has been executed by laymen without legal assistance, and so it must be liberally construed without recourse to technical considerations.
The heading of the document, though relevant, would not determine its character.
It is true that an agreement would operate as a present demise although its terms may commence at a future date.
Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document in future.
In considering the effect of the document we must enquire whether it contains unqualified and unconditional words of present demise and includes the essential terms of a lease.
Generally if rent is made payable under an agreement from the date of its execution or other specified date, it may be said to create a present demise.
Another relevant test is the intention to deliver possession.
If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to be an agreement to lease.
As in the construction of other documents, so in the construction of an agreement to lease, regard must be had to all the relevant and material terms; and an attempt must be made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage.
The learned Attorney General contends that this document is not a contingent grant of lease at all.
According to him it evidences a grant of lease subject to a condition and that shows that a present demise is itended by the parties.
He naturally relies upon the opening recitals of the document.
According to him, when the document says that defendant I has given to the respondent the land described below and that the respondent has become occupancy tenant of the same, it amounts to a clear term of present demise.
A similar recital is repeated in the latter part of the document where it is stated that the estate described 119 above has been given to the respondent in lieu of Rs. 8,700 due to her.
In our opinion, it would be unreasonable to construe these recitals by themselves, apart from, the other recitals in the document.
We cannot lose sight of the fact that the document expressly states that the respondent shall become the owner of the land from 1 6 1944 and that defendant I ' would have no title over it after that date.
This recital also is repeated in the latter part of the document; and it makes the intention of the parties clear that it is only if the amount of debt is not rapid by defendant I on the date specified that the agreement was to come into force.
In other words, reading the document as a whole it would be difficult to spell out a present or immediate demise of the occupancy rights in favour of the respondent.
In this connection the fact that the document is described as a receipt may to some extent be relevant.
It is clear that by executing this document the defendant wanted to comply with the respondent 's request for acknowledging the receipt of the amount coupled with the promise that the amount would be repaid on 1 6 1944.
The defendant also wanted to comply with the respondent 's demand that, if the amount was not repaid on the said date, he would convey the occupancy rights in his lands to her.
Besides, it is significant that the document does not refer to the payment of rent and does not contemplate the delivery of possession until 1 6 1944.
If the document had intended to convey immediately the occupancy rights to the respondent it would undoubtedly have referred to the delivery of possession and specified the rate at which, and the date from which. the rent had to be paid to her.
The stamp purchased for the execution of the document also incidentally shows that the document was intended to be a receipt and nothing more.
Under section 2 of the Central Provinces Land Revenue Act, 1917 (C. P. II of 1917) an agricultural year commences on the first day of June and it is from this date that the agreement would have taken effect if defendant I had not repaid the debt by then.
It is clear that the respondent was not intended to be treated as an 120 occupancy tenant between the date of the document and June 1, 1944.
During that period the agreement did not come into operation at all.
In other words, it is on the contingency of defendant 's failure to repay the amount on June 1, 1944, that the agreement was to take effect.
We have carefully considered the material terms of the document and we are satisfied that it was not intended to, and did not, effect an actual or present demise in favour of the respondent.
In our opinion, therefore, the High Court was right in holding that the document was not an agreement to lease under section 2(7) of the Act and so did not require registration.
We would now briefly refer to some of the decisions on which the learned Attorney General relied in support of his construction of the document.
In Purmananddas Jiwandas vs Dharsey Virji (1), the agreement between the parties had expressly provided that the lease in question was to commence from October 1, 1882, though the agreement was executed seven days later, that the rent was to commence from that day and the rent then due was to be paid by the next day.
It is in the light of these specific terms that the Bombay High Court held that the relevant words in the document operated as an actual demise.
None of these conditions is present in the document with which we are concerned.
Similarly in Pool vs Bentley (2), by the instrument in question, Poole had agreed to let unto Bentley, and Bentley had agreed to take, all that piece of land described for the term of 61 years at the yearly rent of pound 120 free and clear of all taxes, the said rent to be paid quarterly, the first quarter 's rent within 15 days after Michaelmas 1807, and that in consideration of the lease, Bentley had agreed within the space of four years to expend and lay out in 5 or more houses of a third rate or class of building 2000 and Poole had agreed to grant a lease or leases of the said land and premises as soon as the said 5 houses were covered in.
In dealing with the construction of this document Lord (1) Bom.
(2) ; ; 121 Ellenborough, C. J., observed that the rule to be collected from the relevant decisions cited before him was that the intention of the parties as described by the words of the instrument must govern the construction and that the intention of the parties to the document before him appeared to be that the tenant, who was to have spent so much capital upon the premises within the first four years of the term, should have a present legal interest in the term which was to be binding upon both parties; though, when certain progress was made in the building, a more formal lease or leases might be executed.
This decision only shows that if the intention is to effect a present demise the fact that a further formal document is contemplated by the parties would not detract from the said intention.
It would, however, be noticed that the document in that case contained a stipulation for the payment of the rent and the tenant was to be let into possession immediately.
This case also does not assist the appellant.
In Satyadhyantirtha Swami vs Raghunath Daji (1) the contract of lease was contained in two documents which showed that the lands were being cultivated by Appaji and Ravji who had signed the first document.
and that they were authorised to continue ' in occupation of the lands on terms mentioned in the first document.
The argument that a part of the agreement would not come into operation till some years later, it was held, did not operate to make the document other than a present demise.
It is difficult to appreciate how this decision can assist us in construing the present document.
In Balram vs Mahadeo (2) the Nagpur High Court was dealing with an instrument which purported to be a receipt and the terms of which seemed to contemplate the execution of a sale deed in respect of the properties covered by it.
Even so, the material clause was that "I it is agreed to give to you both the above fields in occupancy rights ".
It was held that, on a fair and reasonable construction, the document was (1) A.I.R. 1926 Bom.
(2) I.L.R. 16 122 intended to affect a transfer of the occupancy right in presenti and was as such an agreement to lease.
No doubt, as observed by Bose, J., " on a superficial view of the document it would not appear to be an agreement to lease.
But in construing a transaction one has to look beneath the verbiage and ascertain what are the real rights which are being transferred.
When that is done, we consider that this document is an agreement to lease despite the fact that it calls itself a receipt and speaks throughout of a sale ".
It is unnecessary to consider the merits of the conclusion rea ched by the Nagpur High Court in this case.
It would be enough to say that the said decision would not afford any assistance in construing the document before us.
Besides it is obvious that in construing documents, the usefulness of the precedents is usually of a limited character; after all courts have to consider the material and relevant terms of the document with which they are concerned; and it is on a fair and reasonable construction of the said terms that the nature and character of the transaction evidenced by it has to be determined.
In our opinion, the High Court was right in holding that the instrument (exhibit P 1) was not an agreement to lease under section 2(7) of the Act.
The result is the appeal fails and must be dismissed with costs.
Appeal dismissed. | A document purporting to be a receipt and bearing a four anna revenue stamp was executed by M in favour of the respondent and recited, inter alia, as follows: " I have this day given 108 to you the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 44.
I will have absolutely no right thereto after the said date. .
The estate. has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that in case your amount has not been paid to you on date 1 6 44, You may fully enjoy the estate in any way you like from generation to generation.
" The respondent instituted a suit against M for the specific performance of a contract to lease alleging that under the document he had contracted to lease to her in perpetuity in occupancy right his lands in consideration of the debt of Rs. 8,7oo and as the amount was not paid within the due date, he was liable to perform and give effect to the said contract.
M contended, inter alia, that the document was an agreement to lease under section 2(7) of the Indian , and that as it was not registered it was inadmissible in evidence.
Held, that an agreement to lease under section 2(7) of the Regis tration Act, 1908, must be a document which effects an actual demise and operates as a lease.
An agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a pre sent and immediate demise in his favour is not an agreement to lease within the meaning of section 2(7) of the Act.
Held, further, that on a construction of the document in question, it was not intended to, and did not, effect an actual or present demise in favour of the respondent and consequently it was not an agreement to leaseunders.
2(7) Of the Act.
Accordingly, the document did not require registration and was admissible in evidence.
Hemanta Kumari Devi vs Midnapuy Zamindari Co., Ltd., (1919) L.R. 46 I.A. 240, relied on.
Panchanan Bose vs Chandya Charan Misra, Cal. 808, approved.
Narayanan Chetty vs Muthia Servai, Mad. 63, Purmananddas jiwandas vs Dharsey Kirji, Bom.
101, Balram vs Mahadeo, I.L.R. and Poole vs Bently, ; ; , distinguished. |
Civil Appeal No. 3047 of 1992.
From the Judgement and Order dated 30.7.1984 of the Patna High Court in Civil Writ Jurisdiction Case No. 373 of 1977.
M.L. Verma and S.K. Sinha for the Appellant.
A.K. Srivastava for the Respondents.
The Judgement of the Court was delivered by SHARMA, J.
The question arising in this case is whether a matter, if it comes within the scope of section 40 of the Bihar and Orissa Co operative Societies Act, 1935 (hereinafter referred to as the Act) has to be excluded from the purview of Section 48 of the Act.
Special leave is granted. 3.
The facts relevant for the decision of this appeal are in a short 894 compass.
The respondent No.1 was Depot Manager under the appellant Marketing Union Limited and during his tenure as such, a shortage of coal was detected.
A claim was accordingly made for the said loss by the appellant and a reference was made to the Assistant Registrar, Co operative Societies respondent No.3, under Section 48 of the Act.
The Assistant Registrar absolved the respondent No.1 from the alleged liability and an appeal was filed by the appellant under Section 48(6) of the Act before the Joint Registrar, Co operative Societies, respondent No.2, who are accepted the appellant 's case, rejected the defence and made an award accordingly.
This was challenged before the Patna High Court by a writ application under Article 226 of the Constitution of India.
The High Court held that since the matter was covered by the provisions of Section 40, Section 48 could not apply.
Consequently the award was held to be illegal.
So far section 40 was concerned, it was pointed out that the claim had to be rejected on the ground of limitation.
Thus without considering the other questions raised by the parties, the High Court allowed the writ petition by the impugned judgement which is under challenge in the present appeal.
It has been contended on behalf of the appellant that the provisions of Section 48 are wide enough to embrace the dispute which has been the subject matter of the present case and they cannot be given a narrow interpretation so as to exclude their application to cases which may also be covered by Section 40.
In reply reliance has been placed on behalf of the respondent No.1 on the decision in Purnea Ministerial Government Officer 's Co operative Society Ltd.v.
Abdul Quddus, (1969) B.L.J.R. Vol.
11 969 which has found favour with the High Court.
Section 40 pertaining to surcharge, provides that if as a result of an audit or inquiry it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has either made a payment contrary to law or has been guilty of misappropriation or of having committed similar acts detailed therein, the Registrar may inquire into the matter and make an order requiring him to contribute an appropriate sum by way of compensation to the assets of the society.
The second Proviso to sub section (1) of the said section says that no such order shall be passed in respect of any act or ommission which had occurred more than six years earlier.
The provisions of sub section (1) of Section 48 (omitting the explanations which are not relevant for the present issue) dealing with Disputes are in the 895 following terms: "(1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its managing committee against a paid servant of the society) arises (a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members, past members or deceased members, whether such sureties are members or non members; or (b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased members, whether such sureties are members or non members and the society, its managing committee or any officer, agent or servant of the society; or (c) between the society or its managing committee and any past or present officer, agent or servant of the society; or (d) between the society and any other registered society; or (e) between a financing bank authorised under the provisions of sub section (1) of Sec. 16 and a person who is not a member of a registered society; such dispute shall be referred to the Registrar: Provided that no claim against a past member or the estate of a deceased member shall be treated as a dispute if the liability of the past member or of the estate of the deceased member has been extinguished by virtue of Sec. 32 or Sec. 63".
The claim of the appellant against the respondent No.1 is clearly covered by clause (c) of sub section (1) above and, therefore, could have been validly referred to the Registrar under Section 48.
The argument, however, is that since the matter is covered by Section 40, Section 48 should be held to be inapplicable.
The High Court agreed and made the following observations: 896 "It is well known proposition of law that when a matter falls under any specific provision then if must be governed by that provision and not by general provisions (Generalia specialibus non derogant)".
The High Court has in its judgement assumed that whenever a specific remedy is made available in law the other remedy, more general in nature, necessarily gets excluded.
Validity of plural remedies, if available under the law, cannot be doubted.
If any standard book on the subject is examined, it will be found that the debate is directed to the application of the principle of election, where two or more remedies are available to a person.
Even if the two remedies happen to be inconsistent,they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
In the present case there is no such problem as no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 must, therefore, be held to be available to the appellant for recovery of the loss.
7.Our view that a matter which may attract Section 40 of the Act will continue to be governed by Section 48 also if the necessary conditions are fulfilled, is consistent with the decision of this Court in Prem Jeet Kumar V. Surender Gandotra and others, [1991] Supp. 2 S.C.C. 215, arising under the Delhi Co operative Societies Act, 1972.
The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia.
The reported judgement followed an earlier decision of this Court in Pentakota Srirakulu vs Co operative Marketing Society Ltd.; , We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attracted.
So far the question of limitation is concerned it is true that as in the Delhi Act, a period of six years was fixed under the Bihar Act also by second Proviso under Section 40 (1), which reads thus: "Provided further that no order shall be passed under this sub section in respect of any act or omission mentioned in clauses (a), (b), (c) or (d) except within six years of the date on which such act or omission 897 occurred.
" It will be observed that the six years rule of limitation, however, is limited for the purpose of section 40, and cannot govern the reference under section 48.
The relevant provision of section 48 is to be found in the Proviso to section 48(1) which has been quoted above.
For determining its impact on the present case it is necessary to examine the Proviso closely.
Firstly, both the Proviso and section 63 of the Act are concerned only where the claim is against a member.
Even if the Proviso be assumed to govern a dispute between the society and its past or present officer or servant it cannot come to the aid of the present respondent No.1 because he was dismissed from service on 15.10.1966 and he was directed to deposit the disputed amount within 30 days therefrom.
The dispute was referred for adjudication under section 48 on 12.12.1966 and the reference was registered as Award Case No. 25 of 1968 on 03.08.1968.
Thus all these steps were taken within a period of two years.
No reliance, therefore, can be placed on either section 32 or 63.
The case of Putnea Ministerial government Officers ' Co operative Society Ltd. (Supra) is clearly distinguishable.
The respondent there was a member of the Society in question and had taken a loan which was the subject matter of the dispute.
As was pointed out by the High Court the claim had stood barred by limitation and, therefore, it was held that the reference was incompetent in view of the Proviso to section 48(1).
The High Court in the present case was, in the circumstances, not entitled to rely on this decision and its conclusions must be set aside as being erroneous in law.
However, since in the judgement it is stated that several other questions were also raised on behalf of the respondent No.1 (who was the writ petitioner) which remained undecided, the case requires reconsideration by the High Court on the remaining points.
Accordingly the impugned judgement is set aside and the writ petition is remitted to the High Court for fresh decision in accordance with the observations in the present judgement.
The appeal is allowed but in the circumstances without costs.
U.R. Appeal allowed. | During the tenure of respondent 1 as Depot Manager of the Bihar State Cooperative marketing Union Ltd., a shortage of coal was detected.
The appellant Cooperative Union made a claim for the loss, and a reference was made to the Assistant Registrar, cooperative societies under section 48 of the Bihar and Orissa Cooperative Societies Act 1935.
section 48(1)(c) deals with disputes between the Society.
and a past or present officer or agent of the Society.
Section 40 provides for investigation by the Registrar where upon an audit or enquiry such officer has been found guilty of misappropriation or similar acts.
The Assistant Registrar in an enquiry under Section 48 absolved respondent 1.
This was reversed by the Joint Registrar and an award made accordingly.
The Patna High Court in a writ application under Article 226 by respondent 1 held that since the matter was covered by Section 40, Section 48 could not apply and set aside the award.
The High Court relied on the maxim generalia specialibus non derogant.
The claim under section 40 was rejected on the ground of limitation under second proviso to Section 40 which prescribe a period of six years.
Allowing the appeal, this Court, HELD : 1.
Validity of plural remedies, if available under the law, cannot be doubted.
Even if the two remedies are inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
A matter which may attract Section 40 will continue to be governed by Section 48 also if the necessary conditions 893 are fulfilled.
In the present case no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 are available to the appellant for the recovery of the loss.
[896C D] Prem Jeet Kumar vs Surender Gandotra & Ors., [1991] Supp.
2 SCC 215 and Pentakota Srirakulu vs Co operative Marketing Society Ltd., ; , followed.
The claim of the appellant against respondent 1 is clearly covered by Section 48(1)(c) and therefore was validly referred to the Registrar under Section 48.
[895G] 3.
The six year rule of limitation in Proviso under Section 40(1) is limited for the purpose of Section 40, and cannot govern a reference under Section 48.
Even otherwise, on facts the claim is not barred by limitation.
[897B] Purnea Ministerial Government Officers ' Co operative Society Ltd. vs Abdul Quddus, , distinguished.
Matter remitted to the High Court for decision on the remaining issues.
[897F] |
Civil Appeal No. 1037 of 1988.
589 From the order dated 14.12.1987 of the Customs Excise and Gold (Control) Appellate Tribunal New Delhi in Appeal No. 469/87A order No. 807/87 A S.N. Kackar, R.K. Habbu, P.G. Gokhale, Ms. Sushma Manchanda and B.R. Agarwal for the Appellant.
The Judgment or the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L of the (hereinafter called 'the Act ').
The Superintendent of Central Excise returned the price list of the appellant with a covering letter satating that the price should include all the cost of packing and packing charges in terms of section 4(4)(d)(i) of the Act.
The appellant, a private limited company, manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
According to the appellant, it sold to the customers on wholesale basis the glass bottles manufactured by it, packed in gunny bags and cartons which it purchases from the market.
According to the appellant further, it has been paying duty on the value of the glass bottles including the cost of gunny bags or the cartons in which these are packed at the time of sale.
It appears, therefore, according to the appellant, that it has been paying duty on glass bottles on the basis of the assessable value which included the costs of packing material, namely, the gunny bags and the cartons.
The case of the appellant further is that the glass bottles are normally sold by it in the packing consisting of gunny bags which are durable and returnable and in several cases the gunny bags are returned by the buyers and are used by the appellant again for packing the glass bottles.
It is only when the customers specifically ask for delivered in cartons instead of in gunny bags that the appellant delivered the glass bottles packed in cartons which are also durable and returnable.
Towards the end of 1977 and early 1978 the appellant submitted price list in regard to the glass bottles manufactured by it for approval by showing separately the price at which such goods were actually sold in the course of "wholesale trade" and "the cost of packing".
By his letter dated 10th January, 1978, the Superintendent of Central Excise returned to the appellant the price list duly approved but nothing therein that the price should be inclusive of the cost of packing and packing charges in terms of section 4(4)(d) of the Act.
Section 4(4)(d)(i) as it stood read as follows: 590 "(4) For the purposes of this section: (a) `assessee ' means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) 'place of removal ' means (i) & (ii) x x x (c) xxx (d) 'value ', in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation: In this sub clause, 'packing ' means the wrapper, container, bobbin, pirn, spool, reel or wrap beam or any other thing in which or on which the excisable goods are wrapped, contained or wound," Since then the appellant has been paying duty on the cost of packing under protest and lodging claims of refund.
The appellant, however, did not receive any refund nor any intimation that the claims of refund are or were being rejected.
Various representations made by the appellant were in vain.
The Assistant Collector of Central Excise wrote a letter dated 8th March, 1980 advising the appellant to file an appeal before the Appellate Collector if the appellant felt aggrieved.
Feeling aggrieved, the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay.
The High Court passed an interim order on 18th July, 1984 remanding the case back to the Assistant Collector of Central Excise and to decide the matter after giving the appellant fair and adequate opportunity to adduce evidence.
After considering the written statements filed by the appellant, the Assistant Collector passed an order on 29th April, 1986 rejecting the appellant 's refund claim for about Rs.17 lakhs for the period from 1st January, 1978 to 31st December, 1980 and demanding duty for the period 6th January, 1981 to 31st December, 1985 in terms of the bank guarantees executed by the appellant.
There was an appeal before the 591 Collector of Central Excise (Appeals).
The Collector on 21st January, 1987 rejected the appeal and upheld the order of the Assistant Collector.
The appellant filed an appeal before the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'CEGAT ').
CEGAT dismissed the appeal.
Aggrieved thereby the appellant filed the appeal in this Court.
The Tribunal noted that the appellant manufactured glass bottles.
It delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings hl cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
The appellant 's case was that these packings were also returnable and in many cases they were actually returned and re used by the appellant.
There were no evidence about the durability of the cartons and gunny bags but nothing to show that these were returnable.
The position seems to be as follows.
The Tribunal has rightly applied the returnability test.
In K. Radha Krishnaiah vs Inspector of Central Excise and others, , this Court observed that it cannot be said that the packing is returnable by the buyer to the assessee unless there Is an arrangement between them that it shall be returned.
Therefore, such arrangement has been established.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case after examining the facts, the Tribunal found that there was no clause about returnability of the cartons and gunny bags.
The appellant invited the attention of the Tribunal to the following clause in their standard contractor.
It reads as follows: "6.
All packing cases, other than such as may be supplied or paid for by buyer, shall be returnable in good order and condition within 30 days after receipt. " The Tribunal was of the view that the above clause related to cases".
It could have meant only the crates which belonged to the appellant and for which the customers had not paid anything.
The 592 property in the crates having remained with the appellant all along, the buyers were naturally obliged to return them to their rightful owners.
But that was not the case with the cartons and gunny bags.
The buyers pay for these and the property in these pass on to the buyers.
They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free.
No such contract or agreement was forthcoming.
The Tribunal was not convinced that in the normal course of business anyone could be asked to part with its property, and in addition incur return freight therefor too for nothing.
In those circumstances, the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term.
The Tribunal further noted that since the statute insisted on the packing being returnable, in addition to being durable, the authorities are bound to see whether the transaction fulfilled the tests of returnability as per the Supreme Court and High Court judgments.
In that view of the matter, the Tribunal dismissed the appeal.
As noted above, this Court has considered the meaning of the expression "returnable" in the Section in K. Kadha Krishnaiah 's case (supra).
This Court held that so far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is return able.
While interpreting this word, we must bear in mind that what section 4(4)(d)(i) excludes from computation is cost of packing which is of a durable nature and is "returnable by the buyer to the assessee".
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
In that view of the matter we are of the opinion that in the facts found and the expressions used in section 4(4)(d)(i) of the Act which have been set out hereinbefore, there being no evidence of the agreement that the cartons and gunny bags were returnable, we are of the opinion that the Tribunal came to the correct conclusion.
This appeal fails and is rejected accordingly.
G.N. Appeal dismissed. | The appellant manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
It sold the glass bottles to the customers on wholesale basis packed in gunny bags and cartons which were durable and returnable.
According to the appellant it has been paying duty on glass bottles on the basis of the assessable value which included the cost of packing material, namely, the gunny bags and cartons.
The returned gunny bags and cartons were re used by the appellant.
The appellant submitted for approval, price list in regard to the glass bottles manufactured by it showing separately the price at which the goods were actually sold and the cost of packing.
Returning the price list duly approved, the Superintendent of Central Excise noted therein that the price should be inclusive of the cost of packing and packing charges in terms of Section 4(4)(d) of the Act.
The appellant was paying duty on the cost of packing under protest and lodged claims of refund.
As the appellant did not receive either the refund or any intimation rejecting the claim for refund, it filed a writ petition before the High Court which remanded the case back to the Assistant Collector for deciding the matter after giving the appellant fair and adequate opportunity to adduce evidence.
The Assistant Collector, after considering the written statements filed by the appellant rejected the appellant 's claim for refund and demanded duty for the subsequent period.
The appellant filed an appeal before the Collector of Central Excise (Appeals) which was rejected.
The appeal filed before the Customs Excise and Gold (Control) Appellate Tribunal was also dismissed.
This appeal under Section 35L of the Act is against the Tribunal 's judgment.
588 Dismissing the appeal, ^ HELD: 1.
In view of the facts of the case, and the expressions used in Section 4(4)(d)(i) of the Act, there being no evidence of the agreement that the cartons and gunny bags were returnable, the Tribunal was right in coming to the conclusion that the cartons and gunny bags were not returnable in the accepted sense of the term.
[592G, B C] 2.1 The appellant manufactured glass bottles and delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings in cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
It cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case there was no clause about returnability of the cartons and gunny bags.
[591B F] 2.2.
So far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
What Section 4(4)(d)(i) excludes from computation in cost of packing which is of a durable nature and is returnable by the buyer to the assessee.
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
[592D F K. Radhakrishnaiah vs Inspector of Central Excise and others, referred to. |
N: Criminal Appeal No. 483 of 1980.
From the Judgment and Order dated 6.11.79 of the Andhra Pradesh High Court in Crl.
A. No. 789 of 1979.
T.V.S.R. Krishna Sastry, Vishnu Mathur and V.B. Saharya, Amicus curiee (NP) for the Appellants.
G. Prabhakar for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
Twelve persons were challaned for the murder of Nethala Veeraswamy, a resident and Sarpanch of village Ramaraogudem in Eluru Taluq, West Godavari District (A.P.) in the night of 31.12.1977.
Learned Sessions Judge, West Godavari Division, Eluru tried the case and relying on the evidence of P.Ws. 1,2 and 7 in toto and the evidence of P.W.3 to some extent convicted all the accused persons for the offences charged under Section 302 read with Section 149 I.P.C. and awarded each one of them sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal the High Court set aside the conviction and sentence of seven accused persons, namely, Dasari Bhaskara Rao (A 4), Kali China Krishna (A 5), Namburi Lakshmana (A 8), Namburi Ramulu (A 9), Namburi Prasada Rao (A 10), Mada Govardhana Rao (A 11) and Kali Kamaka Rao (A 12).
The High Court confirmed the conviction of the remaining five accused persons Mullagiri Vajram (A 1), Mada Lakshmandas (A 6) and Gandi Abraham (A 7) under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
The High Court further held that as these accused had been sentenced for the main offence under Section 302 read with Section 149 I.P.C. there was no need of separate sentence under Sections 148 and 147 I.P.C.
The five accused A 1, A 2, A 3, A 6 & A 7 have come before this Court in appeal against the order of the High Court by grant of Special Leave.
Mada Lakshmandas (A 6) expired during the pendency of appeal before this Court as such the appeal filed by him was dismissed as having abated by order dated 8.4.1992.
We are now concerned in this appeal with the four accused appellants A 1, A 2, A 3 and A 7.
We have gone through the Judgment of the lower courts and have perused the record and have considered the arguments advanced by learned counsel for the parties.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws. 1,2,3 and 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2 and who was a clerk working in the panchayat office of Ramaraogudem and had accompanied the deceased in an autorickshaw and had seen the incident.
We find no infirmity in the statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
Learned counsel for the accused persons submitted that even if the statement of P.W.2 is taken to be correct, no offence is made out so far as accused (A 3) is concerned.
Learned counsel in this regard submitted that P.W.2 in the cross examination has admitted that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
It was also submitted that though P.W. 2 stated that he had given the name of A 3 in his statement recorded at the inquest but the name of A 3 does not find mention in exhibit D 7, the statement of P.W.2 recorded at the inquest.
We see force in the aforesaid contention.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
P.C. and also in his statement exhibit D 7 recorded at the inquest.
In view of these circumstances the accused A 3 is also entitled to the benefit of doubt.
It was next contended by learned counsel on behalf of the accused A 2 and A 7 that P.W.2 in the cross examination admitted that after the incident he had gone to police station seven or eight times.
He had gone to the police station as he was asked by the police.
He also admitted that at that time accused persons were in police lock up.
On the basis of the aforesaid statement of P.W.2 it was contended that when P.W.2 had gone to the police station scene or eight times after the incident the possibility of his seeing the accused (A 2) and (A 7) in the police station cannot be ruled out.
It was thus contended that any identification parade held on 25.1.1978 and 26.1.1978 has no value as P.W.2 had already seen the accused persons in the police station.
We find no force in this contention.
Exhibits P 16 and P 17 are the proceedings of identification parade held on 25.1.1978 and 26.1.1978 respectively.
A perusal of these documents shows that P.W.2 Garapati Krishnavatharam had himself stated that he had prior acquaintance with Mullagiri Yesupadam (A 2) and Gandi Abraham (A 7).
The High Court has examined this aspect of the matter and has rightly arrived to the conclusion that P.W.2 in his evidence has stated that he came to know the names of the accused from the children of the deceased and it was not unnatural for a person, who resides in a village for a period of two months and especially when they reside opposite to the residence of the president(deceased) in whose office he was working as a clerk to know the names of the persons residing nearby.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 AND P.W.2 made during the trial as eye witness.
It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the Village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
Nethalaveeraswamy the deceased was given merciless beatings and was done to death in the midnight of 31.12.1977.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the learned trial court as well as by the High Court that A 1 inflicted injuries by and axe and A 2 by a spear and A 7 was Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries by a stick.
It has also come in the evidence of P.W. 19, Inspector of Police that the accused persons had absconded and on 9.1.1978 on information by 5.00 A.M., he along with mediators visited Ramaraogudem and the absconded accused were hiding in the house of A 7.
He surrounded the house with his staff, guarded the house and in that house he found the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
Thus we find that there is no infirmity at all in the reasoning and conclusion arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.
In the result we allow the appeal so far as Dasari Bhima Rao (A 3) is concerned and he is acquitted of all the charged levelled against him his bail bonds shall stand discharged.
The appeal filed by Mullagiri Vajram (A 1), Mullagiri Yesupadam (A 2) and Gandi Abraham(A 7) is dismissed.
They shall surrender to their bail bonds and serve out the sentence awarded to them by the High Court.
N.P.V. Appeal disposed of . | Twelve persons, including the appellants, were challaned for the murder of Sarpanch of a village.
Relying on the evidence of P.Ws. 1,2 and 7 in toto and that of P.W.3 to some extent, the Sessions Judge convicted all the accused persons for the offences under Section 302 read with Section 149 I.P.C. and awarded sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal, the High Court set aside the conviction and sentence of seven accused persons, namely, A 4, A 5, A 8 to 12 and confirmed the conviction of the remaining five accused persons, A 1, A 6 and A 7 under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
These five accused filed an appeal, by special leave, before this Court.
During the pendency of the appeal one of the accused appellants died and as such appeal filed by him was dismissed as having abated.
On behalf of the accused persons it was submitted that even if the statement of P.W. 2 was taken to be correct no offence was made out so far as accused A 3 was concerned, inasmuch as P.W.2 had admitted in the cross examination that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
P.C., and that the name of A 3 was also not found in Exhibit D 7, the statement of P.W.2 recorded at the inquest, and that since P.W.2 had gone to police station seven or eight times after the incident, there was a possibility of his seeing the accused, A 2 and A 7 in the police lock up and hence the identification parades held had no value.
Disposing of the appeal, this Court, HELD: 1.1.
There is no infirmity at all in the reasoning and conclusions arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.[24 B] 1.2 It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
The deceased was given merciless beatings and was done to death in the midnight.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the trial court as well as by the High Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries buy a stick.
It has also come in the evidence of P.W.19, Inspector of Police, that the accused persons had absconded and after a few days of the incident, on information, he, alongwith mediators, visited the village and the absconded accused were hiding in the house of A 7.
He surrounded the house with hes staff, guarded it and found therein, the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
[23 F H, 24 A] 1.3.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws.1 to 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2.
a clerk in the deceased 's office, and who had accompanied the deceased in an autorickshaw and seen the incident.
There is no infirmity in the Statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
[22 D,E] 1.4.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 and P.W.2 made during the trial as eye witness.
[23 E] 1.5.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
and also in his statement, Exhibit D 7, recorded at the inquest.
In the circumstances, the circumstances, the accused A 3 is also entitled to the benefit of doubt.
[22 G] 1.6.
In the result, A 3 is acquitted of all the charges levelled against him, and the conviction and sentence of the other appellants, A 1, A 2 and A 7 are confirmed.
[24 c] |
Civil Appeal Nos.
4507 and 4508 of 1992.
From the Order dated 20.1.1992 of the Central Administrative Tribunal, Madras in O.A No. 925 of 1900.
K.T.S. Tulsi, Addl.
Solicitor General, Kapil Sibal, C.V.S., Rao, C. Ramesh and Ranjit Kumar for the Appellant.
P.P. Rap, V. Balachandran, R.P. Oberoi and B.S. Gupta for the Respondents.
The Judgment of the Court was delivered by MOHAN J.
Leave granted.
Both these appeals can be dealt with by a common judgment since identical issues are involved.
They are directed against the judgment of the judgment Central Administrative Tribunal, Madras dated 23.1.1992.
S.L.P. No. 7138/92 is preferred by Union of India while S.L.P. No. 6494/92 is filed by the affected party (Dr. M. Khalilullah).
The parties are referred to as mentioned in S.L.P. No. 7138/92.
The facts are as under.
The President of India sanctioned 35 posts in super time grade of Central Health Services in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates as admissible to other similar posts.
The sanction was upto 29.2.98.
The sanction was conveyed by the Under Secretary to the Government of India, Ministry of Health and Welfare, New Delhi on 26.8.1987.
After the creation of these posts, proposals were sent to the Union Public Service Commission for convening the meetings of the Departmental Promotion Committee for selection of the Candidates for Promotion.
The Union Public Service Commission approved to amend Rule 4(6) of Central Health Service Rules of 1982.
It also approved the method of recruitment, field of selection and principles of seniority to fill up these 35 posts as a one time measure in the absence of notified recruitment rules.
In its communication dated 29.9.88 the Union Public Service Commission besides referring to the above approvals specifically, stated: "These 35 posts may be treated as common posts both at present and in future to be included in the category of the floating posts for the Teaching and Non Teaching sub cadres mentioned in Rule 4(6) of the CHS Rules of 1982.
The eligibility conditions for promotion will be 3 years of regular service as Professor/Specialist Grade I with 17 years of regular service in Group `A '".
In the end, the Commission advised that the basis of eligibility and the eligibility list might be circulated to all concerned, their objections invited and settled before the meeting of Departmental Promotion Committee (Health).
It also requested that the final eligibility list might be sent to the Union Public Service Commission.
On 3.11.88, this decision was conveyed to all the concerned parties stating that it has been decided to fill up the posts by selection method i.e. merit with regard to seniority.
The eligibility conditions for promotion will be 3 years of regular service in Group `A '.
Together with that letter was enclosed the eligibility list of Professors.
On the basis of the Principles stated in the letter, errors/omissions/objections etc.
Were to be intimated to the Ministry within one month.
In the eligibility list include, Dr. P. Rajaram, the first respondent, was assigned rank No. 13 while Dr. Khalilullah, the third respondent was assigned the rank No. 24.
On 20.9.1989 , in accordance with the guidelines dated 10.3.89, the Departmental Promotion committee met for selection of officers for the promotion to the super time grade posts of director professor in the Central Health Service.
It requires to be stated that these posts were extended from time to time.
Each extension was for a period of one year.
Ultimately by an order dated 2.4.1992, it has been extended for a period of one year up to 28.2.1993.
Consequent upon the selection by Union Public Service by an order dated 17.1.1990, the President was pleased to appoint under Rule 4(10) of the Central Health Services Rules, 1982 the officers of Specialist Grade I of the Teaching Specialist sub cadre of the Central Health Service to supertime grade of the Teaching Specialist sub cadre of the Central Health Service.
They were posted as Director Professors on an officiating basis in the pay scale of Rs. 5900 6700 plus non practising allowance @ Rs.950 p.m.
The dates of promotions were indicated against each of the appointee.
As far as Dr. Rajaram, the first respondent is concerned, he was assigned rank No. 14 and the date of promotion was as 1.4.1989 while respondent No. 3, Dr. M. khalilullah was assigned rank No.4 and the date of promotion was as 1.4.1989.
Paragraph 3 of the order specifically states that the above promotions will be personal to the officers concerned and the posts Presently held by them will stand upgraded to the Supertime grade in the scale of Rs.5900 6700 plus non practising allowance @ Rs.950 p.m. in terms of Ministry 's order No. A 11011/5/88 CHS IV, dated 15.3.1989.
This will continue till the upgraded Posts are held by the officers being promoted now.
Aggrieved by the order dated 17.1.1990, the first respondent (Dr. Rajaram) preferred an application No. 925 of 1988 on 6.7.1990.
In that application, he had stated that he was senior to Dr. B.S. Rana, Dr. M. Khalilullah, Dr. K.K. Jain and Dr. D.D.S. Kulapathy.
They should not have been show above him.
The promotion was only on the basis of seniority.
In opposition to this, the respondent in the application who has secured a higher rank urged that the Departmental Promotion Committee had ranked Dr. Rajaram at serial No. 14 on the basis of merit.
The criterion for promotion is only merit.
Before the Tribunal, the scope of Rule 4 sub rule (10), clause (iii) of Central Health Service Rules, 1982 (hereinafter referred to as "the Rules") came up for interpretation.
The Tribunal, in the impugned judgment, accepted the contention of Dr. Rajaram and held that promotion for the post of director/Professor should be made on the basis of seniority.
Consequently, it directed that he be posted above the respondents who had been named in the application.
It is under these circumstances, the present S.L.Ps. have preferred by Union of India as well as by Dr. Khalilullah.
Mr. Kapil Sibal, learned counsel appearing for Dr. M. Khalilullah after taking us through the rules submits that rule 4(10) (i) of the Rules deals with 35 newly created floating common posts in the supertime grade Rs.5900 6700 in the Teaching and Non Teaching specialist sub cadre.
These posts were in addition to the authorised strength of posts in the supertime grade.
The authorised strength of both categories of Teaching and Non Teaching sub cadres is reflected in Schedule II.
Rule 4(10) (ii) stipulates that promotions to these posts are to be made on the basis of common eligibility list to be drawn separately for the Teaching Specialist sub cadre and the Non Teaching Specialist sub cadre.
This has to be without reference to any of the specialities in respective sub cadres.
Rule 4(10)(iii) stipulates that the eligibility list shall be made after the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to the officer 's suitability for holding the post with the condition that the said officer should have completed three years of regular service as Professor (Specialist) Grade I.
This rule does not stipulate the manner in which the suitability of the said officer is to be assessed by the Departmental Promotion Committee.
Schedule IV of the Rules talks of the constitution of the Departmental promotion Committee.
It is clearly stipulated that in each meeting of the Departmental Promotion Committee the Chairman/Member, Union Public service Commission shall chair the Departmental promotion Committee.
The guidelines stipulate that the Departmental Promotion Committees constituted under the respective Service Rules shall judge the suitability of officers for promotion to selection as well as non selection posts.
Here again, the Union Public service commission should be associated with Departmental Promotion Committee in respect of Central Civil Services Posts belonging to grade `A ' where promotion is based on the principle of selection unless it has been decided by the Government of India not to associate the Union Public Service Commission.
The Union Public Service Commission need not be associated in respect of posts belonging to Grade A if the promotion is based not on the Principles of selection but on seniority cum fitness.
Wherever the Union Public Service Commission is associated with Departmental Promotion Committee, the Chairman or a Member of the Commission will preside over the meeting of Departmental Promotion Committee.
When Schedule IV requires that the Departmental Promotion Committee(Services) ought to be Presided over by the Chairman or Member of the Union Public service Commission itself suggests that the said posts ought to be filled in by way of selection rather than on the basis of seniority cum fitness.
Consequently, the word `suitability ' in Rule 4(10) (iii) in the context of nature of posts, its grade, can only mean suitability for the purposes of being selected to the said Post.
This submission is made on the basis that Rule 4(10) is a complete code in itself.
Even if this post falls outside the Schedule ii, the basis of promotion cannot be seniority.
In terms of Rule 3 of the Rules, the Central health service consists of persons appointed to the service under sub rule (5) of Rule 4 and rules 7 & 8.
It is the contention of the appellant that under Rule 4(3), Government of India is entitled to make temporary additions to or reductions in the strength of `duty posts ' in the various grades as deemed that these are posts with designations specified in Part A of Schedule II whether permanent of temporary.
When this definition is read along with Rule 4(1) (ii) and Rule 4(1) (iii), it is clear that temporary additions or reductions in the number of duty posts can take place from time to time.
These 35 floating/common posts were created for the first time on August 26, 1987 and administrative orders have thereafter been issued from time to time extending the creation of the said `duty posts ' without amending Schedule II.
Certainly, these posts were part of authorised strength at the time of initial constitution of the Service.
Rule 8 contemplates that any vacancy arising in any one of the grades referred to in Schedule II shall be filled in, as provided in rule 8(4) (ii).
The difference between Rule 4(10) (iii) and rule 8(4) (ii) is that whereas in the latter the promotion is to be made with reference to a post in the Teaching Specialist sub cadre or the Non Teaching Specialist sub cadre on account of any vacancy occurring therein, in a particular speciality, in the case of the former, notwithstanding the fact that one of the 35 floating/common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality, since the Teaching Specialist sub cadre forms a class by itself which comprises 29 specialities.
It is in this context, therefore, that the said posts could not be included in schedule II, since specialities.
It is, therefore, clear that whereas the word `selection ' used in Rule 8(4) (ii) is with reference to inter se merit of persons belonging to a particular speciality with reference to a vacancy occurring in a speciality but with reference to the inter se merit of candidates based on their confidential reports and assessed by the Departmental Promotion Committee belonging to any of the 29 specialities, who would be considered most suitable to be promoted, since the concept of seniority cum fitness cannot possibly be applied to a common set of posts without reference to any speciality.
Thus, it is submitted that to determine the meaning of suitability, the same yard stick must be adopted.
In any event, these are highly specialised posts.
Hence, it is unthinkable that the promotions to these posts is based on the principle of seniority cum fitness and not on the basis of selection.
The word `suitability ' will have to be interpreted as seniority cum fitness.
Otherwise, it would be liable to struck down as unconstitutional being violative of Articles 14 and 16 of the Constitutions.
Therefore, it is submitted that the Rule must be so interpreted as not to violate the fundamental rights.
The Tribunal had gone wrong in adopting the principle of seniority and its interpretation of rules cannot be sustained.
Learned counsel for Union of India, Shri K.T.S. Tulsi, supporting the arguments of Shri Kapil Sibal, urged that the order creating these posts clearly mentioned that the posts are created in the super time cadre of Central Health service.
Rule 4(10) (ii) and (iii) as amended merely prescribe the procedure for preparation of eligibility list.
This procedure is nowhere prescribed in any other Rule.
This was because of the fact that the 35 posts were created as floating posts.
They did not pertain to any particular super speciality or sub cadre of Professor/Director.
Therefore, criteria for preparation of eligibility list had to be prescribed for determining inter se ranking between the sub cadre.
Merely because Rule 4(10) (iii) contains the word `suitability ', the said Rule does not supersede alter or amend the criteria for selection.
The word `suitability ' will have to be understood in the light of the guidelines of Departmental Promotion Committee.
These 35 posts referred to in Rule 4(10) are an integral part of the cadre.
The said posts were not added to Schedule Ii, forming part of the temporary strength of the cadre.
However, on August 10, 1992, the said posts have been added to Schedule Ii so as to make its intention clear that the promotion is to be governed by all the relevant rules and not by Rule 4 (10) when read in isolation from the remaining Rules.
Thus, it is submitted that the reasoning of the Tribunal is unsupported.
Mr. P.P. Rao, learned counsel on behalf of Dr. P. Raja Ram would urge as under.
The initial argument particularly on behalf of the Union of India was that these floating/common posts of super time grade of teaching Specialist sub cadre formed part of authorised strength of the Central Health Service in terms of Rule 4(10).
This was contested by this respondent that Schedule II has not been amended till date so as to include these posts.
Instead of frankly admitting the mistake, there was a deliberate attempt to justify the inclusion of these 35 posts as part of Schedule II.
This is nothing but misleading the Court.
This alone is enough to dismiss the Special Leave Petition.
Even on merits, Rule 4(10) states that the posts are to be filled up by the method of promotion and on the basis of an eligibility list.
The note also lays down that the eligibility list shall be prepared with regard to the date of completion of the prescribed qualifying years of service in their respective grades, by the officers.
Further clause (iii) of sub Rule (10) adds the requirements of assessment by a Departmental Promotion Committee in regard to the suitability of each officer for holding the post while considering his case for promotion on the basis of common eligibility list.
The words 'his suitability" in the said clause (iii) are very significant.
They postulate assessment of suitability of each candidate in the order in which the names appear in the common eligibility list drawn on the basis of continuous qualifying service rendered by them in the feeder Grade.
The scheme of sub Rule (10) totally rules out selection on the basis of relative merit of all eligible candidates.
The difference between `common Posts ' and `floating posts ' is that while in `common posts ', a Professor on being promoted to one of the `common posts ', a Professor on being promoted to one of the `common posts ' moves to that post and vacates the post of Professor previously held by him, while in floating posts ' the post held by him is upgraded and he continues to work in the same speciality, in the same institution.
The guidelines of the Departmental Promotion Committee are not of any assistance.
Therefore, no argument can be advanced on this basis.
If guidelines were governed, there was no purpose in adding Rule 4(10) (ii) and (iii).
The basic distinction between the selection posts and non selection posts is, whether it is to be filled by a comparative assessment on merit of all eligible candidates or on the basis of continuous length of service.
The guidelines say that there is no need to make comparative assessment of records of the officers but it should categorise the officers as fit or non fit.
It is a clear indication that there is no comparative assessment involved.
The common eligibility list which talks of Rule 4(10) is nothing but a combined seniority list of officers in different specialities drawn with reference to the date of completion of the prescribed qualifying years of service.
It is also incorrect to contend that it is a duty post as defined under Rule 2(e).
Such an expression as 'duty post is absent under Rule 4(10)".
When these posts had been created in order to release stagnation in addition to authorised strength, presence of Chairman of Member of Union Public Service Commission at the Departmental Promotion Committee does not make a non selection post as selection post simply because the guidelines say in the case of non selection posts, Union Public Service Commission need not be associated.
The fact that this respondent did not raise any objection to the letter dated 3.11.1988, will not, in any manner, deprive him of his right if the Rules confer such a right.
lastly, it is submitted that if two views are possible, the view taken by the Tribunal should be upheld.
Thus, no interference is warranted.
We shall now proceed to consider the merits of the above contentions.
35 posts in super time grade of Central Health Service in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates admissible to similar posts were created.
These posts were to last till 29.2.1988.
Time and again, they were extended.
The Rules which were relevant to appreciate the controversy whether the promotion is on the basis of seniority or on the basis of merit may now be seen.
In exercise of the power conferred under the proviso to Article 309 of the Constitution, the Rules called Central Health Service Rules, 1982 were framed.
Rule 3 speaks of the constitution of Central Health Service.
This service is to consist of persons appointed to the service under the Rules 4(5),7 and 8.
Rule 4 speaks of authorised strength of service.
Sub rule (1) of this Rule states that the authorised strength of duty posts and the deputation posts are as specified in Schedule II.
Under sub rule (3), the Government is empowered to made temporary additions or reductions in the strength of both : (i) the duty posts (ii) deputation posts.
sub rule 6(i) and (ii) may be quoted as follows: (6) (i) "The Controlling Authority shall upgrade five posts in the grade of Specialist Grade I to supertime grade (three posts in the Teaching Specialist Sub cadre as Director Professor and two posts in the Non Teaching Specialist Sub Cadre or Public Health sub cadre as Specialist (Consultant) and twenty five posts in the grade of Specialist Grade II in the non Teaching Specialist Sub cadre or Public Health Sub cadre or Associate Professor in the Teaching Specialist Sub cadre in the grade of Specialist Grade I without altering the combined authorised strength of posts of the respective sub cadre from which these posts are temporarily upgraded.
(6) (ii) The promotions under this sub rule shall be made on the basis of a common eligibility list covering all officers in the respective sub cadres without regard to any specialities.
" It requires to be carefully noted that what is talked of is a common eligibility list.
In other words, this has only reference to eligibility.
This is an aspect which we want to emphasise even in the beginning.
Then, we come to sub rule (10) which was introduced on 30.5.1989 which specifically deals with these 35 newly created floating/common posts in the super time grade of Rs. 5900 6700.
These 35 posts are made up of 20 posts in the Teaching Specialist sub cadre as Director Professor and 15 posts in the Non Teaching Specialist sub cadre as Consultant.
These posts will be in addition to the authorised strength.
It is common ground that these posts were created to release stagnation.
Earlier to this amendment, these posts in the Teaching Specialist Sub cadre were alone open to Professors from all specialities.
They were : (i) Director, G.B. Pant Hospital, New Delhi.
(ii) Dean, Moulana Azad Medical Collage, New Delhi.
(iii) Principal, Lady Harding Medical Collage , New Delhi.
(iv) Director, JIPMER, Pondicherry.
(v) Dean, JIPMER, Pondicherry.
(vi) Deputy Director General (Medical), D.T.E., DGH, New Delhi.
As could be seen, the promotion posts available were very few and were restricted to certain specific specialities.
This led to stagnation.
Therefore, the floating posts (20+15) were created to be filled in the grade of Professor/Specialist Grade I (Rs.4500 5700).
It was in this background Rule 4(10) was introduced.
That lays down : "There shall be 35 newly created floating/common posts in the supertime grade of Rs.5900 6700 (Twenty posts in the teaching specialist sub cadre as Director Professor and fifteen posts in the Non Teaching Specialist sub cadre as Consultant) which will be in addition to the authorised strength of posts in supertime grade of Rs. 5900 6700 in different sub cadres of Central Health Service.
" Further clause (ii) of the above Rule lays down as follows: "The promotions under this sub rule shall be made on the basis of a common eligibility list to be drawn separately for Teaching Specialist sub cadre and Non Teaching Specialist sub cadre covering all officers in the respective sub cadres viz. Teaching and Non Teaching without regard to any specialities".
Here again, it talks of eligibility.
In our opinion, eligibility means interlacing of seniority list of different specialities.
Clause (iii) reads as under : " The appointment against such posts shall be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the post and has been working in the grade of Professor/Specialist Grade I on a regular basis for not less than three years, failing which has been working as a Professor/Specialist Grade I with 17 years of regular service in Group `A ' post".
The note is also made for our purpose that states : "The eligibility list shall be prepared with reference to the date of completion by the officers of the prescribed qualifying years of service in the respective grades.
However, in case of persons who have been appointed on the same date the seniority shall be determined as under : (a) Where the eligible officers were considered by the same D.P.C. the seniority shall be based on the order of merit.
(b) If there is no order of merit, the seniority shall be on the basis of seniority in the feeder grade.
(c) If there is no seniority in the feeder grade or it is not possible to determine the seniority even in the feeder grade, the length of regular service in the feeder grade shall be the guiding factor for determining the seniority.
(d) if length of service in the feeder grade is also the same, regular service in the next lower grade shall be taken into account, failing which date of birth.
" It may be seen that clause (iii) states that the appointment is to be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the Post.
Such a consideration will arise only if the concerned officer has been working in the grade of Professor/Specialist Grade I for a period not less than three years.
The alternative qualification is 17 years of regular service in Group `A ' post and the concerned officer has been working as a Professor or Specialist Grade I.
This clause does not lay down the manner in which the suitability of the officer is to be assessed.
However, It is noteworthy that suitability is to be assessed by a Departmental Promotion Committee.
As to what is stated can be seen, when we look at Rule 2 which contains definitions.
Rule 2(c) says as under : "Departmental Promotion Committee means a group `A ' Departmental Promotion Committee specified in Schedule IV for considering the cases of promotion or confirmation in Group `A ' Posts are of the scale of Rs.2200 4000 and above.
Schedule III defines the method of recruitment, the field of selection for promotion and the minimum qualifying service in the immediate lower grade or lower grades for appointment or promotion of officers to group `A ' duty posts and deputation posts in the Central Health service".
In Note 1 of the said Schedule, it is stated thus : "Promotion to the post of Associate Professor (non functional selection grade), Associate Professor, Specialist Grade II (non functional selection grade), Specialist Grade II (Senior Scale) in non teaching and Public health sub cadres, Chief Medical Officer (non functional selection grade) and Senior Medical Officer will be on non selection basis.
All the remaining posts are selection posts".
When it says all the remaining posts are selection posts, it is obvious that the posts with which we are concerned are selection posts.
Schedule IV lays down the composition of Departmental Promotion Committee.
With regard to the Teaching Specialist sub cadre posts, super time and Specialist Grade I (Professor), the Departmental Promotion Committee shall consist of the following : (i) Chairman.
Chairman/Member, Union Public Service Commission : (ii) Secretary or his nominee, Ministry of Health and Family Welfare ; Member (iii) Director General of Health Services or his nominee : Member.
(iv) One Departmental officer nominated by the Secretary, Ministry of Health and Family Welfare : Member.
When Rule 4 (10) (iii) talks of Departmental Promotion Committee, it is only this Departmental Promotion Committee in accordance with Schedule IV that is thought of.
There guidelines issued under the office memorandum of Government of India dated April 10, 1989.
Under this Office Memorandum, the various instructions have been updated and consolidated.
Under these guidelines, the Departmental Promotion Committee so constituted shall judge the suitability of the officers for promotions to selection posts.
it has already been seen that these are selection posts as per Schedule II of the Rules.
In Paragraph 2.1 with reference to the post in question carrying a scale of Rs.5900 6700 or equivalent.
The minimum status of Officer who should be member of Departmental Promotion Committee is prescribed as Secretary or Additional Secretary to Government of India.
Paragraph 2.2 of the guidelines states as follows : "The Union Public Service Commission (UPSC) should be associated with DPCs in respect of all Central Services/posts belonging to Group `A ' where promotion is based on the principles of selection unless it has been decided by the Government not to associate the UPSC with a Group `A ' DPC.
The UPSC need not be associated in respect of posts belonging to Group `A ', if the promotion is based not on the principles of selection but on seniority cum fitness".
Paragraph 2.4 also stresses the fact that whenever the Union Public Service Commission is associated with the Departmental Promotion Committee the Chairman or a Member of the Commission will preside over the meeting of the Departmental Promotion Committee.
The contention of Mr. P.P. Rao, learned counsel for the respondents that the nature of the post or the method of promotion need not be decided with reference to the guidelines is not correct.
In Rule 4, sub rule (10), clause (iii), to which a reference has already been made, the assessment is required to be done by a Departmental Promotion Committee.
It is for such a Committee that guidelines have been prescribed.
Therefore, we cannot altogether ignore these guidelines.
From the above two paragraphs it is clear that if there is to be an assessment the principle of selection is involved.
On the contrary, if it were merely a seniority cum fitness there is no need to associate the Union Public Service Commission as pointed out in Paragraph 2.3 of the guidelines.
All these lead only to one conclusion that these are selection posts.
Having arrived at this conclusion then the question would be what exactly is the meaning of the word "suitability".
That is dealt with apart from Rule 4, sub rule (10), clause (iii), also under guidelines in Paragraph 6.1.2.
The Departmental Promotion Committee is to devise its own method and procedure for objective assessment of suitability of candidates.
It is noteworthy in paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delienated.
Clause (ii) is very important and we extract the same: "In respect of all posts which are in the level of Rs.3700 5000 and above, the benchmark grade should be `very good '.
However officers who are graded as `Outstanding ' would rank en bloc senior to those who are graded as `Very Good ' and placed in the select panel according upto the number of vacancies, officers with same grading maintaining their inter se seniority in the feeder post".
(Emphasis supplied) In contradistinction to this when we look at paragraph 7 of the guidelines, which deals with non selection method, that dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of the assessment of the record of service.
In so far as we are concerned with selection this paragraph does not have any application whatever.
Thus, therefore, the word "suitability" in Rule 4(10) (iii) having regard to the nature of the post and grade, could only mean suitability for the purposes of being selected to the said post.
(Emphasis supplied) Further, the expression "suitability" in the said clause does not, in any manner, supersede alter or amend the criteria of selection Prescribed in the remaining rules as is applicable to super time grade post.
When the expression "suitability" is construed harmoniously with other rules, the process of selection is inescapable as rightly contended by Mr. K.T.S. Tulsi, learned additional solicitor General.
The argument of Mr. Rao that if these posts are by the method of selection, clauses (ii) and (iii) and a note thereunder are wholly unnecessary in Rule 4(10), overlooks the fact that these clauses deal only with eligibility.
It is a common case between the parties that these 35 floating posts were created by sub rule (10) of the Rule 4 in addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted for the authorised strength it must equally apply to the post created in addition to the authorised strength.
Though a good deal of controversy arose during the course of the arguments whether these posts had been included in Schedule II or not, it was vehemently commented upon by Mr. P.P. Rao, learned counsel, that an inaccurate statement was made by Union of India that controversy pales into insignificance because of the Gazette Notification dated 10th of August, 1992 including these 35 newly floating/common posts in Schedule II.
Therefore, if these posts form part of the authorised strength as to what would be the bearing of Rule 8(4)(ii), requires to be considered.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality, this method is to be adopted.
In contradistinction to this, under rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
The teaching, speciality sub cadre, forms a class within itself since it comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8(4)(ii) with reference, to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.
Lastly, we may refer to one important fact.
The first respondent (Dr. Raja Ram) was served with a copy of letter dated 3.11.1988.
That clearly states that the 20 posts of Director Professor of Super time grade are to be filled up by selection method, merit with regard to seniority.
Therefor, the decision of Government of India had been conveyed to the first respondent.
The first respondent when he was put on notice should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
However, it is one of the points to be borne in mind.
The Departmental Promotion Committee met on 20th September, 1989 and the minutes have been placed before us.
After examination of the character rolls of the senior most eligible officers the committee assessed the officers as given in Annexure I.
The first respondent, Dr. Raja Ram was rated as "very good" while the rating for the other doctors is as follows : 1.
Dr. B.S. Rana (2nd respondent ) : Outstanding 2.
Dr. M. Khalilullah (3rd respondent ) : Outstanding 3.
Dr. K.K. Jain (4th respondent ) : Outstanding 4.
Dr. D.D.S. Kulapathy (5th respondent ) : Outstanding Where respondents 2 to 5 are rated outstanding, they go `en bloc ' above the first respondent since the first respondent is merely "very good".
This is because of the application of clause II of paragraph 6.3.1 of the guidelines quoted above.
It was on this basis the Departmental Promotion Committee assigned rank No.14 to the first respondent, Dr. Raja Ram.
Pursuant to this, the President of India issued the impugned order of promotion dated 17th of January, 1990.
Paragraph 3 of the order, which we have quoted above, clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale of Rs.5900 6700 plus non practising allowance at Rs.950 per mensem in terms of the Ministry 's order dated 15.3.89.
Above all these, we cannot lose sight of the fact that for posts of this character in super time grade carrying high salary, promotion could not be accorded merely on the basis of seniority.
In our considered view, it should be on merit.
For the foregoing reasons, we are clearly of the opinion that the Tribunal had erred in merely adopting seniority as the basis of promotion and not merit.
It is needless for us to consider whether these are duty posts since we have taken the view that these posts fall within Schedule II of the Rules.
In the result, we set aside the impugned judgment of the Tribunal and allow these appeals without costs.
The reason why we are not awarding costs in favour of the appellants is because of a specific objection by Mr. P.P. Rao that these posts have not been included in Schedule II by amending the said Schedule.
In respect of this, the Union of India persisted in the argument that they had been included in Schedule II.
Of Course after the Gazette Notification dated 10.9.92 the position may be different.
But that does not mean that the earlier incorrect statements by the Union of India could be overlooked.
Appeals allowed. | 35 posts in super time grade of Central Health Services were sanctioned and proposals were sent to the Union Public Service Commission(UPSC) for convening departmental Promotion Committee (DPC) meetings for selection of candidates.
UPSC approved to amend Rule 4(6) of Central Health service Rules of 1982.
It also approved the method recruitment, field of selection and principles of seniority to fill up the 35 posts as one time measure in the absence of notified recruitment rules.
The Commission also stipulated that these 35 posts were to be treated as common posts to be included in the category of floating posts for the teaching and non teaching sub cadres mentioned in Rule 4(6) of Central Health Services Rules, 1982.
The eligibility condition stipulated was three years as Professor failing which 17 years of regular service in Group `A '.
The Communication of UPSC together with the eligibility list of Professors was circulated and errors/objections etc.
were to be intimated to the Ministry within one month.
The DPC met and selected candidates.
Respondent No.1 was assigned 14th rank and Respondent No.3 was assigned 4th rank.
The selected candidates were promoted and appointed.
Respondent No.1 filed an application before the Central Administrative Tribunal claiming that he was senior to respondent No.3 and others doctors and since the promotion was only on the basis of seniority and directed that Respondents arrayed in the application before it.
Being aggrieved by the Tribunal 's order, Union of India preferred the first of the two appeals.
Respondent No.3 in that appeal has preferred the other appeal.
On behalf of the appellants/respondent No.3, it was contended that Rule 4(10)(ii) and (iii) as amended merely prescribed the procedure for preparation of eligibility test; that the procedure has not been prescribed in any other Rule as the posts were created as floating posts: that the posts did not pertain to any particular super speciality or sub cadre if Professor/Director and so the criteria for preparation of eligibility list gad to be prescribed for determining inter se ranking between the sub cadres; that merely because Rule 4(10)(iii) contained the word `suitability ' it did not supersede, alter or amend the criteria for selection and that the word `suitability ' has to be understood in the light of the guidelines of DPC.
Allowing the appeals, this Court, HELD: 1.1.
If there is to be an assessment of merit, the principle of selection is involved.
on the contrary, if it were merely a seniority cum fitness there is no need to associate the Union public Service Commission as pointed out in the guidelines.
All these lead only to one conclusion that these are selection posts.
That is dealt with apart from Rule 4, sub rule (10), clause (iii), and also under paragraph 6.1.2 of the guidelines issued by the Government of India.
According to the guidelines the Departmental Promotion Committee is to devise its own method and procedure for objective assessments of suitability of candidates.
It is note worthy in Paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delineated.
[51 C,D] 1.2.
Paragraph 7 of the guidelines deals with non selection method and it dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of assessment of the record of service.
Therefore, the word "suitability" in Rule 4(10)(iii) having regard to the nature of the post and grade could only mean suitability for the purposes of being selected to the said post.
[51 G, H; 52 A] 2.
It is a common case between the parties that these 35 floating posts were created by sub rule 10 of rule 4 in a addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted it must equally apply to the post created in addition to the authorised strength.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality , this method is to be adopted.
In contradistinction to this, under Rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
Comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8 (4)(ii) is with reference to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.[52 D H] 3.
The first respondent was served with a copy of letter dated 3.11.1988 in which the appellant clearly stated that the 20 posts of Director/Professor of super time grade are to be filled by selection method viz. merit with regard to seniority.
Therefore, the decision of Government of India had been conveyed to the first respondent and he should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
[53 A,B] 4.
After examination of the character roll of the senior most eligible officers the committee assessed the officers.
The first respondent was rated as "very good" while the rating for respondents 2 to 5 was outstanding".
So they go en bloc above the first respondent since the first respondent is merely "very good".
This is because of the application of clause Ii of paragraph 6.3.1.
of the guidelines.
It was on this basis the Departmental Promotion Committee assigned rank No. 14 to the first respondent.
Pursuant to this the President of India issued the order of promotion dated 17th January, 1990.
Paragraph 3 of the order clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale in terms of the Ministry 's order dated 15.3.1989.
Hence the Tribunal was in error in merely adopting seniority as the basis of promotion and not merit.
[53 C G] |
N: Criminal Appeal No. 183 of 1993.
From the Judgment and order dated 11.5.1992 of the Allahabad High Court in Criminal Appeal No. 1791 of the 1979.
Bahar U. Bargi and Anis Suhrawardy for the Appellant.
The following Order of the Court was delivered: The petitioner was convicted by the Special Judge, Mathura under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal before the Allahabad High Court which was dismissed for default of the appearance Or the petitioner and his counsel, when the appeal was called out for preliminary hearing.
An application for restoration of the appeal made thereafter has also dismissed by the order which has been challenged before this Court in the present special leave petition.
The question which arises in this case is whether an appeal filed under Section 374 of the Criminal Procedure Code by an accused against his conviction and sentence could be dismissed for the default of the appellant in prosecuting the appeal either in person or through counsel.
Notice was issued in the special leave petition indicating that the matter would be finally disposed of at the notice stage itself.
The office report indicates that notice has been served, but there is no appearance on behalf of the respondent State.
Special leave is granted.
The High Court in its order dated 14th November, 1990 dismissing the appeal for non prosecution, relied upon the observations of this Court in Ram Naresh Yadav and others vs State of Bihar, AIR 1987 SC 1500 to the following effect: "The court can dismiss the appeal for non prosecution and enforce discipline or refer the matter to the Bar Council with this end in view.
But the matter can be disposed of on merits only after hearing the appellant or his counsel.
The learned counsel for the appellant has contended that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
The argument appears to be well founded.
As enjoined by Section 382 of the Code of Criminal Procedure, the appeal has to be filed in the form of a petition.
Section 384 (omitting sub sections (3) and (4) which are not relevant in the present context) quoted below deals with summary disposal of appeal: "384.
Summary dismissal of appeal: (1) If upon examining the petition of appeal and copy of the judgment received under Sec. 382 or Sec.
383, the Appellate Court considers that there is no sufficient ground for interfering, it may dismiss the appeal summarily: Provided that (a) no appeal presented under Sec. 382 shall be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same; (b) no appeal presented under Sec.
383 shall be dismissed except after giving the appellant a reasonable opportunity of being heard in support of the same, unless the Appellate Court considers that the appeal is frivolous or that the production of the accused in custody before the Court would involve such inconvenience as would be disproportionate in the circumstances of the case; (c) no appeal presented under Sec. 383 shall be dismissed summarily until the period allowed for preferring such appeal has expired.
(2) Before dismissing an appeal under this section, the Court may call for the record of the case.
It will be seen that the very opening words of the Section require the Appellate Court to examine the petition of appeal and copy of the impugned judgment in considering whether there is any sufficient ground for interfering with the same.
Sub section (2) provides that the Court may call for the records of the case even at the preliminary stage.
It is, thus clear, that the duty of the appellate court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
In a case where the appellant has been sentenced to imprisonment and he is not in custody when the appeal is taken up for preliminary hearing, the Appellate Court can require him to surrender, and if the appellant fails to obey the direction, other considerations may arise, which may render the appeal liable to be dismissed without consideration of the merits, but that is altogether a different matter with which we are not concerned in the present case.
Here, the appellant 's advocate was not present to argue the appeal when the case was called out and in the restoration application filed subsequently, attempt was made to explain the default, which, of course, did not succeed.
The question is, whether in the circumstances, the High Court could have dismissed the appeal for default, and if not, whether the prayer for restoration should have been allowed.
As is manifest from the provisions of Criminal Procedure Code, referred to above, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismissed the same on the ground that the Advocate for the appellant was not present.
The position of a criminal appeal is not the same as in a civil appeal governed by the Civil Procedure Code.
comparison of the provisions of Section 384 with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellate when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
In the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution, and this is the reason as to why the Criminal Procedure does not contain any special provision like Order 41, Rule 19.
The law was correctly laid down in Shyam Deo Pandey & Ors.
v State of Bihar, a case governed by the old Criminal Procedure Code.
The position in this regard remains the same under the new Code.
Even earlier, the High Courts were following this very principle is clear from the observations Emperor vs Balumal Hotchand and Others, 39 Criminal law Journal 890 and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350.
in Emperor vs Balumal Hotchand and others, it was observed thus: That the law requires that before an Appellate Court dismisses and appeal summarily, it shall read a copy of the judgment, and then, if there is no sufficient ground for interfering, it may dismiss the appeal summarily.
it was emphasized that the dismissal of the appeal shall depend on the exercise by the judgment, and not upon the failure of the accused to press his appeal.
In view of the clear language of the Code of Criminal Procedure and the other reasons mentioned above we are constrained to hold that the observations of this Court in AIR 1987 Supreme Court page 1500 relied Upon by the High Court in the case before us, cannot be treated as having laid down the law correctly.
The High Court was, therefore, not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have, therefore, allowed the prayer of restoration of the criminal appeal under its inherent power.
In the result, the present appeal is allowed, the orders of the High Court are set aside, the Criminal Appeal No. 1791 of 1979 before the High Court is restored and the matter is remitted to the High Court for consideration and decision on merits in accordance with law.
T.N.A Appeal allowed. | The appellant was convicted under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal under Section 374 of the Criminal Procedure Code before the Allahabad High Court which was dismissed for default of the appearance of the appellant and his counsel.
An application for restoration of the appeal made thereafter was also dismissed.
In appeal to this Court it was contended on behalf of the appellant that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
Allowing the appeal and setting aside the orders of the High Court, this Court, HELD: 1.
The High Court was not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have allowed the prayer of restoration of the criminal appeal under its inherent power.
[310 C] 2.
Under Section 384 of the Criminal Procedure Code it is the duty of the appellant court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily.
The said duty is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
Therefore, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismiss the same on the ground that the advocate for the appellant was not present.[308 H; 309 A, C] 3.
The position of a criminal appeal is not be same as that of a civil appeal.
A comparison of the provisions of Section 384 of Criminal Procedure Code with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellant when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
However, in the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution.
[309 D, E] Ram Naresh Yadav & Ors vs State of Bihar, A.I.R. 1987 S.C. 1500, dissented form.
Shyam Deo Pandey & Ors.
vs state of Bihar, [1971 Suppl.
S.C.R. 133, relied on.
Emperor vs Balumal Hotchand and Ors., and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350, referred to. |
Appeal No. 221 of 1956.
Appeal from the judgment and decree dated August 5,1955, of the Bombay High Court in Appeal No. 128/X of 1954.
section N. Andley, J. B. Dadachanji, Rameshwar Nath and ,P. L. Vohra, for the appellants, 654 A V. Viswanatha Sastri and Tarachand Brij mohan Lal.
for the respondents.
January 31.
, J. This appeal which has come to this Court with a certificate issued by the Bombay High Court raises for our decision a short and interesting question about the scope and effect of the provisions contained in section 89 of the Indian Companies Act, 1913, in relation to the law of banking.
This question arises in this way.
The appellant, the Oriol Industries, Ltd. (hereafter called the company) was incorporated on May 15, 1945, and it appointed as its managing agents M/s. Poddar Chack & Co. Soon after its incorporation the company passed a resolution on May 21, 1945, whereby it decided to open an account with the respondent, the Bombay Mercantile Bank, Ltd. (hereafter called the bank) and in accordance with the said resolution an account was opened with it on May 28, 1945.
Twenty eight cheques were drawn on this account aggregating the total amount of Rs. 28,882 13 0 during the period between May 28, 1945 and July, 31, 1945.
These cheques were drawn by K. Poddar and M. J. Chacko in pursuance of the authority conferred on them by the company.
On September 28, 1948, by its liquidator the company brought the present suit claiming to recover from the bank the said amount of Rs. 28,882 13 0.
The case for the company as set out in the plaint was that the payment of the said amount had been made by the bank wrongfully and negligently and the amount drawn under the said cheques had been wrongfully debited to the company in its account kept by the bank.
It appears that the resolution for winding up of the company was held by the court to be null and void, and Bo the plaint was subsequently amended whereby the name of the liquidator was struck out and the suit then purported to be one which was instituted by the company itself The plea raised by the company that the cheques in question had been negligently 'and wrongfully honoured by the bank was 655 seriously disputed by the bank in its statement.
Mr. Justice Tendolkar, who tried the suit on the Original Side of the Bombay High Court, however, upheld the plea raised by the company and came to the conclusion that the cheques had been wrongfully B, honoured.
Even so, Mr. Justice Tendolkar held that out of the total amount in dispute an amount of Rs. 8,882 13 0 had been actually received by the company and so on equitable grounds he rejected the company 's claim in regard to the said amount.
The company 's claim was, however, decreed in respect of the balance of Rs. 20,000.
The decree thus passed by Tendolkar, J. was challenged by the bank in its appeal, whereas the rejection of the company 's claim in respect of Rs. 8,882 13 0 by the trial judge gave rise to cross objections by the company.
The Court of Appeal has reversed the finding of Tendolkar, J., and has held that the bank was not liable to repay any amount to the company since it had accepted and honoured the cheques issued on it in good faith.
It may be stated at this stage that the plea of negligence which had been originally urged by the company in its plaint was expressly given up at the trial.
Since the Appeal Court accepted the bank 's case on the principal question of law it did not think it necessary to consider the question of limitation or the question about the applicability of the equitable doctrine on which the trial judge had relied.
In the result the appeal filed by the bank was allowed, the cross objections preferred by the company were rejected, and the suit filed by the company was dismissed with costs.
The company then moved the High Court for a certificate, and on a certificate being granted it has come to this Court; and on its behalf Mr. Andley has urged that in coming to the conclusion that the company 's claim was unsustainable the Appeal Court has misjudged;the effect of the provisions of section 89 of the Indian Companies Act in relation to the conduct of the bank in the present case.
That is how the principal question which falls for our decision is about, the scope and effect of the provisions of s, 89 of the Indian Companies Act.
84 656 Before dealing with the said question of law it is necessary to dispose of a minor point raised by Mr. Andley.
He contends that the cheques issued by K. Poddar and M. J. Chacko and honoured by the bank had not been issued in the form required by the resolution which gave them authority to operate on the company 's account with the bank.
The relevant resolution passed by the company provided that "the banking accounts of the company be opened with the bank and another bank and that the said banks be and hereby authorised to honour cheques, bills of exchange and promissory notes, drawn, accepted or made on behalf of the company by the Managing Agents M/s. Poddar Chacko & Co., by both the Directors of the Managing Agents firm, namely, Mr. Keshavdeo Poddar and Mr. M. J. Chacko and to act on any instructions so given relating to the account whether the same be overdrawn or not or relating to the transactions of the company.
" The argument is that two conditions had to be satisfied before the bank could accept a cheque issued under this resolution; the cheque had to be signed by both the Directors of the Managing Agents firm, and it had to be drawn on behalf of the company.
In point of fact, all the cheques have been signed by the two individuals without describing themselves as Directors of the Manging Agents firm and without showing that they had drawn them on behalf of the company.
These defects, it is urged, made the cheques irregular and inconsistent with the mandatory requirements of the resolution, and the bank was there fore not justified in honouring the said cheques.
In our opinion, this argument is unsound.
On a fair and reasonable construction of the resolution it is difficult to uphold the contention that the resolution required the drawers of the cheques to specify on each cheque that they were made or drawn on behalf of the company.
The object of the resolution as well as its effect merely was to conform to the requirements of a. 89 of the Indian Companies Act to which we will presently refer.
It cannot be said that the resolution required that the drawers of the cheques had to comply with the said condition apart from the requirements of section 89 ; and so it would be unreasonable 657 to treat the said requirement as a condition prescribed by the resolution independently of section 89.
In this connection the subsequent resolution passed by the company is significant.
It appears that on October 22, 1945, a resolution was passed by the, company authorising M. J. Chacko to sign cheques for the company, and when this resolution was communicated to the bank it was told that the cheques on behalf of the company would thereafter be signed as: it For and on behalf of the Oriol Industries Limited, For Poddar Chacko & Co."; in other words, by this communication the bank was told that it is only cheques signed by M. J. Chacko in the manner specified in the communication that the bank should honour.
This communication affords an eloquent contrast to the communication made by the company to the bank in regard to the earlier resolution by which M/s. Poddar and Chacko were authorised to issue cheques on its behalf Therefore, in our opinion, the argument that the impugned cheques accepted by the bank were inconsistent with the specific mandatory requirements authorised by the resolution cannot be accepted.
That takes us to the principal question of law.
In dealing with the said question it is first necessary to refer to section 26 of the (26 of 1881).
This section provides that " every person capable of contracting according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsements, delivery and negotiation of a promissory note, bill of exchange or cheque." This section further provides, inter alia, that " nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cages in which, under the law for the time being in force, they are so empowered.
" This section does not purport to make any provision of substantive or procedural law.
The latter part of the section merely brings out that a company cannot claim authority to issue a cheque under its first part.
The law in regard to the company 's power to issue negotiable instruments has to be found in the relevant provisions of the Companies Act 658 itself We must, therefore, turn to section 89 of the said Act.
Section 89 provides that " a bill of exchange, hundi or promissory note shall be deemed to have been made, drawn or accepted or endorsed on behalf of a company if made, drawn, accepted or endorsed in the name of, or by or on behalf of, or on account of, the company by any person acting under its authority express or implied.
" It is clear that in order that a company may be bound by a negotiable instrument purporting to have been issued on its behalf two conditions must be satisfied; the instrument must be drawn, made, accepted or endorsed in the name of or by or on behalf of or on account of the company, and the person who makes, draws, endorses or accepts the instrument must have the authority given to him by the company on that behalf.
This authority may be either express or implied.
There is thus no doubt that before a company can be bound by a negotiable instru ment one of the essential conditions is that the instrument on its face must show that it has been drawn, made, accepted or endorsed by the company.
This may be done either by showing the name of the company itself on the instrument, or by the statement of the person making the instrument that he is doing so on behalf of the company.
In other words, unless the plain tenor of the negotiable instrument on its face satisfies the relevant requirement the instrument cannot be validly treated as an instrument drawn by the company.
This position is not disputed.
The importance and significance of the said requirement can be illustrated by reference to a decision of the Privy Council which had occasion to consider a similar requirement under section 27 of the .
The said section provides that "every person capable of binding himself or of being bound, as mentioned in Section 26, may so bind himself or be bound by a duly authorised agent acting in his name." In Sadasuk Janki Das vs Sir Kishan Pershad (1) the Privy Council held that the name of the person or the firm to be charged upon a negotiable document should be stated clearly on the face or on (1) Cal.
659 the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand.
It is not sufficient that the name of the principal should be in some way disclosed; it must be disclosed in such a way that, on any fair interpretation of the instrument his name is the real name of the person liable on the bill. " According to the Privy Council " sections 26, 27 and 28 of the contained nothing inconsistent with the principles just set out, and there was nothing to support the contention urged before it that in an action on a bill of exchange or promissory note against a person whose name properly appears as a party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.
" This decision was no doubt given under section 27 of the , but the principles enunciated in it apply with equal force to a negotiable instrument issued under section 89 of the Indian Companies Act.
The inevitable consequence of this requirement is that wherever a negotiable instrument is issued without complying with the said requirement it would not bind the company and cannot be enforced against it.
In The Bank of Bombay vs H. R. Cormack (1) it was held by the Bombay High Court that in order to make a company liable on a bill or note it must appear on the face of such bill or note that it was intended to be drawn, accepted or made on behalf of the company, and no evidence dehors the bill or note is admissible under section 47 of the Indian Companies Act, X of 1866, equal to section 89 of the present Act.
In support of this decision Sargent, C.J., has cited the observations of Lord Justice James in Miles ' Claim (2) " that it is the law of this country, and always has been the law of this country, that nobody is liable upon a bill of exchange, unless his name, or the name of some partnership, or body of persons of which he is one, appears either on the face or the back of the bill.
" Thus there can be no doubt that the failure to comply with the essential requirements of section 89 must necessarily mean that the.negotiable instrument in question (1) Bom.
(2) 643. 660 defectively issued cannot be enforced against the company.
But the question which arises for our decision is whether this principle can be invoked in the present case where the action is not based on a negotiable instrument.
The present dispute is between the bank and its constituent the company, and the claim made 'by the latter proceeds on the assumption that in honouring the cheques irregularly drawn the bank has acted improperly and exposed itself to the charge that it has honoured the cheques wrongfully and improperly.
In considering this question it may be relevant to recall that both the courts below have found that the bank has acted bona fide and that the charge of negligence levelled against it by the company had been expressly given up.
It is also necessary to bear in mind that when the company opened its account with the bank it was furnished with a book of cheques and it is from the said book that the impugned cheques have been issued.
Evidence also shows that K. Poddar and M. J. Chacko had no other joint account with the bank so that it is clear that when the impugned cheques were issued the bank was justified in thinking that the said cheques must have been issued by the two drawers on behalf of the only account on which they could operate, and that the bank thought was done in pursuance of the authority conferred on them by the company by its resolution.
In such a case, if the bank honours the cheques can it be said that the company on whose behalf the cheques were purported ,to have been issued can contend that the cheques should not have been honoured and that the amount debited to the company by the bank in its accounts has been improperly and wrongfully debited? It would be noticed that the principle underlying section 89 which is a very healthy and salutary principle affords to the companies protection against claims made on negotiable instruments defectively or irregularly drawn; but, when we deal with a dispute between a company and the bank of which it is a constituent it is difficult to extend the said principle.
The said principle in terms is applicable only when a claim is made against a company on a negotiable instrument; in other words, 661 it is only in the matter of enforcement of negotiable instrument against a company that the principle comes into play.
It is, therefore, difficult to see how the principle enunciated in section 89 can be extended to a claim made by the company against the bank.
In our., opinion, therefore, the High Court was right in coming to the conclusion that section 89 cannot be invoked by the company against the bank in making the present claim.
The decisions on which the company relied are all decisions in cases where a negotiable instru ment was sought to be enforced against the company and had thus given rise to a cause of action.
No case has been cited before us in which section 89 has been extended to a claim like the present.
On the other hand, there is authority of the House of Lords in support of the view which the High Court has taken in the present case.
In Mahony vs East Holyford Mining Co. (1), a similar point arose for the decision of the House of Lords.
One of the two points in that case had reference to eight cheques which had been defectively or irregularly drawn on behalf of the company and honoured by the bank.
In reject ing the company 's claim against the bank in respect of the amount covered by the said cbeques Lord Chelmsford observed as follows: " With respect to the objection that the name of the company is not on eight of the cheques paid by the Bank, and therefore by the Companies Act, 1862, they are invalid, and the official liquidator is entitled, at all events, to the amount of these cheques the short answer is, that although the bankers might have perhaps required that these cheques should be made formally correct before they were paid; yet having paid them upon the demand of the only persons whom they knew as representing the company in the operations upon the account, there is not the slightes t pretence for insisting upon the liability of the Bank to repay the amount of these cheques on the ground of an unauthorised payment of them.
" The Lord Chancellor Lord Cairns disposed of the point in these words: " The question being merely as (1) (1875) 7 Eng.
& Irish Reports, 869, 662 to the authority given to the bankers to make the payment, it appears to me that when those who drew and those who honoured the cheque knew the account on which it was intended to operate, the result was ,the same as if the account had been mentioned on the face of the cheque, and that no distinction is to be made as to the money paid upon these cheques." Lord Penzance agreed with this opinion and observed that " looking at the way in which the cheques were drawn, and understood by those who drew them, and by those who paid them, they stand in no different way from the rest of the cheques in the case.
" It would thus be clear that the authority of this decision of the House of Lords is in favour of the view taken by the High Court that the principle enunciated by section 89 of the Indian Companies Act cannot be extended to a claim made by a company against its bank on the ground that the cheque which the bank accepted and honoured was defective in that it did not comply with the requirements of section 89 and could not have been enforced against it.
We ought to add that section 47 of the corresponding English Act of 1862 is exactly in the same terms as section 89 of the Indian Act.
It also appears that Chalmers has expressed the same opinion for he says, ,So, too, bankers may be justified in paying cheques out of the funds of a company, where clearly, by the form of the cheques the company would not be liable as drawers if they should not be paid " (1).
Similarly, Halsbury approves of the same principle in these words: " although documents omitting the name of the company therefore cannot be relied on as against the company, monies paid under them to persons known to represent the company are not on that account payable over again " (2).
The result is the appeal fails and is dismissed with costs.
Appeal dismissed.
(1) Chalmers on " Bills of Exchange ", P. 63.
(2) Halsbury 's Laws of England, 3rd Edn., Vol. , paragraph 830. | The Managing Agents of the appellant company withdrew certain sums of money from its a count with the respondent (1) Mad. 871.
(2) Lah.
(3) (4) I.L.R. (5) (6) Pat. 106 (7) (1953) I.L.R. K. All. 64.
(8) Pat.
653 Bank, which the company had by a resolution authorised the Managing Agents to operate on.
The Managing Agents had no other account with the said Bank.
The company brought the suit, out of which the present appeal arises, against the Bank for recovery of the said amounts on the ground that the cheques issued by the Managing Agents had been wrongfully honoured by the Bank in that they were signed by them without describing themselves as Directors of the Managing Agents firm and on behalf of the company, as required by the resolution.
The trial judge decreed the suit except with regard to a part of the claim which he found to have actually been received by the company.
The appeal court dismissed the suit holding that the Bank had paid in good faith and that the company was not entitled to rely on section 89 of the Indian Companies Act.
Held, that the court of appeal was right in holding that section 89 of the Indian Companies Act could not be invoked by the appellant in the present case.
There can be no doubt that before a negotiable instrument can be enforced against a company under section 89 of the Indian Companies Act, it must on the face of it show that it was drawn, made, accepted or endorsed by the company, and this may be done either by showing the name of the company itself on the instrument, or by statement of the person making the instrument that he was doing so on behalf of the company.
Sadasuk janki Das vs Sir Kishan Pershad, Cal.
663, applied.
The Bank of Bombay vs H. R. Cormack, Born, 275 and Miles ' claim, , referred to.
But the said principle is applicable only to the claim made against a company on a negotiable instrument and cannot be extended to a dispute between a bank and its constituent where the claim is not so based and proceeds on the basis that in honouring the cheques wrongfully drawn the bank acted improperly.
Mahony vs East Holiford Mining Co., (1875) 7 Eng.
& Irish Reports 869, referred to.
Held, further, that the object of the resolution as well as its effect was merely to conform to the requirements of section 89 of the Indian Companies Act, 1913, and not to prescribe any condition precedent independently of that section. |
ition (c) Nos.
655 69 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. (C) 8131 33/82, 8125 30/82, 8349 8368/52, 8146 8166/82, 9610 9630/82, 3756 87/83, 3698 3755/83, 947 960/83, 250/86, C.A. Nos.
4099 4103/82, 10753 57/83, 10758 60/83, 10761/83, W.P. (C) No. 12834/85, C.A. Nos.
1280 83/92, 4737/91, 4302/91, 3410/91, 3481/91, 2850/91, 3171/91, 2866/91, 3905 12/91, 4202 05/91, 70/92, SLP(C) No. 1045/89, T.C. (C) No. 220/88, W.P. (C) No. 175/92.
G. Ramaswamy, Attorney General, G.L. Sanghi, B.K. Mehta, Santosh Hegde., R.R. Aggarwal, Anil B. Divan, H.N. Salve, K. Parasaran, Ms. Suman Bose, Dr. Debi Pal, A.B. Rohtagi, R.N. Sachthey, A.C. Gulati, B.B. Sawhney, Mrs. Janaki Ramachandran, section Ganesh, Ravinder Narain, S.Sukuraman, D.K. Sinha, J.R. Das, J. Gupta, Ashok K. Srivastava, H.S. Munjral, section Walia, G. Bansal, D.P. Mukherjee, R. Mohan, Mukul Mudgal, A. Subba Rao, Ms. Lata Krishnamurti, M.N. Shroff, D. Dave, Ms. Deepa Dixit, K.J. John, A.T.M. Sampath, P. Sen, G.S. Chatterjee, Ashok Mathur, M. Haravu, V.J. Francis, V. Subramaniam, P.S. Seetharaman, Ms. Indu Malhotra, A.S. Bhasme, R.B. Misra Dr. B.S. Chauhan, Ajay K. Aggarwal, Ms. Radha Rangaswamy, Anil Sachthey, Badri Nath Sharma, T.V.S.N. Chari, B. Kanta Rao and Ms. Suruchi Aggarwal for appearing parties.
The Judgments of the Court were delivered by RANGANATHAN, J. Taking a cue from the decision of this Court in Goodyear India Ltd. vs State of Haryana ; , to which I was a party, a contention has been raised, in these appeals and writ petitions, that corresponding provisions of the Gujarat Sales Tax Act, the U.P. Sales Tax Act and the Andhra Pradesh General Sales Tax Act, are ultra vires the powers of the State Legislature insofar as they seek to levy a purchase tax in certain circumstances.
My learned brother, Jeevan Reddy, J., has discussed the provisions and contentions elaborately and exhaustively in his judgment.
It is unnecessary for me to set out over again the statutory provisions considered in Goodyear or those which are challenged in these petitions and appeals or the details of the decision in Goodyear as these have been discussed in great detail in the judgment of my learned brother.
I however, think that I owe it to myself to add a separate judgment as I was a party to Goodyear and explain my views on the provisions presently under challenge in the light of what has already been stated by me in Goodyear.
So far as the U.P. Sales Tax Act is concerned, I do not think that the impugned provision of the said Act (viz. S.3AAAA, as inserted in 1992 with retrospective effect from 1.4.1974) bears any comparison with the provisions that were considered in Goodyear.
S.3AAAA is a very simple provision.
According to its marginal note, its effect is the imposition of a liability to purchase tax on certain transactions.
This liability is attracted in respect of goods, which are liable to tax at the point of sale to the consumer.
In other words, the goods in question as such have run through their gamut of sales in the State.
There will be no more sales in the State of the goods in that form, which can be taxed by the State, whether intra State or inter State, or in the course of export.
Such goods are then made liable to tax in the hands of a purchaser dealer cum consumer either because he purchases them from a registered dealer by whom tax is not payable or because he purchases them from a person other than a registered dealer i.e. a person who is not accessible to the revenue, whose sales cannot be easily verified or from whom tax may not be easily recovered.
To put it differently, since the tax is at the point of sale to the consumer, the Legislature, in order to ensure that goods do not escape tax in the State altogether, make the purchaser liable in respect of the last sale in the State of the goods in question, if otherwise the sale of the goods have not borne tax earlier in the State.
This, on the face of it, is a provision which seems to be perfectly within the legislative competence of the State Legislature.
The argument urged on behalf of the assessees, however, is that no person can be said to be the "consumer" of the goods in the State unless he consumes the goods himself or utilises the goods (where they are in the nature of raw material) for the manufacture or production of other goods.
It is urged, therefore, that as no sale can be postulated to be a sale to the consumer unless and until one of the above events happen, the real taxable event is not the purchase of the goods but their consumption, manufacture or production in the State, or their despatch, otherwise than by way of a sale outside the State, whether in the same form or in a manufactured condition.
It is therefore said that, in substance, the statutory provision is no different from the one considered by us in Goodyear and that the ratio of Goodyear will apply here equally.
So far as the Andhra Pradesh provision is concerned, the argument is the same, with an added advantage to the assessees that the section brings out more emphatically their point of view.
Under section 6 A(i), purchase of goods from a registered dealer is subjected to tax because, though the sale or purchase of that item of goods is generally liable to tax, no tax became payable by the registered dealer on the sale because of the circumstances set out in section 5 or 6.
This corresponds to section 3AAAA(a) of the U.P. Act.
As against this, clause (ii) of section 6 A deals with purchase of goods liable to tax from a person other than a registered dealer and imposes a liability to pay tax where the goods purchased are consumed by the purchaser either in the manufacture of other goods for sale or otherwise and the goods are disposed of otherwise than by way of sale or despatched outside the State otherwise than in the course of inter State trade or commerce.
In other words, the real taxable event for the charge under section 6 A(ii), it is said, is not the purchase of goods but the consumption, manufacture or consignment of the same or other goods outside the State.
If that be so, it is said, the imposition is ultra vires the State Legislature on the principle of the decision in Goodyear.
So far as the State of Gujarat is concerned, the provisions of section l5B, inserted by a retrospective amendment of 1990, are somewhat different.
Cutting out certain words not relevant in the present context, it provides that where a dealer, being liable to pay tax under the Act, purchases any taxable goods and uses them in the manufacture of taxable goods, a purchase tax will be levied on the turnover of such purchases.
Rule 42 E, which was also framed w.e.f. 1.5.90, provides that, where the assessee is a registered dealer and the goods manufactured by him have been sold in the State of Gujarat, he will be entitled to relief in respect of the purchase tax levied under section l5B.
Here again, it is argued, the provision is tainted because it refers to manufacture of the purchased goods and the rule ensures that no purchase tax is levied if the manufactured goods are sold in the State itself; in other words, the levy comes in only if they are consigned outside the State, attracting Goodyear.
It will be seen at once that the three provisions under consideration vary from one another.
S.3AAAA of the U.P. Act does not make the tax conditional on the use or consumption of raw materials purchased or the manner of dealing with the goods manufactured out of such purchases of raw materials.
Section 15B of the Gujarat Act is slightly different.
It talks of the use of the goods purchased in the manufacture of other taxable goods but it does not make any reference to the consumption of the goods otherwise or their despatch or consignment.
The Andhra Pradesh Act is more elaborate and deals with various situations in relation to the purchased goods.
2Of these, I am of opinion that the provisions of the U.P. and Gujarat Acts are clearly beyond challenge on the grounds put forward by the petitioners.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
I have explained earlier the reason why the incidence of tax in such sales is thrown under the Act on the consumer.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
The attempt, on behalf of the petitioners, to undertake an analysis of what will eventually happen to the purchased goods where the purchaser is the consumer and, on the basis thereof, to suggest that the legislature really intends to tax consumption, production or consignment is no doubt ingenious but farfetched, artificial and unrealistic.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly it is that the State purports to levy a tax in respect of but one should not permit one 's imagination to read a purpose or words into the statute which are not there.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, as pointed out by Mukharji J. in Goodyear, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, unlike the A.P. or Haryana Acts, with what he does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
In my opinion, there is considerable force in the substance of the contention of these States that these provisions only impose a tax on purchases.
The marginal title to the provisions indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to Levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
As I have stated in my judgment in Goodyear, even in the context of those Acts, it may be equally plausible to consider the provision either as a purchase tax or a tax consignment.
There is no such ambiguity in the language used in these provisioins.
I have no doubt that, so far as these provisions are concerned, on the face of these acts, the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
The Andhra Pradesh Act, however, is different in its arrangement.
The provisions of section 6 A of this Act are more or less analogous to the provisions of the Haryana Act considered in Goodyear.
The question, therefore, arises as to whether the decision in Goodyear should be applied in the context of the Andhra Pradesh Act.
On behalf of the State of Andhra Pradesh and indeed the other two States also it has been contended that Goodyear needs reconsideration.
Our attention has been drawn to one angle of approach to the statutory provisions in question which had perhaps escaped our notice in the Goodyear case.
It was pointed out that the sum and substance of these provisions is that no sale or purchase of any goods should go without being taxed atleast once in the State.
Primarily the tax is levied on sales.
Where a registered dealer sells his goods he will be liable to tax normally in respect of the taxable goods except where his turnover does not reach up to the minimum prescribed under the Sales Tax Act.
Sometimes, he may not pay any tax or may pay a concessional rate of tax on his sales because of certain declarations or certificates he may receive that the goods will be used inside the State.
Again, where goods are purchased from a person other than a registered dealer, the tax at the sales point may escape actual taxation for many reasons: such person may not be a dealer at all or, being an unregistered dealer, the State may not be able to ascertain his whereabouts and ensure that he is taxed or that the tax is collected.
In cases where no sales tax is paid at the point of sale, it becomes necessary for the State Legislature to provide that the tax will be met by the purchaser.
Invariably in such cases the legislations attach levy of tax to the last purchase made in the State, of a particular item of goods.
Of course, the legislation could have simply said that the last purchase in the State will attract tax unless the tax is payable or has been paid at one of the earlier stages of sale and could not have been objected to.
But that type of legislative wording might lead to difficult questions as to the definition of the expression "last purchase".
That is why the section imposing purchase tax is worded in the manner in which it has been worded in the Andhra and Haryana Acts.
As pointed out by the learned counsel for the assessees in the U.P. cases, a person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which a priori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1) (b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation before us and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected before, or considered by us.
I am inclined now to think that this is an approach that basically alters the parameters and removes the provision from the area of vulnerability.
It is true that it is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way but will it be correct to say that the power of the State to levy a tax on sales or purchases cannot include a right or power to tax goods at the point of their first sale in the State or their last purchase in the State? The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
What we are really concerned with in deciding the question of constitutional validity of the levy of a sales tax is to pose the question "Is the tax levied one with reference to the sale or purchase of goods ?" The ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
This I think is a more appropriate test to be applied in these cases rather than the test of "taxable event" l which is somewhat ambiguous in the context.
I am not inclined to agree that a tax on the sale or purchase of goods will cease to be so merely because the determination of its character as a last purchase would depend upon certain subsequent events which may be spread over a subsequent period of time.
In this view of the matter I am inclined to agree with my learned brother Jeevan Reddy, J. that the levy under the Andhra Pradesh Act is also within the legislative competence of the State.
I am quite conscious that the conclusion I have expressed here as to the vires of the provision impugned is contrary to the conclusion I reached in Goodyear on somewhat analogous provisions.
I need not, for the purposes of the present cases, express any final conclusion as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes there considered or would need a second look and fresh consideration in the context of what has been said here.
But, I should not, I think, hesitate to accept the point of view now presented to us which appeals to me as more realistic, appropriate and preferable, particularly when I see that the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view I took in Goodyear.
Consistency, for the mere sake of it, is no virtue.
If precedent is needed to justify my change of mind, I may quote Bhagwati J. (as he then was) in Distributors (Baroda) P. Ltd. vs Union of India, ; S.C.: "We have given our most anxious consideration to this question, particularly since one of us, namely, P.N. Bhagwati, J. was a party to the decision in Cloth Traders ' case.
But having regard to the various considerations to which we shall advert in detail when we examine the arguments advanced on behalf of the parties, we are compelled to reach the conclusion that Cloth Traders ' case must be regarded as wrongly decided.
The view taken in that case in regard to the construction of section 80M must be held to be erroneous and it must be corrected.
To perpetuate an error is no heroism.
To rectify it is the compulsion of the judicial conscience.
In this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce vs Delameter (A.M.Y. at page 18): "a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn: great and honest enough to discard all mere pride of opinion and follows truth wherever it may lead: and courageous enough to acknowledge his errors".
For the reasons above mentioned, I agree with my learned brother and hold that the impunged provisions under all the three enactments are intra vires the powers of the concerned State Legislature.
B.P. JEEVAN REDDY, J. Validity of provisions of several States Sales Tax enactments imposing purchase tax fall for our consideration in this group of appeals and writ petitions.
Initially the matters arising from Andhra Pradesh (writ petitions 655 669/83 Hotel Balaji and Ors.
vs State of Andhra Pradesh and Civil Appeal No. 10753 57/83 Hindustan Milk Food Manufacturers Limited vs State of Andhra Pradesh) came up for hearing.
During the course of hearing, counsel for the petitioners/appellants relied upon the decision of this court in Goodyear India Ltd vs State of Haryana (1990) 76 S.T.C. 71 whereas the counsel for the State of Andhra Pradesh challenged the correctness of the said decision and pleaded for re consideration of the said judgment.
It was then brought to our notice that a large number of matters coming from different States raising inter alia the question relating to the correctness or the ratio Or Goodyear were also posted before us.
Indeed it was brought to our notice that a bench of three Judges comprising M.N. Venkatachaliah, A.M. Ahmadi, JJ.
and one of us (B.P. Jeevan Reddy, J.) had directed two matters namely State of Punjab vs Industrial Cables India Ltd., C.A. No. 2990 (N.T.) of 1991 and the State of Punjab vs Hindustan Lever Ltd., C.A.480/91 raising a similar question to be posted before a Bench of three Judges.
Those matters are also before us.
It is in this manner that a large number of appeals and writ petitions arising from several States came to be posted before us for hearing.
During the course of hearing, however, we found that on account of restriction of time it would not be possible for this Bench to hear all the matters.
Accordingly, we indicated to the counsel that we shall confine our attention only to three State enactments namely, Gujarat.
Uttar Pradesh and Andhra Pradesh.
Counsel appearing in these matters have been heard fully.
This judgment, therefore, deals only with the validity of Section 15B of the Gujarat Sales Tax Act, Section 3 AAAA of Uttar Pradesh Sales Tax Act and Section 6 A of the Andhra Pradesh Sales Tax Act.
We shall first take up Section 15B of the Gujarat Sales Tax Act.
PART 11 (GUJARAT) Though several appeals and writ petitions from this State are placed before us, it is sufficient to refer to the facts in Civil Appeal No.3410 (N.T.) of 1992 as representative of the facts in all the matters.
This appeal is preferred by the writ petitioner against the judgment of a Division Bench of the High (Court of Gujarat upholding the constitutional validity of Section 15B of the Gujarat Sales Tax Act, 1969 as substituted by the Gujarat Sales Tax (Amendment) Act 6 of 1990.
The Gujarat Sales Tax Act, 1969 (being Act No. 1 of 1970) came into effect on and from May 6,1970, replacing the Bombay Sales Tax Act, which was in force in the State of Gujarat till then.
Section 15 of the Act levied purchase tax on purchases made by a dealer from a person who is not a registered dealer.
Section 15A was introduced by amendment Act 7 of 1983.
It provided for levy of concessional rate of tax in respect of purchase of raw material made by Recognised dealers (who are necessarily manufacturers), provided the goods (raw material) purchased by them fell in Schedule II or III (other than prohibited goods).
Section 15B was introduced by Amendment Act Or 1986.
It provided for levy of an additional purchase tax on raw material purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business situated outside the State but within India.
By an Amendment Act made in 1987, the Section was substituted.
There was, however, no substantial change in the Section.
Following upon the decision of this court in Goodyear, a batch of writ petitions was filed in the Gujarat High Court challenging the validity of Section 15B on the ground that in truth and effect it levied a consignment tax and, hence was outside the competence of the State Legislature.
While the said writ petitions were pending, Section 15B was substituted by an Ordinance being Ordinance No.3 of 1990 issued on 20.4.1990.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
The substituted Section 15(B) was given retrospective effect on and from April 1, 1986, the date on which Section 15(B) first came into force.
In view of the said Amendment Act, the batch of writ petitions challenging Section 15(B), as it stood prior to its substitution by the 1990 Amendment Act, were dismissed as having become infructuous.
A fresh batch of writ petitions followed questioning the validity of the substituted Section 15(B), again on the ground that it continued to be, in essence, a consignment tax.
The contention was that Section 15(B) must be read along with Rule 42(E) of the Gujarat Sales Tax, Rules (inserted by Notification dated 1.5.90) and if so read, the position is the same as was obtaining prior to 1990 Amendment.
Yet another ground urged was that the levy imposed by the new provision is really in the nature of an excise duty, and thus beyond the competence of the State legislature.
The assessees placed strong reliance upon the decision of the Division Bench of the Bombay High Court in Hindustan Lever Ltd vs State of Maharashtra, 79 S.T.C. 255 where, the petitioners say, construing a similar provision in the Bombay Sales Tax Act it was held that the levy created by the said provision is in the nature of an excise duty.
Disagreeing with the Bombay judgment, the High Court dismissed the writ petitions.
Counsel for the appellant/assessee urged that Section 15B (as substituted in 1990) is no different from the earlier provision.
The basic scheme of the earlier provision is now split into two provisions namely, substituted Section 15B and Rule 42E, which Rule was inserted into the Rules simultaneously.
This is a clear instance of colourable legislation and ought not to be countenanced by this court.
The High Court was in error in justifying the same on the theory that just as it is open to an assesses to reduce the tax burden by resorting to legitimate tax planning, similarly it is open to a legislature to make an appropriate enactment to remain outside the mischief pointed out by the court.
It is submitted that as rightly held by the Bombay High Court construing a similar provision, the levy created by the substituted Section 15B is really upon the manufacture of goods and, therefore, not a tax referable to Entry 54 of List II of the Seventh Schedule to the Constitution.
On the other hand, it is argued by F Sri B.K. Mehta, learned counsel appearing for the State of Gujarat that the Legislative competence of the Gujarat Legislature to enact Section 15B ought to be determined on its own language and not with reference to a Rule made by the Government of Gujarat as the delegate of the legislature.
He submitted that on its own language, Section 15B levies a pure and simple purchase tax on raw material purchased by a manufacturer.
It is unconcerned with what happens to the manufactured goods.
For the purpose of Section 15B, it is immaterial whether the manufactured goods are sold inside the State or despatched to a place outside the State of Gujarat or are dealt with or disposed of otherwise.
The principle of Goodyear has absolutely no application to this provision.
Counsel also submitted that when the tax is upon the purchase price of the raw material and is relatable to the act of purchase, it cannot he held to be an excise duty which is levied on the act of manufacture and is levied with reference to the value of such manufactured goods.
For a proper appreciation of the contentions arising herein it would be appropriate to notice a few relevant provisions of the Act.
Clause (16) in Section 2 defines the expression 'manufacture ' in the following words: "manufacture" with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed.
" Clauses 35 and 36 define the expressions "turn over of purchases" and "turn over of sales".
It would be enough to notice the definition of the expression "turn over of purchases".
It reads: "turn over of purchases ' means the aggregate of the amounts of purchase price paid and payable by a dealer in respect of any purchase of goods made by him during a given period, after deducting the amount of purchase price, if any, refunded to the dealer by the seller in respect of any goods purchased from the seller and returned to him within the prescribed period.
" Section 3 is a charging section.
Section 15 which levied purchase tax on purchase of certain goods from a person who is not a registered dealer read as follows at the relevant time: 15 Purchase tax payable on certain purchases of goods.
Where a dealer who is liable to pay tax under this Act purchases any goods specified in Schedule II or III from a person who is not a Registered dealer, then, unless the goods so purchased are resold by the dealer.
there shall be levied, subject to the provisions of section 9.
(i) in the case of goods specified in Schedule 11.
a purchase tax on the turnover of such purchase at the rate set out against them in that Schedule, and (ii) in the case of goods specified in Schedule III, a purchase tax on the turnover of such purchase at a rate equivalent to the rate of sales tax act out against them in that Schedule.
" The said Section has, however, been substituted by Gujarat Amendment Act 9 of 1992 with effect from 1.4.1992, but since the Amendment is not a retrospective one, it is unnecessary to notice the amended provision.
Section 15A provides for a concessional rate of tax in the case of purchases of raw material by a recognised dealer provided the goods purchased are those specified in Schedule II or III (other than the prohibited goods) and he issues a certificate contemplated by Section 13(1)(B).
Prior to the Amendment Act 9 of 1992, Section 15(A) read as follows: "15A. Purchase tax payable on purchases of goods by certain dealers where (i) a recognised dealer purchases any goods specified in Schedule II or III other than prohibited goods, under a certificate given by him under clause (B) of sub section (I) of section 13, or (ii) a commission agent holding permit purchases any goods specified in Schedule II or III other than prohibited goods on behalf of his principal who is recognised under a certificate given by him under clause (C) of sub section (1) of section 13, there shall be levied a purchase tax on the turnover of such purchase at the rate of two paise in the rupee.
" 8 Since the Amendment of this provision in 1992 is also not retrospective, it is unnecessary to notice the same.
We may now set out Section 15B both as it obtained prior to Amendment Act 6 of 1990 and as substituted thereby.
Prior to Amendment it read thus: "Where any dealer liable to pay tax under this Act uses any goods other than declared goods purchased by him or through commission agent as raw or processing materials or consumable stores (irrespective of whether such goods are prohibited goods or not) in the manufacture of taxable goods and despatches any of the goods so manufactured to his own place to business or to his agents place of business situate outside the State hut within India such dealer will be liable to pay, in addition to any tax paid or payable under other provisions of this Act, a purchase tax at the rate of four paise in the rupee on the purchase price of such raw or processing materials or consumable stores used in the goods so manufactured and despatched and accordingly he shall include the purchase price thereof in his turnover of purchases in his declaration or return under section 40 which he is to furnish next thereafter.
Provided that where the raw materials so used is bullion or specie, the purchase tax payable on such bullion or specie under this section shall not exceed the aggregate of the rates of sales tax and the general sales tax payable on bullion or specie.
" After it is substituted in 1990 with retrospective effect from 1.4.1986, this Section reads thus "Where a dealer who being liable to pay tax under this Act purchases either directly or through a commission agent any taxable goods (not being declared goods) and uses them as raw or processing materials or consumable stores, in the manufacture of taxable goods, then there shall he levied in addition to any tax levied under the other provisions of this Act, a purchase tax at the rate of (a) two paise in a rupee on the turnover of such purchases made during the period commencing on the 1st April, 1986 and ending on the 5th August, 1988; and (b) four paise in rupee on the turnover of such purchases made at any time after the 5th August, 1988, provided that where the raw materials purchased for use in the manufacture of goods are bullion or specie, the rate of purchase tax on the turnover of purchases of such raw materials shall not exceed the aggregate of the rates of sales tax and general sales tax leviable on bullion or specie under Entry I in Schedule III.
" Inasmuch as strong reliance is placed by the assessee/appellants upon Rule 42E inserted by G.S.R. 1090 (64) T.H. dated 1.5.1990, it would he appropriate to read the said Rule here: "42 E. Drawback, set off or refund of purchased Tax under section 15B: 42 E.
In assessing the purchase tax levied under section 15B and payable by a dealer (hereinafter referred to as "the assessee") the Commissioner shall subject to conditions of rule 47 in so far as they apply, and further conditions specified below, grant him a draw back, set off or as the case may be refund of the whole of the purchase tax paid in respect of purchase of goods effect on and from the 1st April, 1986 used by him, as raw materials, processing materials, or consumable stores, in the manufacture of taxable goods.
" Conditions: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
" In view of the retrospective amendment of Section 15B, it may not be necessary to refer to Section 15B as it obtained prior to the 1990 amendment except to point out that in material particulars, it was similar to Section 13AA of Bombay Sales Tax Act, which was considered in Goodyear and held to he outside the legislative competence of the State legislature.
The correctness of the ratio in Goodyear has been discussed by us in Part V. Section 15 makes the purchaser liable to pay the tax provided thereunder in case he purchases the goods mentioned in Schedule II and III from a person who is not a registered dealer.
If, however, the goods so purchased are resold by him, he is not liable to pay the said tax.
Section 15A applies only to Recognised dealers.
A recognised dealer is defined in section 32 in short, it means a dealer who is a manufacturer and whose turnover of sales or purchases exceeds the specified limit.
If the recognised dealer purchases goods specified in Schedule II or III (other than prohibited goods) and issues a certificate contempleted by Section 13 (1)(B), he is entitled to pay purchase tax on a concessional rate.
Then comes Section 15B which provides for levy of an additional purchase tax.
An analysis of the Section yields the following ingredients: (i) where a dealer who being liable to pay tax under Act; (ii) purchases either directly or through a commission agent; (iii) any taxable goods not being declared goods and (iv) uses them as raw or processing materials or as consumable stores in the manufacture of taxable goods (v) then there shall be levied in addition to any tax levied under other provisions of the Act, a purchase tax at the rates specified.
It is thus clear that section 15B does not speak of nor does it refer in any manner to the movement sale or disposal of manufactured goods.
According to this section, it is immaterial whether the manufactured goods are sold within the State or dealt with in some other manner.
It is equally immaterial whether the manufacturer consigns them to his own depots or the depots of his agents outside the State.
Therefore, the ratio of Goodyear keeping aside its correctness for the time being has absolutely no application.
The Haryana and Bombay provisions considered in the said decision spoke of the manufactured goods being disposed of within the State otherwise than by way of sale or despatched out of State otherwise than in the course of inter State trade or commerce or in the course of export within the meaning of Section 5(1) of the .
Similarly the Bombay provision spoke of the manufactured goods being sent to the depots of the manufacturer or his agents outside the State of Maharashtra.
It was these features which weighed with this court in characterising the tax as one in the nature of a consignment tax (This aspect has been dealt with in Since the said feature is absent in the impugned provision, we hold, agreeing with the High Court, that the tax imposed by Section 15B cannot be characterised as a consignment tax.
The main contention or the appellants, however, is that Section 15B should not be read in isolation but in conjunction with Rule 42E which was introduced in the Rules simultaneously with the amendment of Section 15(B) and which Rule indeed supplements Section 15B.
They say that if both the provisions are read together, the effect and consequence is the same as that of Section 15B as it obtained prior to 1990 amendment, which means the tax is really upon the consignment of manufactured goods.
We shall first notice what Rule 42E provides.
It says that, in assessing the purchase tax levied under Section 15B, the assessee shall be granted a drawback, set off or as the case may be, refund of the whole of the purchase tax paid in respect of purchase of goods effected on or after 1.4.1986 and which goods have been used by him as raw material, processing material or as consumable stores in the manufacture or taxable goods subject however to the conditions prescribed in the said Rule and further subject to the conditions specified in Rule 47 in so far as they are applicable.
The four conditions specified in the Rule 42E are: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
Condition No. 4, emphasised by the assessees says that the benefit of set off/drawback/refund shall be available only if the manufactured goods are sold within the State of Gujarat.
According to them it means that, where the manufactured goods are consigned by the manufacturer to his own depots or to his agents, depots outside the State of Gujarat, the benefit of drawback etc.
will not be available, which means that purchase tax shall be levied upon the purchase of raw material.
This, say the appellants, is precisely what the old Section 15 B provided for.
According to them, the present Section 15B read with Rule 42E is nothing but a re incarnation of Section 15B as it stood prior to 1990 Amendment Act and falls squarely within the ratio of Goodyear This argument raises in turn the question: how far is it permissible to refer to the Rules made under an Act while judging the legislative competence of a legislature to enact a particular provision? The necessity and significance of the delegated legislation is well accepted and needs no elaboration at our hands.
Even so, it is well to remind ourselves that Rules represent subordinate legislation.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made shall be deemed "as if enacted in this Act", the position may be different.
(It is not necessary to express any definite opinion on this aspect for the purpose of this case).
But where the Act does not say so, the Rules do not become part of the Act.
Sri Mehta relies upon the following statement of law in Halsbury 's Laws of England (3rd Edn.) Vol. 36 at page 40]: "Where a statute provides that subordinate legislation made under it is to have effect as if enacted in the statute such legislation may be referred to for the purpose of construing a provision in the statute itself.
Where a statute does not contain such a provision, and does not confer any power to modify the application of the statute by subordinate legislation, it is clear that subordinate legislation made under the statute cannot after or vary the meaning of the statute itself where it is unambiguous, and it is doubtful whether such legislation can be referred to for the purpose of construing an expression in the statute, even if the meaning of the expression is ambiguous." He says that this statement of law has been referred to with approval by Hegde, J. in his opinion in J.K Steel Ltd. v Union of India A.I.R. 1970 S.C. 1173.
Though the opinion of Hegde, J. is a dissenting one, he submits, the majority has not held to the contrary on this aspect.
He also relies upon the English decisions referred to in the opinion of Hegde, J. and points out that no decision of this court has expressed any opinion on the subject, a fact noted by Hegde, J. He commends the view taken by Hegde, J. for our acceptance.
Sri Mehta points out further that Section 86 which confers the Rule making power upon the Government does not say that the Rules when made shall be treated as if enacted in the Act.
Being a rule made by the Government, he says, Rule 42E can be deleted, amended or modified at any time.
In such a situation, the legislative competence of a legislature to enact a particular provision in the Act cannot be made to depend upon the Rule or Rules, as the case may be, obtaining at a given point of time, he submits.
We are inclined to agree with the learned counsel.
His submission appears to represent the correct principle in matters where the legislative competence of a legislature to enact a particular provision arises.
If so, the very foundation of the appellants ' arguments collapses.
Even if we agree with the appellants and read Rule 42E along with Section 15(B), they cannot succeed.
Rule 14E provides for set off etc.
in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots (or to the depots of his agents) outside the State of Gujarat.
What in effect the State says is this: "Raw material when purchased is taxable but I won 't tax the raw material if you sell the goods manufactured out of such raw material within the State because I derive larger revenue there; I do not want to tax both the raw material and the manufactured goods, in the interest of trade and public.
But if you dispose of the manufactured goods in some other manner, I will tax the purchase of raw material because there is no reason why I should forego the purchase tax due on raw material, when I am not getting any revenue from your method of disposal or despatch of manufactured products.
" There is nothing objectionable in the State saying so.
It can indeed rely on the principle of the decision of this court in Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, reported in (1992) 4 J.T. S.C. 317.
It is difficult to see how can it be said that by reading Rule 42E into Section 15B, the levy becomes a consignment tax.
In any event, the ratio of Goodyear cannot be accepted as good law for the reasons mentioned in part V.
We are equally not satisfied with the argument that the Gujarat legislature has resorted to a device, a stratagem to circumvent the decision or this court or that it is an instance of fraud on power what is sometimes referred to as `colourable legislation '.
That a legislature is empowered to amend a provision to remove the defect pointed out by a court is well accepted.
So far as the Gujarat Act is concerned, it was never the subject matter of an adverse decision either by this court or the Gujarat High Court.
Writ Petitions were no doubt pending challenging the validity of Section 15B as it then stood.
It was perfectly open to the Legislature to act to set its house in order to obviate a possible adverse verdict applying the ratio of Goodyear.
The question is whether the provision now enacted, with retrospective effect, is beyond the legislative competence of Gujarat Legislature? It not, no further question arises.
So far as the retrospectivity given to Section 15B by the 1990 Amendment Act is concerned, it is hardly open to doubt in the light of several decisions of this court commencing from Ramakrishna vs State of Bihar, ; This is not even a case where the old provision was struck down by a court.
The period or retrospectivity covers only the period during which Section 15B has been in force.
The levy was already there.
In any event, in view of our conclusion that Goodyear does not represent the correct position in law, this aspect has really no relevance.
It is then contended that the levy is really in the nature of excise duty or use tax inasmuch as it attaches not on purchase of goods but on their use in manufacture of other goods.
This argument in our opinion misses the true nature of tax.
It is an additional tax on the purchase of raw material used in manufacture of other goods.
A certain concession is given to manufacturers (recognised dealers) in purchase of certain types of raw material (Section 15A); an additional purchase tax is levied under Section 15B; and in certain situations, this tax is refunded or set off, as the case may be under Rule 42 E.
All these provisions are intended to encourage industry and to derive revenue at the same time.
Counsel for the assessees placed strong reliance upon the word "then" occurring in the section and its placement.
He emphasised that the tax is payable only when the dealer (1) purchases the goods and (2) uses them in the manufacture of other goods.
It is not possible to agree.
Heading of Section 15B is "Purchase tax on raw or processing materials or consumable stores used in manufacture of goods in certain cases.
" The Section, read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material and not upon the value of the manufactured products.
Entry 54 of List II must receive a liberal construction, being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the legislature can levy it in such mode or in such manner as it thinks appropriate.
As affirmed by Mukharji, J. in Goodyear, the well established principles in such matters is "that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
" The legislature must he presumed to know its limitations and acted within those limits.
Transgression must be clearly established, and is not lo be lightly assumed.
For the very same reasons, the argument that it is a use tax also fails.
In essence, the provision is akin to the one considered by this court in Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212.
For the above reasons, the appeals and writ petitions are dismissed with no order as to costs.
PART III (UTTAR PRADESH) These Civil Appeals and Writ Petition are filed by the Tribeni Tissues Limited, Varanasi, Uttar Pradesh.
The Appeals are preferred against the Judgment of a learned Single Judge of Allahabad High Court allowing Sales Tax Revisions No.325, 327 and 328 of 1989 preferred by the Commissioner of Sales tax, Uttar Pradesh against the orders of the Sales tax Appellate Tribunal.
The assessment years concerned are 1978 79 to 1981 82.
The appellant is a dealer registered under the U.P. Sales tax Act, having an office at Varanasi.
It has a paper mill at Calcutta.
The appellant purchases sun hemp, raw jute, old hemp rope cuttings, Old Jute rope cuttings and jute cuttings etc.
at Varanasi and sends them to the paper mill at Calcutta for being used as raw material.
These purchases are made by the appellant from farmers, `kabadis ' and other persons who are not registered dealers.
The turnover relating to such purchases was subjected to purchase tax under section 3 AAAA by the assessing authorities which the appellant objected to.
The Tribunal, by a majority of 2:1 held in favour of the appellant against which the Commissioner preferred revisions before the High Court.
Section 3AAAA read as follows at the relevant time.
"3 AAAA.
Liability to purchase tax on certain transactions Where any goods liable to tax at the point of sale to the consumer are sold to a dealer but in view of any provision of this Act no sales tax is payable by the seller and the purchasing dealer does not resell such goods within the State or in the course of inter State trade or commerce, in the same form and condition in which he had purchased them the purchasing dealer shall subject to the provisions of Section 3, be liable to pay tax on such purchases at the rate at which tax is leviable on sale of such goods to the consumer within the State; Provided that if it is proved to the satisfaction of the assessing authority that the goods so purchased had already been subjected to tax or may be subjected to tax under Section 3 AAA, no tax under this section shall be payable.
" The section subjected the purchase of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
The expression "goods liable to tax at the point of the sale to the consumer" is explained in Section 3 AAA.
Section 3A prescribes the rates of tax.
As it stood at the relevant time, sub sections (1) and (2) prescribed different rates for different goods.
Sub section (2A) which alone is relevant herein, read as follows: "3A (2A): The turnover in respect of goods other than those referred to in sub sections (1) and (2) shall be liable to tax at the point of sale by the manufacturer or importer at the rate of seven per cent, provided that the State Government may from time to time by notification in the Gazette modify the rate or point or tax on the turnover in respect of any such goods with effect from such date as may be notified in that behalf, so however.
that the rate does not exceed seven per cent.
(The goods concerned herein, according to both the parties, fall within sub section (2A) of Section 3A).
The State Government issued a notification dated 30.5.1975 in terms of and as contemplated by the proviso to sub section (2A) of Section 3 A declaring that with effect from June 1, 1975, the turnover in respect of goods specified in column 2 of the Schedule to the notification shall be liable to tax at the point of sale and at the rate specified respectively in columns (3) and (4) thereof.
The Schedule, in so far as relevant may be set out: "SCHEDULE `M ' stands for sale by manufacturer in Uttar Pradesh.
`I ' stands for sale by the Importer in Uttar Pradesh.
Description of goods Point at which Rate of tax No. tax shall be levied (Items No.1 to 14 omitted as unnecessary.
Old, discarded, unservice able or obsolete machinery, stores or vehicles including waste products except cinder, coal ash and such items as are included in any other notification issued under the Act.
(Item Nos. 16) to 25 omitted as sale to consumer 5 per cent unnecessary.) 26.
Jute and Hemp Goods M or I 4 per cent The controversy before the High Court was a limited one.
It was: "whether the said goods will fall under the entry at SI.
No. 15 of the notification dated 30th May, 1975 as contended by the learned standing counsel (for the State of Uttar Pradesh) or under SI.
No. 26 as Jute and Hemp goods under the notification dated 1st October, 1975 as urged on behalf of the assessee." (Quoted from the judgment of the High Court.) The learned Judge held that the goods fall under item No.15 and accordingly allowed the revisions filed by the Commissioner.
The correctness of the Judgment of the High Court is questioned in these Civil Appeals.
While the Civil Appeals were pending in this Court, a Division Bench of the Allahabad High Court held in C.M.W.P.No.168 of 1983 and batch (decided on 3rd April, 1991) that Section 3 AAAA was ultra vires the legislative competence of the legislature of Uttar Pradesh and, therefore, void.
The Division Bench followed and applied the ratio of Goodyear and held that under the said provision the taxable event is not the purchase of the goods by the purchasing dealer but the subsequent event namely use of said goods in the manufacture of other goods and their despatch without effecting a sale within the State of Uttar Pradesh to a place outside the Uttar Pradesh.
To get over the said decision and to remove the defect pointed out therein, the Governor of Uttar Pradesh issued an Ordinance being Ordinance No. 45 of 1991 on 12th December, 1991 substituting Section 3 AAAA in its entirety with effect from April 1, 1974.
The said Ordinance has since been replaced by U.P. Sales tax (Amendment) Act 8 of 1992.
Section 3 AAAA as substituted by the aforesaid Amending Act reads thus: "3 AAAA.
Liability to purchase tax on certain transactions.
(1) Except as provided in sub section (2) and subject to the provision of Section 3, every dealer, who purchases any goods liable to tax at the point of sale to consumer (a) from any registered dealer in circumstances in which no tax is payable by such registered dealer, shall be liable to pay tax on the purchase price of such goods at the same rate at which, but for such circumstances, tax would have been payable on the sale of such goods; (b) from any person other than a registered dealer, whether or not tax is payable by such person, shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
(2) Exemption shall be granted in the tax payable under sub section (1) to the extent of the amount or tax, (a) to which the goods purchased from a registered dealer have already been subjected or may be subjected under any provision of this Act or the ; (b) already paid in respect of the goods purchased from any person other than a registered dealer; (c) on the sale of goods liable to be exempted under Section 4 A; (d) to which the sale of dressed hides and skins (or tanned leather) and ginned cotton obtained from raw hides and skins and raw cotton so purchased or rice obtained from paddy so purchased during the period commencing on September 2, 1976 and ending with April 30, 1977, are liable under any provision of this Act or the .
" Writ Petition No. 175 of 1992 is preferred questioning the constitutional validity of the said provision.
We shall first deal with Civil Appeals.
According to the statement of facts contained in the Judgment of the High Court, the appellant purchased "sun hemp, raw jute, old hemp rope cuttings, old jute rope cuttings and jute cuttings etc.
" Item No. 26 of the notification dated October 1, 1975 speaks of "jute and hemp goods".
The appellant inter alia purchased "sunhemp" and "raw jute".
Certainly they do not fall under item 26 of the Schedule.
Coming to "old hemp rope cuttings, old jute rope cuttings and jute cuttings" they fall, by their very nature more properly under item 15 because admittedly they are discarded, worn out, and waste material.
It would he rather odd to call them "jute the hemp goods" in the presence of item (15).
The High Court was, therefore, justified in holding that the goods purchased by the appellant are properly relatable to item 15 and not to item 26 of the notification.
The learned counsel for the appellant urged that item 15 is confined only to old, discarded, unserviceable and obsolete "stores" which in the context means "stores" maintained by a factory or industry.
Having regard to the language of item 15, he submitted.
it does not take in old discarded material coming from other sources We see no warrant for this restricted reading of item 15.
Be that as it may, once the said goods do not fall under item 26, as held by us, they must fall under item 15, since it is not suggested that there is any other item which takes in these goods.
The (Civil Appeals accordingly fail and are dismissed.
No costs.
Writ Petition No. 175 of 1992.
In view of the fact that Section 3 AAAA has been substituted by the 1992 Amendment Act with retrospective effect from April 1, 1974, it is not really necessary for us to deal at any length with the Section as it stood prior to the said amendment or with the correctness of the judgment of the Division Bench of the Allahabad High Court declaring the same as beyond the legislative competence of the U.P. Legislature.
Suffice it to say that the decision of the Division Bench closely follows and applies the ratio of Goodyear which according to us does not represent the correct position in law as explained in Part V. Coming to Section 3 AAAA as it now stands, an analysis of the Section yields the following ingredients: A. (i) A dealer who purchases any goods liable to tax at the point of sale to the consumer, (ii) from any registered dealer in circumstances in which no tax is payable by such registered dealer, (iii) the purchasing dealer shall he liable to pay tax on the purchase price of such goods at the same rate at which the tax would have been payable on the sale of such goods.
B. (i) A dealer who purchases any goods liable to tax at the Joint of sale to consumer, (ii) from any person other than a registered dealer, whether or not such person is liable to pay the tax on such sale, (iii) the purchasing dealer shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
The purchasing dealer is, however, entitled to be exempted from the tax payable under the above two heads to the extent of the amount of tax mentioned in clauses (a), (b), (c) and (d) of sub section (2).
Clause (a) speaks of the tax paid or payable under any of the provision of U.P. Act or C.S.T. Act.
Clause (b) speaks of the tax already paid, if any, in respect of goods purchased from any person other than a registered dealer.
Clause (c) refers to sale of goods entitled to exemption under section 4A and clause (d) refers to sale of dressed hides and skins.
In short, the scheme of the section is this: (I) if a dealer purchases the goods liable to tax at the point of sale to the consumer from any registered dealer who is not liable to pay tax on such sale, the purchasing dealer shall pay such tax.
If, however, the purchasing dealer establishes that the goods purchased by him have already been subjected to or may be subjected to tax under the U.P. Act or , he will get an exemption to that extent.
(2) If the said goods are purchased from a person other than a registered dealer the purchasing dealer shall pay the tax payable on sale of such goods.
If, however, he proves that tax payable has been paid, either wholly or partly, by the seller, the tax payable by the purchasing dealer shall be exempted to that extent.
(3) Similar exemption will be available to the purchasing dealer in case he establishes any of the facts mentioned in clauses (c) and (d) of sub section (2).
The central idea is that no transaction of sale (of goods taxable at the point of sale to consumer) should go untaxed.
Either the seller pays the tax or the purchaser pays.
It is for achieving this central purpose that Section 3 AAAA has been enacted providing for several situations.
It would be immediately evident that section that Section 3 AAAA does not speak of and does not refer in any manner to the user of the goods purchased.
It is immaterial whether the goods purchased are used in the manufacture of other goods or dealt with otherwise.
Much less does it speak of the manner in which the goods manufactured out of such purchased goods, if any, are dealt with.
The exemptions provided in sub section (2) are equally un related to the above aspects.
Sub section (1) is clear and simple.
The tax becomes payable by the purchasing dealer in the two situations contemplated by clauses (a) and (b) of the said sub section.
If he can establish any of the facts mentioned in clauses (a) to (d) of sub section (2), he gets an appropriate exemption.
Otherwise not.
We are, therefore, unable to see any room for contending that the tax imposed by the said section is in the nature of consignment tax or a use or consumption tax.
Simply because the petitioner chooses to take the goods purchased by him out of the State, in the same form and condition or otherwise, for being used as raw material in his factory at Calcutta, makes no difference to the levy.
The validity of the levy cannot depend upon what a particular dealer or person chooses to do with the goods.
It was argued for the petitioner that sub section (2) of Section 3 AAAA places a heavy and uncalled for burden upon the purchasing dealer; that it is not practicable for the purchaser to establish that the selling person (other than the registered dealer) has paid the tax or not.
It is submitted that the petitioner purchases his goods from hundreds of persons who are not registered dealers and it cannot reasonably be expected of the petitioner to gather the particulars of or from all such persons.
We are unable to appreciate this contention.
A person other than a registered dealer is not amenable to the discipline of the Act.
He cannot indeed collect any tax [Section 8(A) (2) and, therefore, will not, justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
It a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
So far as registered dealers are concerned, all that the purchasing dealer need prove is that the said goods have already been or may be subjected to tax under State Act or .
On this score, we see no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealer can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the .
We are equally unable to see any vagueness in the provision nor is it established that any such vagueness is operating to the prejudice of the petitioner.
In this view of the matter, it is unnecessary, strictly speaking, to consider whether the present Section 3 AAAA is in effect and substance the same as the one obtaining prior to 1992 Amendment Act.
For the sake of completeness, however, we may mention that under Section 3 AAAA (before it was substituted in 19920 tax was payable by the purchasing dealer where he purchased goods liable to tax was payable by the purchasing dealer where he purchased goods liable to tax at the point of sale to the consumer in circumstances where no tax is payable by the seller, provided he did not resell the said goods, in the same form and condition, within the State or in the course of inter State, trade or commerce.
The section was understood by the Division Bench in the following manner: " 23.
That brings us to the vital question as to which are the circumstances in which sale of the goods purchased within the State or in the course of inter State trade and commerce in the same form and condition in which the dealer purchased the goods, may be rendered impossible.
To our mind, keeping in view the usual course of business, the normal possibilities seem to be these: 1. use and consumption of the goods purchased by the purchasing dealer in the manufacture of some other taxable goods within the State; 2. despatch of the manufactured goods, without sale, outside the State otherwise than in the course of inter State trade and commerce; 3. despatch of the goods out of the territory of India pursuant to a contract of sale, i.e. despatch in the course of an export sale; 24.
These then are the activities or transactions that constitute the taxable events on the happening of which the tax would be immediately attracted, that is to say, the tax in question becomes exigible at these points.
Once these points are reached the possibility of the sale of goods purchased within State or in the course of inter State trade and commerce in the same form and condition, shall stand excluded.
The fourth and the last condition envisaged by Section 3 AAAA set out hereinabove necessary for attracting the levy would also stand fulfilled.
It is only on the happening of these events that the taxing authority can reach the conclusion that the purchasing dealer has be come liable under Section 3 AAAA.
" With respect we find ourselves unable to agree with the above understanding of the section.
All that the section provided was: (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the seller and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter State trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If however, it was proved that the said goods have already suffered tax under Section 3 AA, no purchase tax was payable under Section 3 AAAA.
It is obvious that the section did not speak or the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to he found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter State trade or commerce, the tax , under it is not payable.
This is for the simple reason that in both those contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the ).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax atleast on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act and in Section 3 AAAA of U.P. Act (as it stood prior to 1992 Amendment Act) or for that matter as it stands now.
These basic differences cannot be ignored.
Constitutionality of Section 3 AAAA ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
PART IV (ANDHRA PRADESH) Writ Petitions No. 655 669 of 1983 are filed by Hotel Balaji and 14 other hotels/restaurants for issuance of a writ, order or direction directing the respondents viz., State of Andhra Pradesh and its Sales Tax Authorities not to levy and collect purchase tax on milk @ 4% under Section 6 A as also the surcharge tax @ 10% of the tax.
According to the petitioners such a levy violates Article 14 as also the fundamental right guaranteed to them by sub clause (g) of clause (1) of Article 19 of the Constitution.
Civil Appeal Nos.
10753 57 of 1983 are directed against the judgment and order of a Division Bench of the Andhra Pradesh High Court upholding the validity of Section 6 A of the Andhra Pradesh General Sales Tax Act.
The case of the petitioners in the writ petitions is this: They purchase the milk required by them both from registered dealers as well as persons other than registered dealers.
The authorities are collecting purchase tax @ 4% under Section 6 A from the petitioners which is illegal in view of the fact that the sale of fresh milk is exempted from tax by a notification issued by the Government of Andhra Pradesh under Section 9 of the Act being G.O.Ms.
No.1091 dated 10.6.1957.
Because of the said exemption notification not only the seller is exempted but also the purchaser.
In some cases, the petitioners purchased milk from registered dealers like Andhra Pradesh Dairy Development Corporation which is exempted from sales tax by virtue of a notification issued under Section 9.
In such cases, the tax is sought to be levied upon the petitioners which is equally illegal.
The milk purchased by the petitioners is being consumed in preparing and serving to consuming public tea, coffee and other eatables.
The tax levied under Section 6 A is really not upon the purchase but upon the use and consumption.
G.O.Ms.
No.1091 dated 10.6.1957 as originally issued read as follows: "In exercise of the power conferred by sub section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act 1957 (Andhra Pradesh Act 6 of 57), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act the sales of following goods: (1) and (2) omitted as unnecessary; (3) fresh milk, curd and butter milk." By G.O,Ms. No. 60 (Revenue) dated 10.1.1961, item (3) was substituted as follows: "fresh milk, curd and butter milk sold by dealers exclusively dealing in them." By G.O.Ms.
No. 1786 dated 20.11.1962, the words "and their byeproducts realised by utilisation of surpluses thereof were added at the end of the entry.
By yet another amendment, the word "bye products" was substituted by the word "products".
Thus, at the relevant time item 3 of the said notification read as follows: "fresh milk,.curd and butter milk sold by dealers exclusively dealing in them and their products realised by utilisation of surpluses thereof.
" It is also brought to our notice that by G.O.Ms.
No. 669 dated 26.5.1975, the Government of Andhra Pradesh exempted the sale of pasturised milk by the Andhra Pradesh Dairy Development Corporation from the levy of tax payable under the said Act with effect from the 1st day of May, 1975.
In the Civil Appeals the appellant is Hindustan Milk Food Manufacturers Ltd. They purchased milk mainly from persons other than registered dealers which they utilised in manufacture of various products.
Its products are sold not only within the State of Andhra Pradesh but also in other States of the country.
It has an office at Dhawaleshwaram in East Godavari Distt.
of Andhra Pradesh.
It is registered as a dealer under the Act.
In the course of their assessment proceedings for the assessment year 1979 80 (among other assessment years) the appellant contended that the milk having been exempted by virtue of a notification issued under Section 9 is not taxable and that levy of purchase tax is incompetent.
They questioned the constitutionality of Section 6 A.
The Assessing authority overruled the said objections and levied the purchase tax on the turnover of milk purchased by the appellant.
The matter was brought to the High Court which, as stated above.
negatived the challenge to the constitutionality of the provision .
So far as the exemption notification in G.O.Ms.
No. 1091 dated 10.6.1957 is concerned, it must be noticed that what was exempted there under was the tax payable on the "sale of fresh milk sold by dealers exclusively dealing in them.
So far as agriculturists are concerned, they are not dealers at all by virtue of Explanation II to the definition of "dealer" H contained in clause (e) of Section 2.
The notification has, therefore, no application to sale of milk by them.
Since the purchase by Hindustan Milk Food is almost wholly from such agriculturists, it cannot take advantage of the said notification.
If, however, any milk is purchased by the appellant or the writ petitioners from dealers exclusively dealing in milk, they would be liable to pay the purchase tax only in cases where the selling dealer is not liable to pay the tax either because of an exemption notification or otherwise.
A contention was urged before us that the milk was not at all taxable under the Act.
It was submitted that milk is not mentioned in any of the Schedules I to VI appended to the Act.
This argument in our opinion proceeds upon a mis apprehension of the scope and scheme of Section 5, as we shall presently demonstrate.
Fresh milk was taxable as general goods under Section 5(1) of the Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) and which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment if has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.
Section 6 A was inserted by Andhra Pradesh General Sales Tax .
(Amendment) Act, 49 of 1976 with effect from September 1, 1976.
As originally enacted, the section read as follows: "6 A: Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business (i) Purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under Section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is IV liable to tax under this Act) from a person other than a registered dealer, and (a) either consumes such goods in the manufacture of other goods for sale or otherwise, or (b) disposes of such goods in any manner other than by way of sale in the State, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate which but for the existence of the aforementioned circumstances, tile tax would have been leviable on such goods under Section 5 or 6".
The Section has been amended in some particulars by the Amendment Act 18 of 1985 but these amendments do not make a difference to nature or character of the tax.
Be that as it may , we may as well set the section as it stands now, in view of the fact that the validity of the section as such is questioned before us.
It reads: "6 A. Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business: (i) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and (a) consumes such goods in the manufacture of other goods for sale or consumes them otherwise, or (b) discloses of such goods in any manner other than by way of sale in the state, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under Section 5 or Section 5 A or Section 6: Provided that in respect Or declared goods such rate together with the rate of additional tax specified in Section 5 A shall not exceed four percent of the purchase price of such goods." An analysis of the Section yields the following ingredients: "A. (i) a dealer who in the course of business purchases any goods liable to tax under the Act, (ii) from a registered dealer in circumstances in which no tax is payable by such selling dealer under Section 5 or 6 and (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
B.(i) A dealer who in the course of his business purchases any goods which are taxable under the Act (ii) from a person other than a registered dealer and, (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) despatches them to a place outside the Stale except as a direct result of sale or purchase in the course of inter State trade or commerce, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
" The proviso which governs both the above situations provides that in case of declared goods the total tax shall not exceed 4% of the purchase price of such goods.
Broadly speaking, the effect is Tax payable at sale point becomes the tax payable on the purchase point, in certain circumstances.
Because, the seller is not or cannot be taxed for certain reasons, the purchasing dealer is being taxed.
Two examples, each illustrating one of the two situations envisaged by the Section may be given: (a) Andhra Pradesh Dairy Development Corporation, a registered dealer, is exempted from paying the tax on sale of pasturised milk.
The purchaser of pasturised milk from the Corporation is taxed provided he satisfies one of the conditions specified in clauses (i) to (iii) mentioned in the Section, thereby becoming the last purchaser in the State of such milk.
(b) Fresh milk is taxable at sale point.
But when it is sold by a farmer/agriculturist raising cattle on lands held by him, he cannot be taxed because he is not a dealer.
The purchaser is taxed in such cases provided he satisfies one of the conditions specified in clauses (i) to (iii) in the Section, thereby becoming the last purchaser in the State of such milk.
It would, therefore, be clear that the real object of the clauses (i) to (iii) in the Section is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or case to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
In this connection, observations of P.S. Poti, J. in Malabar Fruit Products Co.v.
S.T.O., 30 S.T.(J. 537, which have been expressly approved by this court in State of Tamil Nadu vs Kanda Swami, 36 S.T.C. 191 = discussed in detail in part V may be referred to.
It is not necessary to set out the said discussion here over again.
In the circumstances, we are unable to see how the tax imposed by Section 6 A be described either as use tax, consumption tax or consignment tax.
Since we are of the opinion, as explained in Part V, that Goodyear does not interpret Section 9 of Haryana Act and Section 13AA of Bombay Act correctly, its reasoning cannot be brought in here to contend that clause (c) of Section 6 A imposes a consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
Reference to a few more provisions of the Act would be appropriate at this stage to complete the picture.
The expression "dealer" has been defined in clause (e) of Section 2.
It is not necessary to notice the entire definition except Explanation II which says that a grower of agricultural or horticultural produce cannot be deemed to be a dealer if he sells his produce.
Explanation reads as follows: "Explanation II: Where a grower of agricultural or hor ticultural produce sells such producer grown by himself on any land in which he has an interest whether as owner, usufructuary mortgage, tenant or otherwise, in a form different from the one in which it was produced after subjecting it to any physical, chemical or any process other than mere cleaning, grading or sorting he shall be deemed to be a dealer for the purpose of this Act.
" Section 5 is the charging section.
Prior to the Amendment Act 4 of 1989, Section 5 had four sub sections.
The first sub section made all sales/purchases by dealers within the State of Andhra Pradesh subject to tax.
It, however, the goods sold were those mentioned in Schedule I they were taxable at a single point, viz., at the point of sale and at the rate prescribed in the said Schedule.
Similarly, if the goods fell in the Second Schedule they too were taxable only at one point namely, the point of purchase at the rate prescribed.
[Sub section (2)1 Schedule III comprises of declared goods while Schedule IV sets out goods which are totally exempted Income tax under Section 8 of the Act.
Schedule V deals with jaggery and Schedule VI with 2liquors.
In other words, goods which did not fall in any of the Schedules I to VI fell under sub section (I) and were taxed as general goods.
In this sense, fresh milk which is not mentioned in any of the Schedules i to VI was chargeable as general goods under sub section (I) of Section 5.
By Amendment Act 4 of 1989 the entire scheme of Section 5 has been changed.
The present section says that the goods mentioned in Schedules I to VII shall be taxed at the point and at the rate specified therein.
Schedule VII which has been inserted by the very same Amendment Act is in the nature of a residuary Schedule, the good which do not fall in any of the Schedules I to VI fall under Schedule VII.
Even such goods have also been made taxable only at one point and at the rate specified.
After the coming into force of the said Amendment Act of 1989, fresh milk would fall under Schedule VII and taxable as such.
It is, therefore wrong to say that sale of milk was or is not taxable under the Act.
Section 9 empowers the Government to exempt either the sale of certain goods or sates by certain persons either wholly or partly.
Section reads as follows: "9.
Power of State Government to notify exemptions and reductions of tax (or interest): (1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption, or reduction in rate, in respect of any tax or interest payable under the Act (i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in series of sales or purchases by successive dealers; or (ii) by any specified class of persons, in regard to the whole or any part of their turnover.
(2) Any exemption from tax or interest or reduction in the rate of tax notified under sub section (I) (a) may extend to the whole of the State or to any specified area or areas therein; (b) may he subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.
" It may be noticed that while exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified point or points in the scries of sales or purchases of successive dealers.
Several notifications have been issued by the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
No.1091 is one of them.
We have already noticed the rather qualified terms in which the exemption is couched.
It is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 and the language of G.O.Ms.
No.1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A as well, much less in all cases.
For the above reasons, appeals and writ petitions are dismissed with no order as to costs.
PART V (DOES GOODYEAR REQUlRE RE CONSIDERATION?) As mentioned earlier, counsel for all the assessees in these matters strongly rely on the decision of this Court in Goodyear which invalidated a purchase tax levied by the Haryana and Maharashtra Sales Tax Acts.
We may, therefore, notice this decision in some detail.
What precisely is the ratio of Goodyear? Provisions relating to purchase tax in Haryana Sales Tax Act and Bombay Sales Tax Act fall for consideration in this case.
Section 9 of the Haryana Act, before it was amended by Haryana General Sales (Amendment and Validation) Act, 1983, read as follows: 9, Where a dealer liable to pay tax under this Act purchases goods other than those specified in Schedule B from any source in the State and (a) uses them in the State in the manufacture of, (i) goods specified In Schedule B or (ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter State trade or commerce or within the meaning of sub section (l) of Section 5 of the , in the course of export out of the territory of India.
(b) exports them, in the circumstances in which no tax is payable under any other provisions of this Act, there shall be levied, of subject to the provisions of Section 17, a tax on the purchase of such goods at such rate as may be notified under Section 15.
" A notification dated 19th July, 1974 was issued by the Government of Haryana under the said provision read with Section 15(1) of the Act in purported implementation of the said provision.
Validity of Section 9 as well as of the notification was challenged in a batch of writ petitions filed in the High Court of Punjab and Haryana.
The High Court upheld the challenge holding that "whereas the said provision (Section 9) provided only for the levy of a purchase tax on the disposal of manufactured goods, the notification by making a mere despatch of goods to the dealers them selves taxable in essence, legislates and imposes a substantive tax which it obviously cannot." Goodyear India Ltd. vs State of Haryana (1990) 76 S.T.C. 71.
After it was amended by the aforesaid amendment Act, sub sections (] ) and (2) of Section 9 read as follows: "9. Liability to pay purchase tax, (1) Where a dealer liable to pay tax under this Act, (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (b) purchases goods, other than those specified in Schedule B, from any source in the State and uses than in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of B the ; or (c) purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in the circumstances in which no tax is payable under any other provision of the Act, there shall be levied, subject to the provisions of Section 17 a tax on the purchases of such goods at such rate as may be notified under Section 15.
(2) Notwithstanding anything contained in this Act or the rules made thereunder, if the goods leviable to tax under this section are exported in the same condition in which they wore purchased, the tax shall be levied, charged and paid at the station of despatch or at any other station before the goods leave the State and the tax so levied, charged and paid shall be provisional and the same shall be adjustable towards the tax due from the dealer on such purchase as a result of assessment or re assessment made in accordance with the provisions of this Act and the rules made there under on the production of proof regarding the payment thereof in the State." Again a batch of writ petitions was filed questioning the validity of the amended provision which challenge too was upheld by the High Court in its decision in Bata India Ltd. vs State of Haryana, 54 S.T.C. 226.
The main ground upon which the High Court allowed the writ petitions was that mere despatch of goods to a place outside the State in any manner other than by way of sale in the course of inter State trade or commerce is synonymous with or is in any case included within the ambit of consignment of goods to the person making it or to any other person in the course of inter state trade or commerce as specified in Article 269(l)(iv) and Entry 92(B) of List l of the Seventh Schedule to the Constitution and thus beyond the competence of the State legislature.
According to the High Court, the taxable event was not the purchase of goods nor the use of such goods in manufacture of end products but the despatch of goods.
Doubting the view taken in Bata India, one of the learned Judges of the Punjab and Haryana High Court, Punchhi, J. (as he then was) referred the matter to a Bull Bench which took a different view in Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C.393.
The Full Bench was of the view that according to Section 9 (amended) the taxing event is the act of purchase of goods which are used in the manufacture of end products and not the act of despatch or consignment as held in Bata India.
The correctness of all the three decisions aforesaid was questioned in appeals filed before this Court.
The appeals were heard by a Bench comprising Sabyasachi Mukharji, J. (as he then was) and one of us (S.Ranganathan, J.).
Mukharji, J., in his separate judgment, set out the test for determining the taxable event in the following words: "It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed.
The realisation often is postponed to further date.
The quantification of the levy and the recovery of tax are also postponed in some cases Taxable event is that which on its occurrence creates or attracts the liability to tax." Then the learned Judge proceeded to analyse Section 9 (amended) and concluded as follows: "Analysing the section it appears to us that conditions specified, before the event of despatch outside the State as mentioned in Section 9(1)(b) namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State.
If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be tax under Section (I)(b) The liability to pay tax in this section does not accrue on purchasing the goods simplicitor, but only when these are despatched or consigned out of the State of Haryana.
In all these cases, it is necessary to find out the true nature of the tax.
Analysing the Section, if one looks to the purchase tax under Section 9, one gets the conclusion that the Section itself does not provide for imposition of the purchase tax on the transaction of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created "According , the learned judge held , the is in the nature of a consignment tax which the Parliament alone could impose and not the State legislature.
The correctness of the said view is questioned by the learned counsel for the State of Andhra Pradesh and other counsel for the State Governments.
The question for our consideration is whether the learned Judge was not right in holding that the taxable event under the section Is not the purchase goods used in the manufacture of end products but the despatch of manufactured goods to out state destinations.
The other provision considered in the said decision is the one contained in Section 13AA of the Bombay Sales Tax Act.
The said provision which was introduced into the Act by the Maharashtra Act (28 of 82) read as follows at the relevant time: "13AA.
Purchase tax payable on goods in Schedule C, Part I when manufactured goods are transferred to outside branches.
Where a dealer, who is liable to pay tax under this Act, purchases any goods specified in Part I of Schedule C, directly or through Commission agent, from a person who is or is not a Registered dealer and uses such goods in the manufacture of taxable goods and despatches the goods, so manufactured, to his own place of business or to his agent 's place of business situated outside the State within Indian then such dealer shall be liable to pay, in addition to the sales tax paid or payable, or as the case may be, the purchase tax levied or leviable under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include purchase price of such goods in his turnover of purchases in his return under Section 32, which he is to furnish next thereafter.
The validity of the said provision was challenged inter alia by Hindustan Lever Limited which was negatived by the Bombay High Court in its decision reported in 72 S.T.C. 69.
The High Court was of the opinion that the additional purchase tax leviable under the said provision is on the purchase value of V.N.E.Oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred.
It held further that the goods taxed under Section 13AA are consumed in the State as raw material in the process of manufacturing other commodities and therefore tax imposed thereon cannot be said to hinder the free flow of trade within the meaning of Article 301 of the Constitution.
The question again was which is the taxable event according to Section 13AA.
Mukharji, J. on an analysis of the section held that the taxable event is the despatch of manufactured goods outside the State which means that the levy is beyond the competence of the State legislature.
The attack based upon Article 301 of the Constitution was, however, repelled.
Though agreeing with the conclusion arrived at by Mukharji, J., Ranganathan, J. made a few pertinent observations in his separate opinion.
The learned Judge opined that both Section 9 of the Haryana Act and Section 13AA of the Bombay Sales Tax Act "purport only to levy a purchase tax" and further that "the tax, however, becomes exigible not on the occasion or event of purchase but only later.
It materialises only if the purchaser (a) utilises the goods purchased in the manufacture of taxable goods and (b) despatches the goods so manufactured (otherwise than by way of sale) to a place of business situated outside the State.
The legislature, however, is careful to impose the tax only on the price at which the raw materials are purchased and not on the value of the manufactured goods consigned outside the State.
The State describes the tax as one levied on the purchase of a class of goods viz., those purchased in the State and utilised as raw material in the manufacture of goods which are consigned outside the State otherwise than by way of sale.
" The learned Judge opined: "to me it appeared as plausible to describe the levy as a tax on purchase of goods inside the State (which attaches itself only in certain eventualities) as to describe it as a tax on goods consigned outside the state but limited to the value of raw material purchase inside the State and utilised therein." The learned Judge stated that he had "considerable doubts" as to the taxable event but that on further reflection he was inclined to agree with H S.Mukharji, J. that the tax though described as a purchase tax actually became effective with reference to a totally different class of goods and that too only on the happening of an event which is unrelated to the Act of purchase and therefore, in truth and essence, it was a consignment tax.
The crucial question, therefore, is what is the basis of taxation in either of the above provisions? In other words, the question is whether levy of tax is on the purchase of goods or upon the consignment of the manufactured goods? Let us first deal with Section 9 of the Haryana Act (as amended in 1983).
Properly analysed, the following are the ingredients of the Section: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of a inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of the (Central Sales Tax Act, 1956.
If all the above three ingredients are satisfied, the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
Now, what does the above analysis signify? The section applies only in those cases where (a) the goods are purchased (for convenience sake, I may refer to them as raw material) by a dealer liable to pay tax under the Act in the State.
(b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (e) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State, no tax is payable on such disposition; similarly, where manufactured goods are despatched out of State as a result of an inter State sale or export sale, no tax is payable on such sale.
Similarly again where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents, no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State, it is consignment, which cannot be taxed by the State legislature.
With the greatest respect at our command, we beg to disagree.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is hound to be higher than the value of the raw material).
The State legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e., consigned to dealers own depots or agents), the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation, the State says, it would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
Now coming to inter State sale and export sale, it may be noticed that in the case of inter State sale, the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India, Article 269 of the Constitution provides for making over the tax collected to the States in accordance with certain principles.
Where, of course, the sale is an export sale within the meaning of Section 5(1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put an end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Would it be right to say that the levy is upon consignment of manufactured goods in such a case? True it is that the levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way act sale or are consigned to the manufacturing dealer 's dopots/agents outside the State of Haryana.
But does that change the nature and character of the levy? Does such postponement if one can call it as such convert what is avowedly a purchase tax what is on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods? We think not.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible (as pointed out by Ranganathan, J. in his separate opinion) to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the constitutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provision, the former must be preferred, according to all known canons of interpretation.
This is also the view expressly approved by Mukharji, J. in his opinion, as pointed out hereinbefore.
In para 71 of his opinion, the learned Judge states: `it is well settled that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah at page 768 and Income Tax Commissioners for City of London vs Gibbs ' (1942) 10 ITR Suppl.
121 at page 132 (H.L.)".
(emphasis supplied) However, we would presently show that merely because the levy attaches on the happening or non happening of a subsequent event, the nature and character of the levy does not change.
In several enactments.
for instance, tax is levied at the last sale point or last purchase point, as the case may be.
How does one determine the last purchase point in the State '? Only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
As pointed out pertinently by P.S.Poti, J. (as he then was) in Malabar Fruit Products Company and Ors.
vs The Sales Tax Officer and Ors, (1972) 30 S.T.C. 537, applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
In the said decision.
the learned Judge was dealing with the validity and construction of Section 5 A of Kerala General Sales Tax Act, 1963, sub section (l) whereof read as follows: "5A. Levy of purchase tax (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods.
the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under Section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to any place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall whatever be the quantum of the turnover relating to such purchase for that year at the rates mentioned in Section 5.
" One of the arguments urged against the validity of the said provision was that inasmuch as the tax is levied depending upon the mode in which the goods purchased are consumed, disposed of or despatched, the tax is really one in the nature of consumption tax or use tax, but not sales tax.
This argument was answered by the learned Judge in the following words: According to me, this contention is based on a misconception of the scope of taxation on the sale of goods.
It is true that sales tax is a tax imposed on the occasion of the sale of goods.
But it has no reference to the point of time at which the sale or purchase takes place.
It refers to the connection with the event of purchase or sale and not the point of time at which such purchase or sale takes place.
To read it otherwise would render any retrospective in position of sales tax invalid as in every such case the tax would not be one which arises on the occasion of sale.
By the same logic, it would not he possible to tax any goods at the last purchase point in the State, for the last purchase point in regard to any goods could be determined only when the goods arc sold later and not when the goods are purchased.
On the same reasoning as urged by counsel, one should say in such a case that since the goods are taxed only when the goods are sold outside the State or are despatched for such sale outside the State and so the last purchases are taxed not on the "occasion" of the purchases and, consequently, it is beyond the competence of the Legislature.
That certainly cannot be and the Supreme Court has held in the decision in State of Madras vs Narayanaswami Naidu, (1968) 21 S.T.C.1 (S.C.), that the goods are taxable in such cases in the financial year when they become the last purchases.
" C: The decision of Poti, J. was affirmed by a Division Bench of Kerala High Court in Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359.
Both these decisions were expressly referred to and approved by a three Judge Bench of this Court in State of Tamil Nadu vs Kandaswami and Ors., (1975) 36 S.T.C. page 191.
Kandaswami was concerned with the construction of Section 7 A of the Tamil Nadu General Sales Tax Act which too a levied purchase tax and is couched in language similar to Section 5 A of the Kerala Act.
While dealing with the scheme of Section 7 A, this court quoted with approval certain passages from the judgment of Poti, J. including the following sentence: "If the goods are not available in the State for subsequent taxation by reason of one or other of the circumstances mentioned in clauses (a), (b) and (c) of Section 5 A(1) ofthe Act then the purchaser is sought to be made liable under Section 5 A.
This statement accords with our understanding of the scheme of Section 9 of Haryana Act as set out hereinabove.
To repeat, the scheme of Section 9 of Haryana Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of nation and its economy, as explained hereinbefore.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
Another observation in Kandaswami relevant for the present purpose may also be noticed: "It may be remembered that Section 7 A is at once a charging as well as a remedial provision.
Its main object is to plug leakage and prevent evasion of tax.
In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should he eschewed.
If more than one construction is possible that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile.
The view taken by the High Court is repugnant to this cardinal canon of interpretation.
" In the light of the above scheme of Section 9, it would not be right, in our respectful opinion, to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
Section 9 of Haryana Act and Section 13AA of Bombay Act are intended to encourage the industry and at the same time derive revenue.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the Side.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room, in our respectful opinion, for saying that the tax is on the consignment of manufactured goods.
We may in this connection refer to the decision of a Constitution Bench of this Court in Andhra Sugars vs State of Andhra Pradesh, 21 S.T.C, 212, relating to the validity of Section 21 of the A.P. Sugarcane Regulation of Supply and Purchase Act, 1961.
Sub section (1) of Section 21 read as follows: "21.
(1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
" One of the arguments urged against the validity of the levy was that since the levy is not on every purchase of sugarcane but only "on the purchase of cane required for use, consumption or sale in a factory" the tax is not really a purchase tax referable to Entry 54 of List II of the VIIth Schedule to the Constitution but a use tax, a tax of a different character altogether not falling under Entry 54.
It was also argued that since the tax is levied at the stage of entry of cane into the factory for being used and consumed in the manufacture of sugar, it is in the nature of an entry tax but since the factory was not a "local area" within the meaning of Entry 52 of List II, the levy was incompetent.
Both the arguments were rejected in the following words: "Under that entry, the State Legislature is not bound to levy a tax on all purchase of cane.
It may levy a tax on purchases of cane required for "use, consumption or sale in a factory.
The Legislature is competent to tax and also to exempt from payment of tax sales or purchases of goods required for specific purposes.
Other instances of special treatment of goods required for particular purpose may he given.
Section 6 and Schedule I, item 23 of the Bombay Sales Tax Act, 1946, levy tax on fabrics and articles for personal wear.
Section 2(j)(a)(ii) of the C.P. and Berar Sales Tax Act, 1947, exempts sales of goods intended for use by a registered dealer as raw materials tor the manufacture of goods.
Mr. Chatterjee submitted that the tax levied under Section 21 was a use tax and referred to Mcleod vs Dilworth and Co. ; ; , and C.G. Naidu and Co. vs The State of Madras, A.I.R. 1953 Mad.
116, 127 128; 3 STC 405.
He argued that the State Legislature could not levy a use tax which was essentially different from a purchase tax.
The assumption of counsel that Section 21 levies a use tax is not well founded.
The taxable event under Section 21 is the purchase of goods and not the use or enjoyment of what is purchased.
The constitutional implication of a use tax in American law is entirely irrelevent.". . "To appreciate another argument of Mr. Chatterjee, it is necessary to refer to a few Acts.
It appears that paragraph 21 of the Bill published in the Gazette on March 3, 1960 preliminary to the passing of Act No. 43 of 1961 provided for a levy of a cess on the entry of cane into the premises of a factory for use, consumption or sale therein.
On December 13, 1960, this court in Diamond Sugar Mills Ltd., and Another vs The State of Uttar Pardesh and Another, ; , struck down a similar provision in the U.P. Sugarcane Cess Act, 1956, on the ground that the State Legislature was not competent to enact it under Entry 52, List II, as the premises of a factory was not a local area within the meaning of the entry.
Having regard to this decision, paragraph 21 of the Bill was amended and Section 21 in its present form was passed by the State Legislature.
The Act was published in the Gazette on December 30, 1961.
Mr. Chatterjee submitted that in this context the levy under Section 21 was really a levy on the entry of goods into a factory for consumption, use or said therein.
We are unable to accept this contention.
As the proposed tax on the entry of goods into a factory was unconstitutional, paragraph 21 of the original Bill was amended and Section 21 in its present form was enacted.
The tax under Section 21 is essentially a tax on purchase of goods The taxable event is the purchase of cane for use, consumption or sale in a factory and not the entry of cane into a factory.
As the tax is not on the entry of the cane into a factory, it is not payable on cane cultivated by the factory and entering the factory premises.
" For the above reasons, we find it difficult to agree with the reasoning of Mukharji, J, in Goodyear.
It is also not possible to agree with the learned Judge when he says that "the two conditions specified, before the event of despatch outside the State as mentioned in Section 9(1)(b), namely (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State are only descriptive of the goods liable to tax under Section 9(1)(h) in the event to despatch outside the State".
When the tax is levied on the purchase of raw material on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the above construction, in our respectful opinion, runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory; except for the two minor areas pointed out in Murli Manohar and Company vs State of Haryana; , , the Section which has its parallels in all the State enactments has practically become redundant.
This was the main reason we undertook to reconsider the said decision which course we would not have ordinarily agreed to adopt.
In our respectful opinion, the tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
In certain situations (the three situations mentioned above viz, sale of manufactured goods within the State, inter State sale and export sale of manufactured goods) it is waived.
In other cases, it is not.
It is argued for the assessees that apart from Goodyear a Bench of three Judges of this Court has independently approved and affirmed the correctness of the ratio and reasoning in Goodyear.
Reference is to Mukerian Papers Ltd. vs State of Punjab; , The case arose under the Punjab General Sales Tax Act and the provision which fell for interpretation was Section 4B.
It levied purchase tax on the raw material used in the manufacture of goods which in turn are sold outside the State otherwise than by way of sale in the course of inter State trade or commerce or in the course of export out of the territory of India.
The argument for the assessee/appellant was "that the main question of law involved in this case is concluded by the decision of this court in Goodyear India Ltd. vs State of Haryana which was an appeal arising from the High Court 's decision in the case of the same assessee. ".
It was this contention which was examined by the Bench.
Section 4B of the Punjab Act was analysed and it was found that it is in material particulars, similar to Section 9 of the Haryana Act even though the language was not identical.
Ahmadi, J. speaking for the Bench observed: "therefore, even though the language of Section 4B of the Act is not identical with the relevant part of Section 9(1) of the Haryana Act, it is in substance similar in certain respects, particularly in respect of the point of time when the liability to pay tax arises.
Under that provision, as here, the liability to pay purchase tax on the raw material purchased in the State which was consumed in the manufacture of any other taxable goods arose only on the despatch of the goods outside the State.
We are, therefore, of the opinion that the ratio of the said decision of this Court in Goodyear India Ltd. applies on all fours to the main question at issue in this case." When the counsel for the revenue sought to argue that the decision of this court in Kandaswami takes a different view the Bench did not permit the same to be urged in the view of the fact that the correctness of the judgment in Goodyear was not canvassed before them.
The Bench said "the decision in Kandaswami though in the context of an analogous provision was distinguished by this court in Goodyear India Ltd. on the ground that it did not touch the core of the question at issue in the latter case.
This aspect of the matter is elaborately dealt with in paragraphs 31 to 34 at page 796 of the report.
We need not dilate on this any more since the correctness of the judgment in Goodyear India Ltd. is not canvassed before us.
" It is, thus, clear that the main argument for the Bench was that the ratio of Goodyear governs the said case and it was so found.
It is equally clear that the correctness of the decision in Goodyear was not questioned before the Bench and that is why the Bench took care to specifically advert to and record the said circumstance.
So far as the decision in Murli Manohar & Co. vs State of Haryana ; is concerned, it arose under Haryana Sales Tax Act and explains the meaning of export sale referred to in Section 9(1)(h) of the Act.
There is no discussion in this decision about the point at issue before us.
The same is the position under Section 13AA of the Bombay Sales Tax Act.
The said provision, properly analysed, yields the following ingredients: (i) where a dealer who is liable to pay tax under this Act purchases any goods specified in Part I of Schedule (C) either directly or through commission agent, from a person who is or is not a registered dealer and (ii) uses such goods in the manufacture of taxable goods and (iii) despatches the goods so manufactured to his own place of business or to his agent 's place or business situated outside the State within India.
(iv) such dealer shall pay, in addition to the sales tax/purchase tax paid or payable or levied or leviable, as the case may be, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture.
Here again it may be noticed that the tax levied is a purchase tax on the purchase of raw material and not upon the consignment of the manufactured goods The object of this provision too is the same as of the Haryana provision The levy is waived where the manufactured goods are sold within the State, or sold in the course of inter State trade or commerce or sold in the course of export.
It is retained and collected where the goods are taken out of Maharashtra State by way of consignment, in which event the State sees no reason not to retain and collect the levy on purchase of raw material The provisions is substantially similar to Section 9 of Haryana Act.
Whatever we have said with respect to the Haryana provision applies equally to this provision.
It is not necessary to repeat the same here.
Before parting with this matter, it is necessary to clarify: it was brought to our notice that both the Haryana and Bombay provisions have since been substituted with retrospective effect.
We have not referred to those provisions in this part for the reason that we are concerned only with the reasoning in Goodyear.
For the reasons mentioned above, we uphold the constitutional validity of the impugned provisions.
The appeals, writ petitions, S.L.Ps and T.C. accordingly fail and are dismissed No order as to costs G.N. Petitions dismissed. | The constitutional validity of S.15B of Gujarat Sales Tax Act, S.3 AAAA of Uttar Pradesh Sales Tax Act and S.6A of the Andhra Pradesh General Sales Tax Act was challenged in the present Appeals, Writ Petitions SLPs and Transferred case.
S.15 B of the Gujarat Sales Tax Act, 1969 was introduced by Amendment Act, 1986.
It provided for levy of additional purchase tax on raw materials purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business outside the State but within India.
By the Amendment Act, 1987, the section was substituted.
Writ Petitions were filed before the High Court challenging the validity of unamended S.15 B on the ground that it levied a consignment tax and hence was outside the competence of State Legislature.
During the pendency of the writ petitions, S.15 B was substituted by an Ordinance.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
S.15 B was given retrospective effect from 1.4.1986, the date on which it first came into force.
In view of the said Amendment Act, the Writ Petitions came to be dismissed as infructuous.
A fresh batch of Writ Petitions were filed challenging the validity of substituted S.15 B on the ground that it continued to be a consignment tax.
The High Court having dismissed the Writ Petitions, the matter has come up before this Court.
Section 3 AAAA of the U.P. Sales Tax subjected the purchase Of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
While the Civil Appeals were pending in this Court as regards the validity of S.3 AAAA, the High Court, while deciding some Writ Petitions, applied the ratio in Good Year and held that section was ultra vires the legislative competence of the State Legislature.
It held that under the said provision the taxable event was not the purchase of the goods by the purchasing dealer but the subsequent event namely use of the said goods in the manufacture of other goods and their despatch without effecting a sale within the State of U.P. to a place outside U.P.
To overcome this decision an Ordinance was issued which was later replaced by the U.P. Sales Tax (Amendment) Act, 1992, the constitutional validity of which has been challenged before this Court.
In the A.P. Sales Tax Act Section 6 A was inserted by the Andhra Pradesh General Sales Tax (Amendment) Act of 1976 with effect from 1.9.76.
The effect was that tax payable at sale point became tax payable on purchase point in certain circumstances.
Writ Petitions were filed before the High Court challenging the validity of S.6 A.
It was contended that the notification issued under S.9 of the Act exempted from tax certain goods which were sought to be taxed under S.6 A and that S.6 A was in fact a consumption or consignment tax and hence void.
Unable to succeed before the High Court, the assessees challenged the vires of the said section before this Court.
Apart from challenging the constitutional validity of the above said provisions of the three State Sales Tax Acts, the correctness of Good Year India Ltd vs State of Haryana, ; which invalidated certain purchase tax levied by the Haryana and Maharashtra Sales Tax Acts, was also questioned by the Revenue before this Court.
Dismissing the matters.
this Court, HELD: (By the Court): S.15B of the Gujarat Sales Tax, 1969, S.3AAAA of Uttar Pradesh Sales Tax Act, 1948 and S.6 A of the Andhra Pradesh General Sales Tax Act, 1957 are intra vires the powers of the respective State Legislatures and hence valid.
[249 D] Per B.P Jeevan Reddy, J: (for himself and V. Ramaswami, J.) 1.
The necessity and significance of the delegated legislation is well accepted and needs no elaboration.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made be deemed "as if enacted in this Act", the position may be different.
But where the Act does not say so, the Rules do not become part of the Act.
[212 B, Cl Halsbury 's Laws of England (3rd.
Edn.) Vol.
36, referred to.
Entry 54 of List 11 of Seventh Schedule to the Constitution must receive a liberal construction, it being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the Legislature can levy it in such mode or in such manner as it thinks appropriate, the well established principles in such matters being that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
The Legislature must be presumed to know its limitations and act within those limits.
Transgression must be clearly established, and is not to be lightly assumed.
[214 H; 215 A, B] 3.
A person other than a registered dealer is not amenable to the discipline of the Sales Tax Act.
He cannot indeed collect any tax and, therefore, will not make over or pay any tax.
This the legislature is justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
If a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
[222 C, D] 4.
So far as registered dealers are concerned, all that the purchasing dealer need to prove is that the said goods have already been or may be subjected to tax under State Act or Central Sales Tax Act.
On this score, there is no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealers can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the Central Sales Tax Act.
[222 E, F] GUJARAT SALES TAX ACT/RULES: 5.1.
S.15 B of the Gujarat Sales Tax Act read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material an not upon the value of the manufactured products.
[214 G, H] 5.2.
Rule 14E of Gujarat Sales Tax Rules along with S.15B of the Gujarat Sales Tax Act provide for set off etc., in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots or to the depots or his agents outside the State of Gujarat.
There is nothing objectionable in the State doing so.
It cannot be said that by reading Rule 42 E into S.15 B, the levy becomes a consignment tax.
[213 E F] Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, (1992) 4 J.T.(S.C.) 317 and Andhra Sugars Ltd. & Anr.
v The State of Andhra Pradesh and Anr., 21 S.T.C. 212, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Ramkrishna vs State of Bihar, A.l.
R. 1963 S.C.1667, referred to.
U.P. SALES TAX ACT: 6.1.
All that section 3 AAAA of the U.P. Sales Tax Act prior to its substitution in 1992 provided was; (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the sellers and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter state trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If, however, it was proved that the said goods have already suffered tax under section 3 AAAA, no purchase tax was payable under section 3 AAAA.
It is obvious that the section did not speak of the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to be found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter state trade or commerce, the tax under it is not payable.
This is for the simple reason that in both the contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the Central Sales Tax Act).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax at least on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
[223 G H; 224 A D] 6.2.
There is no vagueness in the provision viz. sub sec.(2) of S.3 AAAA of U.P. Sales Tax Act nor can it be said that it placed heavy and uncalled for burden upon the purchasing dealer or that it is not practicable for the purchaser to establish that the seller (other than the registered dealer) has paid the tax or not.
[222 B] 6.3.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act on the one hand and in Section 3 AAAA of U.P. Act on the other (as it stood prior to 1992 Amendment Act or for that matter as it stands now).
These basic differences cannot be ignored.
[1224 E] Constitutionality of Section 3 AAAA of the U.P. Sales Tax Act ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List 11 of the Seventh Schedule to the Constitution.
[224 F] Goodyear India Ltd vs State of Haryana, ; , dissented from.
ANDHRA PRADESH GENERAL SALES TAX ACT/RULES: 7.1.
The real object of clauses (i) to (iii) in Section 6 A of the A.P. Sales Tax Act is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or cease to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
The tax imposed by S.6 A cannot be described either as use tax, consumption tax or consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List ll of the Seventh Schedule to the Constitution.
[230 G & 231 B] 7.2.
While exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified points in the series of sales or purchase of successive dealers.
Several notifications have been issued the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
1091 is one of them.
The exemption is couched in qualified form.
Thus, it is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 of the A.P. Sales Tax Act and the language of G.O.Ms No. 1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A of the Act, as well, much less in all cases.
[233 B, C] 7.3.
Fresh milk was taxable as general goods under Section 5(l) of the Andhra Pradesh Sales Tax Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) aud which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment it has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.[227 C D] Goodyear India Ltd. vs State of Haryana ; , dissented from.
RATIO OF GOODYEAR RECONSIDERATION OF: 8.1.
The ingredients of Section 9 of Haryana Sales Tax Act are: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured to a place outside the State in any manner otherwise than by way of sale in the course of an inter state trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of the .
If all the above three ingredients are satisfied the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
It applies only in those cases where (a) the goods are purchased (referred to as material) by a dealer liable to pay tax under the Act in the State, (b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (c) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State no tax is payable on such disposition; similarly where manufactured goods are despatched out of State as a result of an inter State sale or export sale no tax is payable on such sale.
Similarly against where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State it is consignment which cannot be taxed by the State Legislature.
This is not correct.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If however the manufactured goods are sold within the State no purchase tax is collected on the raw material evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is bound to be higher than the value of the raw material).
The State Legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e. consigned to dealers own depots or agents) the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation the State would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
[239 B D; 240 A D] 8.2.
In the case of inter State sale the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India Article 269 of the Constitution provides for making over the tax collected to the State in accordance with certain principles.
Where of course the sale is an export sale within the meaning of Section 5 (1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put and end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the manufacturing dealers ' depots/agents outside the State of Haryana.
Such postponement does not convert what is avowedly a purchase tax on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the consititutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provisions, the former must be preferred, according to all known canons of interpretation.
[240 E H; 241 A C] 8.3.
In several enactments tax is levied at the last sale point or last purchase point, as the case may be.
The last purchase point in the State can be determined only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
Applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
[241 F G] 8.4.
The scheme of Section 9 of Haryana Sales Tax Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of the nation and its economy.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
It would not be right to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the State.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room for saying that the tax is on the consignment of manufactured goods.[243 G H; 244 A F] 8.5.
When the tax is levied on the purchase of raw material, on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the construction placed in Goodyear runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory.
The tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
[247 A C] 8.6.S. 13AA of the Bombay Sales Tax Act is substantially similar to Section 9 of Haryana Sales Tax Act.
Whatever is said with respect to the Haryana provision applies equally to this provision.
[249 D] Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212 and State of Tamil Nadu vs Kandaswami, 36 S.T.C. 191, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Mukerian Papers Ltd. vs State of Punjab, ; , Explained.
Murli Manohar and Company vs State of Haryana [199]1 1 S.C.C. 377, distinguished.
Malabar Fruit Products Co. vs S.T.O., 30 S.T.C. 537, approved.
Hindustan Lever Ltd. vs State of Maharashtra, 79 S.T.C. 255; J.K Steel Ltd. vs Union of India, A.l.
R. 1970 S.C. 1173; Bata India Ltd. vs State of Haryana, 54 S.T.C. 226; Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C. 393; Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah, ; Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359 and Income Tax Commissioners for City of London vs Gibbs, (1942) 10 ITR Suppl.
121 (H.L.), referred to.
Per Ranganathan, J. (Concurring): 1.
The provisions of the U.P. and Gujarat Sales Tax Acts are clearly beyond challenge.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly is the purport behind the levy, but should not permit one 's imagination to read a purpose or words into the statute which are not there.
1198 C G] 2.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, with what the manufacturer does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E of the Gujarat Sales Tax Rules is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
[198 H; 199 A, B] 3.
The marginal title to the provisions under challenge indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
Even in the context of those Acts, it may be equally plausible to consider the provisions either as a purchase tax or a tax on consignment.
There is no such ambiguity in the language used in these provisions, and the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
[199 C F] 4.
A person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which apriori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1)(b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected or considered.
This approach would basically alter the parameters and remove the provision from the area of vulnerability.
[200 F H; 201 A D] 5.
It is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way.
The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
The more appropriate test would be to see whether the ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
In this view of the matter the levy under the A.P. Act is also within the legislative competence of the State. , B] 6.
The conclusion reached as to the vires of the provisions under challenge is contrary to the conclusion reached in Goodyear on somewhat analogous provisions.
No final conclusion is expressed as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes considered there, or would need a second look and fresh consideration in the context of what has been said now.
There is no hesitation to accept the point of view now presented and which appeals to be more realistic, appropriate and preferable, particularly the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view taken in Goodyear.
Consistency, for the mere sake of it, is no virtue.
[202 C, D] Distributors (Baroda) P. Ltd. vs Union of India, (1985 )155 I.T.R. 120 S.C., relied on.
Goodyear India Ltd. vs State of Haryana, ; , referred to. |
tition (C) No. 499 of 1991.
(Under Article 32 of the Constitution of India).
WITH Civil Appeal Nos.
4788 & 4794 of 1992.
C.S. Vaidyanathan, K. Lahiri, P.P.Rao, Vishwajeet Singh, R.B. Misra, 4 R.K. Khanna, Surya Kant, R. Singhvi, C.V.S. Rao, Ms. A. Subhashini, R.P. Singh, S.N. Terdol, A. Sharan, H.K. Puri, Ms. Abha Sharma and K.K. Lahiri for the appearing parties.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
Special leave granted.
As the trio raised common questions of law, they are disposed of by a common judgment.
The 1st petitioner in the Writ Petition is an Association representing the officers of the State Civil Service of U.P. and petitioner Nos. 2 to 17 are its members.
some of them and Bihar State Officers are the appellants in the two appeals respectively.
On January 19, 1984, the association represented to the Govt.
of India requesing to remove wide disparity prevailing in different States of promotional avenues from the State Civil Services to All India Administrative Service.
The officers from Andhra Pradesh and Kerala, on completion of 8 to 9 years of service are becoming qualified for promotion to All India Administrative Service, while the officers from States like Uttar Pradesh and Bihar would get chance only after putting 24 to 27 years of service.
The Estimate Committee of Seventh Lok Sabha too in its 77th Report highlighted the injustice.
A committee of A senior Secretaries constituted by the Union Govt.
recommended, after due consideration, to evolve equitable principles of comparable seniority from different States for promotion to Indian Administrative Service.
Pursuant thereto the Central Govt.
proposed to amend the Indian Administrative Service (Regulation of Seniority) Rules, 1954, for short 'the Seniority Rules '.
In the meantime the Rules were repealed and replaced by I.A.S. (Regulation of Seniority) Rules, 1987 which came with effect from Nov. 6, 1987 for short 'New Seniority Rules '.
The first respondent issued (Circular letter dated September 9, 1986 to the State Govts.
indicating amendments for fixation of seniority of officers promoted from State Civil Services ' to I.A.S. to give weightage over and above 4 years in the assignment of year of allotment as per the existing relevant rules, namely, four years for the first 12 years State service with additional weightage of one year for every two to three years ' completed service subject to a maximum of five years.
After receiving suggestions or comments from State Governments, the Central India exercising the power under sub sec.
(1) of Sec. 3 of All India Service Act, 1951 for short, 'the Act ' amended the New Seniority Rules, 1987 which amendment was published in the Gazette of India on February 3, 1989 for short the 'First Amendment Rules '.
The proviso thereto was made limiting its operation prospectively from February 3, 1989.
Putting the proviso and its prospective operation in issue, the appellants from U.P. in Civil Appeal No. 4788 of 1992[S.L.P. (C) No. 13823 of 1991] filed Original Application No. 18 of 1989 in the Central Administrative Tribunal, Allahabad at Lucknow Circuit Bench, contending that they were promoted in 1980 onwards but by limiting its application to November 6, 1987, they were discriminated.
Bihar Officers questioned the Rule in O.A. No. 136 of 1989 before the C.A.T. at Patna.
Therein the appellants though found to be entitled to the total weightage of 9 years since their juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules were given 1983 as the year of allotment.
Thereby they were denied 3 years weightage.
The Tribunal at Lucknow held that the prospective operation discriminated the Senior State Civil Service Officers but it refused to direct the Union Govt.
to amend the Rules with retrospective effect.
However, the Govt.
of India was requested to reconsider the matter to give retrospective operation to the First Amendment Rules.
The Tribunal at Patna upheld the rules and dismissed the application.
The Officers from Uttar Pradesh through their Association filed the Writ Petition under article 32 of the Constitution seeking writ of certiorari to quash the order dated December 12, 1990 made by the Ministry of Personnel, Public Grievance and Pension Department and for a mandamus to extend the benefits flowing from the First Amendment Rules to its members promoted prior to January 1988 and to the petitioners Nos. 2 to 17 in particular.
It is needless to state that the First Amendment Rules would operate with full effect from 1992, while the Promotee Officers promoted between 1988 to 1991 would reap partial benefit.
Rule 3 of the Seniority Rules, 1954 postulated assignment of the year allotment as per the Rules to every officer appointed to the Indian Administrative Service, be it a direct recruit or a Promotee officer.
The Promotee officer appointed in accordance with rule 9 of the IAS Recruitment Rules read with regulation 9 of IAS Promotion Regulations shall be allotted an year of allotment next below the junior most direct recruit officer recruited in accordance with rule 7 of the Recruitment Rules (Direct Recruitment Rules) and who officiated continuously in a senior post from a date earlier than the date of the commencement of such officiation by the Promotee officer.
Under the New Seniority Rules 1987, rule 3(1) postulates that every officer shall be assigned year of allotment in accordance with the provisions hereinafter contained in the rules.
The year of allotment of an officer in service at the commencement of the amended Seniority Rules shall be the same as per the rule 3(2) as has been assigned to him by the Central Govt.
in accordance with the orders and instructions in force immediately before the commencement of the New Seniority Rules.
Sub rule (3) of Rule 3 provides thus: "3(3) The year of allotment of an officer appointed to the Service after the commencement of these rules shall be as follows: 3(3)(i) the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held: Provided that if a direct recruit officer is permitted to join probationary training under rule 5(1) of the IAS (Probation) Rules, 1954, with direct recruit officers of a subsequent year of allotment, then he shall be assigned that subsequent year as the year of allotment.
3(ii) The year of allotment of a promotee officer shall be determined in the following manner]: (a) For the service rendered by him in the State Civil Service upto twelve years, in the rank not below that of a Deputy Collector or equivalent, he shall be given a weightage of four year towards fixation of the year of allotment; (b) He shall also be given a weightage of one year for every completed three years of service beyond the period of twelve years, referred to in sub clause (a), subject to a maximum weightage of five years.
In the calculation, fractions are to be ignored.
(c) The weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is appointed to the service: Provided that he shall not be assigned a year of allotment earlier than the year of allotment assigned to an officer senior, to him in that select list or appointed to the service on the basis of an earlier Select List.
3(3) (iii) The year of allotment of an officer appointed by selection shall be determined in the following manner: a) for the first 12 years of gazetted service, he shall be given a weightage of 4 years towards fixation of the year of allotment; (b) he shall also be given a weightage of one year for every completed 3 years of service beyond the period of 12 years, referred to in sub clause (a), subject to a maximum weightage of 5 years.
In this calculation, fractions are to be ignored; (c) the weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is A appointed to the service: Provided that he shall not become senior to another non State Civil Service Officer already appointed in the service.
Provided further that he shall not be allotted a year earlier than the year of allotment assigned to an officer already appointed to the service in accordance with sub rule (1) of rule 8 of the Recruitment Rules, whose length of class I continuous service in the State Civil Service in the State Civil Service is equal to or more than the length of Class I continuous service of the former in connection with the affairs of the State".
A plain and fair reading of the sub rules manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given further benefit of one year weightage of every completed 3 years of service, beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
the weightage shall be computed from the year of appointment of the officer to the service.
The offending proviso limits the operation of Rule 3(3)(ii)(a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officers senior to him in that select list or appointed on the basis of an earlier select list.
Under rule 3(3) (iii) also, though not relevant for the purpose of the case but serves as an analogy, that the year of allotment of an officer appointed by selection shall also be given the year of allotment in the same manner as adumbrated in sub rule 3(3) (ii) and its effect also was circumscribed under the proviso that he shall not become senior to another non State Civil Service Officer already appointed to the service.
It is, therefore, clear that the New Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of A allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in 3(3)(ii) of the rules down in seniority.
It is settled law that ability, merit and suitability are the criteria to select an officer of the State Civil Service for inclusion in the select list for promotion under regulation 9 of the IAS Promotion Regulations, 1955 read with rule 9 of the IAS Recruitment Rules, 1954.
In that behalf no change was brought about.
A junior officer who thus superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of l.
But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
Moreover, the entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely effected in their seniority.
Under sec.
3(2) of the Act, every rule made by the Central Govt.
under sec.3(1) and every regulation made thereunder or in pursuance of any such rules, shall be laid, as soon as may be, after such or regulation is made, before each House of Parliament while in session.
Before the expiry of the session, if both Houses agree to make any modification to such rules or regulations or both Houses agree to make any modification to such rules or regulations or both Houses agree that such rules or regulations should not be made, the rule or regulation shall thereafter have effect, only in such modified form or be of no effect as the case may be.
SO, however, that any such modification or annulment shall be, without prejudice to the validity of anything previously done under that rule or the regulation.
Thereby the rules or regulations made in exercise of the power under sec.
3(1) of the Act regulating recruitment and the conditions of service for persons appointed to an All India Service are statutory in character.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such construction.
The Legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
It is equally settled law that court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
I is equally settled law that the mere fact that the result of a statue may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine of purposive construction.
In Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, , the constitution bench of this court interpreting sections 70 and 90 of the U.P. District Board Act, in particular, the expression. "orders of any authority whose sanction is necessary", held that " No doubt it is the duty of the court to try to harmonise various provisions of an Act passed by the Legislature.
But it is certainly not the duty of the court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act".
In Nalinakhaya Bysck vs Shyam Suder haldar 7 Ors.[1953] SCR 533 at 545, this court held that it is not competent to any court to proceed upon the assumption that the Legislature has made a mistake.
The court must proceed on the footing that the Legislature intended what it has said.
Even if there is some defect in the phraseology used by the Legislature the court cannot aid the Legislature 's defective phrasing of an act or add or amend or, by construction make up deficiencies which are left in the Act.
The approach adopted contra by the High Court was held illegal.
In Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad; , at 438, this court held that in a developing country like ours any legal system may permit judges to play a creative role and innovate to ensure justice without doing violence to the norm as set by legislation.
But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of in strumentalities.
Thus it is settled law that where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the case, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the Legislature intended to convey.
Where the meaning of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
It could thus be held that the legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous.
Rule 3(3) (ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
Whether the proviso is violative of article 14 and article 16(1) of the Constitution of India? Undoubtedly all the promotees form the state civil service constitute a class preceding or succeeding or succeeding the First Amendment Rules.
The purpose of temporary truce carved out by the proviso is self evident.
By dint of merit, ability and suitability a junior officer could seal a march over the senior officers in the state civil service and get entry into the Indian Administrative services earlier to the senior officers and thus becomes a member of the Indian Administrative services officer, who was superseded and subsequently became qualified for inclusion in the select list, after the New seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in state civil services.
If he gets benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving and he would be pushed down and would again become junior to him in senior officer, though had varied length of services, but because of late promotion to Indian Administrative service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
The first Amendment Rules doubtless provided the weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
The proviso intended to protect the seniority of the officer promoted/appointed earlier than the appellants and its effect would be that till rule 3(3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative service.
Equally it intended not to let endless compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is prevented unequals to become equals.
The contention of sri P.P Rao, therefore, that invidious discrimination was meted out to senior officers and that they are similarly circumstanced are devoid of force.
This Court by a Constitution Bench in the state of Jammu & Kashmir V. T. N. Khosa, ; at 463, held that the amended rules varying the conditions of service would operate in future and governs the future rights of the existing personnel.
The promoted state civil Service Officers who had already the year of allotment in I.A.S cadre are not discriminated.
But the benefit o f full weightage of 9 years was cut down and applied in varied degree to officers promoted during the transitional period to prevent unjust results and to mete out justice to the junior officers or officers promoted earlier and upto 1992.
It is equally settled law that in an affirmative action the court strike down a rule which offends the right to equality enshrined in articles 14 and 16(1) of the Constitution like the one arose in D.S. Nakara vs Union of India, ; and B. Prabhakar Rao vs state of A.P., [1985]2 suppl, SCR 379, this court extended parity in an affirmative action by reading the rule down without doing violence to the language or injustice to others.
The application of the First Amendment Rule has the inevitable and insiduous effect of doing injustice to the direct recruit/promotee officers or officers promoted earlier to Feb. 3 1989 and the proviso avoided such injustice to the date of promotion to I.A.S the rule to all the senior irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust results which itself is unfair, arbitrary and unjust, offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to rule 3(3) (ii) of the First Amendment Rules was made.
The doctrine or kicking down or picking up, put forth in Union of India vs P.K. Roy, at 201 202, equally cannot be extended to the facts of the case.
But for the proviso the operation of rule 3(3) (ii) would be inconsistent with sec.
3(1A) of the Act.
Equally though the doctrine of reading down is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of rule 3(3) (ii) and (b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitution.
In the light of the above discussion no directions could be given to the central Govt.
to amend to Rules.
Therefore, we have no hesitation to hold that though Govt.
of India has power to amend the New Seniority Rules by First Amendment Rules prospectively giving weightage of total 9 years services to promotee officers of state Civil services in assigning a year of allotment, no direction or mandamus could be issued commanding the Central Govt.
To disobey the proviso or to apply the rules retrospectively to all the officers even to word out monetary benefits as contended by sri Vaidyanathan.
His further contention that the First Amendment Rules would be applied with effect form the date of the New seniority Rules or date of intimation of the proposed First Amendment Rules to the state Government for limited retrospectivity also cannot be acceded to for the same reasons.
In this context it is necessary to note that Sec.
3(1A) of the Act which provides: "3(1A) The power to make rules conferred by this section shall include the power to give retrospective effect from a date not earlier than the date of commencement of commencement of this Act, to the rules or any of them but no retrospective effect shall be given to any rule so as to prejudicially affect the interests of any person to whom such rule may be applicable.
" Its bare reading clearly indicates that the Rules made under the Act shall not be given retrospective effect so as to prejudicially affect the "interest of any person to whom such rules may be applicable".
The attempt of Sri Vidyanathan that this rule may be so read as applicable only to the promotee officers vis a vis the senior promotee officers cannot be accepted.
The Lucknow Bench of the C.A.T glossed over it by adopting strange construction that since the offending proviso to rule 3(3) (ii) of the First Amendment Rules would apply to promotee officers inter se , sub section (1) (a) of section 3 of the Act would not apply to the direct recruits, to say the least, is disparate construction.
There is a distinction between right and interest.
No one has vested right to promotion or seniority, but an officer has an interest to seniority , But an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
Sub section (1A) of sec.
3 of the Act enjoins the authorities not to give retrospective effect to such a rule or regulation so as to avoid "Prejudicial affect to the interest" of any person to whom such rule may be applicable.
The operation of law may have the effect of postponing the future consideration of the claims or legitimate expectation of interest for promotion.
Take a case as an illustration.
Articles 14 16(1), 16(4) ,335 and 46 read with proviso to article 309 of the Constitution empowers the President or the Governor to make satutory rules of reservation, where there is no adequate representation to persons belonging to scheduled castes and scheduled Tribes in a service or posts in connection with the affairs of the Central Govt.
or the state Government.
By operation of rule of reservation appointments or promotions given to a Scheduled Caste or Scheduled Tribe officer, though prejudicially affect the interest of officers of general category on parity of merit, in the larger public interest by the operation of the rule of reservation discrimination in favour of scheduled castes and scheduled Tribes ins constitutionally permissible as class.
Therefore, the proviso to rule 3(3) (ii) of the Amendment Rules is consistent with section 3(1A) of the Act, and that therefore, it is not ultra vires of the power of the central Govt.
nor it offends articles 14 and 16(1) of the constitution.
Counsel for the appellants/petitioners are their contention that there is no vested right to seniority and is variable and defeasible by operation of law.
In A.K. Bhatnagar vs Union of India,[1991] 1 SCR 544 this court held that seniority is an incidence of services and when rules prescribe the method of computation, It is squarely governed by such rules.
This would be amplified by following hypothetical illustrations.
In a direct recruitment the seniority would be arranged in the order of merit and it starts from the date of joining the duty.
Suppose 'A ' to 'D ' were appointed on the same day and 'A ' was senior most among them.
But 'A ' did not pass the prescribed tests and for varied reasons 'A 's probation was confirmed after a long period.
In the meanwhile 'B ' to 'D ' were confirmed 'B ' to 'D ' thereby became senior to 'A ' though appointed in the same day and 'A ' was No. I among them.
Suppose probation was not declared mala fide resulting in delayed confirmation and 'A ' challenged it in a court of law issued by the court to confirm 'A ' challenged it in court of law and succeeded in proving mala fide action and consequential direction was issued by the court to confirm 'A ' from the date of his appointment.
Though 'B ' to 'D ' become seniors to 'A ' later confirmation and the consequential defeasance of acquired seniority.
An empolyee has an interest in the accrued seniority which by operation of law also is liable to be varied.
by 'A ' later confirmation and the consequential defeasance of acquired seniority.
An employee has an interest in the accrued seniority which by operation of law also is liable to be varied.
Suppose 'A ' to 'D ' were appointed on the same day by direct recruitment 'A ' and 'D ' are general candidates and 'B ' and 'C ' though far below in merit and yet were assigned 2nd and 3rd places as per roster and 'D ' lost seniority though secured at the competitive examination due to operation of roster system 'D ' became junior to 'B ' and 'C '.
BY operation of law 'D ' s legitimate interest was thereby defeated.
suppose in promotion posts also similar situation may emerge. 'A ' though senior most in the feeder cadre, due to pendency of charges, he was superseded by 'B ' to 'D ' and thereby they gained early entry into promoted posts and thereby was promoted.
Though 'B ' to 'D ' became initially seniors to 'A ' he was rested to his seniority in 'D ' became initially seniors to 'A ' he was restored to his seniority in promotion posts as well and 'B ' to 'D ' interest was defeated.
Suppose the promotion was on the basis of merit and ability 'D ' was found to be more meritorious and was promoted earlier to `A ' to `C ', `D ' thereby would become senior to `A ' to `C ' though he was junior most in the feeder service.
The right to seniority and interest thereby were varied by operation of law.
Suppose `B ' and `C ' also have the benefit of reservation in promotion as well and by its application they were promoted earlier to `A ' though the latter was more meritorious.
`A ' was later on promoted.
He cannot claim his seniority over `B ' and `C ' who scaled a march over `A ' and became senior to `A ' in promoted cadre or service.
The seniority of `A ' thereby was varied.
However, law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3)(ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
Admittedly, the draft of the First Amendment Rules, as circulated to the State Government did not contain the offending proviso.
It is stated in the counter affidavit filed on behalf of the Central Govt.
that some of the State Government had suggested to incorporate the proviso and after necessary consultation the proviso was added to the First Amendment Rule.
Section 3(1) of the Act provide thus: "3(1) Regulation of recruitment and conditions of services.
(1) The Central Govt.
may, after consultation with the Governments of the State concerned (including the State of Jammu and Kashmir), (and by notification in the Official Gazette) make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service.
" It is thereby clear that sec.
3(1) empowers the Central Govt.
to make any rule regulating the recruitment and the conditions of service of All India Service, which include amendment from time to time, but the rider it engrafted is that the power should be exercised "after consultation with the Governments of the State concerned".
It is already held that by operation of sub section (2) of section 3 of the Act, the rules or regulations are statutory in character.
The meaning of the word `consultation ' was considered in catena of case.
This Court in Union of India vs Sankalchand Himatlal Sheth & Anr.,[1977] 4 SCC 193, held that the word "consult" implies a conference of two or more persons or an impact of two or more minds in respect of a topics in order to enable them to evolve a correct or at least a satisfactory solution.
In order that the two minds may be able to confer and produce a mutual impact it is essential that each must have for its consideration full and identical facts which can at one contitute both the source and foundation of the final decision.
In that case the question related to the transfer of a High Court from one High Court to another.
In that context this court considered whether sounding of the Chief Justice of India without meaningful consultation would be proper discharge of the constitutional obligation by the President.
In that context the principle of law laid was that the respective view point of the Govt.
and the Chief Justice must be known to each other and both were to the discuss and examine the merits of the proposed transfer.
The meaning of the word "consultation" was evaluated in that backdrop.
This Court approved the dictum laid by K. Subba Rao.
J., as he then was, in R.Pushpam vs State of Madras, AIR 1953 Madras 392.
In State of U.P. vs Manmohan Lal Srivastava, ; at 542, the word "consultation" in article 320 of the Constitution of India was considered by a Constitution Bench.
It was held that the word "consultation" did not envisage mandatory character for consultation, but the Constitution makers allowed the discretion to the appointing authority to consult the Public Service Commission.
But the executive Govt.
cannot completely ignore the existence of the Public Service Commission or to pick up and choose cases in which it may or may not be consulted.
However, prior consultation was held to be not mandatory for removal of a Govt.
servant as the Central Govt.
has not been tied down by the advice of the U.P.S.C.
This court did not extend the rule of consultation to making the advice of the Commission on those matter binding on the Govt.
In the absence of a binding character, this Court held that non compliance of article 320(3)(c) would not have the effect of nullifying the final order passed by the Govt.
of removal of the Govt.
servant from service.
In U.R. Bhatt vs Union of India, AIR 1962 SC 1344, this Court held that the absence of consultation of the Public Service Commission or any irregularity in consultation under article 320 does not effect the ultimate decision taken by the authority under article 311 of the Constitution.
In Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; , the same view was reiterated.
In N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; , words "prior approval" of the Central Govt.
in construing the proviso to sec.
115(7) of S.R. Act of the words of varying the conditions of service the Constitution Bench held that "prior approval" would include general approval to the variation in the conditions of service with certain limits indicated by the Central Govt.
Same view was reiterated by another Constitution Bench in Mohd. Sujat Ali & Ors.
vs Union of India.
, ; at 469 471.
In Chandramouleshwar Prasad vs Patna High Court & Ors. ; at 674 & 675, construing the word "consultation" in article 233 of the Constitution, another Constitution Bench in the context of removal of a District Judge by the Governor on the recommedation of the High Court, held that "consultation" or "deliberation" is not complete or effective unless the parties thereto, i.e., the State Govt.
and High Court make their respective points of view known to each other and discuss and examine the relative merits of their views.
If the one party makes a proposal to the other who has a counter proposal in his mind which is not communicated to the proposer the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation.
In that case it was held that the absence of any consultation with the High Court rendered the order to removal dated October 17, 1968 passed by the State Govt.
illegal.
In Narain Sankaran Mooss vs State of Kerala & Anr., ; , the facts were that the State Govt.
, exercising the power under Sec. 4 (1) of the Electricity Supply Act, cancelled the licence of the appellant without consulting the Electricity Board.
The question was whether cancellation would be ultra vires of the power.
While examining that question, this court considered whether consultation was mandatory or directory, and held that the revocation of the licence trenches into the right to carry on business guarantee under article 19(1)(g) of the Constitution.
Therefore, when the Act prescribed prior consultation of the Electricity Board such condition was incorporated to prevent abuse to power and to ensure just exercise of the power.
Section 4 of the Electricity Supply Act enjoins, in public interest, to consult the Board before revocation of the licence.
Consultation provided an additional safeguard to the license and when revoking the licence the Govt.
act in two stages.
Before and after the explanation was received and when the Govt.
considered the explanation, it is mandatory that it should consult the Electricity Board and non consultation rendered the order as void.
Consultant of the Board, was therefore, held to be a condition precedent for making order of revocation.
In Naraindas Indurkhya vs State of M.P. & Ors., , M.P. Madhyamik Siksha Adhiniyam Act, 1973 provided that before prescribing the text books the Chairman of the Board was to be consulted.
Its infraction was considered and held that any attempted exercise of the power by the State Govt.
without complying with this condition would be null and void.
On the facts of the case, it was held that the notification issued by the State Govt.
without consultation of Chairman was invalid being in breach of mandatory requirement of the proviso to Sec.4 (1) of the Act.
In Hindustan Zinc Ltd. vs A.P Electricity Board & Ors., ; the revision of tariff was effected without consulting the Consultative Council.
This Court held that the revision of tariff was a question of policy under Sec 78A of the Indian Electricity Supply Act.
The failure of the Board to consult the Consultative Council whether rendered the revision of tariff invalid.
It was held that the consequence of non compliance of Sec.
16 was not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, it cannot be said that the revision of tariff, without seeking the advice of the Consultative Council, rendered the revision of tariff itself invalid.
On the other hand the Board after revision of the tariff has to place the revised tariff on the table of the House or Houses of the Stat Legislature and such statement is open to discussion therein, the Board is bound to take into consideration such modification, if made, or any comments made on such statement by the State Legislature.
Under those circumstance it was held that the non compliance of Sec 16(5) did not render the revision of tariff invalid.
In Rollo & Anr.
vs Minister of Town & Country Planning [1948] 1 All Eng.
Report of the Towns Act, 1946 envisages the Minister of Town & Country Planning after consultation with the local authorities, if satisfied that it is expedient in the national interest that any area of land should be developed as a new town by the Corporation established under the Act, he may make an order designating that area as a site of the proposal of the new town.
On October 7, 1946 press notice was issued giving the date of meeting of the representatives of the local authorities and the Minister explained in the meeting what he had in his mind in arriving at the boundaries of the area.
Objections were raised and public enquiry was held.
But actual explanation was not sought from any local authorities.
In those circumstance contention was raised that there was no consultation as adumbrated under Sec.
Repelling the contention, the House of Lords held that in the meeting the local authorities clearly were informed of the general nature of the proposal, the areas suggested, it size and what the Minister wished and intended to do.
Discussion was followed.
Minutes were prepared and press notice was issued stating what had happened.
In those circumstance it was held that there was consultation and the requirement was complied with.
The ratio of Morris, J. in Elecher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496, was approved.
The same view was reiterated in Sinfield & Ors.
vs London Transport Executive Law Report 1970 Chancery Divn.
In Derham & Anr.
vs Church Commissioners of England, 1954 Appeal Cases 245, the Judicial Committee was to consider the question of consultation with Church Commissioners of effecting the union of beneficers under Sec.
3(1) of the Pastoral Reorganisation Measure, 1949 which postulates of "consultation so far as is practicable".
Construing the language it was held that a meeting was held explaining the proposed scheme, the members of the Church though opposed the scheme, it was approved.
As such it was held that the action was valid and their was proper consultation.
In Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, the local Govt.
of Mauritius was empowered under the Local Government Ordinance, 1962 by sec.
73 (1) to alter the boundries of any town, district or village, after consultation with the local authorities concerned.
The Governor and Council of Ministers in May 1963 had in their minds to alter the boundaries of Port Louis, so that the villages surrounding Port Louis Township would be embraced within and would enlarge the area of the town of Port Louis.
The Minister by a letter asked the views of the local authorities, enclosing the details of the proposed alternation and the map.
Majority Councillors had resigned on the ground that they has no mandate to express any views.
On subsequent nomination, those Councillors raised certain points and asked for information, which was duly complied with.
Further information was called for, but the Minister refused to extend time nor supplied information.
The Governor in Council has issued a proclamation extending the boundaries of Port Louis Action was initiated by the local authorities for declaration that the proclamation was ultra vires, null and void in so far as it related to the extended boundries of the town of Port Louis, contending that there had been no consultation as required by Sec.
73 (1) of the Ordinance.
The Judicial Committee construing the word "after consultation" in that setting held that the local authorities has received a clear proposal.
The failure to supply information by detailed answers to their questions would not render the proclamation as invalid.
Accordingly uphold the action as affirmed by the Supreme Court of Mauritius.
The ratio in Union of India & Ors.
vs Dr. section Krishna Murthy & Ors., ; , renders little assistance to the appellants.
In that case the question was the year of allotment under the Forest Service (Regulation of Seniority) Rules, 1968.
By fixation of the year of allotment it had retrospective effect from the dated when the promotee was brought into select list or the date of appointment whichever was later.
Under those circumstance it was held that retrospective operation of the rules did not prejudicely affect any vested right much less any fundamental rights of the officers recruited from the State service.
The result of the above discussion leads to the following conclusions: (1) Consultation is a process which requires meeting of minds between the parties involved to evolve a correct or at least satisfactory solution.
There should be meeting of mind between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
(2) When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or void.
(3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
(4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
(5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted; have the views or objections, taken them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstance it amounts to an action "after consultation".
(6) No hard and fast rules could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and circumstances whether the action is "after consultation"; "was in fact consulted" or was it a "sufficient consultation".
(7) Where any action is legislative in character, the consultation envisages like one under Sec.
3(1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outline and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation Rules or Regulations being legislative in character, would tacitly receive the approval of the State Government through the people 's representative when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
The Central Govt.
had prior consultation with the State Governments concerned and the Law Department.
In the light of the above principle and applying them to the facts of this case we have no hesitation to hold that the general consultation has by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
The contention of Sri Vaidyanathan that the proviso is rendered void for the absence of consultation of the State Govts.
is devoid of any force.
By operation of sub sec.
(2) of Sec. 3 the rules laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliament.
Under the circumstance we have no hesitation to hold that the failure to consult all the State Governments or Union Territories on the proviso to rule 3(3)(ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
Accordingly, we do not find any merit to issue the writ as prayed for in the writ petition.
The Writ Petition and Civil Appeal arising out of S.L.P. (C) No. 12469/90 are dismissed.
The appeal arising out of S.L.P. (C) No. 13823/91 is allowed and the order of the Central Administrative Tribunal, Allahabad Bench at Lucknow is set side.
But in the circumstance parties are directed to bear their own costs throughout.
WP (C) No. 499/91 dismissed.
C.A. No. 4794/92 dismissed.
C.A. No. 4788/92 allowed. | On 19.1.1984, the Association [petitioner No. 1 in W.P. (C) No. 499 of 1991] requested the Union Government (Respondent) to remove the disparity prevailing in different states of promotional avenues from State Civil Services to All India Administrative Service.
A Committee of Senior Secretaries, constituted by the Union Government, recommended an equitable principle of comparable seniority from different States for promotion to the Indian Administrative Service.
The I.A.S. (Regulation of Seniority) Rules, 1987 came into force with effect from 6.11.1987, repealing the old Rules.
In a Circular dated 9.9.1986 issued by the respondent Union Government directed the State Governments to give weightage over and above four years the assignment of year of allotment as per the existing rules, namely, four years for the first 12 years State service with additional weightage one year for every two to the years completed service subject to a maximum of five years.
Union Government amended and published the New Seniority Rules, 1987, after considering the suggestions from the State Governments.
The First Amendment Rules was published in the Gazette of India on 32.1989 which was given prospective operation from 3.2.1989.
The appellants in C.I. No. 4794 of 1992 questioned Rule 3(3) (ii) proviso of the First Amendment Rules, in an application before the CAT.
at Patna.
They contended that though they were found to be entitled to the total weightage of 9 years since the juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules, were given 1983 as the year of allotment and thereby the appellants were denied the 3 years weightage.
The Tribunal upheld the Rules and dismissed the application, against which appeal C.A. No. 4794 of 1992 was filed in this Court.
The appellants in C.A. No. 4788 of 1992, some members of the Association petitioner No. 1 of the W.P. (C) No. 499 of 1991 filed an application before the Central Administrative Tribunal at Lucknow contending that they were promoted in 1980 onwards, and they were discriminated in fixation of their seniority.
The Tribunal held that the prospective operation of the 1987 Rules discriminated the Senior State Civil Service Officers, but refused to direct the Union Government to amend the Rules but retrospective effect.
However, it requested the Government of India to reconsider the matter and to give retrospective operation to the First Amendment Rules.
This decision was questioned hl an appeal C.A. No. 4788 of 1992.
In WP(C)No. of 499 of 1991, Petitioner No. 1 An Association representing the officers of the U.P. State Civil Service and petitioners 2 17, its members filed the writ petition under Article 32 of the Constitution to quash the order of the respondent Union Government dated 12.12.1990, and for a direction to extend the benefit flowing from the First Amendment Rules to its members promoted prior to January 1988.
It was contended that the First Amendment Rules operated with effect from 1992, whereas the promotee Officers were promoted between 1988 to 1991 and that they would get only partial benefit.
As these cases raised common questions of law, they were heard together.
Dismissing WP(C)No.
499/1991 and CA No. 4794 of 1992, and allowing C.A No. 4788 of 1992, this Court, HELD: 1.01.
The entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely affected in their seniority.
[403 D] 1.02.
Rule 3(31 manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
[400 G H] 1.03.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given, further benefit of one year weightage of every completed 3 years of service.
beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
The weightage shall be computed from the year G of appointment of the officer to the service.
[402 E] 1.04.
The offending proviso limits the operation of Rule 3(3) (ii) (a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officer senior to him in that select list or appointed on the basis of an earlier select list.
[1402 F] 105.
The proviso aims that the State Civil Service senior officer ' though had varied length of services, but because of late promotion to Indian Administrative Service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
[406 B] 1.06.
The first amendment rules doubtless provided the remedy to remove existing discriminatory results by giving graded weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
[406 C] 1.07.
The Proviso intended to protect the seniority of the officers promoted/appointed earlier than the appellants and its effect would be that till rule 3 (3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative Service.
Equally it in tended not to let endless chain reaction occur to unsettle the settled interests in seniority.
These compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is discernible, but inevitable to ensure just results.
In other words the proviso prevented unequals to become equals.
[406 D E] 1.08.
The new Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in Rule 3(3) (ii) of the Rules down in seniority.
[402 H, 403 A B] 1.09.
By dint of merit, ability and suitability junior officer could steal a march over the senior officers in the State Civil Service and get entry into the Indian Administrative Service earlier to the senior officers and thus becomes a member of the Indian Administrative Service.
Thereby he becomes senior in service.
The senior State Civil Service officer, who was superseded and subsequently became qualified tor inclusion in the select list, after the new Seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in State Civil Service.
If he gets the benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving the promoted erstwhile junior officer of the benefit of early promotion and he would be pushed down and would again become junior to him in the Indian Administrative Service.
[405 G H; 406 A B] 1.10.
A junior officer who superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of I.A.S. But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
[403 E] 2.01.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such a construction.
The legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
1404 A] 2.02.
Court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, E phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
[404 B] 2.04.
The mere fact that the result of a statute may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the Court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine or purposive construction.
1404 C D] 2.05.
Where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the ease, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the legislature intended to convey.
[405 B] 2.06.
Where the meaning of the statute is clear and sensible, either with or without omitting the words or adding one, interpolation is improper, since the primary purpose of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
[405 C] 2.07.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
[405 D] 2.08.
The Legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous, Rule 3(3)(ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
The proviso carved out an exception to ward off injustice to the officers that became members of I.A.S. earlier to those dates.
[405 E] Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, ; Nalinakhaya Bysck vs Shyam Sunder Haldar & Ors., ; at 545 and Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad, 119861 2 SCR 430 at 438, referred to. 3.01.
The application of the First Amendment Rules has the inevitable and insiduous effect of doing injustice to the direct recruit promotee officer or officers promoted earlier to Feb. 3, 1989 and the proviso avoided such unjust results.
Giving retrospective effect or directing to apply the rule to all the seniors irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust.
offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to Rule 3(3)(ii) of the First Amendment Rules was made.
[407 C] 3.02.
But for the proviso the operation of Rule 3(3)(ii) would be inconsistent with Sec. 3(1A) of the Act.
Equally though the doctrine 'Reading down ' is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of Rule 3(3)(ii)(a)&(b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitutions.
[407 D] 3.03.
The proviso to Rule 3(3)(ii) of the First Amendment Rules is consistent with section 3(1A) of the Act and it is not ultra vires of the power the Central Govt.
nor it offends articles 14 and 16(1) of the Constitution.
[409 A] 3.04.
There is a distinction between right and interest.
No one has a vested right to promotion or seniority, but an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
[408 E] 3.05.
Law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3) (ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
[410 C] State of Jammu & Kashmir vs T.N. Khosa, ; at 779; J. Kumar vs Union of India, ; at 463 and Union of India vs P.K Roy, 11968] 2 SCR 186 at 201 202, distinguished.
D.S. Nakara vs Union of India,.
; ; B. Prabhakar Rao vs State of A.P., [1985] 2 Supp.
SCR 379 and A.K Bhatnagar vs Union of India, [1991] 1 SCC 544, referred to.
Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution.
There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
[415 E] 4.02.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
[415 E] 4.03.
When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or 4.04.
When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
1415 F] 4.05.
When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
[415 G] 4.06.
When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted, have the views or objections, taken them into consideration, and there after, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstances it amounts to an action "after consultation".
[415 H, 416 A B] 4.07.
No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate or lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and cir cumstances whether the action is "after consultation", "was in fact consulted" or was it a "sufficient consultation".
[416 C] 4.08.
Where any action is legislative in character, the consultation envisages like one under Sec.
3 (1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified from need not again be communicated to all the concerned State Governments nor have prior fresh consultation.
Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people 's representatives when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
[416 D F] 4.09 The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
[416 G] 4.10 The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
[416 H] 4.11 The general consultation had by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
[417 B] 4.12 By operation of sub sec.
(2) of Sec. 3 the rules were laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliaments.
Thus the First Amendment Rules stood approved by the Parliament.
[417 C] 4.13 The failure to consult all the State Governments or Union Territories on the proviso to Rule 3(3) (ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
[417 D] Union of India vs Sankalchand Himatlal Sheth & Anr., ; ; R. Pushpam vs State of Madras, AIR 1953 Madras 392; State of U.P. vs Manmohan Lal Srivastava, ; at 542; U.R. Bhatt vs Union of India, AIR 1962 SC 1344; Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; ; N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; ; Mohd. Sujat Ali & Ors.
vs Union of India, ; at 469 471; Chandramouleshwar Prasad vs Patna High Court & Ors., ; at 674 675; Narain Sankaran Mooss vs State of Kerala & Anr, ; ; Naraindas Indurkhya vs State of M.P. & Ors., ; Hindustan Zinc Ltd. vs A.P. Electricity Board, Ors.; , ; Rollo & Anr.
vs Minister of Town & Country Planning, [1948] 1 All Eng.
Reports 13; Electher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496; Sinfield & Ors.
vs London Transport Executive, Law Reports 1970 Chancery Divn., Derham & Anr.
vs Church Commissioners for England, 1954 Appeal Cases 245 and Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, referred to.
Union of India & Ors.
vs Dr. section Krishna Murthy & Ors.,[1989] 4 SCC 689, distinguished. |
ion would meet the re quirement and at the end of such period the scheme is ex pected to become effectively operative.
The Tamil Nadu Board may undertake the supervision from January 1992, and it is directed that the State Government and the said Board to coordinate the implementation.
The Secretary of the Tamil Nadu Board who would be mainly in charge of the field job shall be paid by the State Government a sum of Rs.1,500 per month from January 1992, as an allowance to meet out of pocket expenses for the period he does the work as Secretary of the Board.
[362 G, H, 363 A] & ORIGINAL JURISDICTION: Writ Petition (Civil) No. 1262 of 1987 WITH Writ Petition (Civil) No. 13064 of 1983.
(Under Article 32 of the Constitution of India).
Har Dev Singh and R.K. Agnihotri for the Petitioners.
Raju Ramachandran, R.Mohan, Ms Shanta Vasudeva, P.K.Manohar, K.Swamy, Ms.
A.Subhashini and R.C.Kohli for the respondents.
360 The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
A letter petition received from the District Beedi Worker 's Union, Tirunelveli in the State of Tamil Nadu was treated as an application under Article 32 of the Constitution and notice was ordered intially to three factories referred to in the said letter and later to other beedi manufacturing units within the State.
In the letter, complaint was made about manipulation of records regarding employees, non payment of appropriate dues for work taken, failure to implement the provisions of the labour laws, prevalence of contract labour system etc.
There is a connected petition also relating to the same subject matter with different ancillary reliefs covering employment of child labour and the non implementation of the Beedi and Cigar Workers (Conditions of Employment) Act, 1956.
We have considered it appropriate to deal with both the applications together.
This Court by an Order dated 24th October, 1989 appointed a social organisation by name 'Society for Community Organisa tion Trust (SOCCO) ganisation for making appropriate investigation and circuated the State to the court.
After the Report was received an were given time to file their respones Tamil Nadu and the manu facturers were given time to file their response by way of affidavits.
This Court then directed that a scheme should be formulated for for consideration of the Court.
This court made an Order on 24th July, 1991 to the following effect.
"We gather from the submissions made at the bar that in the meantime some exercise has been undertaken for the purpose of finalising the Scheme.
Initially the state of Tamil Nadu has taken the lead but later Union of India has also go interested and meeting on a bigger ,scale for the purpose of finalising the Scheme is being arranged.
The attorney General is present in Court today.
We have also suggested to him that he may par ticipate in the proceedings to help the schem to be finalised as quickly as possible.
" Then came two Schemes, one by the petitioners and the other by the State of r Thamil Nadu.
By order dated October 8, 1991, the Court directedon the basis of consent of counsel that at a conference the terms should be settled for one Scheme to be adopted by the Court.
On 10 th October, 1991, on the representation of the parties, the Court made the following Order: "Pursuant to our earlier direction, the em ployers, employees and the State Government through their representatives met 361 and have sorted out, some of the differences.
Matters which are agreed to by all.
and as pects which are not agred to by the employers have been seperately shown.
A copy of this may be served on counsel for the Union of India present in the court today and he is given three weeks ' time to indicate the responses.
The appropriate Ministry of the Government of india to respond to the relevant aspects.
" Pursuant to this Order, the Under Secretary in the Minis try of Labour of the Union Government has filed an affidavit which we have examined.
The objection which have.
been especially refered to in the affidavit of the Central Government do not really surive after the matter is heard inasmuch as these are questions with which the union Government in not concerned and Under the constitutional scheme they relate to the power of the State Government.
w,e would like ' to dispose of these petitions with the following directions taken from the scheme as formulated by the petitioners and the State Government, 1.
The Beedi and Cigar Workers (Conditions of Employment) Rules 1969 should be strictly implemented ,and once that is done the evil of not furnishing the books to the home workers would be eradicated.
An establishment of the Regional Provident Fund Commissioner with full 'equipment for the purpopose of implementation of the Statute should be located within the area and the Regional Provident Fund commissioner should have directionS to enforce the Act in all aspects.
This establishment should start functioning within three months from now.
The labour laws as also the Beedi and Cigar Workers (Conditions of Employment) Act should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
Tobacco manufacturing has indeed health hazards.
Child labour in this grade should theirfore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State GovernmeAts Out within a perioed not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly imple mented.
362 5.
Contract labour system, it is alleged, is indispensable this trade.
The Union Government is directed look into this aspect of the matter and take its final decision one way or the other within six months from now.
Beedi trade is a flourishmg one.
Exploi tation of labour is rampant in this trade.
A governmental labour establishment should be located in the area with full complement to answer the requirements of the matter.
Since beedi manufacturing process is carried more outside the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, therefore, be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated only through the record maintained in the registers.
The and the which contain beneficial provisions should be implemented in the true spirit and since they are legislations of the Central Government, the machinery of the Central Government should be made operational in the area.
Grievance has been made that the pass books are not maintained in the names of actual workers.
This should be ensured.
The Welfare Fund should be properly administered after and in the case of death of a workman appropriate assistance should be extended out of the Fund quickly.
In view of the health hazard involved in the manufacturing process, every worker in cluding children, if employed, should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
We are of the view that the implementation of the scheme within the state in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid & Advice Board can be entrusted with this responsibility.
A three year period of such supervision, in our opinion, would meet the requirement and at the end of such period the scheme is expected to become effectively operative.
We, therefore, require the Tamil Nadu Board to undertake the super. 363 vision from January, 1992 and we direct the Tamil Nadu Government and the said Board to coordinate the implementa tion.
The Secretary of the Tamil Nadu Board Mr. Raja, who would be mainly in charge of the field job shall be paid a sum of Rs. 1,500 (fifteen) per month from January 1992, as an allowance to meet out of pocket expenses by the State Government for the period he does the work as Secretary of the Board.
We dispose of these cases with the directions indicated above and hope and trust that the authorities as also the employers and the employees would try to implement the directions in true spirit.
Liberty to apply.
G.N. Petitions disposed of. | These petitions relate to child employment, prevalence of contract labour system and the non implementation of .
This Court considered the petitions and appointed a Trust viz., Society for Community Organisation Trust for conducting appropriate investigation and to submit a report.
The Trust submitted its report, which was then circulated to the Respondent State Government and the beedi manufacturers.
On the direction of this Court for formulating a scheme, two Schemes cameto be formulated, one by the State Govern ment and the other by the petitioners.
This Court directed that the terms should be settled for one Scheme to be accept ed by the Court, and given time to the Union of India to respond to the same.
Union of India filed certain objec tions.
Rejecting the objections and disposing of the petitions, this Court, 358 HELD: 1.1 The Beedi and Cigar Workers (Condition of Employment) Rules, 1968 should be strictly implemented and once that is done the evil of not furnishing the books to the home workers would be eradicated.
[361 D, E] 2.
An establishment of the Regional Provident Fund Commissioner with full equipment for the purpose of imple mentation of the Statute should be located within the area and the Regional provident Fund Commissioner should have directions to enforce the Act in all aspects.
This estab lishment should start functioning within three months from now.
[361 E, F] 3.
The labour laws as also the should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
[361 F G] 4.
Tobacco manufacturing has indeed health hazards.
Child labour in this trade should therefore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State Government but within a period not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly implemented.
[361 G, 11] 5.
The Union Government is directed to look into the aspect whether contract labour system is indispensable in this trade and take its final decision one way or the other within six months from now.
[362 A] 6.
Beedi trade is a flourishing one and exploitation of labour is rampant in this trade.
A governmental labour establishment should he located in the area with full com plement to answer the requiretenants of the matter.
[362 F] 7.
Sincc Beedi manufacturing process is carried more out side the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, there fore be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated through the record maintained in the registers.
[362 C] 8.
The and the Beedi 359 Workers Welfare Fund Act, 1976 which contain beneficial provision should be implemented in the true spirit and since they are legislations of the Central Government, the machin ery of the Central Government should be made operational in the area.
[362 D] 9.
It should be ensured that pass hooks are maintained in the names of actual workers.
[362 E] 10.
The Welfare Fund should be properly administered and in the case of death of workman appropriate assistance should be extended out of the Fund quickly.
[362 E, F] 11.
In view of the health hazard involved in the manu facturing process, every worker including children, if employed should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
[362 F] 12.
The implementation of the scheme within the State in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid |
Civil Appeal No. 8244 of 1983.
From the Judgment and Order dated 22.7.1980 of the Kerala High Court in Second Appeal No. 171 of 1976.
E.M.S. Anam of the Appellants N. Sudhakaran for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Whether a junior member of the Tarwad, in Kerala, who redeems the mortgage and is in possession for more than 50 years is a `mortgagee holding the land comprised in a mortgage ' so as to acquire rights of tenant of tenant under Section 4(A) of the Kerala Land Reforms Act, is the legal issue that arises for consideration in this appeal, by successors of other members of the Tarwad who suit for partition was dismissed in second appeal by the High Court.
In the year 1045 (1870) a mortgage was executed by the Karnavan (akin to Manager) of the Tarwad, (somewhat like a joint family).
Two junior members, of the Tarwad, paid the amount in the year 1061 (1886), got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other member of the Tarwad, in whose favour equity of redemption, of the land in suit, was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under Section 4(1)(a) of the Land Reforms Act.
Since there was no dispute on basic facts, namely, redemption of mortgage by two junior members and their continuance in possession for more than fifty years on the date Section 4(1)(a) was added to the Land Reforms Act the rights of parties were decided, more, as a matter of law.
According to the trial court and first appellate court the junior members, as a result of getting the property released, were holder of special right under Marumakkathayam Law.
They could not be held to be mortgagee, therefore, they did not acquire any right under the Land Reforms Act.
But the High Court held otherwise, mainly because in 1962 when the Tarwad was partitioned the property was treated as under mortgage since equity of redemption for the same was given to the plaintiff appellant.
It was found that, even, in the plaint it was averred that in consequence of release the mortgagee right vested in the predecessor of defendants who were junior members of the Tarwad.
The High Court, therefore, held that the defendants being assignee of mortgage in possession for fifty years, on the date the Land Reforms Act was amended and Section 4(1)(a) was added by Act XXXV of 1969, were entitled to rights as tenants.
The High Court, thus, accepted the claim of defendants because the member of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
This, apart, it was held that junior member of the Tarwad paying off the debt of Tarwad becomes a mortgagee of the excess share in his own right.
But this enunciation, of law, was not accepted, as correct by a division bench of the Kerala High Court itself in Raghavan Nair vs Anandavally Amma, The question, therefore, is if a junior member of the Tarwad who redeems the properly, and gets release, is holder of special right only or he steps into the shoes of mortgagee.
Nature of right of a junior member in the Tarwad, a family corporation, in which every member male or female possesses equal right has been explained by this Court in Kochuni vs States of Madras & Kerala, ; at 1099, thus: " The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited.
The learned author says at p.7 thus: "The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on.
The issue of the male children do not belong to their tarwad but to the tarwad of their consorts.
The property belonging to the tarwad is the property of all the males and females that compose it.
Its affairs are administered by one of those persons, usually the eldest male, called the karnavan.
The individual members are not entitled to enforce partition, but a partition may be effected by common consent.
The rights of the junior members are stated to be (1) if males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the family property, (4) to see that the property is duly conserved, (5) to bar an adoption, and (6) to get a share at any partition that may take place.
These are what may be called effective rights.
Otherwise everyone is a proprietor and has equal rights.
" One of the rights according to this decision which vests in the junior member is to see that the property is duly conserved.
Such a right, obviously, includes a right to redeem the property by paying the debts outstanding against the Tarwad.
It is an incidence of co ownership or co proprietorship which flows from the nature of Tarwad.
But whether the person who thus conserves the property steps into shoes of mortgagee and holds the same rights and interests or he is a surety holding the property on behalf of the Tarwad subject to right of contribution has to be decided on general principles of mortgage as the customary law of Tarwad does not throw any light on it.
Mortgage has been defined in Section 58 of the as transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.
The definition brings out clearly the nature of mortgage.
It was understood and followed in same sense, even, before the Act came into force.
In Gopal vs Parsotam 1883 5 All. 121.
137 F.B. it was observed : "Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the (IV of 1882).
That definition has not in any way altered the law, but, on the contrary, has only formulated in clear language the notions of mortgage as understood by all the writers of text books on Indian mortgages.
Every word of the definition is borne out by the decisions of lndian Courts of Justice.
" It was not different where customary law prevailed.
Even in customary Marumakkathayam Law, governing section of people inhabiting the West Coast, the law of mortgage was understood in no different sense.
Since the transfer in a mortgage is, only, of interest and not of the entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interest.
A mortgagor may assign or transfer the equity of redemption or may even create second mortgage.
Similarly a mortgagee may assign his interest or create another mortgage.
What happens when a mortgagee assigns his interest in favour of another person? Since an assignor can pass interest that he has, the assignee becomes holder of the same interest that a mortgagee has.
In other words, he steps into the shoes of the mortgagee.
Can the same be said where a co mortgagor or anyone on behalf of mortgagor authorised under law, pays the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption the mortgage comes to an end by operation of law.
Consequently the relationship of mortgagor and mortgagee cannot subsist.
What then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes the owner, entitled to hold and possess the property.
But in equity the right is to hold the property till he is reimbursed.
In other words, he may hold the property in surety or he may bring the claim for contribution.
In Ganeshi Lal vs Joti Pershad, ; , it was held; ".
Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors. " Similarly the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
In Valliamma Champaka Pillay vs Sivathanu Pillay & Ors., [1980] I SCR 354 the principle was explained thus: "From what has been said above it was clear that where the is not in force and a mortgage with possession is made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity, have two distinct rights: Firstly, to be subrogated to the rights of the mortgagee discharged, vis a vis the non redeeming co mortgagor, including the right to get into possession of the latters portion or share of the hypotheca.
Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca, which belonged not to him but to the other co mortgagor.
It follows that where one co mortgagor gets the right to contribution against the other co mortgagor by paying off the entire mortgage debt, a co related right also accrues to the latter to redeem his share of the property and get its possession on payment of his share of the liability to the former.
This corresponding right of the ' non redeeming ' co mortgagor, to pay his share of the liability and get possession of his property from the redeeming co mortgagor, subsists as long as the latter 's right to contribution subsists " But these rights in equity, either in favour of the person 2who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
Even under subrogation, a legal concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as Section 92 in since 1929, the rights that are created in favour of a co mortgagor as a result of discharge of debt are 'so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems '.
What is the meaning of expression 'right as mortgagee '? Does a person who, in equity, gets subrogated becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitutee becomes a mortgagee.
The expression is, 'right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, 'as ' according to Black 's Legal Dictionary means, 'in the manner prescribed '.
Thus a co mortgagor in possession, of excess share redeemed by him, can enforce his claim against non redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
Therefore, a co mortgagor or a Junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reforms Act.
Legal position explained above does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgage subsisted.
None of these actions could effect the operation of law.
In the result this appeal succeeds and is allowed.
The judgment and order of the High Court is set aside and the order of the trial court decreeing the suit for partition is restored.
Parties shall bear their own costs.
N.P.V. Appeals allowed.
STATE bank of india and anr.
vs V. PARTHASARATHY ETC.
NOVEMBER 9, 1992 [KULDIP SINGH AND P.B. SAWANT, JJ.] Civil Services: State Bank of India Promotion to the post of Head Clerk Circular No. 42 Clause Three options Outside the city within city and within the same office Debarment on refusal of third and final offer Local Head Office and five other offfices to be considered as one Unit Final offer made in one such office Whether valid and debars the optees permanently on refusal to accept.
The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A] CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs. | Two junior member of a Tarwad (somewhat like a joint family) redeemed a mortgage executed in 1870 by the Karnavan (akin to Manager) of the Tarwad.
They paid the amount in 1886, got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other members of the Tarwad, in whose favour equity of redemption, of the suit land was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under section 4A(1)(a) of the Kerala Land Reforms Act, 1964.
The trial court and first appellate court held that the junior members, as a result of getting the property released, were holders of special right under Marumakkathayam Law and they could not be held to be mortgages and, therefore, they did not acquire any right under the Land Reform Act.
The High Court, however, held that the junior member being assignee of mortgage in possession for fifty years, on the date the Kerala Land Reform Act, 1964, was amended and Section 4(1)(a) was added by Amendment Act of 1969, were entitled to rights as tenants, and thus, accepted the claim of junior members, because the members of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
It also held that a junior member of the Tarwad, paying off the debt of Tarwad, became a mortgagee of the excess share in his own right.
Allowing the appeals of the sucessors of other members of Tarwad, this Court, HELD: 1.
A co mortgagor or a junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reform Act, 1964.
This position does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgages subsisted.
None of these actions could affect the operation of law.
[425 D E] 2.1 Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law.
Consequently, the relationship of mortgagor and mortgagee cannot subsist.
[423 E, F] 2.2 In law, the status of a person paying off debt to secure the property either with consent of others or on own volition is that the becomes the owner, entitle to hold and possess the property.
But, in equity the right is to hold the property till he is reimbursed.
In other words, the may hold the property in surety or he may bring the claim for contribution.
Similarly, the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
But these rights in equity, either in favour of the person who discharge the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
[423 F, G; 424 B] 2.3 A plain reading of Section 92 of the does not warrant a construction that the substitutee become a mortgagee.
The expression is `right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, `as ' means, `in the manner prescribed '.
[425 B C] 2.4 A co mortgagor in possession of excess share redeemed by him can thus enforce his claim against non redeeming mortgagor by exercising rights or foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
[426 C D] Raghavan Nair vs Anandavally Amma, , approved.
Kochuni vs State of Madras Kerala, A.I.R. 1960 S.C. 1080; Ganeshi Lal vs Joti Pershad, ; and Valliamma Champaka Pillay vs Sivathanu Pillay & Ors.
, ; , referred to . |
(Civil) No. 3 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. Nos.
4OO 402, 425, 492, 2493 2495, 2526 2528 of 1983 and 1256 of 1987.
Soli J. Sorabjee, Ravinder Narain, DA.
Dave and P.H. Parekh, for the Petitioners.
A.K. Ganguli, T.V.S.N. Chari Ms. Radha Rangaswamy and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by YOGESHWAR DAYAL J.
This order will dispose of the aforesaid writ petitions under Article 32 of the Constitution of India.
All these cases come under Item 18.1 and/or 18 III and/or 18E of the Tariff contained in the schedule attached to the Central Excise and Salt Act 1944 (hereinafter referred to as 'the Act ').
For facility of reference we are giving the facts of the case of Civil Writ Petition No. 3 of 1983.
144 This Writ Petition is stated to be covered by the decision of this Court in J.K Cotton Spinning and Weaving Mills Ltd. & another vs Union of India and others; , and the surviving prayer in the writ petition is to declare that the duty of excise in respect of Tariff Item Nos. 18 (A) (a), 18 (III) (ii) and 18E is to be levied and collected on the weight of the unsized yarn and not on the basis of the weight of the sized yarn".
Before we deal with the objections of the learned counsel for the respondents, it would be useful to examine the points which were involved in the aforesaid case of J.K Cotton Mills.
The appellants in the said case had a composite mill wherein it manufactured fabrics of different types.
In order to manufacture the said fabrics, yarn was obtained at an intermediate stage.
The yarn so obtained was further processed in an integrated process in the said composite mill for weaving the same into fabrics.
The appellants did not dispute that the different kinds of fabrics which were manufactured in the miff were liable to payment of excise duty on their removal from the factory.
They also did not dispute their liability in respect of yarn which was also removed from the factory.
It was the contention of the appellants therein that no duty of excise could be levied and collected in respect of yam which was obtained at an intermediate stage and, thereafter subjected to an integrated process for the manufacture of different fabrics.
On a writ petition, by those appellants, the Delhi High Court by its judgment dated 16th October, 1980 held that yarn obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise.
It was the case of the appellants that in spite of the said decision of the Delhi High Court, the Central Board of Excise had wrongly issued a circular dated 24th September, 1980 purporting to interpret Rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ') and directing the subordinate excise authorities to levy and collect duty of excise in accordance therewith.
In the said circular, the Board had directed the subordinate excise authorities that use of goods in manufacture of another commodity even within the place/premises that have been specified in this behalf by the Central Excise Officers in terms of the powers conferred under Rule 9 of the Rules, will attract duty".
As the said circular was being implemented to the prejudice of the appellants, they filed the writ petition before the Delhi High Court, inter alia, challenging the validity of the said circular.
During the pendency of the writ petition in the Delhi High Court, the 145 Central Government by Notification No. 20/82 C.E. dated 20th February, 1982 amended Rules 9 and 49 of the Rules.
Section 51 of the Finance Act provides that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. 28th February, 1944.
After the said amendments of the Rules with retrospective effect, the appellants amended the Writ petition and challenged the constitutional validity of Section 51 of the Finance Act, 1982 and of the amendments to Rules 9 and 49 of the Rules.
The High Court came to the conclusion that section 51 of the Finance Act, 1982 and Rules 9 and 49 of the Rules, as amended, were valid.
It was further held that the retrospective effect given by Section 51 of the Finance Act, 1982 will be subject to the provisions of Sections 11A and 11B of the Act.
It was further held that the yam which is produced at an intermediate stage in the mill of the appellants therein and subjected to the integrated process of weaving the same into fabrics, will be liable to payment of excise duty in view of the amended provisions of Rules 9 and 49 of the Rules.
But the sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose, does not change the nature of the commodity as yarn.
The Writ Petition was accordingly allowed in part, as stated aforesaid, and it was this decision which came up in appeal before this Court.
This Court agreed with the Delhi High Court and upheld the vires of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982.
This Court also agreed with the High Court that the retrospective effect given by section 51 of the Finance Act, 1982 will be subject to the Provisions of Sections 11A and 11B of the Act.
This Court also agreed with the view of the High Court that the yarn which is produced at an intermediate stage in the mill of the appellants and subjected to integrated process of weaving the same into fabrics, would be liable to payment of excise duty in view of the amended provisions of the Rules, But, this Court further agreed with the High Court, the sized yarn which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose does not change the nature of the commodity as yarn.
This Court observed at pages 720 and 721 of the report as under: "In the instant case, the appellants are liable to pay excise duty on the yarn which is obtained at an intermediate stage and, thereafter, further processed in an integrated process for weav 146 ing the same into fabrics.
Although it has been alleged that the yam is obtained at an intermediate stage of an integrated process of manufacture of fabrics, it appears to be not so.
After the yarn is produced it is sized and, thereafter, subjected to a process of weaving the same into fabrics.
Be that as it may, as we have held that the commodity which is obtained at an intermediate stage of an integrated process of manufacture of another commodity, is liable to the payment of excise duty, the yarn that is produced by the appellants is also liable to payment of excise duty.
In our view, the High Court by the impugned judgment has rightly held that the appellants are not liable to pay any excise duty on the yarn after it is sized for the purpose of weaving the same into fabrics.
No distinction can be made between unsized yarn and sized yarn, for the unsized yarn when converted into sized yarn does not lose its character as yarn.
" The petitioner herein on the other hand approached the Gujarat High Court and the Gujarat High Court by its judgment dated 30th July, 1981 had, before the issuance of the impugned circular dated 24th May, 1982, taken the view that no duty can be levied on the weight of sizing material contained in yarn, falling under Tariff Item No. 18 111 or 18 E and directed that the duty levied should be refunded because the duty has been levied not on the basis of yam at the spindle stage, but on the weight of the sized yarn.
After the decision of the Gujarat High Court the Central Government had amended Rules 9 and 49 of the Rules and Section 51 of the Finance Act, 1982, had made them effective retrospectively.
The present writ petition filled in this Court had inter alia pleaded that the retrospective amendment of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982 be declared as ultra vires of the Constitution.
This Court upheld the validity of the Section as well as the retrospective applicability of the Rules but took the view that this would be subjected to the provisions of Sections 11A and 11B of the Act and at the same time declared that the appellants were not liable to pay excise duty on the yarn after it is sized for a purpose of weaving the same into fabrics.
It will be noticed that under items 18.1, 18.III and 18E the measure is "per kilogram".
At this stage items 18.1, 18.111 and 18E of the Tariff may be noticed 147 "18.
I. Man made fibres, other than mineral fibres : (i) Non cellulosic Eighty five rupees per kilogram (ii) Cellulosic Ten rupees per kilogram '18.III.
Cellulosic spun yarn: Yam, in which man made fibre of cellulosic origin predomi nates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power (i) not containing, any manmade fibres of non cellulosic origin.
six paise per count per kilogram (ii) containing man made fibres of non cellulosic origin.
Eighteen Rupees per kilogram.
Explanation 1: "Count" means the size of grey yarn (excluding any sizing material) expressed in English Count.
Eighteen Rupees per kilogram "18E.
Non cellulosic Spun Yam: Spun (discontinuous) yarn, in which man made fibres of noncellulosic origin, other than acrylic fibre, predominate in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.
Twenty four rupees per kilogram.
148 Explanation : Explanation III under sub item III of item No. 18 shall, so far as may be, apply in relation to this item as it applies in relation to that item.
" It will be noticed from the aforesaid items that the measure for imposition of excise duty is by weight "per kilogram" in all the three items, namely 18.1, 18.111 and 18E. Therefore, the aforesaid decision in J.K. Couon Mills will be applicable to all types of cases under Items 18.1, 18.111 and 18E. After the decision of the Gujarat High Court, instead of granting the refund, the Superintendent of Central Excise, Range IV, Division V, Ahmedabad, issued impugned notices, collectively annexed as Annexures 'B ' and 'C ' to the present writ petition in pursuance of the directives dated 24th May, 1982 which are subject matter of challenge in the present writ petition.
On behalf of the respondents Mr. Ganguly learned counsel submitted that this Hon 'ble Court ought not to entertain the present writ petition under Article 32 of the Constitution.
He, however, could not dispute that the matter is directly covered by the decision of this Court in the aforesaid case of J.K Cotton Mills.
These petitions were admitted to hearing in view of the pendency of the aforesaid appeal in the case of J.K Cotton Mills and in view of the decision of the Delhi High Court which was appealed against in the aforesaid case of J.K Couon Mills.
Practically nine years have gone by now and the impugned show cause notices have been issued by virtue of the same directives which were subject matter of the aforesaid case of J.K.cotton Mills.
In view of this peculiar fact it would not be in the interest of justice if the parties are directed to contest the individual show cause notices issued by the respondents in view of the aforesaid directives.
In order to avoid multiplicity of proceedings involving time and expense, we quash the impugned notices in all the cases.
The result is that all the aforesaid writ petitions are accepted and the impugned show cause notices are quashed.
There will be no order as to costs.
G.N. Petitions allowed. | The petitioners challenged before the High Court the levy of excise duty on the weight of the yarn sized for the purpose of weaving them into fabrics.
The High Court held that no duty could be levied on the weight of the sizing material contained in yarn, and directed that the duty should be refunded since it has been levied not on the basis of yarn at the spindle stage, but on the weight of the sized yarn.
After the said judgment, the Central Government by Notification dated 20.2.1982 amended Rules 9 and 49 of the and Section 51 of the Finance Act, 1982 with retrospective effect.
In accordance with the said Notification, Central Excise Department issued show cause notices to the petitioners.
The constitutional validity of these amendments are challenged by the petitioners in the present Writ Petitions filed before this Court.
On behalf of the petitioners, it was contended that their cases were covered by the decision of this Court in J.K. Cotton Spinning and Weaving Mills Ltd. & Anr.
vs Union of India and Ors., ; and that excise duty could be levied on the weight of the unsized yarn and not on the basis of the weight of the sized yarn.
Allowing the petitions, this Court HELD: 1.1.
The Vires of Rules 9 and 49 of the Central Excise Rules, 1944 as well as section 51 of the Finance Act, 1982 and the retrospective 143 application of the same has already been upheld by this Court.
[145E] 1.2.
The sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty, for the unsized yam which is sized for the purpose, does not change the nature of commodity as yarn.
Thus excise duty cannot be levied on the weight of the yarn after the yarn is sized for the purpose of weaving the same into fabrics.
[145G] 13.
Practically nine years have gone by since the show cause notices were issued by virtue of the same directives which were subject matter of J.K Cotton Mills case.
In view of this peculiar fact it would not be in the interest of justice if the petitioners are directed to contest the individual show cause notices issued by the respondents.
In order to avoid multiplicity of proceedings involving time and expense, the show cause notices in all these cases are quashed.
[148F G] J.K Cotton Spinning and Weaving Mills Ltd & Anr.
vs Union of India & Ors.
, ; , applied. |
(C) Nos.
1189798 of 1992 etc.
From the judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos.
1152 & 1157 of 1992.
V.R. Reddy, Addl.
Solicitor General, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh, K.K Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, K.N. Bhat, T.R. Andhyarujina, C.V. Subba Rao, P.P. Singh, Mrs B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms Sunanda Roy, Ms. section Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P. K. Ganguli, Manoj K. Das, Amit Prabhat, Tripurary Roy, K.L. Mehta, section Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N. Najjunda Reddy for the appearing parties.
The following Order of the Court was delivered by 116 K. JAYACHANDRA REDDY, J. All these Special Leave Petitions arise out of the common judgment of the High Court of Delhi in Civil Writ Petitions Nos. 1 152 and 1 157/92.
We heard these matters for considerable length of time.
Eminent counsel appearing on both sides advanced detailed arguments.
After the conclusion of the hearing it was represented that having regard to the constraint of time factor, namely that the contracts with the Railways entered into by the manufacturers who are parties, have to be completed very soon the judgment in these matters has to be delivered as early as possible or at least the conclusions have to be given soon.
We are conscious of the fact that it is likely to take considerable time to deliver a detailed judgment.
However having gone through the records carefully and after due consideration of the various arguments advanced, we have reached the conclusions given hereunder and we propose to deliver the detailed judgment at a later stage giving all the reasons in support of these conclusions.
We, however, think it necessary to state a few relevant facts and the issues involved in a concised form before we set out our conclusions.
Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons.
Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability.
There are 12 suppliers in the field who have been regularly supplying these items.
Two new firms Simplex and Beekay also entered the field.
Among them admittedly M/s H.D.C., Mukand and Bhartiya are bigger manufacturers having capacity to manufacture larger quantities.
On 25, 10.91 a limited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well as the above two new entrants for the year namely from 1.4.1992 to 31.3.93.
The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M.
It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railway reserved the right to order additional quantity upto 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The offers were to remain open for a period of 90 days.
On that day the tenders were opened in the presence of all parties.
The price quoted by the three manufacturers 117 i.e M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666 per bogie while other tenderers quoted between 83.000 and 84,500 per bogie.
After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction.
of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel.
The tenders were put up and and placed before the Tender Committee of the Railways which considered all the aspects.
The committee concluded that three of the tenderers namely M/s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed acartel.
The Tender committee also noted that the rates quoted by them were the lowest.
Taking into consideration the reduction of Rs. 1500 as a result of the concessions in respect of the reduction of custody duty on the import of steel scrap and dispensation of the freight equalisation fund for steel, the Tender Committee concluded that the reasonable rate would be Rs.76,000per bogie.
On the question of distribution of quantities to the various manufacturers the Tender committee decided to follow the existing procedure.
The Tender Committee.
signed these recommendations on 4.2.92 but on the same day the Member (Mechanical) of the Committee received letters from M/s H.D.C. and Mukand.
M/s H.D.C. in its letter stated that in view of the concessions and also on the basis that per kg.
rate of casting per bogie could be reduced from Rs.37.50 to Rs.29 the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called.
M/s Mukand in its letter also offered to substantially reduce the prices and they would like to co operate with the Railways and the Government and bring down the prices as low as possible and asked for negotiations.
Though this was post tender correspondence, the Department felt that the offers made by M/s H.D.C. and Mukand could be considered.
The whole matter was examined by the Advisor (Finance) in the first instance and by an elaborate note he observed that the need for encouraging open competition to improve quality and bring down costs has been recommended by the Government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not be useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the 118 existing policy would take time, the present tender can be decided on the basis of the existing policy.
With this noting the file was immediately sent to the Member ( Mechanical), the nest higher authority.
He with some observation, however recommended the acceptance of the Tender Committee 's recommendations.
The file was then put up to Financial Commissioner, He noted that the Tender Committee was convinced that the three manufacturers who quoted identical price of Rs. 77,666 had formed a cartel.
He also considered the offers made by M/s H.D.C. and Mukand and observed that these three manufacturers who quoted a cartel price intended to get a larger order on the basis of such negotiated price which would eventually nullify the competition from the other manufacturers and lead to their industrial sickness and subsequently to monopolistic price situation.
lie, however, approved the Tender committee 's recommendations that a counter offer of Rs. 76,000 may be accepted but in the case of M/s H.D.C. a price lower by Rs. 1 1,000 may be offered as per their letter dated 4.2.92.
lie also recommended that the two manufacturers M/s. Cimmco and Texaco may the given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may he applied to all manufacturers except the three who have formed a cartel.
He also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. 79,305.
He also made certain other recommendations and finally concluded that the post tender letters may be ignored and that for short term gains the Department can not sacrifice long term healthy competition.
After these recommendations of the Financial commissioner the file was put up to the approving authority i.e. the Minister for Railways, who in general agreed with the recommendations of the Financial Advisor.
He also noted that these three manufacturers have formed a cartel.
He also noted that subsequent to the Financial commissioner 's note, besides M/s H.D.C. and Mukand has also offered to reduce the price by 10% or more vide their letter dated 19.2.92 if called for negotiations.
Taking these circumstances into consideration the Minister ordered that all these three firms may be offered a price lower by Rs. 1 1,000 with reference to the counter offer recommended by the Tender committee and the quantities also be suitably adjusted so that the cartel is broken.
The Minister also noted that as a result of this a saving of about Rs. 11 119 crores would be effected.
In his note, the Minister also ordered redistribution of the quantities.
Heal so ordered that3O% options should straightaway be exercised.
After the approving authority took these decisions,the file went to he Chairman Railway Board for implementing the decisions.
The noted that action will be taken as decided by the Minister but added that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more.
The file was then again sent to and was considered by the financial Commissioner who noticed this endorsement made by the Chairman, Railway Board.
He however noted that so far all the other firms are concerned it is Rs.3305 less than the present contract price but it would not be equitable to offer the lower price put forward by the three manufacturers as it would make the other units enviable and that incidentally the price of ' Rs. 76,000 now proposed to be counteroffered to the other firms is also in line with the recommendation of the Tender committee.
The, however, noted that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing.
Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the render Committee and directed that the same may be implemented.
In view of this final decision taken by the approving authority a telegram was issued to the three manufacturers giving them a counter offer of Rs. 65 000 per bogie.
The counter offer was also made to the other nine manufacturers at the rate of Rs. 76,000per bogie namely the price worked out by the Tender committee.
Soon after the receipt of this telegram dated 18.3.92 M/s H.D.C. and Mukand filed writ petitions in the Delhi High Court challenging the so called discriminatory counteroffer.
M/s Bhartiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court.
In the writ petitions filed by M/s H.D.C. and Mukand, the High Courts stayed the operation of the telegram dated 18.3.92 and issued notice to the Union of India and to the Executive Director and Director of the Railways (Stores) who figured as respondents in those writ petitions.
M/s H.D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were not prepared to accept the counter offer at the rate of Rs.65,000 and 120 instead they offered to supply the bogies at the rate of Rs 67,000) per bogie.
The Railways accepted this offer and intimated M/s H.D.C. and Mukand accordingly.
The High Court, in an interlocutory stage pending the writ petitions, passed an order on 2.4.92 directing the Ministry to accept the allocation of bogies recommended by the Tender committee and to pay a price at the rate of Rs. 67,000 only per bogie and that would be subject to the final decision of the writ petitions.
Being aggrieved by this order, the Railways filed a petition for special leave to appeal No. 5512/92 and this court while refusing to interfere at that interlocutory stage made the following observations on 28.4.92: "However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court (including the petitioners in the High Court in the writ petition), seek an "on account" payment representing the difference between the sum of Rs. 67,000 indicated as price by the High Court and the sun of Rs 76,000 contemplated by the Railways; the order of the High Court shall not prohibit the Government making such on account payment to such suppliers on each wagon on the condition that the said on account payment of Rs. 9,000 per bogie should be covered by a bank guarantee for its prompt repayment together with interest at 20% per anum in the event the on account payment cannot be observed in the price structure that may ultimately come to be determined pursuant to the final decision in the writ petitions.
The special leave petitions are disposed of accordingly.
" Thereafter the High Court took up the writ petitions for final hearing and by the impugned judgment allowed the writ petitions filed by M/s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs. 67,000 per bogie and also set aside the quantity allocation and directed that the same should be considered 121 afresh on a reasonable basis and pending such fresh consideration future supplies should he made on the basis of the recommendations ofthe Tender Committee.
In the course of the judgment, the High Court also made certain observation to the effect that the decision of the approving authority is arbitrary and that this Government has no justification to offer a higher price than the market price to any supplier to rehabilitate it.
It was further observed that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations.
The learned judges of the High Court also observed that they failed to understand as to why the Railways authorities could not initiate negotiations with those manufacturers who had offered to reduce their offer which could result in saving crores of rupees to the Railways.
Aggrieved by this judgment of the High Court the Union of India filed S.L.P. (civil) Nos. 1 1897 98/92.
Before the High Court in the two writ petitions filed by M/s H.D.C. and Mukand the other manufacturers figured is respondents Nos. 4 to 12 and M/s Bharatiya otherwise Known as Besco figured as respondent No. 13.
The other S.L.Ps. are filed by those nine manufacturers.
M/s Bharatiya, respondent No. 13, has not questioned the judgment of the High Court.
As mentioned above M/s Bharatiya filed a separate writ petition No. 1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court.
The same also was disposed of in terms of the judgment in the, other two writ petitions Nos. 1 152 and 1157/92.
But they have not questioned the same.
Consequently M/s Bhartiya figures as a respondent before us in the SLP filed by the Union of India.
Before we proceed further.
we would like to briefly indicate the main submissions made on behalf of all the parties to the extent relevant and important for arriving at the necessary conclusions.
Learned counsel have advanced arguments on several other aspects which are incidental.
We propose to deal with them and give our findings in our detailed judgment at a later stage.
Mr. Kapil Sibal, learned counsel appearing for the Union of India submitted that the three big manufacturers i.e. M/s H.D.C. Mukand and Bhartiya formed a cartel and the same is evident from the fact that each one of them quoted an identical price which is a cartel price; and that the Government in the matters of economic policy for good and sufficient reasons and in the public interest can reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers and that the dual pricing adopted 122 by the Railways under the circumstances is not discriminatory.
In this context it is also submitted that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs. 67,000 per bogie was not reasonable and workable and it was only a cartel price and that Rs. 76,000 was the reasonable price and on that basis made acounter offer to other manufacturers except to these three big manufacturers.
The Railways had no option except to accept the offer of Rs. 67,000 by the three big manufacturers as they took firm stand that the price is reasonable and that they would be able to supply on that rate and thereby a binding contract came into force so far these three manufacturers are concerned.
Regarding the allocation of quantities the Railways have taken into consideration all the relevant factors namely that three of the nine manufacturers were BIER companies and the two others are also wagon builders having their entire business with Railways only and on that rational basis the quantities were allotted.
It is also his submission that since the three big manufacture originally offered a cartel price and ill of them later apparently offered Rs. 67,000/ , in unworkable price, the Railways felt that they attempted to destroy the competition.
Therefore they were not given larger share.
Learned counsel relied on several authorities particularly touching the scope and ambit of Article 14 and the power of the court under Article 226 of the constitution of India.
Mr. Sibal also strongly contended that the High Court grossly erred in making certain observations against the Railways namely that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations and somewhat similar observations in respect of the decision or the Railways on the question of price fixation.
The other counsel appearing for the nine smaller manufacturers in general supported these submissions and also highlighted certain aspects in their individual cases.
Shri K.K. Venugopal.
learned counsel appearing for the respondent namely M/s H.D.C. submitted that the award of the contract for supply of bogies was vitiated by malafides and that disproportionate allotment of quota of bogeis and dual pricing were based on malafides and extraneous considerations violating Article 14 of the Constitution.
tie further submitted that the reasons put forward on behalf of the Railways are disingenuous and bereft of rationale.
The supported the finding of the High Court that the price should he fixed at Rs. 67,000 123 for every manufacturer.
Shri Nariman, learned counsel appearing for M/s Mukand, another respondent submitted that the dual set of counter offers and allocation of disproportionate quantites are highly arbitrary and that the practice and policy of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy is arbitrary and unreasonable.
He further submitted that the making of law tender offers can not by itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
Shri Shanti Bhaushan, learned counsel appearing for M/s. Bhartiya submitted that the Tender Committee erred in treating M/s. Bhartiya also as a member of the cartel and that the allotment of quantities has been arbitrarily reduced.
He however made one special submission namely that M/s Bhartiya never made an offer of Rs. 67,000 and there is nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they are, willing to supply at the, rate of Rs. 67,000 and that they should not be treated by treated differently from the other nine manufacturers.
Taking all the aspects into consideration and for the purpose of giving our conclusions it may broadly be stated that M/s H.D.C. and Mukand gave post tender offers at a low pride with the hope that they would get a larger quantity allotted.
M/s Bhartiya also fell in line with them though did not specifically put it in writing.
But during the course of the hearing of the writ proceedings, it was represented on behalf of M/s Bharatiya that they would be willing to supply at Rs. 67,000 if the court fixes that price.
This is noted by the High Court in its judgment.
The Railways authorities however concluded that in the beginning itself these three have formed a cartel and the price quoted by them was only a cartel price.
The note by the Financial Commissioner is somewhat elaborate on this aspect and the Minister for Railways, the competent authority agreed with him and also directed that the quantities be suitably adjusted so that the cartel is broken.
He also took into consideration the fact that some of the smaller units are sick and 124 therefore they should be given a larger quantity to enable them to rehabilitate.
The other recommendations of the authorities were also accepted.
However in giving any directions we must bear in mind that the contract period is going to end shortly and till now all the manufacturers have been manufacturing and supplying pursuant to the interim orders.
We may indicate at this stage that we shall discuss all these aspects later in detail in our judgment.
After due and careful consideration of all the aspects, our conclusions are as follows: (1) There is no enough material to conclude that M/s H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the said three manufacturers for which there is some basis, the conclusion that the said manufacturers had formed a cartel does not appear to be correct.
However since the offers of the said three tenders were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of the decision making body including the Minister of Railways.
Though there is no enough of material to establish formation of a cartel as is understood in the legal parlance but at the same time it cannot be contended that such an opinion entertained by the concerned authorities including the Minister was perse malicious or was actuated by any extraneous considerations.
After a careful examination of the entire record and facts and circumstances of the case we are of view that all the Railway authorities including the Minister acted in a bonafide manner in taking the stand that the three manufactures formed a cartel.
(2) The current contract price based on the updated price is Rs. 79,305 The three manufacturers offered at Rs. 77,6000. 'Faking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
In the post tender correspondence M/s H.D.C. and Mukand offered to supply at a price of Rs. 67,000 per bogie, but no particulars as to how it would be reasonable, were given.
However they have come forward before us with some particulars.
M/s Bhartiya did not gave any such offering writing, but fell in line with them and did not choose to question the order of the High court fixing the price at Rs. 67,000 The Railways were of the view that 125 it is an unreasonable price an smaller manufacturers cannot supply at that price and consequently they will get extinguished resulting in a monopoly by the big manufacturers.
The High court has directed that supply should be at Rs. 67,000 by everyone.
Taking into consideration all these aspects we are of the view that the fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving_ necessary protection to the smaller manufacturers.
Consequently we set aside this direction of the High Court and direct the Tender Committee to reconsider the question of fixation of reasonable price.
The Tender committee shall consider the offer of Rs, 67,000 made by M/s H.D.C. and Mukand along with the data that would be given by them in support of that and the percentage of profits available to all the 3 manufacturers and other relevant aspects and then fix a reasonable price.
at which the manufacturer would be able to supply.
The Tender Committee shall within two weeks from today complete the process.
(3) At a belated post tender stage Railways authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under these circumstances is bonafide and not malafide.
However.
dual pricing on principle may not appear to be rational since the railways have been following certain formula in fixing the price which is made applicable to all the manufacturers, But under certain circumstances dual pricing may be reasonable.
In the instant case M/ s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bharatiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers just be deemed to be in a position to supply at the rate of Rs. 67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
126 (4) If the price that is to be fixed by the Tender Committee as directed by us happens to be more than Rs. 67.000 then that would be applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(5) The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall he deemed to be final and the respective contracts shall be deemed to be concluded so for the price is concerned.
(6) Now coming to the allotment of quota of bogies the Tender Committee made recommendations on the basis of the existing practice.
The Minister of Railways in his ultimate decision has made some variations taking into consideration tile recommendations of the Financial commissioner and other authorities.
The has however not accepted these recommendations fully.
In making these variations, the Minister accepting ultimately reduced the allotment of quota to the said three tenderers substantially by way of reprisal.
In view of our finding that the formation of an opinion that cartel was formed had no firm factual foundation; such a reduction of quota by way of reprisal can not be justified.
we are however, not inclined to accept the contention made on behalf of M/s H.D.C., Mukand and Bhartiya that no departure from the recommendations of the Tender committee is permissible in the absence of any established policy which was also known by the tenderers.
From the records it appears that in the past also there have been such variations.
In our view, the Minister of Railways as the final authority.
after considering various relevant factors, may he justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case.
it appears to us that all the smaller manufacturers deserving a favourable treatment in the matter of allotment of quota, have not been equally treated in the sense that one or, two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
We hope that in future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
127 (7) In view of the interim orders, during the pendency of writ petitions before the High Court, and until now all the manufacturers have been supplying as per the allotments by the Tender Committee.
The High Court in its judgment finally directed the Railways to reconsider the allocation on reasonable basis.
It is submitted on behalf of the smaller manufacturers that they have made necessary manufac turing arrangements on the basis of the final allotment.
On behalf of the M/s H.D.C., Mukand and Bhartiya, it is submitted that their legitimate quotas also are cut short and that they are entitled to larger quantities in view of the low price offered by them.
Having considered the contentions made by all the manufacturers direct that the there manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender committee.
We, however.
do not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
We leave it to the Railway authorities to make necessary adjustments next year in the matter of allocation of quantities to them taking, into consideration these allotments given to them this year.
To that extent we modify the order of the High Court.
(8) It will he open the Railways to exercise 30% option, if not already exercised.
(9) Taking all the circumstances and the time factor into consideration the time to complete the supply is extended upto 31.3.1993.
Accordingly these Special Leave petitions are disposed of.
There will he no order as to costs.
V. P. R. SL Ps disposed of. | The Railway Board entered into contracts with 12 manufactur ers for the supply of cast steel bogies to be used for building the wagons, every year.
Among them H.D.C., Mukand and Bhartiya had capacity to manufacture larger quantities.
In 1991 two new firms Simplex and Beekay also entered the field.
For the year 1992 93, a tender notice for procurement of 1900 cast steel bogies was issued to the Regular suppliers as well as to Simplex and Beekay the new entrants.
The tender notice stated therein that the last date for submission of offers was 27.11.91 by 2.30 P.M. and the tenders to be opened at 3 P.M. on the same day; that the price was subject to the price variation clause and the base date for escalation purpose was 1.9.91; that the Railways reserved the right to order additional quantity upto 30 % of the quantity ordered during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The price quoted by H.D.C., Mukand and Bhartiya firms was identical, i.e. Rs. 77.
666 per bogie.
Other tenderers price varied between Rs. 83.000 and Rs. 84, 500 per bogie.
The Government 's announcement of reduction of custom duty 109 on the import of steel scrap and dispensation of freight equalisation fund for steel came after the opening of the tenders and before the finalisation of the tenders.
The Tender Committee recommended that the three manufac turers who quoted an identical lowest rates without any cushion for escalation between 1.7.91 and 1.9.1991 formed a cartel; that the reasonable rate per bogie was to be Rs. 76,000 by taking into consideration of the two concessions announced by the Government; and that the existing procedure to be followed on the question of distribution of quantities to the tenderers.
On 4.2.92, the Committee signed the recommendations.
On the same date, the Member (Mechanical) of the Committee received letter from H.D.C. and Mukand, wherein the tenderers offered to substantially reduce the prices because of the concessions.
The Advisor (Finance) examined the matter and observed that if it was intended to continue the existing policy of fixing a rate and distributing the order among all the tenderers, then negotiations might not be useful; that review of the existing policy would take time; and that the present tender be decided on the basis of the existing policy.
The Member (Mechanical), the next higher authority recom mended the acceptance (if the Tender Committee 's recommendation.
The Finance Commissioner approving the recommendations of the committee, noted that the tenderers who quoted the identical rates had formed a cartel; that a counter offer of Rs. 76,000 be accepted but in the case of H.D.C., a price lower by Rs.1 1,000 to he offered as per their post tender letter dated 4.2.92; that the present formula regarding the distribution of quantities be applied to all tenderers except the three who formed a cartel; that some recoveries from the three tenderers he made on the basis of their letters wherein they quoted prices which were much less than the updated price on 1.9.91 of Rs.79.305; that the post tender letters be ignored and that for short term gains the Department could not sacrifice long term healthy compensation.
110 The Minister for Railways, the approving authority agreeing with the recommendations of the Finance Advisor, noted that the three tenderers had formed a cartel and they he offered a price lower by Rs. 1 1.000 with reference to the counter offer recommended by the Tender Committee and the quantities also be suitable adjusted to break the cartel and ordered for redistrib ution of the quantities exercising 30% option.
The Chairman, Railway Board, when received the file for implementation of the orders from the Minister, noted that action be taken as decided by the Minister, which had resulted in dual pricing, namely, one to the three tenderers and the higher one to the other tenderers and therefore, the Minister to consider whether they could counter offer the lower price to all the tenderers as that would result in saving much more.
When the matter was sent to the Finance Commissioner, he observed that as some of the units were sick units and owe a lot of money to the nationalised banks; it would be in the national interest to accept dual pricing.
Therefore, the rile was again put up to the approving authority.
He agreed with the recommendations of the Commissioner and the Tender Committee and directed for their implementation.
As per the final decision taken by the approving authority the three tenderers were issued a counter offer of Rs.65,000 per bogie by telegram and other tenderers were given a counter offer of Rs.76,000/ per bogie.
After the receipt of the telegram dated 18.3.92 H.D.C. and Mukand riled writ petitions in the Delhi High Court challenging the discriminatory counter offer.
Bhartiya had riled a writ petition in the Calcutta High Court.
It was withdrawn and another writ petition was riled later in the Delhi High Court.
In the writ petitions filed by H.D.C.and Mukand, the High Court issuing notice to the respondents,stayed the operation of the telegram dated 18.3.92.
111 In reply to the telegram, H.D.C. and Mukand also wrote to the Minister of Railways offering to supply the bogies at the rate of Rs.67.000 per bogie, which was accepted by the Railway.
Pending the writ petitions, the High Court passed an interlocutory order, directing the Railway to accept the allocation of bogies recommended by the Tender Committee at the rate of Rs.67.000 per bogie subjected to the final decision in the writ petitions.
The Railway 's petition for special leave to appeal filed against the interlocutor%, order of the High Court was dismissed.
Thereafter, the High Court allowed the writ petitions riled by H.D.C and Mukand and directed that all the tenderers should make the supplies at the rate of Rs. 67.000 per bogie and allocation of quantity to be considered afresh on a reasonable basis.
The Union of India filed appeal by special leave (S.L.P. (c) Nos. 11897 98/92) against the judgment of the High Court.
The other SLPs.
were riled by the affected tenderers who figured as respondents Nos. 4 to 12 in the writ petitions before the High Court.
The High Court disposed of Bharatiya 's writ petition in terms of the judgment in the other two writ petitions (W.P.Nos. 1152 and 1157/ 92) wherein they were shown as respondent No. 13).
As Bharatiya alias Besco did not question the judgment of the High Court, they were arrayed as respondent in the S.L.P. riled by the Union of India.
The Union of India submitted that the three big manufactures i.e. M/s H.D.C., Mukand and Bhartiya formed a cartel and the same was evident from the fact that each one of them quoted an identical price which was a cartel price '; that the Government in the matters of economic policy for good and sufficient reasons and in the public interest could reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers; that the dual pricing adopted by the Railways under the circumstances was not discriminatory; that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs.67,000 per bogie was not reasonable and, workable and it was only a cartel price and that Rs. 76,000 was the reasonable price 112 and on that basis made a counter offer to other manufacturers except to these three big manufacturers; that the Railways took into consideration all the relevant factors and on rational basis the quantities were allotted; and, therefore, they were not given larger share.
The nine smaller manufacturers in general supported the sub missions of the Union of India.
The respondent M/s H.D.C. supporting the finding of the High Court submitted that the award of the contract for supply of bogies was vitiated by mala fides and that disproportionate allotment of quota of bogies and.
dual pricing were based on malafides and estraneous considerations violating Article 14 of the Constitution; that the reasons put forward on behalf of the Railways were disingenuous and bereft of rationale.
M/s Mukand respondent submitted that the dual set of counter offers and allocation of disproportionate quantities were highly arbitrary and that the practice and police of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy was arbitrary and unreasonable; that the making of law tender offers could not by Itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
M/s. Bhartiya submitted that the Tender Committee erred In treating m/s Bhartiya also as a member of the cartel and that the allotment of quantities was arbitrarily reduced; that M/s Bhartiya never made an offer of Rs. 67,000 and there was nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they were willing to supply at the rate of Rs. 67,000 and that they should not be treated differently from the other nine manufacturers.
Disposing of the Special Leave Petitions, this Court, 113 HELD: 1.1.
Since the offers of the three tenderers were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of decision making body including the Minister of Railways.
(124 D) 1.2.
All the Railway authorities including the Minister acted in a bonafide mannerin taking the stand that the three manufacturers formed a cartel.
(124F) 1.3.
There is no enough of material to conclude that M/S H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the Said three manufacturers for which there is some basis, the conclusion, that the "id manufacturers had formed a cartel does not appear to be correct.
(124 C) 1.4.
The current contract priced based on the updated price is Rs.79,505.
The three manufacturers offered at Rs. 77,600.
Taking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
(124 F) 1.5.
The fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving necessary protection to the smaller manufacturers.
(125 B) 1.6.
The Tender committee is directed to reconsider the question of fixation of reasonable price.
The Tender Committee shall consider, the offer of Rs. 67,000 made by M/s H.D.C. and Mukand along with the data that would he given by them in support of that and the percentage of profits available to all the manufacturers and other relevant aspects and then fix a resonable price, at which the manufacturer would be able to supply.
(125 C) 114 1.7.
At a belated post tender stage the Railway authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under the circumstances is bona fide and not malafide.
However, dual pricing on principle may not appear to be rational since the Railways have been following certain formula in fixing the price which is made applicable to all the manufacturers.
But under certain circumstances dual pricing may be reasonable. (125 E F) 1.8.
M/s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bhartiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers must be deemed to be in a position to supply at the rate of Rs.67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
(125 F G) 1.9.
If the price that is to be fixed by the Tender Committee as directed by the Court happens to be more than Rs. 67,000 then that would he applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(126 A) 1.10.
The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall be deemed to be final and the respective contracts shall be deemed to he concluded so for the price is concerned.
(126 B) 1.11.
The formation of an opinion that a cartel was formed had no firm factual foundation; reduction of quota by way of reprisal can not be justified.
The Minister of Railways as the final authority, after considering various relevant factors, may be justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case, all the smaller manufacturers deserving a favourable treatment in the mat 115 ter of allotment of quota, have not been equally treated in the sense that one or two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
In future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
(126 E H) 1.12.
The three manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender Committee.
However, this Court does not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
(127 C) The Railway authorities was left to make necessary adjustments next year in the matter of allocation of quantities to them taking into consideration these allotments given to them this year.
It will be open to the Railways to exercise 30% option if not already exercised.
The time to complete the supply is extended upto 31.3.1993.
(127 D F) |
N: Criminal Appeal No. 238 of 1988.
From the Judgment and Order dated 4.8.1986 of the Punjab and Haryana High Court in Criminal Appeal No. 329 DB of 1986 and Murder Reference No. 2 of 1986.
Mrs. Urmila Kapoor and Ms. section Janani for the Appellant.
R. section Suri for the Respondent.
The Judgment of the Court was delivered by OJA, J.
This appeal has come to this Court on grant of leave against the conviction of the appellant under Section 302 and sentence of death and also his conviction under Section 201 IPC and sentence of 7 years rigorous imprisonment and fine of Rs.200 awarded by Sessions Judge, Ferozepur and confirmed by the High Court of Punjab & Haryana.
The appellant is convicted for having committed the murder of his father and son.
It is alleged that deceased Banta Singh father of the present appellant owned 4 5 killas of land situated at Ferozepur Road where a tube well was also installed by the side of a samll kotha where he alongwith his grandson Seva Singh used to live away from the house where the appellant resided.
It is alleged that Seva Singh was crippled and used to move about on a tricycle Banta Singh and Seva Singh used to go to Gurudwara of their village to render services.
Banta Singh had only one son i.e. present appellant whereas the appellant had a son Seva Singh the deceased from his first wife (since deceased).
Later he married second time and had two children, but she also died.
At present he has the third wife and with her, he has two sons.
616 It was alleged, as motive for the offence, that the appellant used to quarrel with his father and son in connection with land owned by father as the latter wanted to transfer his land in the name of Seva Singh who used to live with the grandfather.
According to the prosecution a day prior to Amawasaya of Chet 1985 (May 1985) when Nihal Singh (PW 2) was rendering services with Banta Singh and Seva Singh at Gurudwara at about 5 p.m. the appellant went to the Gurudwara and told his father and son that in the evening a truck of Car Seva would come from Fazilka and that they would go to Amritsar to take the holy bath.
On this representation, appellant took Banta Singh and Seva Singh from the Gurudwara.
It is alleged that on the same day at about 10 p.m. when Nihal Singh was proceeding to his fields for guarding his tubewell he met the accused on the way and found carrying dang with him.
On being questioned by Nihal Singh as to why he was there and why he did not go to Amritsar, the appellant replied that Banta Singh and Seva Singh were sent to Amritsar by him in a truck of Car Seva.
It is further alleged that when Nihal Singh did not see for sometime Banta Singh and Seva Singh he felt suspicious and lodged a report dated 10 October 1985 in the Police Station Mamdot.
That became the FIR (exhibit PG).
S.I. Puran Singh who recorded the statement of Nihal Singh raided the house of the appellant who it is alleged was not present.
On 13 of August 1985, it is alleged that the appellant made an extra judicial confession to one Amrik Singh and Amrik Singh produced the appellant before the Police.
On 15 August, 1985, a memorandum under Section 27 of the evidence Act was recorded by the Investigating officer at the instance of the appellant and later the dead bodies of Banta Singh and Seva Singh were recovered from a field.
It is also alleged that at that time there was a Jhinjan crop standing in the field.
The dead bodies were identified by one Channan Singh who was a Panch witness.
The tricycle and other articles were recovered from the Kotha at the instance of the appellant.
On the basis of this evidence, the courts below convicted the present appellant.
The circumstances which have been found against the appellant are: (i) Last seen with the deceased at the Gurudwara by.
Nihal Sing (ii) extra judicial confession made to Amrik Singh (iii) the statement under Section 27 leading to discovery of dead bodies and (iv) recovery of tricycle and other articles from the Kotha where the two deceased used to reside and the motive alleged against the appellant.
617 Learned counsel for the appellant contended that as against the motive is concerned.
the appellant at the trial had produced a will A executed by deceased Banta Singh wherein he has given away all his lands to the appellant.
In the cross examination of prosecution witnesses it was suggested that . that his brother in law Manjit Singh was interested in getting the property transferred in his name or in his wife 's name.
It was also argued that extra judicial confession even otherwise is a very weak piece of evidence and in this case it is strange that the appellant chose this Amrik Singh to make an extra judicial confession and the reasons suggested by Amrik Singh also do not appear to be justifiable.
Similarly it was said that the recovery of dead bodies and the memorandum of the statement leading to the discovery are of no consequence as even according to the Investigating officer he had learnt from Amrik Singh that the dead bodies were in the field but he felt that the information he had got was not sufficient and therefore he recorded the information under Section 27 given by the appellant.
In our opinion, these contentions are well founded and must be accepted as correct.
The field where the bodies were recovered is an open place.
It is alleged that there was Jhinjan crop standing in the field and prosecution has not led any evidence to indicate as to who was in possession of the field and who cultivated the crop which was standing at that time.
We will discuss this part of the case in detail a little later.
It is very significant to note that according to the medical opinion bodies were recovered about three months after the death.
The bodies were found disintegrated.
It was difficult to identify.
The disintegration has gone to such an extent that the bodies could not be removed and sent for postmortem and therefore medical expert was called to the spot to perform the postmortem.
The prosecution did not examine any one of the relatives or the daughter of deceased Banta Singh or the son in law Manjit Singh to identify the dead bodies although it has appeared in evidence that during the trial Manjit Singh was present in the Court.
As to the extra judicial confession, it may be noted that Nihal Singh claims to be a person who had seen the deceased Banta Singh and Seva Singh alongwith the appellant in the month of May in the Gurudwara.
On the same night he again met the appellant and enquired about them.
The witness also stated that when he did not see the old man for some time, he became suspicious about the missing of those two persons.
This witness in order to justify his meeting with the appellant at 10 P.M.
On that day said that although his own land was at 618 a distance, he had taken some land on lease which was adjacent to the land of the appellant and so he had to go near the appellant 's house.
But in cross examination he had to admit that for the lease he had no document to support.
The prosecution has suggested that the appellant did not search for his father, but according to the appellant, the deceased had been taken away by Manjit Singh to their place on the pretext that Manjit Singh 's wife i.e. the appellant 's sister was not well and this was also put in cross examination to Nihal Singh.
In the absence of evidence of Manjit Singh, the suggestion of the appellant cannot be brushed aside.
On 10 August, 1985 F.I.R. was lodged by Nihal Singh (PW 2)1 and on 13.8.85 the appellant went to Amrik Singh (PW 3) to make an extra judicial confession.
Amrik Singh says that the appellant told him that as the Police was after him he had come and confessed the fact so that he might not be unnecessarily harrased.
There is nothing to indicate that this Amrik Singh was a person having some influence with the Police or a person of some status to protect the appellant from harrassment.
In his cross examination he admits that he is neither the Lumbardar or Sarpanch nor a person who is frequently visiting the Police Station.
He further admits that when he produced the appellant there was a crowd of 10 to 12 persons.
There is no other corroborative evidence about the extra judicial confession.
As rightly conceded by the learned counsel for the State that extra judicial confession is a very weak piece of evidence and is hardly of any consequence.
The council however, mainly relied on motive, the evidence of last seen, the evidence of recovery of dead bodies and the conduct of the appellant in not making a report about the missing father and son.
As regards the motive the will in question is sufficient to dislodge it.
An attempt was made by the learned counsel for the State to suggest that even after the will the appellant could have done away with the old man to avoid changing the will.
But the will was executed on 31 December, 1984 and it is a figment of imagination that the murder was committed apprehending that the will likely to be changed.
There is also no evidence to indicate that appellant was not having good relations with his father or that there was ever any trouble between father and the son.
In fact Nihal Singh was asked in cross examination as to whether there was any dispute between the father and son? He had to admit that there was no dispute or difference.
As regards the evidence of last seen it was the case of appellant 619 that Manjit Singh had taken Banta Singh and Seva Singh to his place on the pretext that the wife of Manjit Singh was not well.
There is no evidence led by the prosecution to negative this stand of the appellant.
Manjit Singh has not been examined although it has come in evidence that he was present in the Court when Nihal Singh was examined.
The sister of appellant was also not examined and in the absence of any such evidence to negative this stand of the appellant it could not be said that the prosecution has proved that suggestion was false.
In these circumstances, the presence of deceased Banta Singh and Seva Singh along with the appellant at the Gurudwara on the Amawasaya day in Chet could not be said to be the last seen before the murder in question.
May be, Nihal Singh saw them on that day but it is significant that no other person connected with the deceased has been produced to suggest that he was not seen thereafter.
Therefore, the evidence as to last seen also can not be considered as a piece of circumstantial evidence against the appellant.
Then we are left with the recovery of the dead bodies.
Investigating officer S.I. Puran Singh (PW 8) admitted in cross examination that after recording the statement of Amrik Singh he could not know the correct place where the bodies and other articles were kept buried and concealed.
This clearly indicates that he could get some information from the statement of Amrik Singh.
As seen earlier, the field is an open place surrounded by other fields and according to Nihal Singh the adjacent field is his own as he had taken it on lease and therefore it cannot be said that any one else could not have known about the bodies being buried in the field.
The Investigating officer himself admitted that after recording the statement of Amrik Singh he knew that the bodies were buried in the field but he felt that information was not sufficient.
It cannot therefore, be said that the place from where the bodies were recovered was such a place about which knowledge could only be attributed to the appellant and none alse.
Since the exclusive knowledge to the appellant cannot be attributed, the evidence under Section 27 also cannot be said to be a circumstances against the appellant.
As regards the recovery made from the Kotha where the deceased Banta Singh and Seva Singh used to reside there is nothing significant.
The tricycle and other belongings of the deceased were bound to be there and on that basis no inference could be drawn against the appellant.
620 In view of all these circumstances, the charge against the appellant cannot be said to have been proved beyond doubt and the conviction of the appellant Therefore cannot be sustained.
The appeal is therefore allowed.
Conviction and sentence passed against the appellant are set aside.
He is in custody.
He be set at liberty forthwith if not wanted in connection with any other case.
P.S.S. Appeal allowed. | The appellant was convicted under section 302 read with section 201 IPC for having committed the murder of his father and son.
It was alleged, as motive for offence, that the appellant used to quarrel with his father as the latter wanted to transfer his land in the name of his grandson, who used to live with him.
PW. 2 had deposed that a day prior to Amawasya of Chet 1985 at about 5 p.m. he had seen the two deceased persons at the Gurdwara when appellant went there and told them that he had arranged for their visit to Amritsar, through the car seva truck coming that evening, to take the holy bath.
He had met the appellant that very night at about 10 p.m.
On his way to the fields and enquired of him why he too did not go to Amritsar.
And, that when he did not see the deceased for sometime he felt suspicious and lodged a report with the police on 8th August, 1985, which became the FIR.
On 13th August, 1985 the appellant is alleged to have made an extrajudicial confession to PW. 3, his sister 's husband, who is said to have produced him before the police.
On 15th August, 1985 a memorandum under section 27 of the Evidence Act was recorded by the investigating officer at the instance of the appellant and later dead bodies were recovered from field and identified.
The belongings of the deceased were recovered from the Kotha in the fields, where the deceased used to reside, at the instance of the appellant.
Based on this evidence the appellant was convicted and sentenced to death by the Sessions Court.
That order was upheld by the High Court.
614 Allowing the appeal by special leave, ^ HELD: The charge against the appellant cannot be said to have been proved beyond doubt.
His conviction, therefore, cannot be sustained.
[620] Extra judicial confession is a very weak piece of evidence and is hardly of any consequence.
3 says that the appellant told him that as the police was after him he had come and confessed the fact so that he might not be unnecessarily harassed.
There is nothing to indicate that this witness was a person having influence with the police or a person or some status to protect the appellant from harassment.
There is no other corroborative evidence about the extra judicial confession.
[618D E] As regards the motive, the will was executed on 31st December, 1984 and it is a figment of imagination that the murder was committed apprehending that the will was likely to be changed.
There is also no evidence to indicate that appellant was not having good relations with his father or that there was ever any trouble between father and the son.
[618F G] The evidence as to last seen also cannot be considered as a piece of circumstantial evidence against the appellant.
The case of the appellant was that his brother in law, Manjit Singh, had taken the deceased to his place on the pretext that appellant 's sister was not well.
There is no evidence led by the prosecution to negative this stand.
May be, PW. 2 saw them with the appellant at the Gurdwara on the Amawasaya day in Chet but it is significant that no other person connected with the deceased has been produced to suggest that he was not seen there after.
[619B C] As regards the recovery of dead bodies, the investigation officer himself admitted that after recording the statement of PW. 3 he knew that the bodies were buried in the field but he felt that information was not sufficient.
The said field is an open place surrounded by other fields.
It cannot be said that any one else could not have known about the bodies being buried there.
Since exclusive knowledge to the appellant cannot be attributed, the evidence under section 27 of the Evidence Act also cannot be said to be a circumstance against the appellant.
[619E G] According to the medical opinion, bodies were recovered about three months after the death.
The bodies were found disintegrated.
It was difficult to identify.
The disintegration had gone to such an extent 615 that the bodies could not be removed and sent for postmortem and therefore medical expert was called to the spot to perform the postmortem.
The prosecution did not examine any one of the relatives or the daughter of deceased or his son in law to identify the dead bodies although it has appeared in evidence that during the trial the said son in law was present in the Court.
[617E F] As regards recovery made from the Kotha where the deceased used to reside, there is nothing significant.
Their belonging were found to be there and on that basis no inference could be drawn against the appellant.
[61G H] |
mpt Petition No. 159 of 1992.
IN Special Leave Petition (C) No. 12709 of 1991.
From the Judgment and Order dated 26.4.1991 of the Calcutta High Court in Appeal No. 232 of 1990.
M.L. Verma, R. Mukhejee, J. Gupta and M.L. Chibber for the Petitioners.
Ranjan Dutta, Mrs. N. Dutta, Mrs. Mridula Ray and M.N. Shroff for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
In a suit for specific performance certain interlocutory orders were passed by a Single Judge of the Calcutta High Court.
On appeal a Division Bench of the said Court modified the said orders.
A number of special leave petitions were filed in this Court against the orders of the Division Bench.
Though the petitioners in these special leave petitions are different, the contesting respondents in all these cases are common, namely Russel Estate Corporation and its managing partner Sri Hari Narayan Bhan.
For the purpose of this petition, it is enough to mention that each of the petitioners in these S.L.Ps. is claiming to be entitled to allotment of one or more of the flats being constructed by the respondents at Calcutta.
Their complaint has been that ignoring the agreements in their favour, the 753 respondents have been allotting the constructed flats in favour of third parties thereby seeking to defeat their rights.
On 1.8.1991 a Bench of this Court comprising section Ranganathan, M. Fathima Beevi and N.D. Ojha, JJ. passed the following order in I.A. No.2 of 1991 after hearing the respondents.
"Counsel accepts notice.
in the meantime, till this Special Leave Petition is disposed of, respondents 1 & 2 should not make any further allotment of any other flats in the building in dispute, with effect from today.
Counsel for the petitioner contends that the allotment of the flat, originally allotted to him, to some other person violates an oral order of a Division Bench of the High Court.
It will be open to the petitioner to move the High Court for appropriate relief in this regard if so advised." This Contempt Petition is filed complaining that the respondents have allotted certain flats in favour of third parties in violation of the said order.
So far as the petitioners in this Contempt Petition (Major) Genl.
B.M. Bhattacharjee and Smt.
section Laha) are concerned, they claim to be interested in the flats on the 8th floor of the said building.
At any rate the complaint in this Contempt Petition pertains to the said two flats.
The petitioners say that the said flats have been allotted to the third parties in the month of January, 1992.
They rely upon the report of a group of investigators (National Bureau of Investigation) in support of the said plea.
Notice was issued to the respondents.
In their counter (filed by Shri Hari Narayan Bhan) it is stated that the two floors on the 8th floor (described as east and west flats) were allotted on 26th April, 1991 itself i.e., long prior to the order of this Court dated 1.8.1991.
It is denied that the allotment of said flats took place in the month of January, 1992.
The correctness of the Report of the National Bureau of Investigation is disputed.
It is, however, conceded that the possession of the said flats was handed over to the said third parties on 17th August, 1991 which is admittedly a date subsequent to the date on which this Court passed the aforesaid restraint order.
It is also not disputed by them that the registered sale deeds in respect of said flats in favour of the said third parties were 754 also executed in March, 1992.
The report of the Receiver (Smt.
Pratibha Bonnerjea, a retired Judge of the Calcutta High Court who was appointed as such by an order of this Court dated 7.1.1992) also supports the petitioners ' allegations.
The relevant portion of the Report reads as follows: "Present condition of these two flats in the floor.
The western apartment in the 8th floor is occupied by one Mr. & Mrs.
Kamal Thavrani, Ms. Thavrani said that they are in occupation of the flat from December, 1991.
Mr. K.K. Thavrani said that he had taken both the eastern and western apartments in the 8th floor.
He produced a copy of the agreement executed on 26.4.91 on a stamp paper purchased on 26.4.91 by M/s. Russel Estate Corporation.
The agreement relates to both the flats on the 8th floor for a total consideration of Rs. 13,40,000.
It is stated that the occupiers have taken possession in December, 1991.
Mr. Thavrani submits that the conveyance have been registered in March, 1992 but he is unable to produce the registered conveyance as the same is still lying with the Registrar.
We found eastern flat was not complete.
Wooden work was going on.
Photos Nos.
3 to 5 are attached to this effect.
" At the bearing of this Contempt Petition the respondents ' counsel took the stand that the delivery of possession on 17.8.1991 and the execution of the registered sale deed in March, 1992 do not constitute violation of the Order dated 1.8.1991.
His submission is that this Court merely restrained the allotment of flats.
Allotment, according to the learned Counsel, means entering into the agreement of sale.
Inasmuch as the agreement of sale with respect to the said two.
flats on the 8th floor was entered into long prior to the said Order of this Court, it is submitted, there is no disobedience to the order of this Court.
it is submitted that delivery of possession and the registration of the sale deed(s) is in pursuance of the aforesaid agreement of sale and not in pursuance of any agreement of We entered into on or after 1.8.1991.
The counsel further submitted that even on the date when the aforesaid order was passed on 1.8.1991, the second respondent had represented to this Court that agreement of sale in respect 755 of all the flats have already been entered into.
In this view, it is submitted, there has been no misrepresentation or suppression of relevant facts on their part.
We may mention that when we indicated our disagreement with the above stand during the course of hearing, the counsel for the respondents, Shri Dutta took time till 14th of January, 1993 to file a further affidavit/additional counter and/or documents in continuation of the counter already filed.
The second respondent has accordingly filed a further affidavit on 14.1.1993.
The counsel for the petitioners ' disputes the correctness, genuineness and validity of the agreement, allegedly entered into on 26.4.1991 in respect of said flats.
According to him, it is a fabricated document.
He points out that the stamp paper for the said agreement of sale was purchased by the Russel Estate Corporation and not by the purchaser of the flats.
It is also pointed out that the agreement is not a registered one and that it could have been fabricated at any time putting a back date.
It is not necessary for us to pronounce upon the disputed question whether the agreement dated 26.4.1991 relating to the said two flats on the 8th floor is true and genuine.
Assuming that the said agreement is true, we are yet of the opinion that the respondents have committed gross contempt of this Court by their brazen violation of the order dated 18 1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect from today. ' Now what does the word "allotment" mean in the context.
In our opinion, the said word must be understood reasonably and having regard to the context.
The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
The first respondent is a proprietary concern, according to the petitioners, whereas according to the respondents it is a partnership concern.
In either event, there is no such thing as "allotment" in its case.
Even now, it is not their case that they have issued any orders or letters of allotment.
According to them, there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
We are of the opinion that in the context and circumstances, the word "allotment" in the said order means making over of the flats.
In other words, it means delivery of possession 756 and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
It must be remember that even according to the respondents they had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so, as do the respondent, is to rob the order of any meaning or content.
Mr. Dutta, the learned counsel for the respondents contended that the second respondent understood the allotment in a particular manner and that the said misunderstanding, if any, was bona fide.
We are not prepared to agree.
Firstly, there could not have been any doubt in the mind of Respondent with respect to the meaning of the order.
Secondly, assuming that he had any doubt regarding its meaning, the least he could have done was to ask for a clarification of the said Order.
He could well have represented that he had already entered into an agreement of sale on 26.4.1991 in restpect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of said flats in favour of third parties.
He did nothing of the sort.
Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugatory.
It was not open to the respondents to place a convenient interpretation upon the order and proceed to act upon it, thereby totally nullifying the order of this Court.
In this context, we ought to refer to the conduct of the second respondent as disclosed from the order of this Court dated August 7, 1992 to which one of us (B.P. Jeevan Reddy, J.) was a party.
The first two paragraphs of the said order may be quoted in rull.
"In these special leave petitions notice was duly served on the respondents and the matters came up for hearing initially before a Bench of this Court comprising of Ranganathan J., Fathima Beevi J. and Ojha J. on 31.7.91 and 757 1.8.91when the parties were heard and certain interim orders were passed.
Thereafter it was listed before a Bench of this Court (of which Ranganathan J. and V. Ramaswami J. were members) on a number of occasions at which the respondents were represented and no objection was voiced against the hearing of the matters by the said Bench.
However, sometime later an attempt was made on behalf of the respondents to have these matters transferred from this Bench to some other Bench on the allegation that one of the Judges (Ranganathan J.) was biased against the respondents.
This request was made before a Bench presided over by the learned Chief Justice by the second respondent who appeared in person and made the request for the transfer of the case.
The prayer was rejected by the learned Chief Justice on 11.11.1991.
Thereafter the matter was again fisted before a Bench consisting of Ranganathan J., V. Ramaswami J. and Ojha J.
On different occasions without any demur from the parties.
It was then listed before a Bench comprising of Ramaswamy J., Yogeshwar Dayal J. and Mohan J. on 4.3.92.
This Bench directed the cases to be posted before a Bench of which Ranganathan J. is a member.
About this time, an application seems to have been presented to the Registrar that this case should be transferred to some other Bench.
However, the matters came up before us again some time last week when counsel for the respondents agreed that the matters may be listed this week.
The matters were fisted yesterday.
A person claiming to be the son of the second respondent made a request that the matter should not be heard by this Bench.
We rejected this request and made it clear to him that he should make arrangements for the conduct of the case.
The matters did not reach yesterday and when the matters came up today, a letter dated 6.8.92 written by the second respondent to his counsel revoking the counsel 's vakalatnama has been placed before us.
But the respondent No. 2 did not appear before us nor did he make other arrangements for the conduct of the case.
Sri Chatterjee, his advocate on 758 record, appeared but expressed his inability to conduct the case since his client had withdrawn the vakalatnama.
We understand that in one of the matters the respondents are represented by another counsel whose vakalatnama is also seen to have been revoked but she has not appeared or sought permission to withdraw from the case.
In these circumstances we have no other option but to proceed against the respondents ex parte.
We are unable to accede to the respondents request made on a previous occasion by the son of the second respondent for transfer of case to some other Bench.
The circumstances narrated above would show that the respondent has appeared before the Bench on several occasions without protest.
The request made for transfer, after the rejection of the earlier petition by the learned Chief Justice, is belated and is just an attempt by the second respondent to circumvent the order already passed by the Chief Justice rejecting a request for transfer and only because the Constitution of the Bench is not to his liking.
Such a request, we are clear, cannot be countenanced.
" It should be noticed that the said order dated August 7, 1992 was passed not only in the special leave petitions but also in this very Contempt Petition.
The attitude adopted by them before the Receiver (Smt.
Pratibha Bonnerjea retired Judge of Calcutta High Court, appointed by this Court as a Receiver in this case) also discloses the total disregard and disrespect the Respondents have towards the orders of this Court.
The Receiver says: "The next day, by a letter dated 22.8.92, Mr. H.N. Bhan informed me that he would not submit to the order dated 7.8.92 as the Bench was not properly constituted due to the fact that the Hon 'ble Mr. Justice V. Ramaswami was one of the judges and that an application would be moved for recalling the said order.
Thereafter, there was complete non cooperation by M/s. Russel Estate Corporation.
" The conduct of the second respondent as evidenced from the aforesaid material establishes beyond doubt that the second respondent 759 was trying to play with this Court and was consistently flouting its orders.
In the circumstances, the theory of bona fide belief, now put forward before us by his counsel, cannot be accepted.
We may at this stage deal with the further affidavit filed by the second respondent on 14.1.1993.
In para 3 of the affidavit the second respondent has stated that he has the highest regard for this Court, that he has all along complied with the orders passed by this Court and that he never intended to flout or defy the orders of the Court.
He stated further "if in spite of the aforesaid, any order of this Hon 'ble Court has been violated, the same has been so done through mistake, inadvertence and by a misunderstanding of the meaning and purport of that order and surely not intentionally and for which unconditionally apologise for self and on behalf of the Respondent firm and I beg to be excused." Then in paragraphs 4 to 12 he has "without waiving the aforesaid and fully relying thereupon" repeated the contentions which were urged by his counsel before us and which we have dealt with hereinbefore.
He stated that he understood this court 's order dated 1.8.1991 as prohibiting only the entering into of agreements of sale and not delivery of possession or registration of the sale deeds.
All the said contentions we have dealt with hereinbefore.
They need not be reiterated here.
So far as the apology contained in para 3 of the second respondent 's further affidavit is concerned, it may firstly be mentioned that it is not really an unconditional apology though it purports to say so.
While tendering unconditional apology in para 3, the second respondent has tried to defend his action in the subsequent paragraphs.
Secondly, even if we construe paragraph 3 as tendering an unconditional apology, we are not minced to accept the same having regard to the conduct of the respondent which we have adverted to hereinbefore with reference to the order of this court and the report of the Receiver.
Accordingly, we reject the apology tendered in para 3 of the further affidavit.
For the above reasons, we hold the second respondent guilty of Contempt of this Court.
Having regard to the facts and circumstances of this case, we impose a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 upon the second respondent.
The fine shall be paid into this Court within two weeks from today, in default thereof the second 760 respondent shall undergo a further imprisonment of two weeks.
The second respondent shall also pay the costs of the respondents in this Contempt case which are assessed at Rs. 5,000 within two weeks from today.
In case of failure, the Respondents are free to execute this order as a decree of Court and recover the same from the Respondents.
Mr. H.N. Bhan, who is present in the court, be taken into custody forthwith to undergo the sentence of imprisonment.
G.N. Petition allowed. | The present Contempt Petition has been filed complaining that the Respondents had allotted certain flats in favour of third parties in violation of this Court 's order dated 1.8.91.
The Petitioners ' interest has been in respect of two flats on the 8th floor.
They claimed that the said flats had been allotted to third parties in January, 1992, long after this Court 's order dated 1.8.91.
It was also contended that the agreement to sell was a fabricated document.
The Respondents contended that the said flats were allotted on 26.4.91 itself, though possession of the flats was handed over on 17.8.1991, and sale deeds were executed and registered in March 1992.
It was further contended that inasmuch as the agreement for sale was entered into long before the orders of this Court were issued, there was no question of disobedience of the orders of this Court.
Finding the Respondent guilty of Contempt of Court, this Court, HELD : 1.1.
Even assuming that the agreement of sale dated 26.4.1991 is true, the respondents have committed gross contempt of this Court by their brazen violation of the order dated 1.8.1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect 751 from today".
The word "allotment" must be understood reasonably and having regard to the context The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
There is no such thing as "allotment" in this case.
According to the Respondents there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
In the context and circumstances of the case, the word "allotment in the said order means making over of the flats; it means delivery of possession and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
Admittedly the respondents had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so is to rob the order of any meaning or content.
There could not have been any doubt in the mind of the Second Respondent with respect to the meaning of the order.
In case of any doubt the least he could have done was to ask for a clarification of the said Order.
He could well have represented that be had already entered into an agreement of sale on 26.4.1991 in respect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of the said flats in favour of third parties.
He did nothing of the sort Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugaptory.
[755E H, 756A E] 1.2.The conduct of the second respondent as evidenced from the material on record establishes beyond doubt that he was trying to play with this Court and was consistently flouting its orders.
[758H, 759A] 2.
So far as the apology tendered by the second respondent is concerned it is not really an unconditional apology.
While tendering apology the second respondent has tried to defend his action.
Even if it is 752 considered as unconditional apology this Court is not inclined to accept the same having regard to the conduct of the respondent Accordingly, the apology tendered by Respondent No.2 is rejected.
[759E G] 3.
The second respondent is guilty of Contempt of this Court Having regard to the facts and circumstances of this case, a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 is imposed upon him.
The fine shall be paid into this Court within two weeks and in default thereof the second respondent shall undergo a further imprisonment of two weeks.
[760A B] |
minal Appeal No. 918 of 1981.
From the Judgment and Order dated 10.8.81 of the Punjab & Haryana High Court in Crl.
A. No. 417 DB of 1980.
U.R. Lalit, M. Qmaruddin and Mrs. M. Oumaruddin for the Appellant.
Ranbir Singh Yadav and R.S. Suri (NP) for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The appellant has been convicted under Section 302 of the Indian Penal Code and has been sentenced to undergo imprisonment for life, for causing the murder of Paramjit Singh.
It is said that the appellant and the deceased were intimate friends and they used to visit frequently each other 's house.
But Paramjit Singh (hereinafter referred to as 'deceased ') misbehaved with the wife of the appellant and because of that the appellant had nursed a grudge.
On July 8, 1979 in the morning the appellant asked the deceased to accompany him to Chandigarh and Mohali where he wanted to take some suitable shop for his business.
They boarded a bus of the Road Transport Corporation at Patiala for Chandigarh at about 9.59 A.M. Gurcharan Singh (PW 8) also came to Chandigarh by the same bus.
The appellant and the deceased reached Chandigarh at about 11.30 A.M. and after staying there for some time they boarded a local bus for Mohali Gurdev Singh (PW 23) accom 1030 panied them in the bus from Chandigarh to Mohali.
At Mohali after getting down from the bus the appellant went to Raj Kumar Singh (PW 711) brother of his wife and borrowed a bicycle from him.
During this period the deceased was sitting at a shop and taking aerated water.
Shortly thereafter, the appellant arrived with the bicycle at the said shop and both left on the bicycle.
The deceased was pedalling the bicycle and the appellant sat behind on the carrier.
Both were seen going on the bicycle by Jaimal Singh (PW 5) by the side of the Gurdwara, Sahib Singh Sabha, Mohali.
Jaimal Singh (PW 5) after taking his meals went to Gurdwara Sahib Singh Sabha at about 2.45 P.M. the same day.
One Om Parkash, came there and told him that a Sikh gentleman was lying on the ground in the campus of the said Gurdwara in an injured condition.
Jaimal Singh (PW 5) accompanied by Balwinder Singh, Sewadar, came to the spot and found the victim lying on the ground and bleeding profusely.
He identified him to be the same person whom he had seen earlier on the bicycle.
The victim could not speak.
Jaimal Singh (PW 5) left Om Parkash and Balwinder Singh, Sewadar, at the spot and summoned members of the Gurdwara Committee.
Some of the members who were available reached.
But in the meantime the victim succumbed to the injuries.
They searched for the assailant.
Thereafter Jaimal Singh (PW 5) accompanied by Chatter Singh went to the Police Station Mohali and lodged the first information report at 4.00 P.M. the same day.
It is further the case of the prosecution that near about the time of the occurrence the appellant was seen coming from the side of the Gurdwara Sahib Singh Sabha and was noticed on the way by Joginder Singh (PW 9) with blood on his hand.
On being asked the appellant gave out that he had a fight with someone.
and he was going to the hospital to get his injuries dressed.
Gurdev Singh (PW 23) on his way back from the hotel also saw the appellant going on the bicycle and found him puzzled.
He also saw the hand of the appellant stained with blood and blood marks on his clothes as well.
On querry the appellant said that he had got the injury through barbed wire and was going to the doctor to get his wounds dressed.
Last in the chain of events, the appellant reached the house of Raj Kumar Singh (PW 11) and returned him his bicycle.
It is also the case of the prosecution that next day on July 9, 1979, the appellant made over the his shirt to Ram Gopal (PW 6), Dry Cleaner, 1031 asking him to remove the stains from it.
A copy of the receipt prepared in connection with the aforesaid shirt was produced during the trial.
The doctor who held the post mortem examination found several incised wounds on the person of the deceased including injury on the abdomen.
There is no dispute that the prosecution case is based solely on the circumstantial evidence.
If at a trial the prosecution adduces direct evidence to prove the charge, the Court is primarily concerned whether the witnesses who have testified about the role of the accused are reliable.
Once the Court is satisfied that the witnesses who are said to have seen the occurrence are trustworthy and inspire confidence, the finding of guilt has to be recorded, if otherwise the accused has to be acquitted.
But in a case based on circumstantial evidence neither the accused nor the manner of occurrence is known to the persons connected with the victim.
The first information report is lodged only disclosing the offence, leaving to the investigating agency to find out the offender.
It is said that men lie but circumstances do not.
Under the circumstances prevailing in the society today, it is not true in many cases.
Sometimes the circumstances which are sought to be proved against the accused for purpose of establishing the charge are planted by the elements hostile to the accused who find out witnesses to fill up the gaps in the chain of circumstances.
In countries having sophisticated modes of investigation, every trace left behind by the culprit can be followed and pursued imme diately.
Unfortunately it is not available in many parts of the this country.
That is why Courts have insisted (i) the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established; (ii) all the facts so established should be consistent only with the hypothesis of the guilt of the accused and should be such as to exclude every hypothesis but the one sought to be proved; (iii) the circumstances should be of a conclusive nature; and (iv) the chain of evidence should not have any reasonable ground for a conclusion consistent with the innocence of the accused.
A note of caution has also been struck regarding the role of imagination.
In the case of Reg vs Hodge, (1838) 2 Lewin 227, it was said: "The mind was apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts of one 1032 connected while; and the more ingenious the mind of the individual, the more likely was it, considering such matter, to overreach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. ' It has been impressed that suspicion and conjecture should not take place of legal proof It is true that the chain of events proved by the prosecution must show that within all human probability the offence has been committed by the accused, but the Court is expected to consider the total cumulative effect of all the proved facts along with the motive suggested by the prosecution which induced the accused to follow a particular path.
The existence of a motive is often an enlightening factor in a process of presumptive reasoning in cases depending on circumstantial evidence.
Coming to the facts of the present case, Pritam Kaur (PW 12), mother of the deceased, has deposed that the appellant went to her house in the morning and took the deceased with him saying that he win be accompanying him to Mohali because the appellant had to select a suitable shop.
Thereafter both of them left together.
There does not appear to be any reason on the part of the mother of the victim to falsely state about the deceased going along with the appellant in the morning of July 8, 1979.
Gurcharan Singh (PW 8) has testified that at 9.30 A.M. he saw the appellant and the deceased at the bus stand.
He exchanged greeting with them.
They told him that they were going to Chandigarh or Mohali.
The deceased purchased two bus tickets for Chandigarh in his presence.
Gurcharan Singh (PW 8) travelled in the same bus with the appellant and the deceased and all the three came out from the bus at Chandigarh together.
Sahib Chand (PW 24), an employee of the Punjab Roadways Transport Corporation, had sold two tickets.
The yard control register was produced before the Court to prove in respect of sale of the two tickets which were recovered from the person of the deceased at the time to the post mortem examination.
The two tickets were recovered on July 8, 1979, on the date.
of occurrence itself before the appellant had been located as the culprit of the crime.
The two tickets recovered from the person of the deceased 1033 establish that the deceased had travelled from Patiala along with one another person who was close to him because the deceased was keeping both the tickets in his pocket.
This circumstances corroborates the evidence of Pritam Kaur (PW 12) as well as of Gurcharan Singh (PW 8).
The other circumstance in the chain of events, according to the prosecution, is that the appellant and the deceased boarded a local bus at Chandigarh for Mohali reaching there at about 1.30 P.M. Gurdev Singh (PW 23), who was then employee in Colonization Department, Sector 22, Chandigarh, and residing at Badheri, also travelled in the same local bus.
He belonged to Patiala.
Gurdev Singh (PW 23) saw the appellant and the deceased getting down from the local bus at Mohali.
They also exchanged greetings with him and on being asked the appellant told him that they were going to select a shop.
They walked together for a short distance and thereafter Gurdev Singh (PW 23) went to take his meals at a dhaba.
Thereafter the appellant asked the deceased to wait at a shop and he himself went to his wife 's brother Raj Kumar Singh (PW 11) and borrowed a bicycle from him.
Raj Kumar Singh (PW 11) although a close relation of the appellant has testified that the appellant took his red bicycle from his house at about 1.30 P.M. Jaimal Singh (PW 5) saw the deceased taking aerated water at the shop and later saw the appellant and the deceased both going together on a red bicycle.
The deceased was pedalling the bicycle and the appellant was sitting on the carrier.
Gurdev Singh (PW23) aforesaid who had left the appellant and the deceased while going to the dhaba for taking his meals, after taking his meals, at about 2.30 P.M. again saw the appellant coming on the same bicycle alone.
The appellant appeared to be puzzled and his hands were stained with blood.
There were also blood spots on his clothes.
Gurdev Singh (PW 23) asked him.
as to what had happened to him.
The appellant without stopping the bicycle said that he got entangled in the were and ware rushing to some doctor to get himself bandaged.
Yet another witness Joginder Singh (PW 9) who had gone to Mohali in search of some plot saw the appellant at about 2.15 P.M. coming on a red colour bicycle.
He also noticed the hand of the appellant stained with blood.
On query the appellant told Joginder Singh (PW 9) that he had a fight with some person and was going to hospital for dressing of his wounds.
Thereafter the appellant went to Raj Kumar Singh (PW 11) his brother in law to hand over the bicycle aforesaid.
1034 It may be mentioned that in the Court Raj Kumar Singh (PW 11) stated that this appellant had gone to his house at about 1.30 P.M. and taken his red colour bicycle which he returned the same day later.
But he denied that he had stated during investigation that he had seen injuries on the hand of the appellant.
He also denied that he had told the police during investigation that the appellant was mentally agitated.
Still the fact that the appellant had taken from him his red colour bicycle at about 1.30 P.M. which the appellant returned to him later the same day has been testified by him.
If this part of the evidence of Raj Kumar Singh (PW 11) is accepted which we find no reason to doubt then his evidence corroborates the evidence of Jaimal Singh (PW 5) and Gurdev Singh (PW 23) that the appellant was going with the deceased on a red colour bicycle at about 1.30 P.M. and about 2.30 P.M. the appellant was seen coming on the bicycle alone.
Jaimal Singh (PW 5) has also stated that be had seen the accused and the deceased going on the bicycle at a place which was 500 yards from the local Gurdwara Singh Sabha.
Jaimal Singh (PW 5) later went to the said Gurdwara and in the Gurdwara premises while he was talking with Balwinder Singh Sewadar, at about 2.45 P.M. one Om Parkash came there and informed that a Sikh gentlemen was lying on the ground in an injured condition.
All of them went towards the place where the injured was lying.
Jaimal Singh recognised the victim to be the same person whom he had seen earlier taking aerated water at the shop and later on the bicycle along with the appellant.
Blood was coming out from his abdominal region.
The victim was not in a position to speak.
Jaimal Singh (PW 5) went to call the members of the Gurdwara Committee.
Two members of the Gurdwara reached the spot.
But by that time victim had succumbled to his injuries.
Therefore they went to the Police Station Mohali where Jaimal Singh (PW 5) lodged the first information report at 4.00 P.M. Jaimal Singh (PW 5) did not know either the name of the appellant or that of the deceased but he stated in the first information report that he had gone to Dhaba and at about 1.30 P.M., while taking meals he saw a fair complexioned Sardar taking aerated water in the adjoining 'shop.
After taking meals when he was going on the road, again he saw the same Sardar pedalling a cycle going towards Gurdwara Singh Sabha Mohafi and behind him a young Hindu Mona was sitting on the cycle.
Then he gave the details as to how then at the Gurdwara, at about 2.45 P.M., one Om Parkash told him that one Sardar was lying in a comer of Gurdwara in an injured 1035 condition.
He went and identified that he was the same young man whom he had seen taking aerated water at the shop and then on the bicycle.
The first information report was lodged within one and a half hours of the occurrence giving the aforesaid details.
The statements made in the first information report corroborate fully the testimony of Jaimal Singh (PW 5) in Court.
Once the evidence of Jaimal Singh is accepted, it supports and corroborates the evidence of Gurdev Singh (PW 23) who had travelled with the appellant and deceased in local bus from Chandigarh to Mohali and had got down at Mohali at 1.30 P.M.
He later saw the appellant at about 2.30 P.M. returning on the bicycle with injuries on hand and blood on clothes.
Gurdev Singh (PW 23) knew the appellant as well as deceased from before.
Apart from the evidence of the witnesses, who have proved the different links in the chain of events, the shirt which the appellant was wearing and on which blood had been noticed by witnesses as already mentioned above was recovered from the laundry of Ram Gopal (PW 6).
According to Ram Gopal (PW 6) on July 9, 1979 the appellant had given that shirt to remove certain stains.
He had issued a receipt to the appellant and one chit was tagged with the shirt for identification.
The third was kept by way of record.
The shirt was seized and sent to the chemical examiner who found human blood on the said shirt.
The shirt as well as the bicycle were produced as exhibits before the Trial Court and have been identified by the witnesses who were examined on behalf of the prosecution.
None of the witnesses examined on behalf of the prosecution appear to have been set up or planted by any inimical source.
They are neither interested in the deceased nor have any bias against the appellant.
So far the motive which impelled the appellant to commit the murder, it has been suggested on behalf of the prosecution that the appellant and the deceased were intimate friends but the appellant had a suspicion that the deceased was misbehaving with his wife, for which the appellant had a resentment.
The resentment was never allowed to be surfaced by the appellant by way of strong protest or confrontation.
However, he had mentioned this to Darshanjit Singh (PW 13), Kanwaljit Singh (PW 14) and Sarup Lal (PW 15). 'rile three witnesses aforesaid have deposed as to how the appellant was carrying a suspicion and was tense from inside in respect of the conduct of tile deceased.
There is nothing on the record to show that the aforesaid three witnesses were either inimical to the appellant or 1036 interested in the deceased because of that they could have concocted a motive for commission of the crime by the appellant.
According to us the evidence adduced on behalf of the prosecution is clear, unambiguous and in unmistakable terms establish that the appellant is the perpetrator of the crime and nothing has been brought to our notice which leaves any gap in the circumstances to establish the guilt of the appellant.
The facts of the case stands the scrutiny and tests as laid down by this Court in the cases of Hanumant Govind Nargundkar vs State of Madhya Pradesh, AIR 1952 SC 343; Deonandan Mishra vs The State of Bihar, ; ; Govinda Reddy vs State of Nysore, AIR 1960 SC 29; Sharad Birdhichand Sarda vs State of Maharashtra, ; Ashok Kumar Chatterjee vs State of Madhya Pradesh, AIR 1989 SC 1890 and State of UP vs Ashok Kumar Srivastava, The appeal is accordingly dismissed.
V.P.R. Appeal dismissed. | The prosecution case was that the appellant and the deceased were intimate friends.
The appellant nursed a grudge against the deceased, as he misbehaved with the wife of the appellant.
On July 8, 1979 in the morning the deceased accompanied the appellant to Mohali, where the appellant wanted to do business.
At Mohali, the appellant went to the brother of his wife (P.W. 11) and borrowed a bicycle, leaving the deceased at a shop.
later both left the shop on the bicycle.
The deceased was pedalling the bicycle while the appellant was sitting behind on the carrier of the bicycle.
P.W. 5 saw them going by the side of the Gurdwara, Sahib Singh Sabha.
At about 2.45 P.M. on the same day, P.W. 5 when went to the Gurdwara, one Om Parkash came there and told P.W.5 that an injured Sikh gentleman was lying on the ground in the campus of the Gurdwara.
P.W. 5 accompanied by one Balwinder Singh came to the spot.
He identified the victim lying on the ground bleeding profusely.
The members of the Gurdwara Committee were summoned.
The members who were available reached.
The victim succumbed to the injuries in the meantime.
P.W. 5 accompanied by one Chatter Singh lodged the First Information Report at 4.00 p.m., the same day.
The prosecution case was based solely on the circumstantial evidence and it could prove the chain events beyond reasonable doubt by the evidences of its witnesses.
The appellant was convicted under section 302 of the Indian Penal Code and was sentenced to undergo imprisonment for life by the trial Court.
1027 1028 Dismissing the appeal, this Court, HELD : 1.01.
It is said that men lie but circumstances do not.
Under the circumstances prevailing in the society today, it is not true in many cases.
Sometimes the circumstances which are sought to be proved against the accused for purpose of establishing the charge are planted by the elements hostile to the accused who find out witnesses to fill up the gaps in the chain of circumstances.
[1031D] 1.02.
In countries having sophisticated modes of investigation, every trace left behind by culprit can be followed and pursued immediately.
Unfortunately it is not available in many parts of this country.
That is why Courts have insisted (i) the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established; (ii) all the facts so established should be consistent only with the hypothesis of the guilt of the accused and should be such as to exclude every hypothesis but the one sought to be proved; (iii) the circumstances should be of a conclusive nature; and (iv) the chain of evidence should not have any reasonable ground for a conclusion consistent with the innocence of the accused.
[1031E F] 1.03.
If at a trial the prosecution adduces direct evidence to prove the charge, the Court is primarily concerned whether the witnesses who have testified about the role of the accused are reliable.
Once the Court is satisfied that the witnesses who Pre said to have seen the occurrence are trustworthy and inspire confidence, the finding of guilt has to be recorded, if otherwise the accused has to be acquitted.
But in a case based on circumstantial evidence neither the accused nor the manner of occurrence is known to the persons connected with the victim.
[1031B C] 1.04.
Suspicion and conjecture should not take place of legal proof.
It is true that the chain of events proved by the prosecution must show that within all human probability the offence has been committed by the accused, but the Court is expected to consider the total cumulative effect of all the proved facts along with the motive suggested by the prosecution which induced the accused to follow a particular path.
The existence of a motive is often an enlightening factor in a process of presumptive reasoning in cases depending on circumstantial evidence.
[1032C D] 1.05.
The evidence adduced on behalf of the prosecution is clear, 1029 unambiguous and in unmistakable terms establish that the appellant is the perpetrator of the crime and nothing has been brought to Court 's notice which leaves any gap in the circumstances to establish the guilt of the appellant [1036B] Reg vs Hodge, (1838) 2 Lewin 227; Hanumant Govind Nargundkar vs State of Madhya Pradesh AIR 1952 SC 343; Deonandan Mishra vs The State of Bihar, ; ; Govinda Reddy vs State of Mysore, AIR 1960 SC 29; Sharad Birdhichand Sarda vs State of Maharashtra, ; Ashok Kumar Chatterjee vs State of Madhya Pradesh, AIR 1989 SC 1890 and State of U. P. vs Ashok Kumar Srivastava, , referred to. |
Appeal Nos.
636 37 of 1993 From the Judgment and Order dated 20.2.
1992 of the Calcutta High Court in Appeal No. 493 of 1.990.
Harish Salve and Indranil Ghosh for the Appellants.
P. Chidambarani.
Lahoty Ms. section Khazanchi, K.( '.
J. Heard the counsel for the parties.
Leave granted in both the S.L.Ps.
We shall first deal with the appeal arising from S.L.P.(c) No, 5377/92 1068 The appeal is directed against the order dated 4.3.1992 passed by a Division Bench of the Calcutta High Court modifying its earlier order of November 13, 1990.
The controversy in this appeal pertains to the terms of sale of the assets of a Company in liquidation.
A few facts are necessary to be stated to appreciate the controversy.
Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4,1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court.
N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to file a suit under Section 446 of the .
A suit was filed by them in September, 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice published again.
It would be appropriate at this stage to notice the terms of the sale notice, which led to the sale in favour of the respondent, Buxa Holdings Limited since re named as Kanoi Agrotech Limited (hereinafter referred to as "Buxa").
The Sale notice published in the newspaper "The Hindu ' dated 10th April, 1990 reads as follows: "PUBLIC NOTICES Sale Notice Sale Notice Sale Notice In the matter of Neptune Paper Mills Ltd (in Liquidation) That in terms of the order of the Hon 'ble High Court, Calcutta dated 3.4.90, take notice the sale of the above 1069 named company as going concern and "as is where is and whatever there is basis" will be held at 2.00 pm on 17.4.90 in the open Court of the Hon 'ble Company Judge, High Court, Calcutta.
The bids of such sale will be started from 6.90 crores.
The successful bidders must deposit 10% of his/their bids in the Court at the time of sale.
The balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payments of instalments will be considered.
The Purchaser shall have to enter into an agreement and or memorandum of understanding with the employees ' union in the same line with which has already been entered into with one of the bidders in court.
The bidder may have inspection of the assets of the company on applications to Official Liquidator before the sale of date.
Terms and condition along with the list of assets will be available at the office of the undersigned during the office hours.
Official Laiquidator High Court Calcutta Dated the 10th April, 1990.
" The significant thing to notice is that the sale notice did not specify the number of instalments nor did it specify the period within which the entire consideration was to be remitted.
All that it stated was that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 6.90 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instruments as would fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) the purchaser shall have to enter into an agreement and understanding with the employees ' union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs.6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalment @ Rs.45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
When the matter 1070 was taken up by the learned Company Judge on 17th September, 1990, only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deduction 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
The learned Judge directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs.30 lakhs shall be paid until the entire eat nest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Certain other conditions were also stipulated but it is not necessary to notice them for the purpose of this appeal.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and prejudicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
On a consideration of relevant circumstances, the Division Bench came to the opinion that it would not be appropriate for it to set aside the sale, and that no useful purpose will be served by postponing the sale of the assets any further.
At the same time, it was of the opinion that some more safeguards should be provided to protect the interest of the F.1s: Accordingly, it effected the following modifications in the terms of sale: (i) The balance consideration namely Rs.7 crores 20 lakhs (the earnest money of Rs. 80 lakhs was already deposited) shall be paid in the following manner: for the first two years, the instalments payable each year shall be Rs. 60 lakhs; thereafter half yearly instalments in a sum of Rs. 40 lakhs each shall be paid till the entire consideration is paid off.
The first instalment shall be paid by 10th June, 1993 and the last instalment by 30th June, 2000 A.D. (ii) In case of default in payment of any one instalment, the official liquidator 'shall be entitled to take possession of the assets sold.
In such an eventuality the entire earnest money and other instalments paid till then shall stand forfeited.
(iii) Buxa shall provide a revolving bank guarantee in favour of the official liquidator for a sum of Rs. 60 lakhs till all the instalments are paid.
The bank guarantee shall be furnished within three weeks from the date of the order and shall be kept alive till the entire consideration is paid off.
It Is not necessary to notice the other terms and conditions.
This order was made on November 13, 1990.
1071 Aggrieved by the order of the Division Bench, F.Is.
approached this Court by way of a Special Leave Petition (S.L.P. 14929/90), which was disposed of on 19.11.1990 under the following order : "Taken on Board on being mentioned.
We have heard Mr. Gopal Subramanium for the petitioner and counsel for the respondents.
We are of the view that some of the allegations which Mr. Subramanium makes can be appropriately dealt with by the High Court in the case the High Court is moved again but at present we do not think it would be advisable to interfere with the order of the High Court.
We gather today is fixed as the date of which the possession of property would be transfered from the official liquidator to the purchaser.
To secure the interest of the Financial institutions the petitioner we are of the view that until the High Court makes its order the purchaser shall be taken to be the receiver and shall be accountable to be a receiver." Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order.
In this application, the F.Is. prayed that the order dated 13th November, 1990 be recalled, the sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
It was submitted by the F.Is.
that the company in liquidation has been directed to be sold by the company court free from all encumbrances that the financial institutions have a charge for Rs. 8 crores on the assets of the company in liquidation and the granting a period of 10 years for paying the balance consideration in instalments is highly prejudicial to the interest of the F. Is.
Not taking adequate security from the Buxa for proper payment of balance consideration, it was submitted, was also prejudicial to their interest.
At the time of arguments, however, their counsel did not press the request for setting aside the sale.
His main submission was that Buxa be directed to pay the entire balance consideration immediately and that till the payment is made, it should be directed to furnish a bank guarantee besides interest @ 15% per annum.
Alternately, it was submitted that the number of instalments granted be reduced sharply with a provision for interest thereon.
The Division Bench disposed of the said application by its order dated 20.2.1992.
It held that (1) the F.Is.
(secured creditors) by their acts and conduct have come within the winding, up and.
therefore the 1072 assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) The purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factory.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
(4) The only question that survives for consideration is whether the time for making the payment should be curtailed and whether some interest should be directed to be paid by the purchaser.
The application was disposed of with the following directions: (a) The purchaser (Buxa) shall pay in the year 1992 a sum of Rs. 80 lakhs in six bimonthly instalments payable on the last day of February, April, June, August, October and December.
(b) In the year 1993, the sum payable shall be Rs. 85 lakhs.
In 1994, it shall be Rs. 90 lakhs and in 1995, Rs. 95 lakhs.
In the year 1996 and thereafter, the annual amount payable shall be Rs. one crore till the entire consideration is paid off.
(c) The revolving bank guarantee shall be equal to the amount payable in each of the said years.
(d) Along with the last instalment, the purchaser shall pay a lumpsum of Rs. 25 lakhs as and by way of interest.
(e) The purchaser shall not encumber, alienate or transfer assets purchased by him so long as the entire consideration is not paid.
This does not, however, prevent it from raising monies by hypothecation, mortage or by creating charge on the said assets.
(f) In default of payment in any two of the bimonthly instalments, the Official Liquidator shall take possession of the assets sold and all the amounts paid till then shall stand forfeited.
A few other directions were made which, not being relevant herein, need not be noticed.
In this appeal it is contended by Sri Salve, learned counsel for the appellants that the procedure followed by the High Court for selling the 1073 assets of the company in liquidation is not fair and proper and that its has caused grave prejudice to the interest of financial institutions.
He submitted that by granting such liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount due to the financial institutions is more than Rs. 12 crores.
He submitted that either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand, Sri P. Chidambaram, learned counsel for the purchaser submitted that it is not open to this court at this stage to effect any modification in the terms of the sale.
The purchaser in any event is not agreeable to any further modification.
If this court proposes to effect any modification in the terms of sale, the purchaser should be left free to withdraw his offer and to walk out.
The learned counsel submitted that Buxa 's offer of Rs. 6 crores, which was ultimately raised to Rs. 8 crores, was subject to the conditions contained in its offer.
True it is that Buxa accepted the terms and conditions stipulated by the Company Judge which were different from those stipulated by it.
But this was by its consent.
As a matter of fact, with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it even agreed to certain further modifications being made by the Division Bench on both the occasions.
The purchaser is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration.
He submitted that the purchaser has invested huge sums of money and has reemployed almost all the workers and that it is not in a position to bear any further financial burden.
(11) Before we deal with the contentions urged by the learned counsel, we feel constrained to make certain observations with respect to the terms of the sale notice issued by the court.
While we agree that there is no standard or uniform pattern to be followed in such matters, it would be appropriate for the court to adopt such procedure as would avoid a situation where the courts is put to the task of negotiating the terms of sale with the parties.
That would not be consistent with the dignity of the court.
It would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would be granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may 1074 prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
We are not saying that these are the only two methods.
There may be others.
Our object is only to emphasise that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case merely stated that the balance consideration may be paid in instalments as would be fixed by the court.
The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the court.
It is true that in this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments that offered by the purchaser all as a result of persuasive efforts by the Company Judge.
Even so, it has given room for the argument that had it been known beforehand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
We are not prepared to agree with Mr. Chaidambaram, learned counsel for Buxa that this court has no power at this stage to modify the number of instalments.
Nor do we see any basis for Buxa to take up the stand that either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for more than one reason.
Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble court, Calcutta i.e., deferred payment of instalments will be considered".
What the High Court of Calcutta could do, can equally be done by this court sitting in appeal.
Secondly, the purchaser had repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may be imposed by the Court.
We may refer to the stand taken by the counsel for the purchaser before the Division Bench as recorded in its order dated 13th November, 1990.
It reads thus: "Mr. Mukherjee, learned Advocate appearing on behalf of the purchaser has submitted that the sale in this case was sale of assets of the Mill as a going concern and not merely sale as scrap.
The Court had power to grant such instalments whether it was specifically provided in the terms and conditions as advertised or not.
In this connection he has drawn our attention to clause (10) of the Terms.
He has 1075 submitted in the present case the court had granted such instalments for such period and on such terms after considering all the facts. (para 7).
He has submitted that in any event if this court is not inclined to approve the confirmation of the sale on the terms and conditions as prescribed by the Trial Court, it may allow such confirmation in favour of his clients to remain but provide for some modification and/or addition to such term and conditions if this court think it fit and proper.
In this context, he has submitted that so far as the instalments are concerned, the quantum may be increased so that all the instalments are paid by the year 2000 A.D instead of 2002 A.D. as directed by the impugned order.
So far as the guarantee is concerned, he has submitted that the court can provide for similar guarantee as provided for in other cases for sale by court in cast of default.
He also submitted that it may be provided that the charge of the secured creditors be shifted to the sale proceeds and that the sale, which was free from encumbrances, should be subject to this that his clients should approach the financial institutions for further financial held (para 8) . " Even before the second Division Bench which passed the impugned order, the purchaser did not take up the stand that the court has no power to modify the terms and conditions of sale.
All that its counsel submitted was that having regard to the facts and circumstances of the case, the instalments should not be reduced.
The impugned order records the contention of the purchaser 's counsel in the following words: "It is submitted by Mr. Mukherjee, learned counsel for the purchaser that having regard to the commitments of the company and the fact that former employees have been re employed and the company has to consistently run on a profitable basis, it would not be possible to reduce the instalments any further.
" Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, we are of the opinion that certain modifications should be made in the number of instalments in which the balance consideration shall be paid.
But before we do so, we must refer to a particular fact which discloses the unfair conduct of the purchaser (Buxa).
According to the impugned order the purchaser had to pay a sum of Rs. 80 lakhs in the year 1992 in bimonthly instalments.
It paid only a total sum of Rs. 28 lakhs.
The excuse now put forward for nonpayment of the 1076 balance of 52 lakhs is the order of 'status quo ' passed by this court Having entertained the S.L.P. filed by the financial institutions, this court (K. Jayachandra Reddy and late R.C. Patnaik, JJ.) passed the following order on 14.5.1992: "Heard both the parties.
Status quo to be maintained.
The second respondent in SLP(C) 5377/92 shall not encumber, alienate or transfer the assets of the company in liquidation purchased by him.
Respondent No.2, shall, however, maintain accounts and, as and when required, produce the same before the Court.
Post the matter before an appropriate Bench on 21.7.1992.
Meanwhile, if the parties alone chose to file affidavits, they may file.
As the matter before us is at an interlocutory stage, it need not be treated as part heard.
" It is evident from a reading of the order that the order to maintain status quo did not and could never have meant stay of instalments payable by the purchaser in accordance with the impugned order.
To say so would amount to placing a totally unreasonable and unwarranted interpretation upon the said order.
It would be unfair above all.
The purchaser has been put in possession of the assets purchased by him and no fetter whatsoever was ever placed by the said order upon his possession or enjoyment of the property purchased by him.
The idea behind the order was that the purchaser should not transfer, alienate or encumber assets purchased and that he should maintain the accounts and produce them before the court.
The order directing that status quo to be maintained has to be understood in the said context.
We must say that after some debate, Mr. Chidambaram agreed fairly that his client 's interpretation of the said order was wrong, that he retreats his default and that he is prepared to pay the said amount of Rs. 52 lakhs along with such interest as may be prescribed by this Court.
It is directed that the purchaser shall pay the said amount of Rs. 52 lakhs due for the year 1992 in terms of the impugned order along with an amount 107 of Rs. 6 lakhs representing the interest on the said amount, consolidated i.e., a total of Rs. 58 lakhs on or before 5th March, 1993.
This payment shall be in addition to such other amounts as may be payable in accordance with the impugned order as modified by us herein.
Now coming to the modification of the terms imposed in the order under appeal, the only modification we wish to make is in the number of instalments.
After the payment of the aforesaid Rs. 52 lakhs due in the year 1992, the total balance consideration will be Rs. 5.80 crores.
This amount shall be paid in full by the end of the year 1996 in equal bi monthly instalments.
The instalments shall be payable by the last day of February April, June, August, October and December in each year.
This means that each instalment, excepting the last instalment, shall be in a sum of Rs.24,16,000.
The last instalment shall be in such sum as to make up the total shortfall payable on that date i.e., Rs. 20,16,000.
There shall be no other modification in the terms and conditions prescribed in the order under appeal including those relating to default and interest.
Having regard to the facts and circumstances of the case, there shall be no order as to costs.
For the reasons given above, the appeal arising from S.L.P. (C) No. 6736/92 filed by the purchaser is dismissed.
No costs.
G.N.R. Appeal dismissed. | Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4, 1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to rile a suit under Section 446 of the A suit was filed by them in September 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice was published again.
The sale notice would state that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 690 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instalments as would be fixed by tile 1064 Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) and purchaser shall have to enter into an agreement and understanding with the employees union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs. 6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalments @ Rs. 45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
On the date of sale before the learned company Judge only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deducting 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
It was directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs. 30 lakhs shall be paid until the entire earnest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and pre judicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
The Division Bench finding that it would be inappropriate to set aside the sale, effected modifications in the terms of sale thereby providing some more safeguards to protect the interest of the F.Is.
Aggrieved by the order of the Division Bench, F.Is.
approached this court by way of a Special Leave Petition (S.L.P. 14929/90).
This Court, taking the view that the allegations made on behalf of F.Is. can be dealt with by the High Court if it is moved again declined to interfere with the order of the High Court.
But with a view to secure the interest of the Financial institutions it passed an order on 19.11.90 that until the High Court makes its order the Purchaser shall be taken to be the receiver and shall be accountable as a receiver.
Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order with a prayer that the 1065 sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
They further submitted that they have a charge for Rs. 8 crores on the assets of the company in liquidation and that granting a period of 10 years for paying the balance consideration in instalments and not taking adequte security from Buxa for proper payment of balance consideration, was prejudicial of their interest.
The Division Bench disposed of the said application by its order dated 20 2 1992, holding that (1) the F.Is.
(Secured creditors) by their acts and conduct have come within the winding up and. therefore, the assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) the purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factor%?.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
However, it passed directions curtailing the time for payment and providing for payment of interest by the purchaser.
In these appeals by special leave it was contended for the Appellants that (a) the procedure followed by the High Court for selling the assets of the company in liquidation is not fair and proper and that it has caused grave prejudice to the interest of financial institutions, (b) By granting liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount.
due to the financial institutions is more than Rs. 12 crores, (c) either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand the purchaser/Respondent submitted that it is not open to this court at this stage to effect any modification in the terms of the sale; that though with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it agreed to certain further modifications being made by the Division Bench; it is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration and 1066 that as the purchaser has invested huge sums of money and has reemployed almost all the workers; it is not in a position to bear any further financial burden.
Modifying the order and dismissing the appeal, the Court, HELD: 1.
Though there is no standard or uniform pattern to be followed with respect to the terms of the sale notice issued by the Court, it would be appropriate for the court to adopt such procedure as would avoid a situation where the court is put to the task of negotiating the terms of sale with the parties.
That would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would he granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
These are not the only two methods.
But it has to be emphasised that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case.
merely stated that the balance consideration may be paid in instalments as would be fixed by the court The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the Court.
In this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments than offered by the purchaser all as a result of persuasive efforts by the Company Judge.
But it has given room for the argument that had it been known before hand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
[1073G H, 1074A D] 2.
The contention that the Supreme Court has no power at this stage to modify the number of instalments is untenable.
Nor there is any basis for Buxa to take up the stand that, either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for the following 1067 reasons; Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered".
what the High Court of Calcutta could do, can equally be done by this Court sitting in appeal.
Secondly, the purchaser has repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may` be imposed by the Court.
[1074E F] 3.
Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, the following modification was made in the number of instalments in which the balance consideration has to be paid: [1075F G] The total balance consideration of Rs. 5.80 crores, remaining due after payment of Rs. 52 lakhs due in the year 1992 shall be paid in full by the end of the year 1996 in equal bimonthly instalments.
The instalments shall be payable by the last day of February, April, June, August, October and December in each year.
Each instalment excepting the last instalment shall be in a sum of Rs. 24, 16,000.
The last instalment shall be in such sum as to make up the total short fall payable on that date i.e. Rs. 20,16,000.
[1077C] |
Appeal No. 690 of 1993.
From the Judgment and Order dated 21.5.1992 of the Patna High 13 Court in Civil Writ Jurisdiction Case No. 1317 of 1990.
A.K. Sen and M.P. Jha for the Appellant.
Uday Singh, A.K. Sinha and A. Sharan for the Respondents.
The following Order of the Court was delivered: Leave granted.
The admitted facts in the present case are that by an order dated 16th August, 1969 the appellant was appointed by the respondent 2.
Bihar School Examination Board ( 'Board ') as a Special Officer (Stores) for a period not exceeding six months, in the pay scale of Rs. 300 20 400 EB 20 500 with usual allowances.
His services, however, were continued till 10th March, 1971, when he was intimated that the said post of Special Officer would be abolished w.e.f 1st April, 1971 and consequently his services would stand terminated.
The appellant filed a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant whereby he was to be appointed as Section Officer in the General Cadre and his pay as a Special Officer was to be protected.
Pursuant to this compromise, the Board passed an Office Order on 20th March, 1972 which stated as follows: "Shri Tej Narain Tiwary who is at present working as Special Officer (Stores) on purely temporary basis, is appointed on the vacant post of Sectional Head (Section Officer) in the initial pay of the pay scale of Rs. 230 15350 EB 20 450 besides dearness allowance.
Besides pay he is sanctioned reducible personal pay at the rate of Rs. 70 per month".
By the same order, another Special Officer (Vigilance) was also appointed to one more vacant post of Sectional Head (Section Officer) in the same pay with an additional reducible personal pay of Rs. 20 per month.
The order further stated as follows: "As per the decision dated 18.12.1971 of the Board, the posts of Special Officer (Stores) and Assistant Vigilance Officer are abolished from the date of issue of this order: 14 We are not concerned with the post of Special Officer (Vigilance).
What is obvious from the above order is that the appellant was working as Special Officer till that time and was appointed in one of the vacant posts of Section Officers with the protection of his pay.
We do not know how the amount of Rs. 70 per month was arrived at.
Read with the note put up by the Secretary of the Board, it is apparent that appellant 's then pay as Special Officer was to be protected entirely.
We presume that it was wholly protected.
The point to note is that his pay could be protected, whether partially or fully, only if he was transferred from one post to another whether on account of the abolition of the former post or as a matter of compulsory transfer.
Read with the Office Order dated 20th March, 1972, it appears that the Board had adopted the device of first transferring the appellant from the post of Special Officer to the post of Section Officer and then abolishing the post of the Special Officer.
It is necessary to note this fact, since the Board has interpreted this device as amalgamation of the posts of Special Officer with that of the Section Officer and not as a compulsory transfer from the post of Special Officer to that of Section Officer.
Further, whether it is construed as amalgamation or as compulsory transfer, the legal consequences are the same, viz., that the appellant would have to be absorbed in the post of Section Officer from the date of his appointment in the post of Special Officer.
Since further the Board itself regularised the appointment from the date of appointment as Special Officer, viz., 16th August, 1969, as is evident from its Order of 11th November, 1986, no objection can be raised in that behalf However, respondents who was promoted to one of the posts of Section Officers on 27th August, 1970 has contended that the seniority given to the appellant in the post of Section Officer w.e.f 16th August, 1969 i.e., from the day on which he was appointed as Special Officer, was illegal.
We may now deal with the said contention.
Respondent 5 was an Assistant in the Office of the Board and as stated above, was for the first time, promoted as Section Officer on 27th August, 1970.
It appears that for the first time in 1983, a seniority list of Section Officers was prepared but not circulated.
In that list respondents was shown at No. 23 whereas, the appellant was shown at No. 33.
This was so because two representations made by the appellant to give him seniority from 16th August, 1969 stood rejected on 20th April, 1977 and 13th March, 1978 respectively.
It appears that it was for the first time that by the order 15 dated 11th November, 1986, the appellant 's representation was accepted and he was given seniority from 16th August, 1969.
Against the said order, respondents filed a writ petition which was withdrawn by him on 22nd December, 1986 since the learned Advocate General appearing for the Board stated before the Court that by the order dated 11th November, 1986 the Board had merely given seniority to the appellant from 16th August, 1969 and that grant of this seniority to the appellant had nothing to do with the inter se seniority in the cadre of Section Officers which would be determined later.
It appears that, thereafter, & seniority list of Section Officers was prepared by the Board in which the appellant was shown above respondent 5 and was granted promotion to the post of Assistant Secretary on 20th March, 1982 and to that of Deputy Secretary on 29th November, 1989.
Against the said list of seniority, the respondents filed the present writ petition in the High Court primarily challenging the order of llth November, 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post and was not a cadre post; since the said post was abolished and thereafter the appellant was appointed as a Section Officer on 20th March, 1972 he would have to rank below respondent 5 who was appointed as Section Officer on 27th August, 1970.
The High Court also relied on the fact that the Board 's case before it was that as a consequence of the abolition of the post, the appellant was appointed as a Section Officer.
We are of the view that the approach of the High Court is not correct.
As stated above, the facts reveal that the appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer, and after the transfer, by the same order of the 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of Special Officer with the cadre posts of Section Officers.
As stated earlier, the consequence of both the interpretations of the said order is the same, viz., that the appellant would get seniority from the date of his appointment as the Special Officer.
That it is a case of a compulsory transfer or of the amalgamation of post is evident from the fact that the appellant 's salary as Special Officer was 16 protected on the said transfer.
It is true that there is nothing on record except the order of 20th March, 1972 to show that the temporary post of Special Officer which was created for the first time on 16th August, 1969 with the appointment of the appellant to it, was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and the orders of the Board itself.
It cannot be suggested that the Board could not regularise the post and the appointment retrospectively by passing resolutions which in the absence of rules and regulations are equally valid.
The Board 's intentions in that behalf are clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the conditions governing it.
There is, therefore, nothing in the decisions relied upon by the learned Counsel for respondent 5, viz., The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra and Ors.
, ; and State of Bihar & Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl.
1 SCC 334 which militates against the seniority given to the appellant.
We accordingly allow the appeal.
There will be no order is to costs.
S.L.S. Appeal allowed. | By an order dated 16th August 1969, the appellant was appointed by respondent 2 the Bihar School Examination Board as a Special Officer (Stores) for a period not exceeding six months in the pay scale of Rs. 300 20400 EB 20 500, with usual allowances.
The services were, however, continued till 10th March, 1971, when it was intimated that the said post of Special Officer would be abolished with effect from 1st April 1971, and consequently his services were terminated.
The appellant riled a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant, whereby he was appointed as Section Officer in the General Cadre and his pay as Special Officer was to be protected.
Pursuant to this compromise, the Board by order dated 20th March, 1972 appointed him on the vacant post of Section Officer, with a personal pay of Rs. 70 per month.
Later, by an order dated 11.11.86, respondent No. 2 regularised the appointment from the date of his appointment as Special Officer viz. 16.8.69.
However, respondent No. 5 promoted to one of the posts of Section officers on 27 8 70, contended that the seniority given to the appellant in the post of Section Officer w.e.f. 16 8 69, ie.
from the date of his appointment as Special Officer was illegal.
In the Seniority list of Section Officers prepared by respondent No. 2, the appellant was shown above respondent No. 5 and he was granted promotion to the post of Asstt.
Secretary on 20th March, 1982, and to that of Deputy Secretary on 29.11.87.
12 Against the said list of seniority, respondent No. 5 filed a writ petition in the High Court, formally challenging the order of dt 11th Nov., 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post, which was abolished, and therefore, he would have to rank below respondent No. section The appellant came to this Court.
Allowing the Appeal, HELD: The approach of the High Court was not correct.
The appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer and after that transfer by the same order of 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of a Special Officer with the cadre post of Section Officer.
[15H G] The consequence of both the interpretations of the said order is the same, viz. that the appellant would get seniority from the date of his appointment as Special Officer.
[15G] It is true that there is nothing on record except the order of 20th March, 1972, to show that in the temporary post of Special Officer which was created for the first time on 16th August, 1969, that the appointment of appellant was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and orders of the Board itself.
The Board 's intention is clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the condition governing it.
There is accordingly nothing, which militates against the seniority given to the appellant.
[16A D] The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra & Ors.
, ; and State of Bihar& Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl. 1 SCC 334, referred to. |
y Application No. 1 of 1992.
IN Writ Petition No. 1165 of 1986.
(Under Article 32 of the Constitution of India).
M.C. Bhandare, P.P. Rao, N.N. Goswamy, C.K Sucharita, Ms. Shashi Kiran, Ms. Manjula Gupta, R. Shashi Prabhu, V.K. Verma and Raj Kumar Gupta for P.C. Kapur for the appearing parties.
The Judgment of the Court was delivered by SAWANT, J.
The petitioner applicants are some of the Medical Officers who were recruited by the Railways on ,id hoc basis as Assistant Divisional Medical Officers between 1968 and 1st October, 1984.
They were appointed as such ad hoc employees by way of a stop gap arrangement pending the regular recruitment to the said posts through the Union Public Service Commission [UPSC ' for short], according to the rules.
It appears that although from time to time the UPSC recruited candidates on regular basis, there remained some vacancies unfilled, either because the doctors recruited were less in number than the number of vacancies since suitable candidates were not available or some of those who were selected did not join the service or between the date of advertisement by the UPSC and that of the empanelling, some more vacancies occurred.
Whatever the reasons, the fact was that even after the UPSC undertook the exercise of recruiting the doctors from time to time, some vacancies always remained unfilled.
The result was that every time the petitioner applicants and others like them were continued on ad hoc basis as a stop gap arrangement till the next recruitment by the UPSC.
It may be mentioned in this connection that the ad hoc appointees were always at liberty to appear before the UPSC for their regular recruitment.
Some of them in fact did so appear and were selected; others like the petitioner applicants either failed to be selected or did not care to appear.
The fact, however, remains that the petitioner applicants and others like them continued to serve on ad hoc 4 basis since 1968.
Hence they filed writ petitions in this Court for their regularisation in service.
By an order dated 24th September, 1987 passed in the case of Dr. A.K Jain & Ors.
vs Union of India & Ors.
, [1987] Supp.
SCC 497 at 500 this court directed as follows: "(1) The services of all doctors appointed either as Assistant Medical Officers or as Assistant Divisional Medical Officers on ad hoc basis up to October 1, 1984 shall be regularised in consultation with the Union Public Service Commission on the evaluation of their work and conduct on the basis of their confidential reports in respect of a period subsequent to October 1, 1982.
Such evaluation shall be done by the Union Public Service Commission.
The doctors so regularised shall be appointed as Assistant Divisional Medical Officers with effect from the date from which they have been continuously working as Assistant Medical Officer/Assistant Divisional Medical Officer.
The Railway shall be at liberty to terminat e the services of those who are not so regularised.
If the services of any of the petitioners appointed prior to October 1, 1984 have been terminated except on resignation or on disciplinary grounds, he shall be also considered for regularisation and if found fit his services shall be regularised as if there was not break in the continuity of service but without any back wages.
(2) The petitions of the Assistant Medical Officers/Assistant Divisional Medical Officers appointed subsequent to October 1, 1984 are dismissed.
But we however direct that the Assistant Divisional Medical Officers who may have been now selected by the Union Public Service Commission shall first be posted to the vacant posts available wherever they may be.
If all those selected by the UPSC cannot be accommodated against the available vacant posts they may be posted to the posts now held by the doctors appointed on ad hoc basis subsequent to October 1, 1984 and on such posting the doctor holding the post on ad hoc basis shall vacate the same.
While making such postings the principle of 'last come, first go ' shall be 5 observed by the Railways on zonal basis.
If any doctor who is displaced pursuant to the above direction is willing to serve in any other.
zone where there is a vacancy he may be accommodated on ad hoc basis in such vacancy.
(3) All Assistant Medical Officers/Assistant Divisional Medical Officers working on ad hoc basis shall be paid the same Wary and allowances as Assistant Divisional Medical Officers on the revised scale with effect from January 1, 1986.
The arrears shall be paid within four months.
(4) No ad hoc Assistant Medical Officer/Assistant Divisional Medical Officer who may be working in the Railways shall be replaced by any newly appointed AMO/ADMO on ad hoc basis.
Whenever there is need for the appointment of any AMO/ADMOs on ad hoc basis in any zone the existing ad hoc AMO/ADMOs who are likely to be replaced by regularly appointed candidates shall be given preference.
(5) If the ad hoc doctors appointed after October 1, 1984 apply for selection by the Union Public Service Commission the Union of India and the Railways Department shall grant relaxation in age, to the extent of the period of service rendered by them as ad hoc doctors in the Railways.
All the Writ Petitions are disposed of in the above terms.
" It appears that since they experienced difficulty in adjusting the seniority of the petitioner applicants the Union of India moved an application before this Court and this court on 1st November, 1988 made the following order in that application: "We have heard learned counsel for the Union of India (the applicant in this Civil Miscellaneous Petition) and the learned counsel for the petitioners in the Writ Petition.
In the circumstances of the case we feel that the Union 6 Government should be directed to implement the order passed by us in the writ petition Nos. 522, 875, 180 & 200 of 1987 and connected cases on 24th September, 1987 in full except to the extent of fixing the inter se seniority between the petitioners in the Writ Petition and the direct recruits.
We accordingly make an order in this case.
The question of seniority, however, is left to be decided by the Government in the light of the decision to be rendered by this Court in the cases which are pending before the Constitution Bench involving similar questions.
If any person is aggrieved by the decision of the Government on the question of seniority he is at liberty to question it in an appropriate forum.
The order passed by us in the Writ Petition subject to the above modification shall be complied with by the Union Government within two months without failure.
The Civil Miscellaneous Petition is disposed of accordingly.
" The present application has been moved in Writ Petition No. 1165 of 1986 which has been disposed of on 24th September, 1987 along with other writ petitions in which also the aforesaid order of 1st November, 1988 was made by this Court.
Thus we are concerned in this application with those Assistant.
Divisional Medical Officers who were appointed between 1968 and 1st October, 1984 and who have been regularised by the aforesaid two orders but whose seniority remains to be fixed.
After the order of 1st November, 1988, the Constitution Bench of this Court delivered its judgment in Direct Recruit Class II Engineering Officers ' Association & Ors.
vs State of Maharashtra & Ors.
, ; pending ' which decision the fixation of seniority of the petitioner applicants was kept pending.
In that case the Constitution Bench has laid down certain guidelines for fixing the seniority.
Two of them, viz., (A) & (B), which are relevant for our purpose are as follows: "(A) Once an incumbent is appointed to a post according to rule, his seniority has to be counted from the date of 7 his appointment and not according to the date of his confirmation.
The corollary of the above rule is that where the initial appointment is only ad hoc and not according to rules and made as a stop gap arrangement, the officiation in such post cannot be taken into account for considering the seniority.
(B)If the initial appointment is not made by following the procedure laid down by the rules but the appointee continues in the post uninterruptedly till the regularisation of his service in accordance with the rules, the period of officiating service will be counted.
" Before we discuss as to which of the above two guidelines would be applicable in this case, it is necessary to state the relevant facts relating to the applicants ' appointment.
Firstly, it is an admitted fact that the UPSC introduced the Combined Medical Services Examination for the first time in the year 1977.
Prior to 1977, the method of recruitment was otherwise than by examination.
As stated earlier, some of the petitioner applicants were recruited between 1968 and 1977.
Secondly, the petitioner applicants were given three chances for their selection through the UPSC but they did not avail of them.
Some of those who were appointed with them, however, had availed of the chances and have been appointed as regular direct recruits and they have been given their seniority from the date they were regularly appointed through the UPSC.
Thirdly, it appears that although in 1977 the written examination was introduced, on account of exigencies, the UPSC held two special selections in the years 1982 and 1985 based on interviews only and by relaxing the age limit.
In these two special selections respectively 100 and 67 ad hoc doctors like the petitioner applicants were selected and absorbed in the regular cadre.
They have also been given their seniority from the date they were so absorbed regularly.
The petitioner applicants either failed to appear in these examinations also or after appearing in the same, had failed Thus, while fixing the seniority of the petitioner applicants we have to keep in mind that there are three classes of Assistant Divisional Medical Officers (i) the outsiders who have been directly recruited through the UPSC either on the basis of the written examination or the interview; (ii) 8 those who were ad hoc appointees like the applicants but who came to be regularly recruited through the UPSC by appearing in the written examination or in the interview; and (iii) the present petitioner applicants who either did not appear in any written examination/interview or had failed to get through them but who have been regularised in service because of the orders of this Court dated 24th September, 1987 and 1st November, 1988.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guideline (A) laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
In fact, they do not fall under guideline (B) given therein either, since their regularisation is not in accordance with the rules but as a consequence of special procedure laid down by this Court.
The expression "in accordance with the rules ' or "according to rules" used in the said guidelines (A) and (B) means the rules of recruitment and not the special procedure laid down by this Court.
The petitioner applicants thus fall in an altogether different category not covered under any of the guidelines given in Direct Recruit Class II Engineering Officers ' Association 's case (supra).
We have, therefore, to evolve a procedure for fixing their seniority.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
Secondly, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers This is not and cannot be disputed on behalf of the petitioner applicants.
This matter was heard earlier on 14th September, 1992 and was reserved for judgment.
At that time, neither the in service direct recruits nor the outsider direct recruits were made parties to the application.
They made separate applications, being I.A. Nos. 2 and 3 respectively for im pleadment/intervention and requested that they be heard in the matter before judgment is pronounced.
Hence, this matter was set down for a fresh hearing and all the parties were heard on 11th and 18th January, 1993.
The anxiety of the interveners, was obvious.
In no case their seniority should be disturbed and they be penalised for passing the examinations/interview tests and for coming into the cadre according to the rules through 9 the UPSC, and no premium should be given to the applicants for their refusal to appear for the tests or for their failure to pass the same.
This contention of their is unexceptionable and whether they had appeared in the case or not, the Court was bound to protect their interests particularly when the matter was heard in their absence.
The petitioner applicants, however, relied upon a decision of this Court in Dr. P.P.C Rawani & Ors. etc vs Union of India & Ors., (JT 1991 (6) 534).
Shri Bhandare, appearing for the petitioner applicants, made a very fervent plea that in the circumstances, the course adopted by this Court in Dr. Rawani 's case (supra) should be followed which will do no injustice to both the categories of direct recruits.
We have gone through the said decision and have anxiously considered whether the course adopted there should be adopted in the present case.
We are conscious of the fact that the petitioner applicants have been serving the Railways from the year 1968.
It is also possible, as contended on their behalf that many of the outside direct recruits have joined the service long after 1968 and some of them might have even taken initial instructions from the petitioner applicants.
We are also conscious of the fact that candidates in service have a disadvantage as against the fresh candidates in the tests particularly when they face the tests after a long lapse of time.
As against this, however, we cannot lose sight of the fact that the recruitment rules made under Article 309 of the Constitution have to be followed strictly and not in breach.
If a disregard of the rules and the by passing of the Public Service Commissions are permitted, it will open a back door for illegal recruitment without limit.
In fact this Court has, of late, been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
It appears that since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities have been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept in cold storage and candidates dictated by various considerations are being recruited as a matter of course.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have exerted themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel unlike in Dr. Rawani 's case (supra).
We have thus on hand three classes of 10 employees as pointed out earlier, viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
Further, Dr. Rawani 's case (supra), as has been pointed out on behalf of the respondents, pertains to the Central Government Health Services which has a larger component both at the initial and promotional stages.
The course adopted by this Court to direct creation of supernumerary promotional posts at every higher promotional stage there, may not be feasible in the medical service in the Railways.
The creation of supernumerary posts has its own limitations, both physical and financial.
The burden of additional posts even when they are not necessary and cannot be accommodated, is not easy to carry.
We are, therefore, of the view that the direction given in Dr. Rawani 's case (supra) has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
We would rather refrain from creating a precedent by giving such directions.
In the result, we direct that the seniority of the direct recruits both outsiders and insiders should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till this date.
Among themselves, their seniority will be governed by the dates of their initial appointment.
The interlocutory application is disposed of in the above terms.
G.N. Application disposed of. | The petitioner applicants were recruited by the Railways on ad hoc basis as Assistant Divisional Medical Officers between 1968 and 1984.
Though UPSC recruited candidates on regular basis from time to time, either due to non availability of number of candidates or non joining of selected candidates, vacancies remained and persons like the petitioners continued in such vacancies on ad hoc basis.
The petitioners riled Writ Petitions before this Court for regularisation of their services.
By orders of this Court, the services of the petitioners have already been regularised.
The present application is for fixing the seniority of the Writ Petitioners whose services were regularised.
Disposing of the application, this Court, HELD: 1.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court, it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guidelines in Direct Recruit Class II Engineering Officers 'Association 's case.
The expression "in accordance with the rules ' or 'according to rules" used in the said guidelines means the rules of recruitment and not the special procedure laid down by this Court The petitioner applicants thus fall in an altogether different category.
Therefore, a procedure for fixing their seniority has to be evolved.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers ' 2 Association 's case.
Further, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers.
[8C F] Direct Recruit Class II Engineering Officers Association & Ors.
vs State of Maharashtra & Ors.
, ; , referred to.
Of late this Court has been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
Since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept In cold storage and candidates dictated by various considerations an being recruited as a matter of course.
[9E G] 2.2.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel.
There are three classes of employees viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
The direction given In Dr. Rawani 's case for creation of supernumerary posts has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this Court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
This Court would rather refrain from creating a precedent by giving such directions.
[9G H; 10A D] Dr A.K Jain & Ors.
vs Union of India & Ors.
[1987] Sapp.
SCC 497 and Dr. P.P. C. Rawani & Ors etc.
vs Union of India & Ors.
, JT 1991 (6) 534, referred to.
The seniority of the direct recruits both outsiders and insiders ,should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till date.
Among 3 themselves, their seniority will be governed by the dates of their initial appointment [10E] |
Appeal No. 265 of 1956.
Appeal from the judgment and order dated August 26, 1954, of the Calcutta High Court in Income tax Reference No. 107 of 1952.
S.Mitra, Dipak Choudhry and B. N. Ghosh, for the appellants.
C.K. Daphtary, Solicitor General of India, K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
356 1959.
March 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
Messrs.
Mcgregor & Balfour, Ltd., Calcutta (hereinafter called the Company) is a Company incorporated in the United Kingdom.
Its head office is also there.
It, however, does business in India also.
In some of the previous years, the Company was required to pay excess profits tax both in England and in India.
When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian lncome tax Act, under s.12(2) of the Indian Excess Profits Tax Act.
In the assessment year 1947 1948 which corresponded to the accounting year of the Company ending on October 31, 1946, 'it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England.
This was under section 28(1) of 4 & 5, Geo.
VI, Ch. 30.
For purposes of the levy of the Indian Income tax, this sum was included in the taxable profits of the Company by the Income tax Officer.
He purported to act under section 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act).
The income of the Company in India was held to be Rs. 6,34,937 (including the sum of Rs. 2,31,009) while the in ' come outside the taxable territory was held to be Rs. 4,29,620.
Applying section 4A(c)(b) of the Indian Income tax Act, the Income tax Officer assessed the Company on its total world income.
The appeals of the Company made successively to the Appellate Assistant Commissioner and the Incometax Appellate Tribunal were dismissed.
The Tribunal, however, referred the following questions of law to the High Court at Calcutta under section 66 of the Indian Income tax Act: "(1) Whether on the above facts and circumstances of this case the Tribunal was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income tax Act ? and (2)If so, whether this amount could not be taken into consideration for determining the residence of the 357 assessee under section 4A(c)(b) of the Indian Income tax Act ? " This reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated August 26, 1954, answered the first question in the affirmative and the second in the negative.
They, however, granted a certificate under section 66A of the Indian Income tax Act, read with article 135 of the Constitution to appeal to this Court.
No appeal has been filed on behalf of the Department, and the second of the two questions must be taken to be finally settled in this case.
The contentions of the Company in this appeal, thus, concern only the first question, and they are two: It was said firstly that section 11(14) of the Finance Act could not be made applicable to the assessment year 1947 1948, because the provision was not incorporated in the Indian Income tax Act or repeated in the subsequent Finance Acts.
This argument was not seriously pressed before us, and beyond mentioning it, Mr. Mitra for the Company did not choose to elaborate it.
We think that Mr. Mitra has been quite correct in not pursuing the matter.
The section framed as it is, does apply to subsequent assessment years just as it did to the assessment for 1946 1947, and prima facie, it was not necessary to follow one of the two courses detailed above.
Since the point was not pressed before us, we need not give our reasons here.
It was said nextly that the High Court was in error in construing section 11(14) of the Finance Act as a provision which created a liability proprio vigore, as if it was a charging section.
It was contended that the repayment was not within the taxable territory, and in view of the answer to the second question as to the applicability of section 4A(c)(b), there could be no tax upon it.
On behalf of the Department it was argued that the sub section created a charge by itself and the fiction therein created being sufficient and clear, it was not necessary to consider where the income arose.
Section 11(14) of the Finance Act reads as follows: " Where under the provisions of sub section (2) of 358 section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income tax and supertax the profits and gains of any business, the amount of any repayment under sub section (1) of Section 28 of the Finance Act, 1941, (4 & 5, Geo.
6, c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6, Geo 6, c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income tax Act, 1922, and shall, for the purpose of assessment to income tax and super tax, be treated as income of the previous year during which the repayment is made.
" This section may be compared with R. 4(1) of the Rules which are applicable to cases 1 and 11 of sch.
D of the Income tax Act, 1918 (8 & 9, Geo.
V, c. 40): " Where any person has paid excess profits duty, the amount so paid shall be allowed as a deduction in computing the profits or gains of the year which included the end of the accounting period in respect of which the excess profits duty has been paid; but where any person has received repayment of any amount previously paid by him by way of excess profits duty, the amount repaid shall be treated as profit for the _year in which the repayment is received.
" The English rule above quoted deals first with the deduction of the amount paid as excess profits duty from the profits or gains of the year which includes the end of the accounting period in respect of which the excess profits duty has been paid a matter dealt with in section 12(2) of, the Indian Excess Profits Tax Act, and next with the assessability to tax of the amount repaid from the excess profits duty previously charged a matter dealt with in sub sections (11) and (14) of section 11 of the Finance Act.
The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verbal they are substantially in the same words and also in pari materia.
The concluding words of the English rule " the amount repaid shall be treated as profits of the year in which the repayment is received ", and which have been interpreted by 359 English Courts may specially be compared with the concluding words of sub section
(14) of section 11 of the Finance Act, which run: " any repayment. shall, for the purposes of assessment to income tax and super tax, be treated as the income of the previous year during which the repayment is made.
" There can be no doubt that the intention underlying the two provisions is the same, and the language is substantially similar.
Now, the English rule was interpreted by the English Courts to create a liability irrespective of considerations arising from the general provisions of the income tax law.
In Eglinton Silica Brick Co., Ltd. vs Marrian (1), the assessee company which had gone into voluntary liquidation in 1904 was carried on by the liquidator till 1921 when the business was sold to another company which took it over on October 5, 1921, and the business of the appellant company then ceased.
The income tax assessment for the year 192122 was apportioned between the two companies and inasmuch as the assessee company had suffered a loss, it was reduced to nil in its case.
The assessee company then received pound, 7,224 and pound, 1,150 in 1952 after it had ceased to carry on business as repayments of excess profits duty, and this income was assessed under R. 4(1) above mentioned.
The question was whether this was right.
The case was considered by the Lords of the First Division, and they are their opinion against the assessee firm.
The Lord President (Clyde) with whom Lords Skerrington, Cullen and Sands agreed (Lord Sands dubitans) explained the two parts of the rule as follows: " The principle is obvious.
It is that if a taxpayer has made profits assessable (directly, or indirectly through the operation of the three years ' average) to income tax, and the Revenue takes a share of those profits in the name of Excess Profits Duty, it is only fair that the profits actually assessed to Income Tax should suffer some corresponding deduction. . ." (1)(1924) , 98.
360 The problem which arose in the case of repayment of Excess Profits Duty was different.
Nobody knew or could know how soon, or how late, repayment might fall to be made; nor whether the business whose profits were assessed to Excess Profits Duty would be in the same hands when repayment (if any) came to be made.
By that time the business might have ceased to be in existence.
Repayment might therefore have to be made to a person who was not carrying on the original business.
The original trader might have given up business, died, and an executor might have come in his place.
The solution provided for all these cases is that contained in the second part of the paragraph, according to which the amount repaid to any person is to be I treated as profit for the year in which the repayment is received. ' It is obvious that the amount of the former trading profits so repaid could not actually be trading profits for such year.
None the less, the amount repaid is to be treated as if it were that which in fact it is not, and cannot be.
The amount repaid consists of trading profits which reach the taxpayer out of their proper time.
However belated his fruition of them, they have not lost their original character as trading profits.
In my opinion, this is what explains the position of paragraph (1) of Rule 4 as part of the Rules under Cases I and 11 of Schedule D, which are concerned with the profits of trades and vocations.
That some artificial rule should be formulated was in the circumstances inevitable, and the highly artificial character of the rule adopted is shown by the words in which it is expressed , the amount repaid shall be treated as profit for the year in which the repayment is received.
In short, the amount repaid is deemed to be something that it is not, and could not in the actual circumstances possibly be.
Nor is this in any way unreasonable or contrary to what might be expected, if regard be had to the subject matter.
For, as has been seen, the Excess Profits Duty was itself a part of the trading profits computed by methods familiar under the Income Tax Act.
It was not merely a part of something which entered into the computation of profit; it was actual 361 computed profit.
And, but for the disparity between the ' accounting period ' and the three years ' average, it would have been directly assessable to Income Tax.
" A similar view was taken in the Court of Appeal by Lord Hanworth, M. R., Scrutton, L. J., and Romer, J. (Scrutton, L. J., dubitans) in A. & W. Nesbitt Ltd. vs Mitchell (1).
There too, the assessee company after suffering losses in the accounting period May 1 to November 25, 1920, went into liquidation and ceased to trade.
On April 22, 1924, the repayment of Excess Profits Duty took place, and this was assessed to income tax.
The Master of the Rolls described the amount received as repayment in these words: " But in respect of what is that payment made ? It is not a legacy, it is not a sum which has fallen from the skies ; it, is a sum which is repaid because there was too large a sum paid by the Company to the Revenue Authorities over the whole period during which Excess Profits Duty was paid, and that sum means and is intended to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading.
It comes back, therefore, not having lost its character but being still the repayment of a sum too much, it is true, but a sum taken out of the profits which were made by the Company in the course of its trading, profits which at the time they were made were subject to Income Tax and subject to Excess Profits Duty, and that is the character of the repayment that has been made.
" Dealing with the rule, the Master of the Rolls observed : "I have pointed out, this is a case where the Company has received payment of an amount previously paid by way of Excess Profits Duty and having that characteristic attaching to it; and we are told by the Statute that when such a sum is repaid it is to be treated as a profit for the year in which the repayment is received.
It is said it may be treated as a (1) 217, 218.
46 362 profit; but it ought not to be treated as an assessable profit.
The answer, to my mind, is that it is paid back not by way of a sum which has no origin or ancestry ; it is a sum which represents a repayment of the amount previously paid by that company in the form of Excess profits duty upon their trading.
If it is to have that character and is to be treated as such a profit, although it be a repayment of sums paid in respect of profits, it is to be treated as a profit for the year in which the repayment is received.
The word ' treated ' indicates that it is to be deemed to be something which in fact it is not, or whether it is so or not it is to be treated as a profit, and therefore it is, to my mind, impossible to discuss the question of whether or not difficulties may arise or whether it may be criticised as financially not quite sound that it should be treated in this method in that particular year; but we are told by the Statute that it is to be treated as a profit for the year in which the repayment is received.
" In a case similar on facts as the ones cited above (Kirke 's Trustees vs The Commissioners of Inland Revenue (1)), the House of Lords Viscount Cave, L. C., Lord Atkinson, Lord Shaw of Dunfermline, Lord Sumner and Lord Carson) placed the same construction upon the latter part of R. 4(1).
The following passage in the speech of Lord Sumner, explaining the extent of the fiction in the latter part of the Rule, is extremely instructive : " The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty.
Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year.
Treated ' is a, fresh word free from legal technicality.
(1) , 332.
363 It is the widest word that could be chosen.
The Legislature avoided saying 'shall be assessed as ' or I shall be brought into the computation of profit and loss , and simply says that something which is not profit but mere payment shall be treated as profit, which it c may or may not be, and as profit for the year.
I think, therefore, that the word treated is an apt word to impose a charge ".
See also in this connection Olive and Partington Ltd. vs Rose (1).
These cases were relied on by Chakravarti, C. J., and Lahiri, J., in the judgment under appeal, and the learned Judges pointed out that the addition of the words " for the purposes of assessment to income tax and super tax " rather strengthen the reasoning in its application to the words of the Indian Statute.
We agree with this statement.
It is to be noticed that the sub section creates two fictions.
By the first fiction it makes the amount of any repayment ' income ' for the purposes of the Indian Income tax Act, and goes on to say that that ' income ' shall be ' treated ' for purposes of assessment to income tax and super tax, as the income of the previous year.
Mr. Mitra, for the Company contends that no doubt the amount may be treated as 'income ' for the purposes of the Indian Income tax Act, but the Department is still under a duty to prove that the Company is liable to tax at all.
According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as 'within the taxable territory ', it would have said so specifically.
In our opinion, this submission cannot be accepted.
That this would have been taxable income but for the provisions of section 12(2) of the Excess Profits Tax Act, goes without saying.
The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years.
The distinction between (1) 364 incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ' treated ' as income within the previous year.
The effect thus is that the sub section charges the said amount with a liability to tax by its own force or to borrow the words of Lord Sumner, is apt to ' impose a charge '.
In our opinion, the amount received as repayment of excess profits tax must be deemed to be 'income ' for the purposes of the Indian Income tax Act and for assessment it must be treated as income of the previous year.
The answer to question No. 1 given by the Calcutta High Court was thus correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed. | The appellant carried on business in England and in India.
For the previous years it paid excess profits tax in both countries and it obtained deduction of the amounts so paid from its profits and gains for the purposes of the Indian Income tax Act.
In the assessment year 1947 48 it obtained a repayment of RS.
2,31,009 out of the excess profits tax paid in England.
The Income tax authorities acting under section 11(14), Indian Finance Act 1946, included this amount received in England in the taxable profits of the appellant.
The appellant contended that the repayment not being within the taxable territory it could not be taxed.
Held, that the amount received as repayment of the excess profits tax was rightly taxed.
Under section 11(14) the amount of repayment was deemed to be 'income ' for purposes of the Indian Income tax Act and that ' income ' was to be treated as the income for the previous year during which the repayment was made.
Section 11(14) created a liability irrespective of the considerations arising from the general provisions of the income tax law.
The distinction between incomes within and without taxable territories was made unnecessary by section 11(14).
Eglinton Silica Brick Co. Ltd. vs Maryian, (1924) 9 Tax Cas. 92; A. & W. Nesbitt Ltd. vs Mitchell, (1926) " Tax Cas. 217 and Kirke 's Trustees vs The Commissioners of lnland Revenue, , applied. |
Appeal Nos.
3115 16 of 1980.
From the Judgment and Order dated 15.6.1978 of the Bombay High Court in I.T. Ref.
No. 458 of 1976.
V.U. Eradi and Suman J. Khaitan for Khaitan & Co. for the Appellant.
section Rajappa for Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Assessee is the appellant.
He is aggrieved by the decision of the Bombay High Court in Income Tax Reference No. 458 of 1976 answering the following question, which was referred to it at his instance, against him: "whether on the facts and in the circumstances of the case the amount of tax paid by Ballarpur on behalf of the assessee in assessment years 1974 75 and 1975 76 is income tax ore under the heading 'other sources" '.
The Ballarpur Paper and Straw Board Mills Limited (Ballarpur) is a public limited company engaged in the manufacture of paper and straw board.
It undertook to set up a caustic soda/chlorine manufacturing plant at Ballarpur.
For this purpose, it entered into an agreement with Krebs, a French concern, for purchase of certain machinery and equipment.
There was a second agreement between Ballarpur and Krebs whereunder Krebs undertook to provide services of certain personnel including engineers for setting up the plant at Ballarpur.
Krebs, in turn, entered into an arrangement with a Swiss concern, Escher Wyas Eurich, for supply of certain machinery and also to make available services of certain personnel.
The 30 assessee, Emil Webler, was one such person provided by the Swiss concern The assessee came to India and worked here in connection with the setting up of the plant.
According to the agreement between Ballarpur and Krebs the former undertook to pay salaries and other emoluments to personnel provided by Krebs in accordance with the formula contained in the agreement.
Inter alia, it was provided that 'salaries are understood free of any Indian tax or duty '.
For the assessment year 1974 75, the assessee appellant was paid a sum of Rs. 3,82,481 and for the assessment year 1975 76, a sum of Rs. 67,200 in addition to daily allowances and other facilities.
The assessee contended before the Income Tax Officer that he was not liable to pay tax He also filed returns affirming the said stand.
The stand taken by him was negatived, whereupon Ballarpur paid the tax of Rs. 3,23,400 and Rs. 35,546 for the said two assessment years respectively.
In his assessment orders, the I.T.O. treated the said tax amount as a perquisite and added the same to the salary amount received by the assessee.
The said addition was questioned by the assessee in appeal, before the A.A.C. but without success.
The matter was then carried to the Tribunal.
The Tribunal too did not agree with the assessee 's contention and dismissed his appeal whereupon he obtained the aforesaid reference which, as stated above, has been answered against him by the Bombay High Court.
For a proper appreciation of the question arising herein, it is necessary to notice certain factual statements contained in the Statement of the Case.
It is stated therein: "according to this agreement, Ballarpur were under an obligation to pay by the device of delegation invoices opened with a bank in France certain amount of salaries at agreed rates to Krebs and Cis.
Paris for setting up the plant at the town of Ballapur. . .
The Tribunal clarified that there was no dispute between the parties that the amounts of Rs. 3,82,481 and Rs. 67,200 paid by Ballarpur through Krebs to the assessee for services rendered by it in the two respective years were taxable under the heading 'Salary '.
It further clarified that there was no dispute between the parties, that the relationship of the employer and employee did not exist between Ballarpur and the assessee.
The Tribunal held as below: (1) Ballarpur was under a legal obligation to pay the tax if any, levied on the assessee; (2) Ballarpur paid the tax by virtue of such a legal obligation . . . 31 The facts found by the Tribunal thus show that the assessee appellant was paid certain salary free of tax but that the tax payable in that behalf was to be and was in fact paid by Ballarpur.
The assessment was made upon the assessee directly.
The question is whether the said tax component paid by Ballarptir can be included within the income of the assessee.
The first contention of ' the learned counsel for the assessee is that the amount paid by Ballarpur by way of tax cannot be treated as 'income ' of assessee at all.
His second contention is that the assessee did not receive the said amount and, therefore, it cannot constitute his income.
Indeed, the learned counsel sought to argue that Ballarpur was under no obligation to pay the said tax amount relating to the salary amount received by the assessee.
We find it difficult to agree with the learned counsel.
The definition of 'income ' in clause (24) of Section 2 of the Act is an inclusive definition.
It adds several artificial categories to the concept of income but on that account the expression 'income ' does not lose its natural connotation.
Indeed, it is repeatedly said that it is difficult to define the expression 'income ' in precise terms.
Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act.
It is from the said angle that we have to examine whether the amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee.
It cannot be overlooked that the said amount is nothing but a tax upon the salary received by the assessee.
By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax.
The said payment is, therefore, for and on behalf of the assessee.
It is not a gratuitous payment.
But for the said agreement and but for the said payment, the said tax amount would have been liable to be paid by the assessee himself He could not have received the salary which he did but for the said payment of tax.
The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context.
It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee.
We are, therefore, of the opinion that the High Court and the authorities under the Act were right in holding that the said tax amount is liable to be included in the income of the assessee during the said two assessment years.
The question then arises under which head of income should the said 32 income be placed.
Inasmuch as the assessee is not an employee of Ballarpur, which made the payment, it cannot be brought within the purview of Section 17 of the Act.
It must necessarily be placed under sub section (1) of Section 56, 'income from other sources '.
According to the said sub section, income of every kind which is not to be included from the total income under the Act shall be chargeable to income tax under the head 'income from other sources ', if it is not chargeable to income tax under any of the other heads specified in Section 14, Items A to E.
It is not the case of the assessee that any provision of the Act exempts the said income from the liability to tax The learned counsel for the assessee appellant relied upon certain decisions in support of his contention.
The first is the decision of this court in N.A. Modi vs S.A.L. Narayana Rao, SC.
An advocate was appointed as a Judge.
He received certain income after his appointment as a Judge in lieu of the professional service rendered by him before his appointment.
The question was whether the said amount is taxable.
It was held that it was not (in view of the provisions of the Act as it then stood).
The basis for the said decision is that the assessee therein cannot be said to be carrying on the profession of an advocate at the time he received the said income.
We are unable to see how the said decision helps the assessee herein.
Indeed, in the said decision this court emphasised that the question whether an income falls under one head or the other has to be decided according to the common notion of practical men, inasmuch as the Act does not provide any guidance in the matter.
It was observed that the heads of income must be decided on the nature of income by applying practical common notions and not by reference to the assessee 's treatment of income.
The application of said test does not certainly help the assessee herein.
The second decision cited is of the Bombay High Court in CLT.
Bombay vs Smt.
T.P. Sidhwa, The question was whether the income from property received by an assessee of which he is not the owner can be taxed as 'income ' from other 'sources '.
It was held that it cannot be so taxed.
We do not see any anology between the facts and principle of that case and those of this case.
Here the integral connection between the salary received by the assessee and the tax payable thereon, paid by Ballarpur in pursuance of a legal obligation, cannot be overlooked.
The third case cited is in Mrs. Sheela Kaushish vs C.I.T, Delhi, 131 I.T.R. 435 33 S.C.
In this case, it was held that determination of annual value under Section 23 of the Income Tax Act, 1961 should be done by taking the standard rent as the basis even where the assessee is receiving rent higher than the standard rent.
Again we must say, we see no relevance of the said principle of this case to the facts of this case.
For the above reasons, the appeals fail and are dismissed.
No costs.
V.P.R. Appeals dismissed. | Ballarpur, a public limited company undertook to set up a caustic soda/chlorine manufacturing plant.
It entered into an agreement with a French concern for purchase of certain machinery and equipment.
In another agreement with Ballarpur, the French concern agreed to provide services of certain personnel and Ballarpur agreed to pay salaries and other emoluments free of any Indian tax or duty to the personnel.
The French concern entered into an arrangement with a Swiss concern for supply of certain machinery and to make available services of certain personnel.
The assessee appellant was one such person.
He came to India and started working in connection with the setting up of the plant.
In addition to daily allowances and other facilities, the assessee appellant was paid Rs. 3,82, 481 and Rs. 67,200 for the assessment years, 1974 75 and 1975 76, respectively.
Before the Income Tax Officer, the assessee contended that he was not liable to pay tax.
The I.T.O. did not agree.
Ballarpur paid the tax amount of Rs. 3,23,400 and Rs. 35,546 for the assessment years respectively.
The Income Tax Officer treated the tax amount paid by Ballarpur as a perquisite and added the same to the salary amount of the assessee.
The assessee questioned the action of the I.T.O. in appeal before the A.A.C., which was dismissed.
28 The appeal flied before the Tribunal was also dismissed, whereupon the assessee obtained a reference to be answered by the High Court.
The High Court answered the reference, "whether on the facts and in the circumstances of the case the amount of tax paid by Ballarpur on behalf of the assessee in assessment years 1974 75 and 1975 76 is income taxable under the heading 'other sources '," against the assessee.
Hence these appeals by the assessee contending that the amount paid by way of tax could not be treated as 'Income ' of assessee; that as the assessee did not receive the said amount from Ballarpur, it could not constitute his income.
Dismissing the appeals, this Court, HELD: 1.01.
The definition of 'Income ' in clause (24) of Section 2 of the Act is an inclusive definition.
It adds several artificial categories to the concept of income but on that account the expression 'income ' does not lose its natural connotation.
It is repeatedly said that it is difficult to define the expression 'income ' in precise terms.
Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act.
[31D] 1.02.
The amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee.
The said amount is nothing but a tax upon the salary received by the assessee.
By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax.
The said payment is, therefore, for and on behalf of the assessee.
It is not a gratuitous payment But for the said agreement and but for the said payment, the said tax amount would have been liable to be paid by the assessee himself.
He could not have received the salary which he did but for the said payment of tax.
The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context.
It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee.
[31E G] 1.03.
Inasmuch as the assessee is not an employee of Ballarpur, which made the payment, it cannot be brought within the purview of Section 17 of the Act.
It must necessarily be placed under sub section (1) 29 of Section 56, 'income from other sources '.
According to the said sub section, income of every kind which is not to be excluded from the total income under the Act shall be chargeable to income tax under the head 'income from other sources ', if it is not chargeable to income tax under any of the other heads specified in Section 14, Items A to E. [32A B] N 4.
Modi vs S.A.L., Narayana Rao, SC; C.L T., Bombay vs Smt.
T.P. Sidhwa, and Mrs. Sheela Kaushish vs C.I. T. Delhi 131 [TR 435 SC, distinguished. |
Appeal Nos.
714 16 of 1993.
From the Judgment and Order dated 14.9.92 of the Allahabad High Court in Civil Misc.
W.P. Nos. 20731, 23861 & 24353 of 1991.
AND Civil Appeal No. 717 of 1993.
39 From the Judgment and Order dated 9.12.91 of the Allahabad High Court in Civil Misc.
W.P.No.
11114 of 1990.
D.V. Sehgal, Ravi Kiran Jain, Sunil Gupta, Jamshed Bey, H.K. Puri, Mrs. Rani Chhabra and R.B. Misra for the Appellants.
Sabir Hussain Saif, Shakeel Ahmed Syed, Bahar U. Barqi, Anis Suhrawardy and Vijay Hansaria for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
Special leave granted.
As common questions of fact and law are involved in all the above cases, as such they are disposed of by one single order.
First proviso to Section 9 of the United Provinces Municipalities Act, 1916 (hereinafter referred to as 'the Act ') provided for nomination of only one woman as a member of the Municipal Board by the State Government.
Further, there was no provision permitting the State Government to cancel the nomination of such member at its pleasure.
One Smt.
Sarla Devi was nominated by the State Government as the sole Woman member for the Shahjahanpur Municipal Board (hereinafter referred to as 'the Board) in January, 1989.
By U.P. Ordinance No. 2 of 1990 later on succeeded by Ordinance No. 8 of 1990 and eventually replaced by U.P. Act No. 19 of 1990, the aforesaid first proviso to Section 9 of the Act was substituted by another proviso which made provision for the nomination of two women members by the State Government.
Further, a fourth proviso was also added to Section 9 of the Act which provided that the nomination of the aforesaid two members was at the pleasure of the State Government.
The aforesaid Ordinance No. 2 of 1990 was promulgated on 15.2.1990.
Soon thereafter on 19.2.1990, a general notification was issued by the State Government cancelling of nominations of Women members in several Municipal Boards in Uttar Pradesh.
The nomination of Smt.
Sarla Devi also stood cancelled.
On 19.4.1990, the State Government nominated Smt.
Abida and Hazra Khatoon as members of the Board under the newly introduced fourth proviso to Section 9 of the Act.
The total strength of the Board was 37 including two nominated women members.
On 22.7.1991 Mohd. Iqbal was the President of the Board and Shri Om Narain Agarwal was the Vice President of the Board.
Some members of the Board on 40 22.7.1991initiated no confidence motion against Mohd. Iqbal before the District Magistrate in accordance with the procedure prescribed under Section 87 A of the Act.
The District Magistrate fixed 12.8.1991 for consideration of the no confidence motion.
In the meantime, the State Government on 2.8.1991 in exercise of its powers under the fourth proviso to Section 9 of the Act issued notification cancelling the nominations of Smt.
Abida and Hazra Khatoon and in their place nominated Smt.
Shyama Devi and Smt.
Baijanti Devi as the two women members of the Board.
On 9.8.1991 Mohd. Iqbal filed a Writ Petition No. 20731 of 1991 in the High Court challenging the constitutional validity of the fourth proviso to Section 9 of the Act as well as the notification dated 2.8.1991 whereby the nomina tions of Smt.
Abida and Hazra Khatoon were cancelled and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated.
Mohd. lqbal also challenged the proceedings of no confidence motion initiated against him.
The High Court in the aforesaid Writ Petition passed an interim order stating that outcome of the no confidence proceedings shall be subject to the result of the Writ Petition but did not grant any stay of no confidence proceedings.
Shyama Devi and Smt.
Baijanti Devi participated in the meeting held on 12.8.1991 and so far as Smt.
Abida and Hazra Khatoon are concerned, they neither attended the said meeting nor claimed any right to attend the same.
In the aforesaid meeting held on 12.8.1991, 20 members of the Board voted in favour of the no confidence motion out of the total strength of 37 members of the Board.
After the no confidence motion dated 12.8.1991 having been passed against Mohd. lqbal, a casual vacancy arose in the Office of the President of the Board by virtue of Section 47 A of the Act and Shri Om Narain the then Vice President was elected as President of the Board.
Om Narain took charge of the said Office and continued to function as President thereafter.
Mohd. Iqbal then filed another Writ Petition No. 23861 of 1991 on 20th August, 1991 challenging the no confidence motion dated 12.8.1991 passed against him.
The High Court refused to pass any stay order in favour of Mohd. Iqbal.
Abida and Smt.
Hazra Khatoon also filed a Writ Petition No. 24353 of 1991 on 12.9.1991 challenging the cancellation of their nominations and nominating Smt.
Shyama Devi and Smt.
Baijanti Devi in their place.
A Division Bench of the Lucknow Bench of the Allahabad High Court in Writ Petition No. 1067 of 1991 Prem Kumar Balmiki vs State of U.P. by order dated 13.11.1991 held that the fourth proviso to Section 9 of the Act was constitutional and valid and any notification issued by the State 41 Government under the said provision was also valid.
Another Division Bench of the Allahabad High Court sitting at Allahabad in Writ Petition No. 11114 of 1990 Dr. Smt.
Rama Mishra vs State of U.P. by 'order dated 9.12.1991 held that the fourth proviso to Section 9 of the Act was arbitrary, unreasonable, unconstitutional and invalid and any notification issued thereunder cancelling the nomination of any woman member of the Board and nominating a new member was invalid.
A Division Bench of the Allahabad High Court considered all the three Writ Petitions, two filed by Mohd. Iqbal and one by Smt.
Abida and Smt.
Hazra Khatoon and by a common order dated 14.9.1991 recorded its agreement with the decision in Rama Mishra 's case and quashed the notification dated 2.8.1991 whereby Smt.
Abida and Smt.
Hazra Khatoon were ousted and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated and also declared Mohd. Iqbal to be the President of the Board.
In this judgment the High Court though followed Rama Mishra 's case but failed to take notice of the decision of the Lucknow Bench of the High Court dated 13.11.1991 given in Prem Kumar Balmiki 's case.
A review application filed by Om Narain and others was also dismissed by the High Court by order dated 21.9.1992.
Aggrieved against the aforesaid decision of the High Court, Om Narain Agarwal former Vice President, Smt.
Shyama Devi and Smt.
Bailjanti Devi have come in appeal by Special Leave Petition Nos.
13621 23 of 1992.
Bashiran who was a nominated woman member in the Municipality of Varanasi and whose nomination was subsequently cancelled has filed Special Leave Petition No. 13004 of 1992 against the judgment of the Allahabad High Court dated 9.12.1991 passed in Dr. Rama Mishra 's case.
The Division Bench of the High Court in the impugned order dated 14.9.1992 has agreed with the view taken in Dr. Rama Mishra 's case.
After taking the aforesaid view the High Court held that the State Government had no power to cancel the nominations of Smt.
Abida and Smt.
Hazra Khatoon and to nominate Smt.
Shyama Devi and Smt.
Baijanti Devi in their place.
The High Court as a result of the above finding held that the notification dated 2.8.1991 was a nullity and that being so, the earlier notification dated 19.4.1990 nominating Smt.
Abida and Smt.
Hazra Khatoon remained operative.
The High Court then considered the next question as to what was the effect of the notification dated 2.8.1991 and the motion of no confidence passed on 12.8.1991.
The High Court in this 42 regard took the view that the total strength of the members was 37 and the motion of no confidence was carried out by 20 members including the two nominated members Smt.
Shyama Devi and Smt.
Baijanti Devi.
As nomination of these two women members was declared to be invalid, their par ticipation and voting right shall have to be ignored and in that view of the matter, proceedings dated 12.8.1991 shall be considered as having been attended only by 18 eligible members and the motion cannot be deemed to have been carried by a majority of the members consisting of at least 19 members.
The High Court thus held that the provision of Section 87 A (12) of the Act being mandatory and the resolution of no confidence having not been passed by a requisite majority the entire proceedings held on 12.8.1991 relating to the motion of no confidence was non est and as such the resolution of no confidence passed therein was void.
The High Court also repelled the contention that till the nomination of Smt.
Shyama Devi and Smt.
Baijanti Devi was declared void, all acts done by them will be protected by de facto doctrine.
The High Court also repelled the contention that the nomination of Smt.
Abida and Smt.
Hazra Khatoon vide notification dated 19.4.1990 should also be declared invalid on the analogy on which the notification dated 2.8.1991 nominating Smt.
Shyama Devi and Smt.
Baijanti Devi has been declared invalid.
The High Court in this regard held that the notification dated 19.4.1990 shall remain operative unless the same is challenged and declared to be void.
It was also held by the High Court that in view of the interim order passed on 9.8.1991 in Writ Petition No. 20731 of 1991 to the effect that the result of no confidence motion shall be subject to the decision of the Writ Petition, Section 47 A(1)(b) of the Act cannot be invoked against the writ petitioner.
The High Court after recording the above findings passed the following operative order: "In the result the Writ Petition No. 20731 of 1991 is partly allowed and the notification dated 2.8.1991 (Annexure No. 3 to the Petition) is quashed.
The Writ Petition No. 23861 of 1991 succeeds and is allowed and the entire proceedings taken up in the meeting dated 12.8.1991 including the resolution of no confidence passed against the petitioner are quashed.
Annexures No. 1 and 1 A to this petition are quashed.
The respondents are directed not to interfere with the petitioner 's working as President of the Municipal Board, Shahjahanpur.
The Writ Petition No. 24353 of 1991 succeeds and is allowed.
Notification dated 2.8.1991 (An 43 nexure No. 1 to this petition having been quashed, the respondents are directed to treat the petitioners as members of the Municipal Board, Shahjahanpur and permit them to act as such.
No order as to costs.
" Before considering the arguments advanced on behalf of the appellants, it would be necessary to state the relevant provisions of the Act namely, Sections 9, 47 A and 87 A of the Act.
Section 9 of the Act including the amendment added from 15.2.1990 is reproduced as under: "[Section 9.
Normal composition of the board.
Except as otherwise provided by Section 10, a Board shall consist of (a) The President; (b) The elected members who shall not be less than 10 and not more than 40, as the State Government may by notification in the Official Gazette specify; (c) The ex officio members comprising all members of the House of People and the State Legislative Assembly whose constituencies include the whole or part of the limits of the Municipality;] [(d) Ex officio members comprising all members of the Council of States and the State Legislative Council who have their residence within the limits of the Municipality.
Explanation.
For the purposes of this clause, the place of residence of a member of the Council of States or the State Legislative Council shall be deemed to be the place of his residence mentioned in the notification of his election or nomination, as the case may be] : [Provided that if none of the members elected under clause (b), is a woman, the State Government may by a like notification nominate one woman as a member of the Board and thereupon, the normal composition of the 44 Board shall stand varied to that extent] [Provided that if none or only one of the members elected under clause (b), is a woman, the State Government may, by notification, nominate two women members or one more woman member, as the case may be, so that the number of women members in the Board is not less than two and thereupon the normal composition of the Board shall stand varied to that extent] [Provided further that if any member of the State Legislative Council representing the Local Authorities Constituency does not have his residence within the limits of any Municipality, he will be deemed to be ex officio member of the board of such one of the municipalities situated within his constituency as he may choose : Provided also that if none of the members elected under clause (b) belongs to safai mazdoor class, the State Government may, by notification, nominate a person belonging to the said class a member of the Board, and thereupon the normal composition of the Board shall stand varied to that extent.
Explanation : A person shall be deemed to belong to the Safai Mazdoor class if he belongs to such a class of scavengers by occupation or to such of the Scheduled Castes traditionally fol lowing such occupation as may be notified by the State Government] : [Provided also that a member nominated under this section, whether before or after February 15, 1990 shall hold office during the pleasure of the State Government, but not beyond the term of the Board.]" "[47 A. Resignation of President of vote of non confidence. (1) If a motion of non confidence in the President has 45 been passed by the board and communicated to the President in accordance with the provisions of Section 87 A, the President shall (a) With three days or the (receipt) of such communication, either resign his office or represent to the State Government to (supersede) the board stating his reasons therefore, and [(b) unless he resigns under clause (a), cease to hold office of President on the expiry of three days after the date of receipt of such communication, and thereupon a casual vacancy shall be deemed to have occurred in the office of the President within the meaning of Section 44 A: Provided that.if a representation has been made in accordance with clause (a) the board shall not elect a President until an order has been made by the State Government under sub section (3)].
[(2) ****] (3) If a representation has been made in accordance with sub section (1), the State Government may after considering the same [either supersede the board for such period, not exceeding the remainder of the term of the board, as may be specified, or reject the representation.] [(4)*****] [(5)*********] [(6) If the State Government supersedes the board under sub section (3) the consequences mentioned in Section 31 shall follow as if there had been a supersession under Section 30. '] "[87 A. Motion of non confidence against President.
(1) Subject to the Provisions of this section, a motion expressing non confidence in the President shall be made 46 only in accordance with the procedure laid down below.
[(2) Written notice of intention to make a motion of no confidence in its President signed by such number of members of the Board as constitute no less than [one half] of the total number of members of the Board together with a copy of the motion which it is proposed to make shall be delivered in person together by any two of the members signing the notice to the District Magistrate.] (3) The District Magistrate shall then convene a meeting for the consideration of the motion to be held at the office of the board, on the date and at the time appointed by him which shall not be earlier than thirty and not later than thirty five days from the date on which the notice under sub section (2) was delivered to him.
He shall send by registered post not less than seven clear days before the date of the meeting, a notice of such meeting and of the date and time appointed therefor, to every member of the board at his place of residence and shall at the same time cause such notice to be published in such manner as he may deem fit.
Thereupon every member shall be deemed to have received the notice.
(4) The District Magistrate shall arrange with the District Judge for a stipendiary civil judicial officer to preside at the meeting convened under this section, and no other person shall preside thereat.
If within half an hour from the time appointed for the meeting, the judicial officer is not present to preside at the meeting, the meeting shall stand adjourned to the date and the time to be appointed and notified to the members by that officer under sub section (5).
(5) If the judicial officer is unable to preside at the meeting, he may, after recording his reasons adjourn the meeting to such other date and time as he may appoint, but not later than fifteen days from the date appointed for the meeting under sub section (3).
He shall without delay communicate in writing to the District Magistrate the 47 adjournment of the meeting.
It shall not be necessary to send notice of the date and the time of the adjourned meeting to the members individually, but the District Magistrate shall give notice of the date and the time of the adjourned meeting by publication in the manner provided in sub section (3).
(6) Save as provided in sub sections (4) and (5) a meeting convened for the purpose of considering a motion under this section shall not for any reason be adjourned.
(7) As soon as the meeting convened under this section has commenced, the judicial officer shall read to the board the motion for the consideration of which it has been convened and declare it to be open for discussion.
(8) No discussion on any motion under this section shall be adjourned.
(9) Such discussion shall automatically terminate on the expiry of three hours from the time appointed for the commencement of the meeting, unless it is concluded earlier.
Upon the conclusion of the debate or upon the expiry of the said period of three hours, as the case may be, the motion shall be put to the vote of the board.
(10) The judicial officer shall not speak on the merits of the motion, nor shall he be entitled to vote thereon.
(11) A copy of the minutes of the meeting together with a copy of the motion and the result of the voting thereon shall on the termination of the meeting, be forwarded forthwith by the judicial officer to the [President and the] District Magistrate [Provided that if the President refuses or avoids to take delivery of the copies so forwarded, the same shall be affixed at the outer door of his last Known residence and .he shall be deemed to have received the same at the time such affixation is made.] 48 [(11 A.] As soon as may be after three days of the receipt of the copies mentioned in sub section (11), the District Magistrate shall forward the same to the State Government, together, in the event of the motion of non confidence having been carried, with a report whether or not the President has forwarded his resignation in accordance with the provisions of Sections 47 and 47 A;] [(12) The motion shall be deemed to have, been carried only when it has been passed by a majority of [more than one half] of the total number of members of the Board.] [(13) If the motion is not carried by a majority as aforesaid, or if the meeting cannot be held for want of quorum which shall not be less than two thirds of the total number of members of the Board, for the time being, No. notice of any subsequent motion of no confidence in tic same President shall be received until after the expiry of a period of two years from the date of the meeting.] [(14) No Notice of a motion of no confidence under this section shall be received within two years of the assumption of office by a President.] [(15) Nothing done by any member of the board, the District Magistrate, the judicial officer or the [State Government] in pursuance of the provisions of this section shall be questioned in any Court.]" It was contended on behalf of the appellants that the view taken in Dr. Rama Mishra 's case was not correct and the view taken by the Lucknow Bench of the Allahabad High Court in Prem Kumar Balmiki 's case was correct.
It was submitted that the State Legislature was fully competent to insert fourth proviso and to lay down that the nominated members shall hold office during the pleasure of the State Government.
It was submitted that the pleasure doctrine also finds place in several other enactments including the Constitution of India.
It was submitted that under Article 75 (2) of the Constitution, Ministers of the Central Government hold office during the pleasure of the President.
Similarly, under Article 164 (1), the Ministers in the States of the Indian Union hold office during the pleasure 49 of the Governor.
Similarly, under Article 76 (1), the President appoints Attorney General for India and in view of clause 4 of the said Article this office is held during the pleasure of the President.
It was also submitted that Governors for the States are appointed by the President under Article 155 and under Article 156 (1),.
the Governor holds office during the pleasure of the President.
It was also contended that the Office of member of Municipal Board is a political office.
It was further argued that if the initial appointment by nomination is made on political considerations, there appears no reason why political consideration should not be allowed to operate in terminating such appointments made by nomination.
In these circumstances if the Legislature has itself added the fourth proviso to Section 9 of the Act authorising the State Government to allow the nominated member to hold the Office during the pleasure of the State Government, there is no violation of any principle of natural justice nor such provision is arbitrary so as to be violative of Article 14 of the Constitution.
It was contended that the only requirement under the second proviso to Section 9 of the Act was that if none or only one of the members elected under clause (b) is a woman, the State Government may by notification, nominate two women members or one more woman member as the case may be, so that the number of women members in the Board is not less than two.
It was submitted that the State Government has not violated the aforesaid provision inasmuch as Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated in place of Smt.
Abida and Smt.
hazra Khatoon and the number of two women members in the Board was kept intact.
Learned counsel for the private respondents submitted that once the power of nominating the women members is exercised by the State Government, such nominated members cannot be removed prior to the completion of the term of the Board unless they are removed on the grounds contained under Section 40 of the Act.
It was also contended that the State Government cannot be allowed to remove a nominated member at its pleasure without assigning any reason and without affording any opportunity to show cause.
Once a woman member is nominated she gets a vested right to hold the office of a member of the Board and the State Government cannot be given an uncanalised, uncontrolled and arbitrary power to remove such member.
It is contended that such arbitrary and naked power without any guidelines would be contrary to the well established principles of democracy and public policy.
It would hamper the local bodies to act 50 independently without any hindrance from the side of the Government.
Section 10 A of the Act prescribes the term of the Board which is five years.
Section 38 prescribes the term of office of members elected or nominated to fill casual vacancies and reads as under: "The term of office of a member elected to fill a casual vacancy or a vacancy remaining unfilled at the general election shall begin upon the declaration of his election under the Act and shall be the remainder of the term of the Board.
" Section 39 deals with resignation by a member of the Board.
Section 40 provides the grounds for removal of a member of the Board.
Sub section (5) of Section 40 deals with suspension of a member.
From a perusal of the above provisions it is clear that the term of an elected or nominated member is con terminous with the term of the Board.
The normal term of the Board is five years, but it may be curtailed as well as extended.
If the term of the Board is curtailed by dissolution or supersession, the term of the member also gets curtailed.
Similarly, if the term of the Board is extended, the term of the member is also extended.
Apart from the curtailment of the term of a member of the Board by dissolution of supersession of the Board itself, the term of a member also gets curtailed by his resignation or by his removal from office.
Section 40 specifically provides the grounds under which the State Government in the case of a city, or the prescribed authority in any other case, may remove a member of the Board.
The removal under Saction 40 applies to elected as well as nominated members.
In respect of a nominated member, power of curtailment of term has now been given to the State Government under the fourth proviso to Section 9 added after the third proviso through the amending Act of 1990.
In the cases before us, we are concerned with the removal of nominated members under the fourth proviso to Section 9 of the Act and we are not concerned with the removal as contained in Section 40 of the Act.
The right to seek an election or to be elected or nominated to a statutory body, depends and arises under a statute, The initial nomination of the two women members itself depended on the pleasure and subjective satisfaction of the State Government.
If such appointments made initially by nomination are based on political considerations, there can be no violation of any provision of the Constitution in case the Legislature 51 authorised the State Government to terminate such appointment at its pleasure and to nominate new members in their place.
The nominated members do not have the will or authority of any residents of the Municipal Board behind them as may be present in the case of an elected member.
In case of an elected member, the legislature has provided the grounds in Section 40 of the Act under which the members could be removed.
But so far as the nominated members are concerned, the Legislature in its wisdom has provided that they shall hold office during the pleasure of the Govern ment.
It has not been argued from the side of the respondents that the Legislature had no such power to legislate the fourth proviso.
The attack is based on Articles 14 and 15 of the Constitution.
In our view, such provision neither offends any Article of the Constitution nor the same is against any public policy or democratic norms enshrined in the Constitution.
There is also no question of any violation of principles of natural justice in not affording any opportunity to the nominated members before their removal nor the removal under the pleasure doctrine contained in the fourth proviso to Section 9 of the Act puts any stigma on the performance or character of the nominated members.
It is done purely on political considerations.
In Dr. Rama Mishra 's case, the High Court wrongly held that the pleasure doctrine incorporated under the fourth proviso to Section 9 of the Act was violative of the fundamental right of equality as enshrined in Article 14 and Article 15 (3) of the Constitution.
We are unable to agree with the aforesaid reasoning of the High Court.
Clause (3) of Article 15 is itself an exception to Article 14 and clauses (1) and (2) of Article 15 of the Constitution.
Under Article 14, a duty is enjoined on the State not to deny any person equality before the law or the equal protection of the laws within the territory of India.
Article 15 (1) provides that the State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
Article 15 (2) provides that no citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them .be subject to any disability, liability, restriction or condition with regard to (a) access to shops, public restaurants, hotels and places of public entertainments; or (b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the 52 use of the general public.
Thereafter Article 15 (3) provides that nothing in this Article shall prevent the State from making any special provision for women and children.
This means that in case any special provision is made for women, the same would not be violative on the ground of sex which is prohibited under clauses (1) and (2) of Article 15 of the Constitution.
Thus, the special provision contained for nominating one or two women members as the case may be provided in Section 9 of the Act would be protected from challenge under clause (3) of Article 15 of the Constitution.
It may also be worthwhile to note that the provision of pleasure doctrine incorporated by adding proviso four does not, in any manner, take away the right of representation of women members in the Board, but it only permits the State Government to keep the nominated women members of its own choice.
The High Court in Dr. Rama Mishra 's case took a wrong view in holding that the fourth proviso to Section 9 of the Act was violative of Article 15 (3) of the Constitution under an erroneous impression that this provision in any manner curtailed the representation of women members in the Board.
We are not impressed with the reasoning given by the High Court that the fourth proviso to Section 9 of the Act in any manner deprived the fundamental right of equality as enshrined in Article 14 of the Constitution.
It is well established that the right of equality enshrined under Article 14 of the Constitution applies to equals and not to enequals.
The nominated members of the Board fall in a different class and cannot claim equality with the elected members.
We are also not impressed with the argument that there would be a constant fear of removal at the will of the State Government and is bound to demoralise the nominated members in the discharge of their duties as a member in the Board.
We do not find any justification for drawing such an inference, inasmuch as, such contingency usually arises only with the change of ruling party in the Government.
Even in the case of highest functionaries in the Government like the Governors, the Ministers, the Attorney General and the Advocate General discharge their duties efficiently, though removable at the pleasure of the competent authority under the law, and it cannot be said that they are bound to demoralise or remain under a constant fear of removal and as such do not discharge their functions in a proper manner during the period they remain in the office.
Thus, in the circumstances mentioned above, we are clearly of the 53 view that the decision in Dr. Rama Mishra 's case does not lay down.
the .correct law and is overruled and the view taken by the High Court in Prem Kumar Balmiki 's case (supra) is held to be correct.
We do not consider it necessary to dwell upon other arguments made before us or made and dealt with by the High Court, as the above appeals can be disposed of on the point already dealt and decided by us.
Thus, as a result of the view taken by us, we hold that Smt.
Shyama Devi and Smt.
Baijanti Devi, the two women.
members had been rightly nominated in place of Smt.
Abida and Smt.
Hazra Khatoon and were entitled to take part in the meeting held on 12.8.1991 for considering the motion of no confidence against Mohd. Iqbal, the President of Nagar Palika Shahjahanpur.
Further, the motion of no confidence being supported by 20 members which admittedly constituted a majority of the total strength of the members of the Board being 37, the no confidence motion has been rightly carried out and as a result of which Mohd. Iqbal was not entitled to continue as President of the Board.
Similarly, Smt.
Abida and Smt.
Hazra Khatoon having been rightly removed as nominated members, they are no longer entitled to continue as nominated members of the Municipal Board, Shahjahanpur and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi shall be entitled to continue as nominated members of the Board.
In the result, all the above appeals are allowed, the judgment of the High Court dated 14.9.1992 in Writ Petition Nos.
20731 of 1991, 23861 of 1991 and 24353 of 1991 and dated 9.12.1991 in Writ Petition No. 11114 of 1990 are set aside and all the aforesaid Writ Petitions stand dismissed.
No order as to costs.
V.P.R. Appeals allowed. | In January, 1989, in accordance with First Proviso to Section 9 of the United Provinces Act, 1916 one Smt.
Sarla Devi was nominated by the State Government as the sole Woman member for the Municipal Board.
On 15.2.1990 U.P. Ordinance No. 2 of 1990 later on replaced by U.P. Act No. 19 of 1990 amended the proviso of Section 9 of the Act substituting a new proviso, providing for the nomination of two Women members by the State Government.
The Amendment Act also added a fourth proviso to the Section which provided that the nomination of the two women members was at the pleasure of the State Government.
On 19.2.1990 the Government issuing a general notification and cancelled nominations of Women members in several Municipal Boards.
Cancelling the nomination of Smt.
Sarla Devi, Smt.
Abida and Smt.
Hazra Khatoon were nominated by the Government on 19.4.1990.
On 22.7.1991 under Section 87 A of the Act a no confidence motion against one Mohd. Iqbal, the President of the Board was initiated by some members before the District Magistrate.
The District Magistrate fixed 12.8.1991 for consideration of the confidence motion.
On 2.8.1991, the Government nominated Smt Shyama Devi and Smt.
Baijanti Devi as the two women members of the Board, cancelling the nominations of Smt.
Abida and Smt Hazra Khatoon.
35 On 9.8.1991 Mohd. Iqbal, President of the Municipal Board, against whom the non confidence motion was pending, filed a writ petition in the High Court challenging the constitutional validity of the fourth proviso to Section 9 of the Act and also challenged the notification dated 2.8.1991.
Further he challenged the proceedings of no confidence motion initiated against him.
The High Court did not grant any stay of no confidence proceedings, but ordered that the outcome of the no confidence proceedings shall be subject to the result of the writ petition.
In the meeting fixed on 12.8.1991 by the District Magistrate to consider the no confidence motion 20 members of the Board voted in favour of the no confidence motion, out of the total strength of 37 members of the Board.
The newly nominated Women members by notification dated 2.8.1991 participated in the meeting, whereas Smt Abida and Hazra Khatoon neither attended the meeting nor claimed any right to attend the same.
The no confidence motion dated 12.8.1991 was passed against Mohd. Iqbal.
One Om Narain, The appellant No. 1 in C.A. Nos.
714 16 of 1993) who was the Vice President of the Board was elected as the President in the vacancy.
The appellant Om Narain took charge of the office of the President of the Board and continued to function as the president.
Mohd. Iqbal, the former President filed another writ petition challenging the no confidence motion dated 12.8.1991 passed against him.
Abida and Smt Hazra Khatoon also filed a writ petition, challenging the notification dated 2.8.1991, which cancelled their nominations and nominated Smt.
Shyama Devi and Smt.
Baijanti Devi in their places.
A Division Bench of the High Court considered all the three writ petitions two by the former President and one by the former women members.
Agreeing with the decision in Dr. Smt.
Rama Mishra vs State of U.P. (Writ Petition No. 11114 of 1990 disposed on 9.12.1991) allowed the writ petitions, quashing the notification dated 2.8.1991 and declaring Mohd. Iqbal to be the president of the Board.
The review application flied by the appellants was dismissed by the High Court.
36 Being aggrieved against the High Court 's decision, the former Vice President and the Women members nominated by notification dated 2.8.1991 approached this Court in these appeals (C.A.Nos.
714 716 of 1993) by special leave.
The C.& No. 717 of 1993 was by another Woman member of another Municipal Board, having aggrieved against the judgment of the High Court dated 9.12.1991 passed in Dr. Rama Mishra 's case.
The appellants contended that the view taken in Dr. Rama Mishra 's case was not correct and the view taken in Prem Kumar Balmiki vs State of U.P. (W.P. No. 1067 of 1991, disposed of on 13.11.1991) was correct; that the State Legislature was competent to insert fourth proviso and to lay down that the nominated members shall hold office during the pleasure of the State Government; that if the initial appointment by nomination was made on political considerations, political considerations should be allowed to operate in terminating such appointments made by nomination; that there was no violation of any principle of natural justice nor such provision was arbitrary so as to be violative of Article 14 of the Constitution; and that the only requirement under the second proviso to Section 9 of the Act was that if none or only one of the members elected under clause (b) was a woman, the State Government was to nominate by notification two Women members or one more Woman member, as the case may be, so that the number of Women members in the Board was not less than two, and that the State Government did not violate the provision.
The private respondents submitted that once the power of nominating the Women members was exercised by the State Government, such nominated members could not be removed prior to the completion of the term of the Board, unless they were removed on the grounds contained under section 40 of the Act; that the State Government could not be allowed to remove a nominated member at its pleasure without assigning any reason and without affording any opportunity to show cause; that once a Woman member was nominated, she got a vested right to hold the office of a member of the Board and the State Government could not be given an uncanalised, uncontrolled and arbitrary power to remove such member; that such arbitrary power without any guidelines would be contrary to the well established principles of democracy and public policy and that it would hamper the local bodies to act independently without any hindrance from the side of the Government.
37 Allowing the appeals, this Courts, HELD: 1.01.
The right to seek an election or to be elected or nominated to a statutory body, depends and arises under a statute.
The initial nomination of the two Women members itself depended on the pleasure and subjective satisfaction of the State Government.
If such appointments made initially by nomination are based on political con siderations, there can be no violation of any provision of the Constitution in case the Legislature authorised the State Government to terminate such appointment at its pleasure and to nominate new members in their place.
[50G H] 1.02.
The nominated members do not have the will or authority of any residents of the Municipal Board behind them as may be present in the case of an elected member.
In case of an elected member, the Legislature has provided the grounds in Section 40 of the Act under which the members could be removed, But so far as the nominated members are concerned, the Legislature in its wisdom has proved that they shall hold office during the pleasure of the Government.
[51B] 1.03.
Such provision neither offends any Article of the Constitution nor the same is against any public policy or democratic norms enshrined in the Constitution.
There is also no question of any violation of principles of natural justice in not affording any opportunity to the nominated members before their removal nor the removal under the pleasure doctrine contained in the fourth proviso to Section 9 of the Act puts any stigma on the performance or character of the nominated members.
It is done purely on political considerations.
[51D] 1.04.
In Dr. Rama Mishra 's case, the High Court wrongly held that the pleasure doctrine incorporated under the fourth proviso to Section 9 of the Act was violative of the fundamental right of equality as enshrined in Article 14 and Article 15(3) of the Constitution.
[51E] Dr. Smt.
Rama Mishra vs State of U.P. Writ Petition No. 11 114 of 1990 decided on 9.12.1991 by the Allahabad High Court, over ruled.
Prem Kumar Balmiki vs State of U.P. Writ Petition No. 1067 of 1991 decided on 13.11.1991 by the Allahabad High Court, approved.
The special provision contained for nominating one or two 38 women members as the case may be provided in Section 9 of the Act would be protected from challenge under clause (3) of Article 15 of the Constitution.
[52B] 1.06.
The provision of pleasure doctrine incorporated by adding proviso four does not, in any manner, take away the right to representation of women members in the Board, but it only permits the State Government to keep the nominated women members of its own choice.
[52C] 1.07.
The right of equality enshrined under Article 14 of the Constitution applies to equals and not to unequals.
The nominated members of the Board fall in a different class and cannot claim equality with the elected members.
[52E] 1.08.
Even in the case of highest functionaries in the Government like the Governors, the Ministers, the Attorney General and the Advocate General discharge their duties efficiently, though removable at the pleasure of the competent authority under the law, and it cannot be said that they are bound to demoralise or remain under a constant fear of removal and as such do not discharge their functions in a proper manner during the period they remain in the office.
[52G] 1.09.
The motion of no confidence being supported by 20 members which admittedly constituted a majority of the total strength of the members of the Board being 37, the no confidence motion has been rightly carried out and as a result of which Mohd. Iqbal was not entitled to continue as President of the Board.
Similarly, Smt.
Abida and Smt.
Hazra Khatoon having been rightly removed as nominated members, they are no longer entitled to continue as nominated members of the Municipal Board, Shahjahanpur and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi shall be entitled to continue as nominated members of the Board.
[53C D] |
minal Appeal No. 827 of 1981.
From the Judgment and Order dated 22.7.81 of the Allahabad High Court in Government Appeal No. 1861 of 1975.
P.K. Dey, Rakesh Goswami and Ms.
Rani Jethmalani (N.P.) for the Appellant.
R.C. Verma for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The appellant was acquitted of the charges under sections 302 and 307 read with section 34 of the Penal Code by the Trial Court.
On appeal being filed on behalf of the State of Uttar Pradesh he has been convicted under section 302 of the Penal Code by the High Court and sentenced to undergo rigorous imprisonment for life.
It is the case of the prosecution that on 25.2.1974 at about 6.00 P.M. Chandrapal (PW 2) along with Jagdish (hereinafter referred to as "the deceased") were returning after answering the call of nature.
It is said that at that time this appellant along with co accussed Ramesh came from the side of the village; seeing Chandrapal (PW 2) and the deceased, the appellant and Ramesh rushed towards them with knives.
After some chase the appellant gave a knife blow on the chest of the victim.
The co accused Ramesh gave a knife blow to Chandrapal (PW 2).
Thereafter the appellant and Ramesh fled away.
The victim while being taken to Debai, died on the way, Chandrapal (PW 2) lodged the first information report at the Police Station Debai at about 11.30 P.M. the same night.
75 The motive of the occurrence, according to the prosecution, is that about 10 or 12 days before the date of the aforesaid occurrence, there was some altercation between Chandrapal (PW 2) and the deceased on the one side and this appellant on the other, in which the appellant is said to have abused them.
Chandrapal (P.W 2) and the deceased had given two/three slaps to the appellant.
The defence of the appellant was that the prosecution has suppressed the real manner of occurrence.
According to the appellant,.
for last two days prior to the date of occurrence the crop of his grand father Sohan Lal was being damaged.
Because of that he was keeping a watch on the said field.
During night Chandrapal (PW 2) and the deceased came to the field.
The appellant raised an alarm chor chor.
Thereafter Chandrapal (PW 2) and the deceased started running.
The appellant chased them to catch them.
But soon they turned back and started assaulting the appellant with lathies.
To save his life the appellant attacked with a 'ballam ' (spear).
The injuries on the person of the appellant were examined the next morning.
He also filed an application before the Superintendent of Police, giving his version of the occurrence in which he admitted that when he was being assaulted by Chandrapal (PW 2) and the deceased, he bad used a ballam.
A case was registered by the Police at about 10.25 A.M. on 26.2.1974, on the basis of the petition filed on behalf of the appellant.
The injuries on the person of the appellant were examined by Dr. R.P. Rastogi at the District Hospital, Bullandshahar, on 26.2.1974.
He found the following injuries on his person: "(1) Faint contusion 2 cm x 1/2 cm back of left shoulder upper part.
(2) Faint contusion 10 cm x 2 cm on outer side left back at the lower angle of scapula.
(3) Faint contusion 4 1/2 cm x 1 cm on back of upper part 1/3rd left forearm.
(4) Faint contusion 12 cm x 1 cm on the back and inner aspect left forearm upper 1/3rd.
" During the post mortem examination of the deceased which was also held on 26.2.1974, the following injury was found on his person: 76 "Stab wound 1" x 1/2" x 1.3/4".
On probing, on left side front of chest, 2.1/2" inner to left nipple at 10 O ' clock position pointing the onwards and downwards.
" The Doctor (PW 1), who held the post mortem examination, ad mitted that the aforesaid injury could be caused by ballam.
So far Chandrapal (PW 2) is concerned, the Doctor noted the following injury on 26.2.1974: "Abrasion 1 1/2 x 1/3" on the left side front of chest, horizontally with shallow edge, medically, 7" below ancillary pit.
The wound was not bleeding afresh, but had got clotted blood over it.
" The Doctor in Court stated that possibility of self infliction of that injury could not be ruled out.
According to the State, even if the version disclosed by the appellant is accepted, it will amount to a case of free fight between the prosecution party and the accused, both being armed and when there is a free fight there is no question of right of private defence accruing to any side.
A free fight is that when both sides mean to fight a pitched battle.
The question of who attacks and who defends in such a fight is wholly immaterial and depends on the tactics adopted by the rival party.
In such cases of mutual fights, both sides can be convicted for their individual acts.
This position has been settled by this Court in the cases of Gajanand vs State of Uttar Pradesh, AIR 1954 SC 695; Kanbi Nanji Virji vs State of Gujarat AIR 1970 SC 219; Puran vs State of Rajasthan, AIR 1976 SC 912 and Vishvas Aba Kurane vs State of Maharashtra, AIR 1978 SC 414.
As such once it is established by the prosecution that the occurrence in question is result of a free fight then normally no right of private defence is available to either party and they will be guilty of their respective acts.
But so far the facts of the present case are concerned, if the version disclosed by the accused can be held to be a probable version of the occurrence then it cannot be held to be a case of free fight.
According to the appellant, the crops of the field of his grand father were being damaged for last two days prior to the date of the occurrence; because of that appellant claims that he was watching the said field.
During the night the 77 deceased and Chandrapal (PW 2) came to the same field and the appellant chased them.
But soon they turned back and started assaulting the appellant with lathies.
At this stage the appellant wielded his ballam (spear) which caused an injury to the deceased which ultimately proved fatal.
It is an admitted position that the appellant filed a petition before the Superintendent of Police giving his version of the occurrence in the morning of 'basis of that a case was registered at about 10.25 A.M. on 26.2.1974, the occurrence having taken place during the night of 25.2.1974.
This fact has been admitted by Shri Manohar Singh (PW 6) who has proved the first information report lodged on behalf of the prosecution.
On the examination, Dr. R.P. Rastogi (PW 3) of the District Hospital, Bullandshahar, did find four injuries including one on the scapula of the appellant.
It is true that injuries were simple in nature.
But even on the deceased only one injury 1" x 1/2 1.3/4" was found on the left side front of the chest, which according to the Doctor who held the post mortem examination, could have been caused by a weapon like ballam (spear).
In the statement under section 313 of the Code of Criminal Procedure (hereinafter referred to as "the Code") given by the appellant, it was stated by the appellant in detail as to how the standing crops on the land of his grand father were being damaged and on the night of the occurrence he was guarding the field when he saw the deceased and Chandrapal (PW 2) destroying the crops in the field.
He also stated that he shouted chor chor and then chased them to catch them.
But soon they turned round and started giving lathies blows and in self defence the appellant used a ballam.
It appears that all this happened in the aforesaid field which the apppellant was guarding.
From time to time this Court has pointed out that merely because some injuries are found on the accused, which have not been explained by the prosecution, by itself shall not be a ground for rejecting the whole prosecution case.
It will depend on facts of each case what inference should be drawn by the Court.
In the case of The State of Gujarat vs Bai Fatima; , , it was said that when the prosecution fails to explain the injuries on the person of an accused, depending on the facts of each case, any of the three results may follow : "(1) That the accused had inflicted the injuries on the members of the prosecution party in exercise of the right of self defence.
78 (2) It makes the prosecution version of the occurrence doubtful and the charge against the accused cannot be held to have been proved beyond reasonable doubt.
(3) It does not affect the prosecution case at all.
" The aforesaid three inferences drawn on basis of the nature of injuries were reiterated in the case of Lakshmi Singh vs State of Bihar, AIR 1976 SC 2263, and it was further observed: "It seems to us that in a murder case, the non explanation of the injuries sustained by the accused at about the time of the occurrence or in the course of altercation is a very important circumstance from which the Court can draw the following inferences: (1) that the prosecution has suppressed the genesis and the origin of the occurrence and has thus not presented the true version: (2) that the witnesses who have denied the presence of the injuries on the person of the accused are lying on a most material point and therefore their evidence is unreliable; (3) that in case there is a defence version which explains the injuries on the person of the accused it is rendered probable so as to throw doubt on the prosecution case.
The omission on the part of the prosecution to explain the injuries on the person of the accused assumes much greater importance where the evidence consists of interested or inimical witnesses or where the defence gives a version which competes in probability with that of the prosecution one.
" A three Judge Bench in yet another case of Bliaba Nanda Sarma vs The State of Assam, ; , said: "The prosecution is not obliged to explain the injuries on the person of an accused in all cases and in all circumstances.
This is not the law.
It all depends upon the facts and 79 circumstances of each case whether the prosecution case becomes reasonably doubtful for its failure to explain the injuries on the accused.
" In the case of Hare Krishna Singh vs State of Bihar, ; , it was said: "If the witnesses examined on behalf of the prosecution are believed by the Court in proof of the guilt of the accused beyond any reasonable doubt, the question of the obligation of the prosecution to explain the injuries sustained by the accused will not arise.
When the prosecution comes with a definite case that the offence has been committed by the accused and proves its case beyond any reasonable doubt, it becomes hardly necessary for the prosecution to again explain how and in what circumstances injuries have been inflicted on the person of the accused.
" But in the case of State of Rajasthan vs Madho, AIR 1991 SC 1065, it was held: "If the prosecution witnesses shy away from the reality and do not explain the injuries caused to the respondents herein it casts a doubt on the genesis of the prosecution case since the evidence shows that these injuries were sustained in the course of the same incident.
It gives the impression that the witnesses are suppressing some part of the incident.
The High Court was, therefore, of the opinion that having regard to the fact that they have failed to explain the injuries sustained by the two respondents in the course of the same transaction, the respondents were entitled to the benefit of the doubt." As first impression there appears to be some conflict in the views expressed in the different judgments of this Court referred to above.
But on proper reading with reference to the facts of each case, there is no basic difference and according to us this Court rightly in the case of The State of Gujarat vs Bai Fatima (supra) put in three categories the result which may follow from the facts of each case.
It is well known that guilt of the 80 accused is to be judged on the basis of the facts and circumstances of the particular case.
In any particular case the injuries found on the person of the accused being serious in nature may assume importance in respect of the genesis and manner of occurrence alleged by the prosecution.
In other case the injuries being superficial, by themselves may not affect the prosecution case; the version disclosed by the prosecution having been proved by witnesses who are independent, reliable and trustworthy, supported by the circumstances of that particular case, including the prompt ness with which the first information report was lodged on behalf of the prosecution.
But if the first information report has not been lodged promptly and there is no reasonable explanation for the delay; the witnesses who support the version of the prosecution are not only inimical but even their evidence is not consistent with the circumstances found during the course of investigation, then in that situation, injuries on the person of the accused which are not very serious in nature assume importance for the purpose of consideration as to whether the defence of the right of private defence pleaded by the accused should be accepted.
It is well known that accused pleading the right of private defence need not prove it beyond reasonable doubt.
It is enough if on the basis of the circumstances of a particular case, applying the test of preponderance or probabilities the version becomes acceptable.
There are not two parallel versions before the Court, one on behalf of the prosecution and other on behalf of the accused and the Court is required to choose as to which of the two versions is the correct version of the occurrence.
The burden placed on the accused is discharged no sooner he creates a doubt in the mind of the Court and satisfies the Court that the version disclosed by him in the facts and circumstances of that particular case is more probable.
The onus of the accused under section 105 of the Evidence Act has been examined by this Court in the cases of Partap vs The State of U.P., ; ; Mohan Singh vs State of Punjab, AIR 1975 SC 2161; Seriyal Udayar vs State of Tamil Nadu, AIR 1987 SC 1289; Vijayee Singh vs State of U.P., ; and Buta Singh vs State of Punjab, So far the present case is concerned the injuries found on the person of the appellant are not serious in nature and merely on the ground that prosecution has suppressed those injuries, the appellant is not entitled to the acquittal.
But those injuries can certainly be taken into consideration 81 while judging whether the defence version of the accused is probable.
The motive disclosed on behalf of the prosecution for the occurrence is not acceptable.
Even if it is assumed that because of some altercation 10/12 days before the date of occurrence, the appellant had decided to cause the murder of Jagdish then more injuries would have been caused on the person of the victim by the appellant instead of an injury 1" x 1/2 x 1 3/4".
The prosecution case regarding assault by Ramesh with a knife on Chandrapal (PW 2) has been disbelieved by the Trial Court as well as the High Court.
The delay in lodging the first information report by Chandrapal (PW 2) has not at all been explained.
The occurrence according to prosecution took place at 6.00 P.M. in the evening.
The victim while being taken to Debai which is at a distance of five kilometers expired on the way.
Then why first information report was lodged at 11.30 P.M., there is no explanation.
On the other hand the appellant 's case is that the occurrence did not take place at 6.00 P.M. in the evening but at later part in the night.
That appears to be more probable.
The appellant appeared before the Superintendent of Police, the next morning and disclosed his version of the occurrence on basis of which a case was registered.
His injuries were also examined only the next morning.
He also took a firm stand during his statement under section 313 that he give a ballam blow when the deceased and Chandrapal (PW 2) started assaulting him with lathies.
Out of the four injuries one was on the scapula,.
The doctor has not opined that they were manufactured or self inflicted.
Those injuries, according to the doctor, had been caused by a blunt weapon which is consistent with the defence version of the occurrence.
The injury found on the chest of the deceased is inconsistent with the prosecution case that appellant chased the deceased and then gave a blow by knife.
But it is consistent with the defence version that soon the deceased and Chandrapal (PW 2) returned and started assaulting the appellant when the appellant gave a ballam blow in the chest of the deceased.
If the appellant had given the ballam blow while chasing the deceased, in that event it would have caused injury on the back of the deceased.
The High Court has not disbelieved 'the version disclosed by the appellant.
The High Court on consideration of the evidence and the circumstances of the case has observed: "It is true that this respondent gave a different time of the occurrence and his version of the occurrence was also 82 different and it has been disbelieved by the learned Sessions Judge, obviously on cogent grounds.
But this cannot wash out the effect of his clear stand all through that there was a marpit between him and the informant and the deceased in which he had wielded a spear on them.
This part of this respondent 's version was clearly severable from the rest of his version and it was not at all necessary that if the learned Sessions Judge disbelieved his version regarding the manner of the occurrence, he was bound to rule out of consideration this admission of the respondent which was clearly separate and severable from the rest of his story.
" The High Court has used a part of the statement of the appellant as an admission.
According to us, that part of the statement made by the accused under section 313 of the Code cannot be used as an admission, supporting the prosecution case.
It is well known that an admission has to be taken as a whole.
It was not open to the High Court to reject one part so far the aggression and assault by the prosecution party which according to the appellant preceded giving of the ballam blow, and to accept only the later part of the statement that appellant gave a ballam blow, for the purpose of convicting the appellant.
In the case of Hanumant Govind Nargunadkar vs State of Madhya Pradesh, AIR 1952 SC 343.
it was said: "It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him.
An admission must be used either as a whole or not at all.
" The High Court should have taken the whole statement made by the appellant as an admission and then should have examined what shall be the effect thereof on the prosecution case.
According to us, taking all facts and circumstances into consideration the version of the accused of the occurrence appears to be probable and acceptable.
The next question is as to whether in the circumstances of the case appellant could have caused the death of Jagdish.
While accepting the plea of right of private defence it has been said that if the right is available, while judging the question whether the accused has exceeded such right, should not be weighed in a golden scale.
But the right of private defence 83 does not extend to infliction of more harm than is necessary for the purpose of defence.
When the appellant caused the injury with a ballam (spear) in the chest of the victim which resulted in his death, certainly he exceeded his right of private defence.
Accordingly, the conviction of the appellant under section 302 of the Penal Code is set aside.
But the appellant is convicted under section 304, Part 1, and sentenced to rigorous imprisonment for seven years which according to us shall meet the ends of justice.
The appeal is allowed in part to the extent indicated above.
V.P.R. Appeal allowed partly. | The prosecution 's case was that on the date of occurrence, the pw.2 and the deceased were returning after answering the call of nature at about 6 P.M.
At that time the appellant along with co accused came there.
Seeing the p.w.2 and the deceased the accused came rushed towards them with knives.
Appellant chased the deceased and gave a knife blow on his chest.
The P.W.2 received a knife blow from the co accused.
Thereafter the accused fled away.
The victim died on the way while he was being taken to Debai.
The P.W. 2. lodged the first information report on the same night at about 11.30 P.M.
The motive for the occurrence was that about 10 or 12 days before the date of occurrence, the appellant abused the P.W.2 and the deceased.
They gave two/three slaps to the appellant The appellant accused 's case was that for last two days prior to the date of occurrence the crop of his grand father was being damaged.
Therefore, he was keeping a watch on the field.
During night the P.W.2 and the deceased came to the field.
Seeing them, the appellant raised an alarm Chor Chor.
They started running.
The appellant chased them to catch 71 them.
But they turned back and started assaulting the appellant with lathies.
The appellant attacked them with a 'ballam ' to save his life.
The injuries on the person of the appellant were examined, in the next morning.
He filed an application before the Superintendent of Police and a case was registered at about 10.25 A.M. on the next day of the date of occurrence on the basis of appellant 's petition.
The trial Court acquitted the appellant of the charges under sections 302 and 307 read with section 34 of the penal Code.
The State 's appeal was allowed by the High Court and the present appellant was convicted under section 302 of the Penal Code and was sentenced to undergo rigorous imprisonment for life.
Present appeal was filed by the accused against the High Court 's judgment.
The State contended that if the version of appellant was accepted, it would amount to a case of free fight between the prosecution party and the accused, both being armed and that in a case of free right no party could claim right of private defence.
Partly allowing the appeal, this court, HELD: 1.01.
A free right is that when both sides mean to right a pitched battle.
The question of who attacks and who defends in such a fight is wholly immaterial and depends on the tactics adopted by the rival party.
In such cases of mutual rights, both sides can be convicted for their individual acts, [76E] 1.02.
So far the facts of the present case are concerned, if the version disclosed by the accused can be held to be a probable version of the occurrence then it cannot be held to be a case of free fight.
[76G] 1.03.
In any particular case the injuries found on the person of the accused being serious in nature may assume importance in respect of the genesis and manner of occurrence alleged by the prosecution.
In other case the injuries being superficial, by themselves may not affect the prosecution case; the version disclosed by the prosecution having been proved by witnesses who are independent, reliable and trustworthy, supported by the circumstances of that particular case, including the promptness with 72 which the first information report was lodged on behalf of the prosecution.
But if the first information report has not been lodged promptly and there is no reasonable explanation for the delay , the witnesses who support the version of the prosecution are not only inimical but even their evidence is not consistent with the circumstances found during the course of investigation, then in that situation, injuries on the person of the accused which are not very serious in nature assume importance for the purpose of consideration as to whether the defence of the right of private defence pleaded by the accused should be accepted.
[80B D] 1.04.
So far the present case is concerned the injuries found on the person of the appellant are not serious in nature and merely on the ground that prosecution has suppressed those injuries, the appellant is not entitled to the acquittal.
But those injuries can certainly be taken into consideration while judging whether the defence version of the accused is probable.
[80H] 1.05.
The motive disclosed on behalf of the prosecution for the occurrence is not acceptable.
Even if it is assumed that because of some altercation 10/12 days before the date of occurrence, the appellant had decided to cause the murder of the deceased, then more injuries would have been caused on the person of the victim by the appellant.
[81B] 1.06.
The delay in lodging the first information report by PW 2 has not at all been explained.
The occurrence according to prosecution took place at 6.00 P.M. in the evening.
The victim while being taken to Debai which is at a distance of five kilometers expired on the way.
Then why first information report was lodged at 11.30 P.M., there is no explanation.
On the other hand the appellant 's case is that the occurrence did not take place at 6.00 P.M. in the evening but at later part in the night.
That appears to be more probable.
[81C] 1.07.
The injury found on the chest of the deceased is inconsistent with the prosecution case that appellant chased the deceased and then gave a blow by knife.
But it is consistent with the defence version that soon the deceased and PW.2 returned and started assaulting the appellant when the appellant gave a ballam blow in the chest of the deceased.
If the appellant had given the ballam blow while chasing the deceased, in that event it would have caused injury on the back of the deceased.
[81F] 73 1.08.
Taking all facts and circumstances into consideration the version of the accused of the occurrence appears to be probable and acceptable.
[82G] Gajanandv.
State of Uttar Pradesh, AIR1954SC 695;Kanbi Nanji Virji vs State of Gujarat AIR 1970 SC 219; Puran vs State of Rajasthan, AIR 1976 SC 912; Vishvas Aba Kurane vs State of Maharashtra, AIR 1978 SC 414; The State of Gujarat vs Bai Fatima, ; ; Lakshman Singh vs State of Bihar, AIR 1976 SC 2263; Bhaba Nanda Sarma vs The State of Assam, ; ; Hare Krishna Singh vs State of Bihar, ; and State of Rajasthan vs Madho, AIR 1991 SC 1065, referred to.
[76F] 2.01.
Once it is established by the prosecution that the occurrence in question is result of a free fight then normally no right of private defence is available to either party and they will be guilty of their respective acts.
[76G] 2.02.
Accused pleading the right of private defence need not prove it beyond reasonable doubt.
It is enough if on the basis of the circumstances of a particular case, applying the test of preponderance or probabilities the version becomes acceptable.
[80E] 2.03.
There are no two parallel versions before the Court, one on behalf of the prosecution and other on behalf of the accused and the Court is required to choose as to which of the two versions is the correct version of the occurrence.
The burden placed on the accused is discharged no sooner he creates a doubt in the mind of the Court and satisfies the Court that the version disclosed by him in the facts and circumstances of that particular case is more probable.
[80E F] 2.04.
If the right of private defence is available.
While judging the question whether the accused has exceeded such right, should not be weighed in a golden scale.
But the right of private defence does not extend to the infliction of more harm than is necessary for the purpose of defence.
When the appellant caused the injury with a ballani (spear) in the chest of the victim which resulted in his death, certainly he exceeded his right of private defence.
[82H, 83A] Partap vs )le State of U.P., ; Mohan Singh vs State of Punjab, AIR 1975 SC 2161; Seniyal Udayar vs State of Tamil Nadu, AIR 1987 SC 1289; Vijayee Singh vs State of U.P.; , and Buta 74 Singh vs State of Punjab, , referred to.
[80G] 3.
An admission has to be taken as a whole.
It was not open to the High Court to reject one part so far the aggression and assault by the prosecution party which according to the appellant preceded giving of the ballam blow, and to accept only the later part of the statement that appellant gave a ballam blow, for the purpose of convicting the appellant [82D].
Hanumant Govind Nargundkar vs State of Madhya Pradesh, AIR 1952 SC 343, referred to. |
Appeal Nos. 182 and 183 of 1993.
From the Judgment and Order dated 6.6.86 of the Central Ad ministrative Tribunal, Chandigarh in O.A./T.A. Nos.49 & 102 of 1986.
Raj Birbal for the Appellant.
Rajinder Sachher, Mahabir Singh and A.K Mahajan for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Kamlesh Baboo and V.K. Bhardwaj were promoted as Executive Engineer (Civil) with effect from January 21, 1986 in the Engineering Department of the Chandigarh Administration.
The promotion was made on the basis of merit and suitability as determined under the provisions of the Punjab Service of Engineers, Class I (Buildings and Road Branch) Rules, 1960 (Rules) as applicable to the Chandigarh Administration.
Both of them approached the Central Administrative 123 Tribunal, Chandigarh Bench seeking a direction to the effect that their 'seniority in the cadre of Executive Engineers be determined from the date when they became eligible to be considered for promotion under the Rules.
In other words, they claimed January 1, 1985 the eligibility date as the date of their promotion to the post of Executive Engineer instead of January 21, 1986 when they were actually promoted.
The Tribunal by its order dated June 6, 1986 granted the relief asked for by Kamlesh Baboo and V.K. Bhardwaj in the following terms: "In view of the above discussion, we direct that the applicant, who was promoted as Executive Engineer from 21.1.1986 (vide Office Order dated 20.1.1986 and 2.5.1986) shall be continued as Executive Engineer even if the approval of the U.P.S.C. is not received within six months from the date of his promotion.
For the purposes of seniority, the applicant shall be considered from the date when he became eligible.
The promotion of the applicant as Executive Engineer, shall however, be subject to the approval by the U.P.S.C. and without prejudice to the decision of the competent court in the matter of seniority, which is in dispute.
" These two appeals by the Chandigarh Administration are against the order of the Tribunal.
Kamlesh Baboo joined service as Section Officer under the Chandigarh Administration on March 8, 1971.
He was promoted to the post of Sub Divisional Engineer on December 29, 1976 and was confirmed as such on August 13, 1985.
The service particulars of V.K. Bhardwaj are identical.
The conditions of service of the respondents are governed by the Rules.
Rules 6(b) and 8 (1)(3)(4)(8)(9)(10)(11) which are relevant are reproduced hereunder: "6 (b) in the case of an appointment by promotion from Class 11 Service has 8 years completed service, in that class and has passed the departmental examination, as provided in rule 15; 8(1) A committee consisting of the Chairman of the Public 124 Service Commission or where the Chairman is unable to attend, any other member of the Commission representing it, the Secretary, P.W.D. (Buildings and Roads Branch), and the Chief Engineers, Punjab, P.W.D. Buildings and Roads Branch, shall be constituted.
(3)The Committee shall meet at intervals, ordinarily not exceeding one year, and consider the cases of all eligible officers for promotion to the senior scale of the Service, as on the first day of January of that year.
(4)The Committee shall prepare a list of officers suitable for promotion to the senior scale of the Service.
The selection for inclusion in such list shall be based on merit and suitability in all respects with due regard to seniority.
(8)The fist prepared or revised in accordance with subrules (4), (5) and (6) shall then be forwarded to the Commission by Government along with (i) the records of all officers included in the list; (ii) records of all officers proposed to be superseded as a result of the recommendations made by the Committee; (iii)the reasons, if any, recorded by the Committee for the proposed supersession of any officer; (iv) the observations, if any of the State Government on the recommendation of the Committee.
(9) The Commission shall consider the list prepared by the Committee along with other documents received from the State Government and,unless it considers any change necessary, approve the list.
(10) If the Commission considers it necessary to make any, changes in the list received from Government, the 'Commission shall make the changes it proposes and forward the list it considers suitable to the State Government.
125 (11) Appointments to the Service shall be made by Government from this list in the order in which names have been placed by the Commission.
" It is not disputed that the respondents in these two appeals completed eight years of service in Class 11 cadre, by the end of December 1984 and as such they were eligible to be considered for promotion to the post of Executive Engineer on January 1, 1985.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Rules, reproduced above.
Rule 8 of the Rules envisages a Selection Committee presided over by Chairman/Member of the Public Service Commission.
The Committee considers the cases of eligible officers on the basis of merit and suitability, the list of the selected officers is sent to the Commission for final approval and thereafter the appointments are made out of the approved list in accordance with the merit assigned therein.
It is thus obvious that eligibility under Rule 6(b) of the Rules by, itself does not give a right to a member of Class II service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class 11 officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
The question of Assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
Both the respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in class I service keeping in view the date of their appointments as January 21, 1986.
The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules and cannot be sustained.
Even otherwise both Kamlesh Baboo and V.K. Bhardwaj were working as 126 Sub Divisional Engineer on January 1, 1985 and as such treating them to have been appointed to Class I service from that date and giving them benefit towards seniority on that basis would be wholly erroneous.
The question as to whether the deputationists from Punjab and Haryana should be permitted to continue to serve the Chandigarh Administration has no relevance to the controversy involved in these appeals.
That is a matter of policy between the States of Punjab, Haryana and Union Territory of Chandigarh.
The Tribunal was wholly unjustified in seeking support from the non existent fact that because of the presence of many deputationists the respondents in these appeals were not being considered for promotion.
As a matter of fact the respondents got their promotion at the earliest possible opportunity.
They became eligible on January 1, 1985 and thereafter within a period of one year the procedure under Rule 8 was completed and they were promoted with effect from January 21, 1986.
We allow the appeals, set aside the order of the Tribunal dated June 6, 1986 and dismiss the applications filed by respondents Kamlesh Baboo and V.K. Bhardwaj before the Tribunal.
No costs.
V.P.R. Appeals allowed. | The respondent in C.A. No.182 of 1993 joined service as Section Officer under the appellant on 83.1971.
On 29.12.1976 he was promoted to the post of Sub Divisional Engineer and was confirmed on 13.8.1985.
With effect from 21.1.1986, the.
respondent was promoted as Executive Engineer (Civil).
The service particulars of the respondent in C.A. No.183 of 1993 were identical.
The respondents approached the Central Administrative Tribunal to determine their seniority in the cadre of Executive Engineers from the date of eligibility, ie.
1.1.1985 and not from 21.1.1986.
The Tribunal allowed the applications of the respondents, against which the present appeals were riled by the Administration.
Allowing the appeals, this Court, HELD:1.01.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Punjab Service of Engineers, Class I (Buildings and Roads Branch) Rules 1960.
Eligibility under Rule 6(b) of the Rules by itself does not give a right to a member of Class 11 service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim 122 promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class II officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
[125C E] 1.02.
The question of assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
[125F] 1.03.
The respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in Class I service keeping in view the date of their appointments as January 21, 1986.
[125F G] 1.04 The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the Respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules.
[125G H] |
Special Leave Petition (Civil) No. 7508 of 1988.
From the Judgment and order dated 28.6.1988 of the Bombay High Court in Civil Writ Petition No. 800 of 1988.
728 S.N. Kacker, U.R. Lalit, V.D. Joshi, B.D. Joshi, S.C. Bora and Kailash Vasdev for the Petitioner.
Dr. Y.S. Chitale, V.A. Bobde, V.J. Francis, N.M. Popli and Miss Almjit Chauhan for the Respondents.
The Judgment of the Court was delivered by SEN, J.
This special leave petition is directed against the judgment and order of the High Court of Bombay dated June 28, 1988 upholding the election of respondents nos.
1 and 2 Dr. Shantaram Kale and Takiqui Hassan as Mayor and Deputy Mayor respectively, and respondents nos.
3 8 as Members of the Standing Committee at the first meeting of the Aurangabad Municipal Corporation at the Alankar Hall, held on May 6, 1988 at 2 p.m.
The issue involved is whether the first meeting of the Corporation called for that day at 2.45 p.m. by the Municipal Commissioner, respondent No. 9, who presided over the meeting, was adjourned for the day or adjourned sine die and therefore had to be called on some subsequent date to be fixed by him and thus necessitated the giving of seven days ' clear notice as required by r. 1(h), Chapter II of the Rules framed under section 453 of the Bombay Provincial Municipal Corporation Act, 1949.
Since the question involved was a matter of moment and the affidavits filed by the petitioner Chandrakant Khaire, the leader of the Shiv Sena Party which is the largest single group in the Corporation consisting of 18 Concillors, and by some of the Councillors as well as their supporters, and the affidavits in opposition filed by the Party in power Congress I which has formed a coalition with the splinter groups commanding a majority of 32 Councillors in a House of 60, raise controverted facts as to whether the proceedings of the meeting had been adjourned sine die or merely suspended, we thought it better to have the minutes of the proceedings before us.
Shri Vinod Bobde, learned counsel appearing for the Municipal Commissioner has placed the minute books written in Marathi along with a translation thereof in English.
At the last occasion we were left with the impression that the word used by the Municipal Commissioner was 'tahkub ' while adjourning the meeting at 2.45 p.m. amidst unprecedented scenes of complete disorder, commotion and pendemonium.
We now find the word used in the minutes is 'sthagit ' but in the translation furnished the word used is 'adjourned '.
The facts revealed in the counter affidavits filed by the Munici 729 pal Commissioner, Collector and the Superintendent of Police show that a serious law and order situation had arisen due to which both the Collector and the Superintendent of Police had to rush to the venue of the meeting.
They both have sworn to the fact that not only the Councillors but many outsiders were present in the hall where the meeting was being held.
There were also a large number of supporters of the rival parties, spectators and journalists.
The Municipal Commissioner was surrounded by some 20 25 persons apart from the Councillors, one group insisting upon the meeting being adjourned for the day i.e. the Councillors belonging to the majority Shiv Sena Party while the other group consisting of the Congress I Party and the splinter groups forming the coalition demanding that the meeting be continued.
The Collector has sworn to the fact that there was 'total confusion and bedlam inside the hall apart from the fact that the entire atmosphere was surcharged with commotion ' and no business could be transacted.
He has further sworn to the fact that respondent No. 9, the Municipal Commissioner, the presiding officer, appeared to be 'in a very agitated state of mind ' and told him that he could not hold the meeting in the unruly and disorderly situation prevailing and complained that despite his repeated requests to the Councillors to maintain peace, it had no effect and they kept on shouting, raising slogans and fighting amongst themselves and thereby making it impossible for him to transact any business.
The meeting was scheduled to be held at 2 p.m. and respondent No. 9 announced that the polling for the offices of Mayor, Deputy Mayor and Members of the Standing Committee would commence from 2.30 p.m. onwards.
What happened thereafter reveals a very disturbing feature which unfortunately has become too common these days and shows the strain through which our democratic system is passing.
At about 2.30 p.m. some of the Councillors belonging to the Shiv Sena Party sat on the ballot boxes and others belonging to that Party and its supporters surrounded the Municipal Commissioner demanding that the meeting be adjourned to a subsequent date.
Thereupon, the Councillors belonging to the Party in power i.e. Congress I, started shouting at him that the meeting be held later on that day, being apprehensive that if the meeting were to be adjourned, they might lose the contest.
There followed shouting of slogans, hurling of abuses and thumping of the tables.
The Councillors belonging to the rival groups then started throwing chairs at each other leading to a pandemonium.
That the fact that not only Councillors but also many outsiders were present in the hall where the meeting was being held who really had no business to be there, is clearly brought out in the affidavits sworn by the Municipal 730 Commissioner, Collector and the Superintendent of Police.
They also show a large number of persons freely entering and leaving the hall.
It is apparent from the affidavit of the Superintendent of Police that during the time when all this happened, Viswasrao Deshmukh, Revenue Minister, Government of Maharashtra came into his office and left the premises while he was actually busy in supervising the bandobust.
We have been shown photographs showing the presence of a large number of policemen wielding lathis inside the hall.
The Collector 's affidavit reveals that the Superintendent of Police personally requested Chagan Bhujbal, a sitting Member of the State Legislative Assembly belonging to the Shiv Sena Party, to keep himself away from the premises of the meeting hall.
Be that as it may, it appears that both the officers asked the outsiders to clear out of the hall, requested the Councillors to take their places so as to permit the Municipal Commissioner to transact the business for the day and brought the situation under control.
They have sworn to the fact that after the Councillors had calmed down and order was restored, both of them left the hall.
Thereafter, the Municipal Commissioner apparently announced on the mike that the meeting would continue and the elections would be held at 4.30 p.m.
The petitioner Chandrakant Khaire being the leader of the Shiv Sena Party, filed a written protest at 4.15 p.m. that the meeting had been adjourned by the Municipal Commissioner for the day and therefore the holding of the meeting later on that day would be improper and illegal.
After this, the Councillors belonging to the opposition group abstained from participating in the meeting held at 4.30 p.m. at which respondents nos.
1 and 2 Dr. Shantaram Kale and Takiqui Hassan were declared elected as Mayor and Deputy Mayor respectively and respondents nos.
3 8 as Members of the Standing Committee, each of them having polled 32 votes.
We had benefit of hearing Shri S.N. Kacker, learned counsel for the petitioner, Dr. Y.S. Chitale, learned counsel appearing for respondents nos.
1 8 and Shri Vinod Bobde, learned counsel appearing for respondent No. 9, the Municipal Commissioner.
After a protracted hearing we at the end of the day reserved orders.
Having given the matter our anxious consideration, we find it difficult to interfere with the judgment of the High Court.
In view of the conflicting affidavits, the petitioner and his supporters asserting that the Municipal Commissioner had adjourned the meeting for the day and respondent No. 2 reiterating the version of the Municipal Commissioner that he had only suspended the proceedings so that the meeting could be held later in the day and the business for 731 the day, namely, election of the Mayor, Deputy Mayor and Members of the Standing Committee, could be transacted, the High Court relying on the 'preponderance of probabilities ' has come to the conclusion that in the facts and circumstances the affidavit of the Municipal Commissioner, respondent No. 9, appeared to be 'more impressive, probable and convincing ' and therefore they were inclined to accept it as 'one inspiring confidence '.
Acting upon the affidavit sworn by respondent No. 9, the Municipal Commissioner, the High Court has found as a fact that the meeting was not adjourned for the day or sine die but it was to be held as soon as peace was restored on the very day i.e. the meeting had only been postponed.
That is an inference drawn from affidavits and we find no just and compelling reasons to upset the same.
Shri S.N. Kacker, learned counsel for the petitioner contends that the High Court erred in proceeding on probabilities in deciding the present matter which has far reaching ramifications affecting the democratic principles.
It is said that the High Court having found that because of unruly and provocative atmosphere prevailing in the meeting hall, the Municipal Commissioner was required to adjourn the meeting in order to restore peace and to re arrange the furniture which was helter skelter as the Councillors, it is stated, threw chairs at each other, erred in taking the view that the meeting was not adjourned for the day or sine die but had merely been suspended when in fact, the business for the day, namely, elections to the offices of Mayor, Deputy Mayor and Members of the Standing Committee, could not obviously be transacted.
He further contended that when the Municipal Commissioner on his own showing had to adjourn the proceedings in view of the prevailing atmosphere and since he felt it was impossible to continue the election process in that situation, it was wrongly held by the High Court that the meeting was not adjourned sine die when the Municipal Commissioner unequivocally admits that such adjournment was necessary to enable him to decide and announce the time for the resumption of the further proceedings.
In substance, the contention is that the meeting was not adjourned to a definite point of time and must therefore be regarded as adjourned for the day or adjourned sine die.
The learned counsel referred to several law dictionaries to bring out the meaning of the expression 'adjourned sine die ' and relied upon the decision of the Calcutta High Court in Smt.
Menaka Bala Dasi vs Hiralal Gobindalal & Anr., and that of the Madhya Pradesh High Court in Sheokumar Shashtri vs Municipal Committee, Rajnandgaon, AIR (1964) MP 195, and also to a passage from Shackleton on the Law & Practice of Meetings, 7th edn.
at p. 44 for the 732 submission that in the case of adjournment sine die, the meeting stands adjourned to an unspecified date and as such a fresh notice calling for the meeting is necessary.
Dr. Y.S. Chitale appearing for respondents nos.
1 8 and Shri Vinod Bobde for respondent No. 9, on the other hand, contended that the meeting had not been adjourned sine die but the proceedings had merely been suspended at 2.45 p.m. and the adjourned meeting at 4.30 p.m. was a continuation of the original meeting and no new notice of an adjourned meeting had to be given.
It was contended further that there was no warrant for interference under article 136 of the Constitution since a finding of fact has been reached by the High Court on a consideration of the Material on record.
It was also contended that the petitioner having failed to make good the averment in the writ petition that the meeting had been 'adjourned for the day ', the High Court was justified in declining to interfere.
In order to appreciate the point in controversy, it is necessary to set out the relevant statutory provisions bearing on the question.
It is needless to stress that a Municipal Corporation cannot function without the Mayor, Deputy Mayor and Members of the Standing Committee who are entrusted with certain functions and duties under the Act.
Sub section
(1) of section 19 of the Act provides that 'the Corporation shall at its first meeting after the general elections . . . elect from amongst the Councillors one of its members to be the Mayor and another to be the Deputy Mayor ', their term of office being one year.
Sub section
(2) of section 20 enacts that 'the Corporation shall at its first meeting after the general elections appoint 12 persons out of its own body to be Members of the Standing Committee '.
The term of office of the elected Councillors, as provided by section 6(1), is a period of five years which in terms of sub section (2) is deemed to commence on the date of the first meeting called by the Municipal Commissioner.
The relevant Rules framed under section 453 of the Act relating to the proceedings of the Corporation are as follows: "1(b).
The first meeting of the Corporation after general elections shall be held as early as conveniently may be on a day and at a time and place to be fixed by the Commissioner, and if not held on that day shall be held on some subsequent date to be fixed by the Commissioner." "1(h).
At least seven clear days ' notice shall ordinarily be given of every meeting, other than any adjourned meeting. 733 1(m).
Any meeting may, with the consent of a majority of the councillors present be adjourned from time to time to a later hour on the same day or to any other, but no business shall be transacted and, except as is hereinafter provided, no proposition shall be discussed at any adjourned meeting other than the business or proposition remaining undisposed of at the meeting from which the adjournment took place." "2(3).
The Presiding Officer may in case of grave disorder suspend the meeting for a period not exceeding three days.
" It is therefore quite obvious that the first meeting of the Corporation is of prime importance.
Learned counsel for the parties have agreed that cl.(m) may not govern the first meeting of the Corporation but relates to subsequent meetings.
The question before us is whether the first meeting 'could not be held on that day ' within the meaning of cl.(b) of r. 1 and therefore had to be held 'on some subsequent date to be fixed by the Municipal Commissioner '.
The affidavits on record clearly show that the Municipal Commissioner who presided over the meeting, was constrained to adjourn the meeting at 2.45 p.m. when some of the Councillors belonging to the Shiv Sena Party, of which the petitioner is the leader, went inside the booth and forcibly removed the ballot boxes and sat upon them to prevent casting of any votes, giving rise to commotion and pandemonium.
What actually happened is best stated by the Municipal Commissioner in his affidavit: "As a result there was tremendous confusion, chaos and uproar in the house and there was tremendous noise and nothing could be heard clearly.
I say that there was tremendous tension and the situation was going out of control and it was not possible to conduct the election at the moment of time and therefore I announced that the meeting is adjourned and that the Councillors should restore peace.
I also said that I shall soon announce the time of meeting.
I say that I did not leave the house and remained in the chair of the Presiding Authority hoping that the peace would be restored and I would be able to announce the time of the meeting.
Thereafter Shri Man Mohan Singh 734 Oberoi raised the point of order that the meeting should not be adjourned and that he along with another Councillor Dr. Sancheti insisted that meeting should continue.
At this stage the situation in the house worsened and in fact there was hot exchange of words and shouting between different groups of Councillors.
An attempt was made to throw chairs at each other and in fact the furniture in the house was scattered and several Councillors surrounded me and some spoke in favour of adjournment and some spoke in favour of continuation.
My efforts to restore peace and order were futile, and there was serious law and order situation.
In the circumstances aforesaid there was no alternative and I felt that it was my duty to seek the Police help and I called the Police to restore order.
Thereupon some of the Councillors objected and actually resisted the entry of the Police.
Thereafter on my directives the Police soon left.
Some of the Shiv Sena Councillors were in aggressive mood and they came to my table and violently thumped the table and shouted that they would not allow this meeting to take place.
During this period I even suggested that the Councillors should go out.
This was necessary as I felt that without that the furniture cannot be re arranged and further steps for resuming the meeting will not be possible.
In the meantime the District Magistrate Shri R.R. Sinha and Supdt.
of Police Shri T.C. Wankhede entered the Hall.
S.P. Shri Wankhede appealed the Councillors on the mike to restore peace.
I say that discussions took place between myself and the Dist.
Magistrate with a view to restore the peace.
The Dist.
Magistrate Shri Sinha also appealed to restore peace.
Thereafter the Councillors were calmed down and the order was restored.
On the peace being restored both the District Magistrate and the S.P. left the house at 3.45 p.m.
I announced on the mike that meeting would continue and election would be held at 4.30 p.m." ******* ******* ". in effect the adjournment declared by me as aforesaid amounts to suspension of the meeting because of the grave disorder . " ******* ******* 735 "I also said that I shall soon make an announcement about the time for resuming the meeting.
" ******* ******* "I had to adjourn the proceedings in view of the prevailing circumstances set out hereinabove and since I felt that it was impossible to continue the election process in that situation.
It was also necessary to enable myself to decide and announce the time for the resumption of the further proceedings of the meeting.
" While setting out the facts we have already adverted to the facts sworn by the Collector and the Superintendent of Police.
There is no reason not to act on these affidavits.
The Collector says that 'there was total confusion and bedlam inside the hall ' apart from the fact that 'the entire atmosphere was surcharged with commotion ', and 'the Municipal Commissioner was in a very agitated state of mind and said that he could not hold the meeting in the unruly and disorderly situation prevailing '.
There can be no doubt that such unruly scenes witnessed on that day gave rise to a serious law and order situation but both the Collector and the Superintendent of Police were able to restore order in the House and prevailed upon the outsiders to vacate the meeting hall in order that the proceedings could be resumed.
The fact that the Municipal Commissioner did not leave the House or vacate the seat does lend support to the version that he had merely suspended the proceedings till order was restored.
There is no reason to doubt the affidavit sworn by the Municipal Commissioner that he announced on the mike at 3.45 p.m. that the proceedings would be resumed at 4.30 p.m. for transacting the business for the day.
It is quite obvious that the meeting was not 'adjourned for the day ' or 'adjourned sine die '.
Shri Kacker, learned counsel for the petitioner contended that when the affidavits of the three officers showed that utter confusion prevailed and there was pandemonium all around with strangers moving about in the meeting hall, it must necessarily follow that no business could be transacted on that day.
The contention is that the meeting was not adjourned to a definite point of time and must therefore be regarded as 'adjourned for the day ' or 'adjourned sine die '.
He referred to the decisions in Menaka Bala Dasi and Sheokumar Shashtri, as also to various law dictionaries, besides a passage from Shackleton on the Law and Practice of Meetings, 7th edn.
at p. 44.
On the strength of these authorities, it was submitted that 736 the meeting was adjourned not to a definite point of time and must therefore be regarded as 'adjourned for the day ' or 'adjourned sine die '.
He accordingly submitted that the Municipal Commissioner should have fixed another date for the meeting and issued fresh notice therefor.
We are afraid, we cannot accept this line of reasoning.
According to the ordinary meaning, the expression 'sine die ' as given in Shorter Oxford Dictionary, 3rd edn., vol.
II at p. 2000 means: "Without any day being specified (for reassembling, resumption of business etc.); indefinitely." Similarly, in Webster 's Comprehensive Dictionary, International edn., the meaning given is more or less the same: "Without a day; indefinitely: an adjournment sine die (that is, without setting a day for ressembling).
" The same is the legal meaning.
In Black 's Law Dictionary, Deluxe 4th edn.
at p. 1556, the meaning of the expression sine die is: "Without day; without assigning a day for a further meeting or hearing." The legal meaning given in Jowitt 's Dictionary of English Law, 2nd edn., vol.
II at p. 1663 reads: "Without a day being fixed.
The consideration of a matter is said to be adjourned sine die when it is adjourned without a day being fixed for its resumption.
" The passage in Shackleton at p. 44 on which the learned counsel relies reads: "Adjourned meetings: Notice.
An adjournment, if bona fide, is only a continuation of the meeting and the notice that was given for the first meeting holds good for and includes all the other meetings following up it.
If however the meeting is adjourned sine die, a fresh notice must be given.
No new business can be introduced unless notice of such new business is given.
" 737 There can be no dispute with the proposition but the difficulty is about the applicability of that principle to the facts of the case.
Literally, there is nothing on record to substantiate the petitioner 's submission that the first meeting scheduled to be held on May 6, 1988 at 2 p.m. was 'adjourned for the day ' or 'adjourned sine die ' without transacting any business i.e. without consideration of the agenda for the day.
On the contrary, it is not in dispute that the business for the day was partly transacted when the Councillors met at 2 p.m. as scheduled and the Municipal Commissioner declared that the polling would commence from 2.30 p.m. onwards.
The trouble started at 2.30 p.m. when the Councillors belonging to the petitioner 's Shiv Sena Party prevented the casting of votes by snatching away the ballot boxes from the polling booths and sat upon them.
There was a pre determined plan on their part not to allow the first meeting to be held on that day.
But the Municipal Commissioner did not give way to the commotion and pandemonium and he did not put off the meeting to another day.
In the prevailing situation, the Municipal Commissioner had no other alternative but to adjourn the meeting.
Under the scheme of the Act, when the term of the elected Councillors is a period of five years which in terms of sub section (2) of section 6 of the Act is deemed to commence on the date of the first meeting, the Municipal Commissioner obviously could not adjourn the meeting for another day or adjourn it sine die.
If the contention that the meeting having been adjourned without specifying a definite point of time were to prevail, it would give rise to a serious anomaly.
The effect of adjourning the first meeting to another day would imply the coming into existence of another deemed date under section 6(2) of the Act for commencement of the term of the Councillors.
The Municipal Commissioner has unequivocally asserted that he only suspended the proceedings in order that they could be resumed for transaction of the business for the day, and the business for the day had to be transacted on May 6, 1988, the date of the first meeting, as fixed by him.
Admittedly, the Municipal Commissioner did not leave the meeting hall nor vacate his seat.
He showed exemplary courage in not yielding to the threats of violence wielded by the party in opposition, because he knew that in law the first meeting had to be held on that day and could not be adjourned to another day.
There is no reason to disbelieve the Municipal Commissioner that when he adjourned the meeting he simultaneously made an announcement that he would later announce the time when the meeting was to be resumed.
He is candid enough to say that he had to adjourn the proceedings in view of the prevailing situation when he felt that it was impossible to continue the election process hoping that peace would soon be restored and he would be able to announce the time of the 738 meeting.
One of the reasons given for the adjournment was that he adjourned the meeting to enable him to decide and announce the time for the resumption of the further proceedings of the meeting.
Rankin, CJ in Menaka Bala Dasi 's case in repelling the contention that adjournment sine die of an application for making a decree in a mortgage suit final, was a discontinuance of it, observed: "(W)hatever may be the old authorities on that point, I have no doubt myself that with us to day 'adjournment sine die ' differs altogether from discontinuance.
It is after all an adjournment an adjournment to a date that is not at the moment fixed.
" The decision of the Madhya Pradesh High Court in Sheokumar Shasthri 's case relied upon by learned counsel for the petitioner is clearly distinguishable.
In that case, it was admitted that the meeting of the Municipal Committee summoned for January 17, 1962 at which the motion of no confidence was to have been moved was adjourned sine die for want of quorum and the High Court held relying upon the proviso to section 32 of the Madhya Pradesh Municipalities Act, 1961, that a meeting convened for consideration of a no confidence motion could not be adjourned sine die, but had to be adjourned to 'some other day ' for which a fresh notice was necessary, P.V. Dixit, CJ speaking for himself and K.L. Pandey, J. observed: "It is settled law that where there is a power of adjournment and a meeting is adjourned, then the adjourned meeting is a continuation of the original meeting and no new notice of an adjourned meeting need be given unless the relevant statutory provisions or rules so require.
But in the case of an adjournment sine die a fresh notice is necessary, (See: Scadding vs Lorant, ; ; and Wills vs Murray, ; The proviso to section 32 of the C.P. and Berar Municipalities Act, 1922, laid down that: "If at any ordinary or special meeting of the committee a quorum is not present, the Chairman shall adjourn the meeting to such other day as he may think fit . . " Under this proviso, a meeting could be adjouned to some fixed date and not sine die.
" 739 The decision in Sheokumar Shashtri is therefore of no avail.
Shackleton on the Law & Practice of Meetings, 7th edn.
apart from the passage at p. 44 already quoted, gives the different shades of meaning of adjournment as understood in legal parlance, in the following words: "Adjournment is the act is postponing a meeting of any private or public body or any business until another time, or indefinitely, in which case it is an adjournment sine die.
The word applies also to the period during which the meeting or business stands adjourned.
An Adjournment may be: 1.
For an interval expiring on the day of the adjournment.
For an interval expiring on some later date.
For an indefinite time (i.e. sine die).
Until a fixed time and date.
To another place.
" The learned author then sets out the different causes giving rise to an adjournment which may be by (1) Resolution of the meeting.
(2) Action of the chairman, and (3) Failure to achieve or maintain a quorum.
A properly convened meeting cannot be postponed.
The proper course to adopt is to hold the meeting as originally intended, and then and there adjourn it to a more suitable date.
If this course be not adopted, members will be entitled to ignore the notice of postponement, and, if sufficient to form a quorum, hold the meeting as originally convened and validly transact the business thereat.
Even if the relevant rules do not give the chairman power to adjourn the meeting, he may do so in the event of disorder.
Such an adjournment must be for no longer than the chairman considers necessary and the chairman must, so far as possible, communicate his decision to those present.
The law relating to adjournment has been put succinctly in Horsley 's Meetings Procedure, Law and Practice, 2nd edn., edt.
by W. John Taggart at p. 84, para 1002: 740 "The word 'adjournment ' tends to be used loosely in connection with meetings.
Indeed, as a result, the word is possibly in process of acquiring a further, derived meaning of 'close, conclude or finish ', whereas a meeting or a debate is adjourned when its further proceedings are postponed to some subsequent time or to enable it to reassemble at some other place; to a later hour in the same day, to some future date, or indefinitely, i.e. sine die (without a day being named).
The business (of the whole meeting or the debate respectively) is indeed suspended, but with an intention of deferring it until resumption at a later time.
" The learned author goes on to say that the word 'adjourn ' has been in use for almost five centuries in connection with meetings, with an early meaning of 'to put off or defer proceedings to another day ', and adds: "This in due course gave rise to the added meaning 'to break off for later resumption '.
" On an overall view of the facts and circumstances, we have no hesitation in upholding the finding that the first meeting of the Municipal Corporation fixed by the Municipal Commissioner for May 6, 1988 was not 'adjourned for the day ' or 'adjourned sine die ' but had only been put off to a later hour i.e. the proceedings had only been suspended, to re commence when peace and order were restored.
In the result, the special leave petition must fail and is dismissed.
No costs.
G.N. Petition dismissed. | After the election of Members, the first meeting of the Aurangabad Municipal Corporation was held on May 6, 1983 at 2 P.M. and the Municipal Commissioner announced that the polling for the offices of Mayor, Deputy Mayor and Members of the standing Committee would commence from 2.30 p.m. onwards.
But at 2.30 P.M. some of the Councillors belonging to the Opposition Party sat on the ballot boxes and some others surrounded the Municipal Commissioner and demanded that the meeting be adjourned to a subsequent date.
The Councillors belonging to the ruling party demanded that the meeting and election be held later on that day.
Total confusion and bedlam prevailed and the rival groups started throwing Chairs at each other, leading to a pandemonium.
It was a free for all, and even outsiders were present.
When the situation was brought under control, the Municipal Commissioner announced that the meeting would continue and the elections would be held at 4.30 p.m.
The petitioner filed a protest at 4.15 p.m. stating that the meeting had been adjourned by the Municipal Commissioner for the day and, therefore, the holding of the meeting later on the same day would be improper and illegal.
Thereafter, the opposition group abstained from participating in the meeting held at 4.30 p.m., in which Respondents 1 and 2 were declared elected as Mayor and Deputy Mayor respectively 726 and Respondents 3 8 as Members of the Standing Committee.
In a Writ Petition filed before the High Court, the appellant questioned the election, on the basis that the meeting in which the election was held, was invalid.
The High Court held that the meeting was not adjourned for the day or sine die, but was only postponed, to be held as soon as peace was restored on the very day and upheld the election of Respondents 1 to 8.
Against the judgment of the High Court, the petitioner has filed the present special leave petition.
On behalf of the petitioner, it was contended that the meeting was not adjourned to a definite point of time and must therefore be regarded as adjourned for the day or adjourned sine die.
The contention of the Respondents was that the meeting had not been adjourned sine die but the proceedings had merely been suspended at 2.45 p.m. and the adjourned meeting held at 4.30 p.m. was a continuation of the original meeting and no new notice of an adjourned meeting had to be given.
It was also contended that there was no warrant for interference under article 136 of the Constitution since a finding of fact had been reached by the High Court on consideration of the material on record.
Dismissing the petition, ^ HELD: 1.
A properly convened meeting cannot be postponed.
The proper course to adopt is to hold the meeting as originally intended, and then and there adjourn it to a more suitable date.
If this course be not adopted, members will be entitled to ignore the notice of postponement, and, if sufficient to form a quorum, hold the meeting as originally convened and validly transact the business thereat.
Even if the relevant rules do not give the chairman power to adjourn the meeting, he may do so in the event of disorder.
Such an adjournment must be for no longer than the chairman considers necessary and the chairman must, so far as possible, communicate his decision to those present.
[739F G] 2.1 In the instant case, the High Court was right in holding that the first meeting of the Municipal Corporation fixed by the Municipal Commissioner for May 6, 1988 was not 'adjourned for the day ' or 'adjourned sine die ' but had only been put off to a later hour i.e. the proceedings had only been suspended, to re commence when peace and order were restored.
[740D E] 727 2.2 There is nothing on record to sustantiate the petitioner 's submission that the first meeting scheduled to be held on May 6, 1988 at 2 P.M. was 'adjourned for the day ' or 'adjourned sine die ' without transacting any business i.e. without consideration of the agenda for the day.
On the contrary, it is not in dispute that the business for the day was partly transacted when the Councillors met at 2 p.m. as scheduled and the Municipal Commissioner declared that the polling would commence from 2.30 p.m. onwards.
The trouble started at 2.30 p.m. when the Councillors belonging to the petitioner 's party prevented the casting of votes by snatching away the ballot boxes from the polling booths and sat upon them.
There was a pre determined plan on their part not to allow the first meeting to be held on that day.
But the Municipal Commissioner did not give way to the commotion and pandemonium and he did not put off the meeting to another day.
In the prevailing situation, the Municipal Commissioner had no other alternative but to adjourn the meeting.
Under the scheme of the Act, when the term of the elected Councillors is a period of five years which in terms of sub section (2) of section 6 of the Act is deemed to commence on the date of the first meeting, the Municipal Commissioner obviously could not adjourn the meeting for another day or adjourn it sine die.
If the contention that the meeting having been adjourned without specifying a definite point of time were to prevail, it would give rise to a serious anomaly.
The effect of adjourning the first meeting to another day would imply the coming into existence of another deemed date under section 6(2) of the Act for commencement of the term of the Councillors.
The fact that the Municipal Commissioner did not leave the House or vacate the seat lends support to the version that he had merely suspended the proceedings till order was restored.
[737A E] Smt.
Menaka Bala Dasi vs Hiralal Gobindalal & Anr., and Sheokumar Shashtri vs Municipal Committee, Rajnandgaon, AIR 1964 MP 195 Distinguished.
Shackelton on the Law & Practice of Meeting, 7th Edn.
p. 44, Horsley 's Meetings Procedure, Law and Practice, 2nd Edition, p. 84, para 1002 referred to. |
Appeal No. 2230 (NT) of 1977.
From the Judgment and Order dated 13.12.76 of the Gujarat High Court in Income Tax Reference No. 36 of 1972.
Mrs. A.K. Verma, for JBD & Co. for the Appellant.
G.C. Sharma, E.U.Eradi and T.R. Talwar for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
This appeal is preferred by the assessee against the judgment of the Gujarat High Court answering the question, referred at the instance of Revenue, against the assessee.
The following question was referred under Section 256(1) of the Income Tax Act for the opinion of the High Court: 111 "Whether on the facts and in the circumstances of the case, the following amounts are to be included in the computation of capital of the assessee Company under Rule 1.
of the Second Schedule of the : (i) Amount set apart for contingent Rs. 4,50,000 liability (taxation) (ii) Amount set apart for proposed divi Rs. 19,90,000 dend (iii) Reserve for Depreciation fund in ex Rs. 6,77,122 cess of the amount allowed as depreciated in income tax (iv) Excess provision in Revenue Acco Rs. 3,61,876 unts disallowed in income tax assess ment for the assessment years.
" Though the question refers to four items, we are concerned in this appeal only with the first item.
We shall, therefore, state the facts only in so far as they are relevant to the said item.
The assessee is a Private Limited Company.
The assessment year concerned is 1963 64.
Sometime in 1955 56, a notice was issued to the assessee under Section 23A of the Income Tax Act, 1922.
Apprehending that it may become liable to pay additional tax under the said provision, the assessee set apart a sum of Rs. 6,52,000 in its Books for the year ending March 31, 1956.
Out of this amount an amount of Rs. 2,02,000 was transferred to the profit and loss account during the year 1958 59, with the result that a sum of Rs. 4,50,000 continued to remain and was shown as a provision set apart to meet the taxation liability which the assessee called a contingent liability.
At the same time the assessee had been contesting the proceedings taken against it under Section 23A.
Though it failed at the earlier stages, it succeeded ultimately in the Letters Patent Appeal filed by it in the East Punjab High Court.
In the said appeal decided on May 24, 1965, it was held that no action can be taken against the assessee under Section 23A.
With this order, all the orders passed and notices issued under the said provision prior to the date of the said judgment stood vacated.
In its assessment relating to the assessment year 1963 64 under the 112 , the assessee contended that the said sum of Rs. 4,50,000 is a reserve and should be included in its capital for the purposes of the Act.
The Income Tax Officer did not agree and the matter was ultimately taken to the Income Tax Appellate Tribunal.
By the date this appeal was taken up for hearing, another appeal preferred by the assessee relating to the subsequent assessment year (1964 65) was also before the Tribunal.
That appeal arose under the provisions of the Companies Sur tax Profits Act, 1964 which replaced the .
The Tribunal first disposed of the appeal relating to the assessment year 1964 65.
In so far as the item in question is concerned it held that it was a reserve.
Following the said judgment, the appeal pertaining to the assessment year 1963 64 was also allowed.
(It may be stated that the order of the Tribunal relating to assessment year 1964 65 was subsequently rectified by an order dated February 15, 1972 and the said item was held to be a provision.
But no such order was passed with respect to the assessment year 1963 64).
Aggrieved by the judgment of the Tribunal the Revenue obtained the aforesaid reference.
The High Court answered the same.
in favour of Revenue and against the assessee following the decision of this Court in Metal Box Company of India Limited vs Their Workmen, It held that the said amount being a provision made towards a liability which had attached on account of the issuance of a notice was a provision and not a reserve.
In this appeal the correctness of the said view is questioned.
The learned counsel for the appellant assessee submitted that inasmuch as no order levying additional tax under Section 23A was made on or before the date relevant to the assessment year 1963 64 the said amount cannot be treated as a provision.
We find it difficult to agree.
In Metal Box, which has been followed in Vazir Sultan Tobacco Co. Ltd etc.
vs Commissioner of Income Tax, Andhra Pradesh etc.
, , the distinction between provision and reserve is stated in the following words: "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. accounts and the balance sheet.
On the other hand, reserves are appropriations of profits, the assets by which they are rep resented being retained to form part of the capital 113 employed in the business.
Provisions are usually shown in the balance sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor 's interest.
(See Spicer and Pegler 's Book keeping and Accounts, 15th Edn.
p. 42).
" While approving the said statement it was stated in Vazir Sultan: "In other words the broad distinction between the two is that whereas a provision is a charge against the profits to be taken into account against gross receipts in the P.& L. account, a reserve is in appropriation of profits, the asset or assets by which it is represented being retained to form part of the capital employed in the business.
Bearing in mind the aforesaid broad distinction we will briefly indicate how the two concepts are defined and dealt with by the .
" Applying the said test it must be held that the provision made by the assessee in its Books for meeting the anticipated liability of tax (under Section 23A) was indeed a provision and not a reserve.
The assessee itself called it a provision.
It did not call it a reserve nor was it set apart or appropriated as a reserve.
We are not suggesting that the description given or the Book entries made by the assessee are conclusive.
We are only emphasizing how the assessee understood the said item itself.
In the circumstances of the case we must hold that the High Court was right in holding it to be a provision and not a reserve.
The appeal accordingly fails and is dismissed.
No costs.
G.N. Appeals dismissed. | The appellant assessee was issued a notice under Section 23A of the Income tax Act, 1922.
The assessee contested the same.
At the same time, it set apart a sum of Rs. 6,52,000 in its books for the year ending 31st March 1956, to meet the contingency that may arise if his plea failed.
During the year 1958 59 an amount of Rs. 2,02,000 out of the said amount was transferred to the profit & loss account. 'Me balance amount of Rs. 4,50,000 continued to remain and was shown as a provision set apart to meet the aforesaid contingent liability.
The assessee has been contesting the said proceedings.
Ultimately it succeeded before the High Court which held that no action could be taken against the assessee under Section 23A.
For the assessment year 1963 64 in proceedings under the , the assessee claimed that the said sum of Rs. 4,50,000 was a reserve and should be included in its capital.
The Income tax Officer did not agree.
Ultimately the matter reached the Tribunal which agreed with the assessee.
At the instance of Revenue the question as to whether the sum of Rs. 4,50,000 set apart for contingent liability (taxation) was to be included in the computation of capital of the assessee company under Rule 1 of the Second Schedule of the was referred to the High Court.
The High Court having answered the question against the assessee, the, assessee has preferred the present appeal contending that inasmuch as no order levying additional tax under Sec.
23A was made the amount could not be treated as a provision.
109 110 Dismissing the appeals, this Court, HELD : 1.1.
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. accounts 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.
[112G] 1.2.
In the instant case, the provision made by the assessee in its Books for meeting the anticipated liability of tax (under Section 23A of the Income Tax Act, 1922) was indeed a provision and not a reserve.
The assessee Itself called it a provision.
It did not call it a reserve nor was the amount set apart or appropriated as a reserve.
It is not to suggest that the description given or the Book entries made by the assessee are conclusive, but to emphazise how the assessee understood the said item itself In the circumstances of the case the High Court was right in holding it to be a provision and not a reserve, and so the amount of Rs. 4,50,000 was not to be included in the computation of Capital of the assessee Company.
[113E] Metal Box Company of India Limited vs Their Workmen, and Vazir Sultan Tobacco Co.Ltd.
vs Commissioner of Income Tax, Andhra Pradesh etc.
, , relied on. |
Appeal No. 830 of 1993.
From the Judgment and Order dated 6.4.87 of the Allahabad High Court in Civil Misc.
W.P. No. 20544 of 1986.
section Markandeya for the Appellant 152 Pankaj Kalra for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
The appeal is directed against the judgment and order of a Division Bench of the Allahabad High Court allowing Writ Petition 20544 of 1986 with certain directions.
The first respondent Gem Cap (India) Pvt. Ltd. is a private limited company.
Second respondment is its Managing Director.
At the request of the respondents, the appellant, U.P. Financial Corporation, sanctioned a loan of Rs. 29.70 lakhs.
The terms and conditions of loan and the manner of repayment of the loan are contained in the agreement and hypothecation deeds executed in 1981.
Suffice it to note that loan was repayable in certain specified instalments alongwith interest.
A sum of Rs. 26, 29, 578 was released to the respondents.
The first respondent went into production in December 1982.
Within a few months i.e., in March 1983 its operations ceased.
By an order dated February 21, 1984 the first respondent unit was declared a sick unit.
The respondents did not make any repayment as stipulated in the agreement and hypothecation deeds whereupon the Corporation took steps to take over the unit under Section 29 of the for recovering an amount of Rs. 38.57 lakhs due to it by that date vide notice dated July 10, 1984.
Then started a series of Writ Petitions by the respondents, all designed to stall the appellant from taking over and/or recovering the amount due to it.
It is not necessary to trace the course of the several writ petitions except the one from which the present appeal arises.
Writ Petition 20544 of 1986 was filed questioning the taking over of the first respondent unit by the appellant Corporation under Section 29 of the Act and for a direction to the appellant to reschedule the repayment of debt in accordance with the earlier orders of the High Court.
The writ petition has been allowed with the following directions : "(1) Having regard to the discussion made above we direct the U.P. Financial Corporation : (1) to consider expeditiously the resolution dated 29.1.1986aimed at the rehabilitation of the industrial concern in question in the light of the feasibility report of the U.P. Industrial Consultants Ltd. the Financial aid 153 forthcoming from the Bank of Baroda and other financial institutions and the reports of the managing director of the corporation dated 18.12.85 and 29.1.1986; (2) to restore back possession of the unit to the petition No. 1 forthwith.
The notice dated 11.6.1986 issued by the Corporation under Section 29 of the State Financial Corporation Act, 1951 shall, however, remain alive it being open to the Corporation to proceed further in pursuance thereof in case the rehabilitation deal is given a fair trial but does not bear fruit.
The petition is allowed accordingly with no order, however, as to costs." With great respect to the Learned Judges who allowed the writ petition we feel constrained to say this : a reading of the judgment shows that they have not kept in mind the well recognised limitations of their jurisdiction under Article 226 of the Constitution.
The judgment reads as If they were setting as an Appellate Authority over the appellate Corporation.
Not a single provision of law is said to have been violated.
The exclusive concern of the court appears to be to revive and resurrect the respondent Company, with the aid of public funds, without giving any thought to the interest of public financial institutions.
The approach is : "the Corporafion is supposed to act in the best interest of the industrial concern with the object primarily to promote and advance the industrial activity without, of course, undue involvement or risk of its financial commitment 'section .
It needs no emphasis to say that the Corporation is conceived '.Regional Development Bank with the principal object to accelerate the industrial growth in the State by providing financial assistance mainly to small and smaller of the medium scale industries.
The approach has to be business like in conformity with the declared policy of the State Govt.
If the unit is potentially viable or such as maY be capable of being rehabilitated, it would deserve being administered proper treatment and not lead to its liquidation.
" Here was a company which drew substantial public funds and became sick within three months of its going into production.
One of the main reasons for its sickness appears to be the inter necine fight between the two groups controlling the Company.
The 154 unit was closed.
It was not paying a single pie in repayment of the loan neither the principal nor the interest.
Already a huge amount was due to the appellant.
There was no prospect of its recovery.
And yet other financial corporations were being asked by the court, four years after its closure, to sink more money into the sick unit.
Though a passing reference is made to the financial risk of appellant.
this concern was not translated into appropriate directions.
The Corporation was not allowed to sell the unit when it wanted to in 1984 85.
Now, it is difficult to sell it, because it has been lying closed for about 8 years and more.
The machinery must have become junk.
While the Company could not be revived, the appellant corporation now stands to lose more than a crore of rupees all public money in this one instance.
To continue the factual narration against the judgment of the Allahabad High Court aforesaid (dated April 6, 1987) the appellant filed this appeal and on May 8, 1987 this Court while issuing notice on the SLP directed stay of operation of the judgment of the High court.
After the respondents filed a counter affidavit this Court made the following order on September 18, 1987 : "Stay made absolute with the direction that there shall be no sale of the industrial unit.
Hearing expedited.
To be heard alongwith Civil Appeal No. 568 of 1987.
" The S.L.P. could not be heard finally though it was posted for hearing on certain dates.
On November 13, 1991, the counsel for the respondents made an offer which is recorded in the order of that date.
It reads "This matter is adjourned for 11.12.91.
Mr. Shanti Bhushan, Sr.
Adv., suggests that in view of the lapse of time of more than 5 years the position has changed and the Corporation should now consider the feasibility of taking over the assets in liquidation of the dues by making an assessment and consider relieving the directors from their personal responsibilities to the corporation and the other creditors.
" The subsequent order dated December 12, 1991, however, shows that the appellant corporation refused to bite the bait.
The amount due to it had risen to over a crore of rupees by now.
Whereupon, this Court passed 155 the following order : "The appellant in consultation with the other creditors is permitted to put up the industrial undertaking of the firstrespondent for sale.
It may do so either by public auction or by inviting tenders or by an combination of both.
It may proceed to do so within a period of two months from today.
While permitting the appellant to take steps for the sale, we make it clear that before accepting the offers, the appellant should obtain prior permission of this Court.
List this matter after 10 weeks, i.e., in the first week of March, 92.
" It is clear as to why the unit could not be sold .
On March 13, 1992, this Court passed the following further order: "We have heard learned counsel on both sides.
Apart from the merits of the issues raised, it appears to us that the present impasse is to nobody 's advantage.
The dispute has to be resolved in some meaningful way.
We accordingly direct the respondent Company and Sri K.P. Chaturvedi, who claims to be in charge of the affairs of the Company, to confirm in writing to the petitioner Cor poration within three weeks from today that they unconditionally agree to settle the claims of the.
Financial Corporation at a figure which would represent the principal amount said to be Rs. 26.30 lacs and interest thereon from the inception at 13.5% per year with half yearly rests calculated upto 25.7.1986.
If such an offer is made, the Financial Corporation will assess the merit and acceptability of that offer and take within six weeks thereafter, an appropriate decision including the manner in which and the period over which the payment should be completed, and if the Financial Corporation agrees to grant time for payment, the rate of interest for the deferred period.
The decision taken by the Corporation will be placed before this Court.
156 If, however, any offer, as indicated above, is not communicated by the company or Sri Chaturvedi within a period of three weeks from today, then the Financial Corporation shall be at liberty to initiate, with notice to the respondents, steps for the sale by public auction of the subjectmatter of the security in its favour and to treat and hold the proceeds of sale as substituted security in the place of the subject matter of the security, subject to the final result of this S.L.P. Call this matter in the 3rd week of May, 1992.
" Pursuant to the said order the second respondent, Managing Director of the first respondent Company merely wrote a letter addressed to the appellant Corporation, to the following effect : "We, herewith, attach a photo copy of the captioned order which is self explicit.
We, however, unconditionally agree to abide with the directions given to us by the Hon 'ble Supreme Court.
Further, as the Corporation is aware that the Unit (Company) as well as The Registered Office of the Company, both are in possession of the Corporation, we shall feel obliged if you kindly communicate your views to us at the below given address.
" It is evident that the letter written by the second respondent is not in terms of the order to this Court dated March 13, 1992.
No figure is mentioned nor is it mentioned as to how and in what manner the said huge debt is sought to be repaid by the respondents.
Evidently, the appellant corporation could not pay any heed to such a letter.
When the matter came before this Court the second respondent appeared in person stating that he has discharged his advocate and that he will argue the matter himself.
The matter again came up before us on 19.2.1993 when we heard the appellant 's counsel and the second respondent in person.
We allowed the appeal stating that the reasons would follow.
There are the reasons for the order.
It is true that the appellant Corporation is an instrumentality of the 157 State created under the State Finance Corporation Act, 1951.
The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan.
We agree that the Corporation is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, it is necessary to keep certain basic facts in view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
The corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
The Corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness.
Fairness is not a one way street, mote particularly it? matters like the present one.
The above narration of facts shows that the respondents have no intention of repaying any part of the debt.
They are merely putting forward one or other ploy to keep the Corporation at bay.
Approaching the Courts through successive writ petitions is but a part of this game.
Another circumstance.
These Corporation are not sitting on King Solomon 's mines.
They too borrow monies from Government or other 'financial corporation.
They too have to pay interest thereon.
The fairness required of it must be tempered nay, determined, in the light of all these circumstances.
Indeed, in a matter between the Corporation and its debtor, a writ court has no say except in two situation : (1) there is a statutory violation on the part of the Corporation or (21) Where the Corporation acts unfairly i.e., unreasonably.
While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning.
What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an Appellate Authority over the acts and deeds of the corporation and seek 158 to correct them ? Surely, it cannot be.
That is not the function of the High Court under Article 226.
Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction may become rudderless.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of Law and to prevent failure of justice.
This doctrine is complementary to the principles of natural justice which the Quasi Judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin, as pointed out by this Court as far back as 1970 in A.K. Kraipak & Ors.
vs Union of India & Ors., AIR 1970 S.C. 150.
Even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
In the matter of administrative action, it is well known, more than one choice is available to the administrative authorities; they have a certain amount of discretion available to them.
They have "a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred ' (Lord Diplock in Secretary of State for Education vs Tameside Metropolitan Borough Counsel, ; at 1064).
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene.
To quote the classic passage from the judgment of Lord Greene MR in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, (1948) 1 KB at 229.
"It is true the discretion must be exercised reasonably.
Now what does than mean ? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word "unreasonable" in a rather comprehensive sense.
It has frequently been used and is frequently used as a general description of the 159 things that must not be done.
For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law.
He must call his own attention to the matters which he is bound to consider.
He must exclude from his consideration matters which are irrelevant to what he has to consider.
If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably '.
Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. ' While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the power of the High Court while reviewing the administrative action is not that of an appellate court.
The judgment under appeal precisely does that and for that reason is liable to be and is herewith set aside.
On behalf of the appellant reliance has been placed upon the decision of this court in Mahesh Chandra vs Regional Manager, U.P. Financial Corporation & Ors., (1992) 2 J.T. 326.
We have perused the decision.
That was a case where the debtor was anxious to pay off the debt and had been taking several steps to discharge his obligation.
On the facts of that particular 'case it was found that the corporation was acting reasonably.
In that context certain observations were made.
The decision also deals with the procedure to be adopted by the Corporation while selling the units taken over under Section 29.
That aspect is not relevant in this case.
We are, therefore, of the opinion that the said decision is of no help to the appellant herein.
The appeal is accordingly allowed.
The respondents shall pay the .costs of the appellant assessed at Rs. 10,000 consolidated.
T.N.A. Appeal allowed. | The respondent Company obtained loan from the appellant Financial Corporation.
Soon after obtaining the loan it ceased to, operate and was declared a sick unit.
Consequently, it did not make any repayment of loan as stipulated in the agreement and the hypothecation deeds.
Thereafter, the appellant Corporation issued notice under section 29 of the for taking over the respondent 's unit for recovery of the amount due Rs.38.57 lakhs.
Ile respondent Company filed a writ petition in the Allahabad High Court questioning the appellant 's action.
Ile High Court allowed the petition and directed (1) expeditious rehabilitation of the concern and (2) to restore back the 150 possession of the unit to the respondent Company.
Against the judgment of the High Court the Financial Corporation riled an appeal in this Court.
Allowing the appeal and setting aside the order of the High Court, this Court, HELD : 1.
It is true that the appellant Corporation which Is an instrumentality of the State created under the is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, It is necessary to keep certain basic facts In view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
the Corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
Corporations too borrow monies from Government or other financial corporations and they too have to pay interest thereon.
No doubt it has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
[156H, 157A C,F,] Promoting industrilisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what Is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled band and foot in the name of fairness.
Fairness is not a one way street more particularly in matters like the present one.
The fairness required of it must be tempered nay, determined in the light of all these circumstances.
In the instant case the respondents have no intention of repaying any part of the debt.
They were merely putting forward one or other ploy to keep the Corporation at bay.
[157D F] Mahesh Chandra vs Regional Manager, U.P. Financial Corporation Ors., (1992) 2 J.T. 326, held Inapplicable.
In a matter between the corporation and Its debtor, a writ court has no say except in two situations : (1) there is a statutory violation on the part of the Corporation or (2) where the Corporation acts unfairly i.e. 151 unreasonably.
The High Court exercising its jurisdiction under Article 226 of the Constitution cannot sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them.
Doctrine of fairness.
evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction way become rudderless.
[157G H, 158A] 2.1.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of law and to prevent failure of justice.
This doctrine is complementary to the principle of natural justice which the Quasi judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin.
But even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervenes.
[158C F] A.K Kraipak & Ors.
vs Union of India & Ors.
, A.I.R. 1970 S.C. 150; Secretary of State for Education vs Talimeside Metropolitan Borough Council, ; and Associated Provincial Picture Houses Ltd., vs Wednesbury Corporation, ; , relied on.
While passing the impugned order the High Court has not kept in mind the well recognised limitations of its jurisdiction under Article 226 of the Constitution.
While reviewing the administrative action it was not justified in acting as an appellate court.
[153D,159C] |
minal Appeal No. 642 of 1991.
From the Judgment and Order dated 25.4.1991 of the Bombay High Court in Criminal Appeal No. 25 of 1990.
Lalit Chari, Peter D ' Souza and Mukul Mudgal for the Appellant.
J.S. Wad, and Ms. A. Subhashini for the Respondent.
340 The Judgment of the Court was delivered by K. JAYACHANDRA REDDY, J.
The appellant, a German National, has been convicted by the trial court under Section 20(b)(ii) of the ( 'Act ' for short) and sentenced to undergo 10 years R.I. and to pay a fine of Rs. 1 lakh, in default of payment of which to further undergo six months ' R.I.
The appeal filed by the appellant was dismissed by the High Court.
Hence the present appeal.
In brief the prosecution case is that on 29.9.89 the Police Sub Inspector Gaonkar, P.W3 alongwith a police party was patrolling at Calangute Beach near Panjim and they came across the accused who was sitting on a wooden log.
On suspicion they went near him and noticed a chillum (smoking pipe) in front of him lying on the log.
He secured the presence of panch witnesses and searched the accused and recovered a polythene pouch from his pyjama pocket in which there were tobacco, one cigarette paper packet and two cylindrical pieces of 'Charas".
The two pieces of Charas were weighed and found to be 7 gms.
and 5 gms.
respectively.
They were seized under a panchnama and were separately sealed in two different envelopes.
One of the pieces weighing less than 5 gms.
was? sent for chemical analysis and the other piece weighing 7 gms.
was not sent nor part of it by way of sample was sent for chemical analysis.
Maria Caldeira, P.W.1, the Junior Scientific Officer in the Directorate of Health Services carried out the chemical analysis of the substance weighing 4.570 gms.
consisting of three cylindrical pieces sticking together and she deposed that the substance which was examined by her was found to have contained Charas.
P.W.2, a panch witness supported the prosecution case.
The accused when examined under Section 313 Cr.
P.C. denied being in possession of any Charas and said that he had only a pouch containing tobacco and that he was taken to Calangute Police Station and was falsely impli cated.
The trial court relying on the evidence of P.Ws 1 to 3 convicted the accused.
The submissions on behalf of the accused before the trial court as well as the High Court have been that the search conducted on the person of the accused was in contravention of Section 50 of the and that there have been contradictions between the evidence of P.Ws 2 and 3 and that at any rate even if the prosecution case is to be accepted, the 341 accused can be, at the most, held to be in possession of less than 5 gins.
of Charas which is a small quantity and, therefore, is entitled to the benefit of Section 27.
Before us more or less the same submissions are made.
So far as the contentions in respect of seizure and drafting of panchnama and weight are concerned, the question is whether the accused has been told that if he so desires he would be taken to a Magistrate before the search, as provided under Section 50.
Whether this has been complied with or not mostly depends on the evidence and they are only questions of fact.
Both the courts below have considered the entire evidence and have rejected these submissions.
Though these are questions of fact, yet we have also considered the relevant evidence on these aspects and we agree with the findings of the courts below.
The next and most important submission of Shri Lalit Chari, the leaned senior counsel appearing for the appellant is that both the courts below have erred in holding that the accused was found in possession of 12 gins.
of Charas.
According to the learned counsel, only a small quantity i.e. less than 5 gms. has been sent for analysis and the evidence of P.W.1, the Junior Scientific Officer would at the most establish that only that much of quantity which was less than 5 gms.
of Charas is alleged to have been found with the accused.
The remaining part of the substance which has not been sent for analysis can not be held to be also Charas in the absence of any expert evidence and the same could be any other material like tobacco or other intoxicating type which are not covered by the .
Therefore the submission of the learned counsel is that the quantity proved to have been in the possession of the accused would be small quantity as provided under Section 27 of the and the accused should have been given the benefit of that Section.
Shri Wad, learned senior counsel appearing for the State submitted that the other piece of 7 gms.
also was recovered from the possession of the accussed and there was no need to send the entire quantity for chemical analysis and the fact that one of the pieces which was sent for analysis has been found to contain Charas, the necessary inference would be that the other piece also contained Charas and that at any rate since the accused has totally denied, he can not get the benefit of Section 27 as he has not discharged the necessary burden as required under the said Section.
Before examining the scope of this provision, we shall first consider whether the prosecution has established beyond all reasonable 342 doubt that the accused had in his possession two pieces of Charas weighing 7 gms.
and 5 gms.
respectively.
As already mentioned only one piece was sent for chemical analysis and P.W.1, the Junior Scientific Officer who examined the same found it to contain Charas but it was less than 5 gms.
From this report alone it can not be presumed or inferred that the substance in the other piece weighing 7 gms.
also contained Charas.
It has to be borne in mind that the applies to certain narcotic drugs and psychotropic substances and not to all other kinds of intoxicating substances.
In any event in the absence of positive proof that both the pieces recovered from the accused contained Charas only, it is not safe to hold that 12 gms.
of Charas was recovered from the accused.
In view of the evidence of P.W.1 it must be held that the prosecution has proved posi tively that Charas weighing about 4.570 gms.
was recovered from the accused.
The failure to send the other piece has given rise to this inference.
We have to observe that to obviate this difficulty, the concerned authorities would do better if they send the entire quantity seized for chemical analysis so that there may not be any dispute of this nature regarding the quantity seized.
If it is not practicable, in a given case, to send the entire quantity then sufficient quantity by way of samples from each of the packets or pieces recovered should be sent for chemical examination under a regular panchnama and as per the provisions of law.
Section 27 of the reads thus: "27.
Punishment for illegal possession in small quantity for personal consumption of any narcotic drug or psychotropic substance or consumption of such drug or substance whoever, in contravention of any provision of this , or any rule or order made or permit issued thereunder, possesses in a small quantity any narcotic drug or psychotropic substance, which is proved to have been intended for his personal consumption and not for sale or distribution, or consumes any narcotic drug or psychotropic substance, shall, notwithstanding anything contained in this Chapter, be punishable (a) Where the narcotic drug or psychotropic substance possessed or consumed is cocaine, morphine, diacetylmorphine or any other narcotic drug or any psychotropic 343 substance as may be specified in this behalf by the Central Government, by notification i n the Official Gazette, with imprisonment for a term which may extend to one year or with fine or with both; and (b) Where the narcotic drug or psychotropic substance possessed or consumed is other than those specified in or under clause (a) with imprisonment for a term which may extend to six months or with fine or with both Explanation (1) For the purposes of this section "small quantity ' means such quantity as may be specified by the Central Government by the notification in the Official Gazette.
(2) Where a person is shown to have been in possession of a small quantity of a narcotic drug or psychotropic substance, the burden of proving that it was intended for the personal consumption of such person and not for sale or distribution, shall lie on such person." In general possession of any narcotic drug or psychotropic substance has been prohibited by Section 8 of the and any person found in possession of the same contrary to the provisions of the or any rule or order made or permit issued thereunder is liable to be punished as provided thereunder to imprisonment for a term which shall not be less than 10 years and shall also be fined which shall not be less than Rs.1 lakh.
Section 27 of the , however, is an exception whereby lesser punishment is provided for illegally possessing any "smaller quantity ' for personal consumption of any narcotic drug or psychotropic substance, Under this section the following ingredient should be fulfilled: "(a) The person has been found in possession of any narcotic drug or psychotropic substance in "small quantity '; (b) Such possession should be in contravention of any provision of the or any rule of order made or permit issued thereunder; and (c) The said possession of any narcotic drug or psycho 344 tropic substance was intended for his personal consumption and not for sale or distribution.
" The first explanation to this Section lays down that the small quantity means such quantity as may be specified by the Central Government by a notification.
By virtue of the notification issued on 14.11.85 for the purpose of this 5 gms.
or less quantity of Charas shall be the small quantity.
Explanation 2 further lays down that the burden of proof that the substance was intended for the personal consumption and not for sale or distribution, lies on such person from whose possession the same was recovered.
As held above in the instant case the prosecution has proved that the quantity seized from the accused was less than 5 gms.
Therefore, it is within the meaning of 'small quantity" for the purpose of Section 27.
Then the other ingredient that has to be satisfied is whether the substance found in possession of the appellant was intended for his personal consumption and not for sale or distribution.
No doubt as the Section lays down the burden is on the appellant to prove that the substance was intended for his personal consumption.
As to the nature of burden of proof that has to be discharged depends upon the facts and circumstances of each case.
Whether the substance was intended for personal consumption or not has to be examined in the context in which this exception is made.
In the instant case the accused though in general has taken a plea of denial but his examination under Section 313 Cr.
P.C. by the Magistrate reveals that there was such a plea namely that it was meant for his personal consumption.
In the judgment of the trial court it is noted that the accused made an, application on 23.3.90 stating that the piece said to have been recovered from him was less than 5 gms.
and not 12 gms.
as alleged and that the application was written and signed by the appellant himself.
The prosecution case itself shows that he was having this substance in a pouch alongwith a chillum (smoking pipe) and smoking material.
The averments made by the appellant in the application and as extracted by the trial court would themselves show that it was meant for his personal consumption.
The above surrounding circumstances under which it was seized also confirm the same.
The appellant is a foreigner and as a tourist appears to have carried this substance for his personal consumption.
We are aware that the menace of trafficking in narcotic drugs and psychotropic substance has to be dealt with severely but in view of the provisions of Section 27, we are unable to hold that the small quantity found with the appellant was not 345 meant for his personal consumption and that on the other hand it was meant for sale or distribution.
Therefore, the appellant is liable to be punished as provided under Section 27 of the .
From the records it appears that the appellant has been in jail for more than three years but that may not be relevant since the sentence prescribed under Section27 is only six months.
We are only just mentioning it as a fact.
In the result the conviction of the appellant under Section 20(b)(ii) of the and sentence of 10 years R.I. are set aside.
Instead he is convicted under.
Section 27 of the and is sentenced to undergo 6 monghs ' R.I. and to pay a fine of Rs. 1 lac in default of payment of which to further undergo 6 months ' R.I. Subject to the above modifications, the appeal is disposed of N.P.V. Appeal disposed of. | The appellant, a foreign national, was convicted by the trial court under Section 20(b)(ii) of the and sentenced to undergo ten years ' rigorous imprisonment and to pay a fine of one lakh rupees, and in default, to further undergo rigorous imprisonment for six months.
According to the prosecution, two cylindrical pieces of charas, weighing 7 gms.
and 5 gms.
respectively, were seized from the appellant by a Police Patrol Party and on chemical analysis of one of the pieces, it was found that the substance contained charas.
The trial court, relying on the evidence of PW 1, Junior Scientific Officer of the Director of Health Services, who examined the substance, PW 2, a panch witness and PW 3, the Police Inspector, who was heading the Patrol Party, convicted the appellant.
The High Court dismissed the appellants appeal.
In the appeal before this Court, on behalf of the appellant it was contended that both the courts below had erred in holding that the accused was found in possession of 12 gins.
of Charas; since only a small quantity i.e. less than 5 gms. had been sent for analysis the remaining part of the substance, which had not been sent for analysis, could not be held to be also Charas and, therefore, the quantity proved to have been in the 338 possession of the accused would be small quantity, as provided under Section 27 of the Act and the accused should have been given the benefit of that Section.
On behalf of the State, it was submitted that there was no need to send the entire quantity for chemical analysis, and the fact that one of the pieces which was sent for analysis had been found to contain Charas, the necessary inference would be that the other piece also contained Charas and that, at any rate, since the accused had totally denied, he could not get the benefit of Section 27, as he had not discharged the necessary burden as required under the section.
Disposing of the appeal, this Court, HELD:1.1.
In the absence of positive proof that both the pieces recovered from the accused contained Charas only, it is not safe to hold that 12 gms.
of Charas was recovered from the accused.
In view of the evidence of P.W. 1, the prosecution has proved positively that Charas weighing about 4.570 gms.
was recovered from the accused.
[342C] 1.2.In general, possession of any narcotic drug or psychotropic substance has been prohibited by Section 8 of the and any person found in possession of the same contrary to the provisions of the Act or any rule or order made or permit issued thereunder is liable to be punished as provided thereunder to imprisonment for a term not less than 10 years and a fine not less than Rs. 1 lakh.
However, Section 27 is an exception, whereby lesser punishment is provided for illegally possessing any 'smaller quantity ' for personal consumption of any narcotic drug or psychotropic substance.
By virtue of the notification issued on 14.11.85 under Explanation (1) of the Section, 5 gms or less quantity of Charas has been specified by the Central Government to be the small quantity.
[343E F, 344B] 1.3.
In the instance case, the prosecution has proved that the quantity seized from the accused was less than 5 gms.
Therefore, it is within the meaning of"small quantity ' for the purpose of Section 27.
[344C] 1.4.
No doubt, as Section 27 lays down, the burden is on the appellant to prove that the substance was intended for his personal consumption As to the nature of burden of proof that has to be discharged 339 depends upon the facts and circumstances of each case.
Whether the substance was intended for personal consumption or not has to be examined in the context in which this exception is made.
[344D] 1.5.
The accused though in general has taken a plea of denial,but his examination under Section 313 Cr.
P.C. by the Magistrate reveals that there was a plea that it was meant for his personal consumption.
The trial court has also noted in its judgment that the accused had made an application stating that the piece said to have been recovered from him was less than 5 gms., and not 12 gms.
as alleged.
The prosecution case itself shows that he was having this substance in a pouch alongwith a chillum (smoking pipe) and smoking material.
The averments made by the appellant in the application and as extracted by the trial court would themselves show that it was meant for his personal consumption.
The surrounding circumstances under which it was seized also confirm the same.
[344E G] 1.6.The appellant is a foreigner and as a tourist appears to have carried this substance for his personal consumption.
No doubt, the menace of trafficking in narcotic drugs and psychotropic substance has to be dealt with severely, but in view of the provisions of Section 27, it cannot be held that the small quantity found with the appellant was not meant for his personal consumption.
Therefore, the appellant is liable to be punished as provided under Section 27 of the Act.
[344G H, 345A] 1.7.Accordingly, the conviction of the appellant under Section 20(b)(ii) of the Act and sentence of 10 years ' R.I. are set aside, and he is convicted under Section 27 of the Act and sentenced to undergo 6, months ' R.I. and to pay a fine of Rs. 1 lakh, in default of payment of which to further undergo 6 months ' R.I. [345C] |
minal Appeal No. 757 of 1985.
From the Judgment and Order dated 6.11.1984 of the Gauhati High Court in Criminal Appeal No. 11 of 1979.
Sunil Kumar Jain, P.D. Tyagi and Vijay Hansaria for the Appellant.
S.K. Nandy for the Respondent.
ANAND, J. Anil Phukan and his brothers Mahendra Phukan and Jojneswar Phukan were tried for an offence under Section 302/34 IPC for the murder of one Trinavan Chandra Baruah on 21.3.1976 at about 8 p.m.
The learned Sessions Judge convicted all the three brothers for the said offence and sentenced each one of them to suffer imprisonment for life 392 An appeal was preferred by all the three brothers against their conviction and sentence in the Gauhati High Court.
A Division Bench of that court vide judgment dated 6.11.1984 upheld the conviction and sentence of all the three.
A Special Leave Petition (Crl.) No. 561/85, was preferred by Mahendra Nath Phukan, and Anil Phukan, the third brother Jojneswar, however, did not file any special leave petition.
On 2.9.1985, the special leave petition as regards Mahendra Nath Phukan was dismissed while notice was issued in the petition as regards Anil Phukan.
Subsequently, on 29.10.1985, special leave was granted to Anil Phukan and on 29.4.1986, he was also directed to be released on bail to the satisfaction of the Chief Judl.
Magistrate, Golaghat, ' Assam.
We are, therefore, at this stage concerned only with the criminal appeal by special leave, of Anil Phukan.
In brief, the prosecution case is that the appellant, Anil Phukan had borrowed a sum of Rs. 450 from Trinayan Chandra Baruah, deceased and had executed two hand notes exhibit 7 and exhibit 8, promising to repay the amount on 21.3.1976.
However, he did not repay the amount, On 21.3.1976, the deceased accompanied by his nephew, Ajoy Baruah PW3, proceeded to the village of the appellant and as he was getting late, Ajoy Baruah PW3 carried with him a torch light.
The distance of the house of the deceased from that of the appellant is about one furlong.
Anil appellant was present in the fields in front of his house and on being asked as to why he had not come to return the money, he asked them to wait there and proceeded towards his house.
Later on, when Anil did not return for some time, the deceased alongwith Ajoy PW3 proceeded towards the house of the appellant when they found all the three brothers coming towards them variously armed.
Mahendra had a crowbar while jojneswar had a crooked dao and Anil a kupi dao.
Ajoy PW3 apprehended some danger from the appellant and his brothers but his uncle told him that since they had done no wrong, they need not be afraid of any assault.
On coming near the deceased and Ajoy PW3, Mahendra, who came first, gave a blow to Trinayan on his head with the crowbar, the other two brothers also allegedly assaulted the deceased thereafter.
Ajoy PW3 pulled the deceased towards his house and implored the accused not to assault him.
At the asking of his uncle, Ajoy PW3 ran away to his house and gave the information to the wife of the deceased PW5 Debayani Baruah, about the occurrence.
He also narrated the occurrence to PW4, Bijoy Baruah.
the wife of the deceased went to PW6, Punaram Gogoi, and after telling him as to what had been told to her by Ajoy PW3, she requested him to accompany her to the place of 393 occurrence.
On reaching the place of occurrence, they found Trinayan lying on the spot with injuries on his person but he was still alive.
Pws Bijoy and Ajoy brought a bullock cart from Sabharam Bora PW7 and after lifting the body of Trinayan with some difficulty brought it to his house and kept it in the verandah.
However, before any medical aid could be provided, the deceased succumbed to the injuries at night.
The first information report was lodged at Golaghat Police Station the next day in the afternoon at 12.30 p.m. by Surendra Nath Gogoi PW2.
During the investigation, some weapons including an axe were seized from the house of Mahendra accused.
On the same day, Mahendra was arrested at about 6.45 p.m.
The other two brothers Anil and Jojneswar surrendered subsequently in the court.
The I.O. prepared the sketch plan of the place of occurrence and sent the body for postmortem examination.
The autopsy revealed that the deceased had two incised injuries on the head besides one swelling and an injury on the inner part of his thigh.
The prosecution in all examined 12 witnesses to connect 'the accused with the crime.
This case primarly hinges on the testimony of a single eye witness Ajoy PW3.
Indeed, conviction can be based on the testimony of a single eye witness and there is no rule of law or evidence which says to the contrary provided the sole witness passes the test of reliability.
So long as the single eye witness is a wholly reliable witness the courts have no difficulty in basing conviction on his testimony alone.
However, where the single eye witness is not found to be a wholly reliable witness, in the sense that there are some circumstances which may show that he could have an interest in the prosecution, then, the courts generally insist upon some independent corroboration of his testimony, in material particulars, before recording conviction.
It is only when the courts find that the single eyewitness is a wholly unreliable witness that his testimony is discarded in toto and no amount of corroboration can cure that defect.
It is in the light of these settled principles that we shall examine the testimony of PW3 Ajoy.
Ajoy PW3, on his own showing, is the nephew of the deceased.
He had accompanied the deceased to the place of occurrence when the later went to recover the loan from Anil appellant.
This witness, therefore, is a relative of the deceased and an interested witness.
Of course, mere relationship with the deceased is no ground to discard his testimony if it is otherwise found to be reliable and trustworthy.
In the normal course of events, a close relation would be the last person to spare the real assailant 394 of his uncle and implicate a false person.
However, the possibility that he may also implicate some innocent person along with the real assailant cannot be ruled out and therefore, as a matter of prudence, we shall look for some independent corroboration of his testimony, to decide about the involvement of the appellant in the crime.
Since, there are some doubtful aspects in the conduct of Ajoy PW3, it would not be safe to accept his evidence without some independent corroboration, direct or circumstantial.
The unnatural conduct of Ajoy PW3 which has come to our notice from the record is that though he was present alongwith the deceased at the time of occurrence, on 21.3.1976, at about 8 p.m., he made no attempt to save his uncle from the assault.
He did not even continue to stay there, though of course according to him, he ran for his life on being advised so by his uncle.
He was not assaulted though both he and his uncle were unarmed.
Even if Mahendra was engaged in assaulting the deceased, Anil, who was also allegedly armed neither made an attempt to assault Ajoy PW3 nor even chased him.
PW3 Ajoy did not himself lodge the FIR.
Of course, he gave information about the occurrence to PW4, PW5, PW7 and others immediately after the occurrence describing the manner of assault and the names of the assailants but why he did not lodge the FIR has not been explained by him.
In his testimony in the court he deposed that after Mahendra accused gave blow with the crowbar on the head of the deceased "other accused also assaulted him".
He did not describe as to on which part of the body of the deceased, had Anil and Jojneswar caused the injuries and made a general vague statement without assigning any particular injury to either of them.
When we look to the medical evidence, we find that the deceased had suffered two injuries on his head and no other injury on any other part of the body.
In all, four injuries were recorded in the post mortem report.
The other two injuries, according to the doctor, could have been the result of a fall and indeed looking to the nature of those injuries, which are in the nature of a swelling on the back of the interscapular region and a lacerated wound on the interior aspect of the right thigh, it is possible to agree with the medical witness PWl Dr. Ganesh Ch.
Buragohain, that those injuries could have been caused by a fall and were not the result of any direct impact with a weapon of assault.
Both the head injuries are almost of the same dimensions.
The possibility, therefore, that both the injuries had been caused to the deceased by Mahendra with the crowbar, who according to PW3 had hit the deceased on the head cannot be ruled 395 out.
In this connection, it would also be relevant to not that according to the testimony of the Investigating Officer, PW11 Abhiram Taye, all the weapons like the crowbar Ex.M5, a dao, an axe and a hand dag were recovered only from the house of Mahendra.
We have it from the testimony of PW3 and the first informant PW2 that all the three brothers lived separately.
No recovery was affected from the house of the appellant Anil at all.
All that was seized from his house were two bonds Ex.7 and Ex.8, undertaking to repay the loan to the deceased.
Unlike Mahendra accused he was not even arrested on the date of the occurrence and the mere ipse dixit of the investigating officer, that Anil had absconded is not acceptable, particularly when the investigating officer is totally silent as to where all he had made the search for the appellant and when.
He was not questioned under Section 313 Cr.
PC about the allegation of absconding either.
The deceased was still alive when his wife and the other co villagers, who have appeared as witness reached the place of occurrence.
The deceased did not name the appellant as his assailant before anyone.
The crowbar exhibit 5 was recovered from the house of Mahendra and according to the testimony of PW3, it was the same weapon with which Mahendra had hit deceased on his head which position also receives corroboration from medical evidence.
The deposition of PW4, who is the sister of PW3 Ajoy to the effect that when Ajoy PW3 came running to the house, he told her that her uncle had been killed by Anil and his brothers does not stand scrutiny because admittedly according to PW3 himself, when he ran from the place of occurrence, the deceased was still alive and as a matter of fact he was alive even when the wife of the deceased and other neighbours reached there and brought him to the house.
It was only at the house while the deceased was kept in the verandah that he succumbed to the injuries.
There could have been, therefore, no occasion for Ajoy PW3 to have told his sister PW4, that her uncle had been 'killed ' by Anil and his brothers.
This also shows that Ajoy PW3 has the tendency to exaggerate matters.
The medical evidence is consistent with the theory that the deceased had been assualted only by one person and not by all the three brothers as alleged by the prosecution.
The possibility, therefore, that Mahendra accused alone had caused injuries on the deceased cannot be ruled out.
May be on account of the recovery of the two bonds Ex.7 and Ex.8 from the house of Anil, he was also implicated.
We cannot be sure.
The origin of the fight is totally in obscure and the prosecution has not explained the genesis of the origin of the fight either.
It is not even the case of the prosecution that Anil had refused to repay the loan or that any hot words 396 or abuses had exchanged between Anil and the deceased when the later had demanded from him the repayment of the loan.
In view of the infirmities pointed out above, it would not be safe to rely upon the testimony of Ajoy PW3, the sole eye witness, without looking for independent corroboration and as already noticed, the corroboration furnished by the prosecution unlike in the case of Mahendra, is negative in character in so far as the involvement of Anil appellant is concerned.
In our considered opinion, therefore, it would not be safe to hold that the prosecution has established its case against Anil appellant beyond a reasonable doubt.
The appellant in our opinion, is entitled to the benefit of doubt and granting him that benefit, we set aside his conviction and sentence for the offence under Section 302/34 IPC and consequently the judgment of the High Court in so far as Anil appellant is concerned, is set aside and he is hereby acquitted.
Anil appellant is on bail.
His bail bonds shall stand discharged.
N.V.K. Appeal allowed. | The prosecution alleged that the appellant borrowed a sum of Rs. 450 from the deceased and had executed two hand notes exhibit 7 and exhibit 8, promising to repay the amount on 21.3.1976.
On the said date the deceased accompanied by his nephew, PW.3 proceeded to the village of the appellant and as he was getting late, PW.3 carried with him a torch light.
The distance of the house of the deceased from that of the appellant was about one furlong.
The appellant was present in the fields in front of his house and on being asked as to why he had not come to return the money, he asked them to wait there and proceeded towards his house When the appellant did not return for some time, the deceased alongwith PW.3 proceeded towards the house of the appellant when they found him and his two brothers coming towards them variously armed, one had a crowbar while the others had a crooked dao and a kupi dao with them.
PW.3 apprehended some danger from the appellant and his brothers, but his uncle told him that since they had done no wrong, they need not be afraid of any assault.
On coming near the deceased and PW.3, one of the brothers gave a blow with a crowbar, while the other two brothers assaulted the deceased thereafter.
PW.3 pulled the deceased towards his house and implored the accused not to assault him.
At the asking of his uncle PW3 ran away to his house and gave the information to the wife of the deceased and also narrated the occurrence to PW.4.
The wife of the deceased went to PW.6, and after telling him as to what had been told to 390 her by PW3 she requested him to accompany her to the place of occurrence.
On reaching the place of occurrence, they found him lying on the spot with injuries on his person but he was still alive.
Two of the PWs brought a bullock cart and PW.7 after lifting the body with some difficulty brought it to his house and kept it in the verandah.
However, before any medical aid could be provided, the deceased succumbed to the injuries at night.
The first information report was lodged at the police station at 12.30 p.m. by PW.2.
During the investigation, some weapons including an axe were seized from the house of the accused and on the same day one of the brothers was arrested at 6.45 p.m. and the other two brothers surrendered subsequently in the court.
The Investigation Officer prepared a sketch of the place of occurrence and sent the body for postmortem examination.
The appellant alongwith his brothers were tried for offences under section 302/34 IPC for the murder of the deceased, and the Sessions Judge convicted all the three brothers for the said offence and sentenced them for life.
On appeal by the three brothers the Division Bench of the High Court upheld the conviction and sentence of all the three.
The instant SLP was admitted as regards one petitioner only and notice was issued.
The S.L.P. of the second petitioner was dismissed while the third brother did not file any appeal.
Allowing the appeal and acquitting the appellant, this court, HELD: 1.
Conviction can be based on the testimony of a single eye witness and there is no rule of law or evidence which says to the contrary provided the sole eye witness passes the test of reliability.
So long as the single eye witness is a wholly reliable witness the courts have no difficulty in basing conviction on his testimony alone.
However, where the single eye witness is not found to be a wholly reliable witness, in the sense that there are some circumstances which may show that he could have an interest in the prosecution, then the courts generally insist upon some independent corroboration of his testimony, In material particulars, before recording conviction.
It is only when the courts find that the single eye witness is a wholly unreliable witness that his testimony is discarded in toto and no amount of corroboration can cure that defect.
[393E F] 391 2.
The instant case, the medical evidence is consistent with the theory that the deceased had been assaulted only by one person and not by all the three brothers as alleged by the prosecution.
The possibility, therefore, that Mahendra accused alone had caused injuries on the deceased cannot be ruled 'Out.
May be on account of the recovery of the two bonds Ext.
7 and Ext 8, from the house of Anil, he was also implicated.
[395G] 3.
The origin of the fight is totally obscure, and the prosecution has not explained the genesis of the origin of the fight either.
It is not even the case of the prosecution that Anil had refused to repay the loan or that any hot words or abuses had been exchanged between Anil and the deceased when the later had demanded from him the repayment of the loan.
[395H, 396A] 4.
In view of the infirmities of the prosecution evidence it would not be safe to rely upon the testimony of Ajoy PW.3, the sole eye witness, without looking for independent corroboration and as already noticed, the corroboration furnished by the prosecution, unlike in the case of Mahendra the appellant 's brother, is negative in character in so far as the involvement of Anil appellant is concerned.
[396B] 5.
The appellant, was held entitled to the benefit of doubt and granting him that benefit, his conviction and sentence for the offence under Section 302/34 IPC were set aside.
[396C] |
Appeal No. 251 of 1982.
From the Judgment and Order dated 24.10.81 of the Disciplinary Committee of the Bar Council of India, Delhi in B.C.I.T R. Case No. 28 of 1979.
B.Singh, S.K.Gambhir and Davinder Singh for the Appellant.
R.P.Kapur and Rajiv Kapur for the Respondents.
The Judgment of the Court was delivered by 491 KULDIP SINGH, J.
D.S. Dalal was a practising advocate in Delhi.
The Bar Council of India by its order dated October 24, 1981, removed his name from the rolls of advocates of the Bar Council of Delhi and the sanad granted to him has been withdrawn.
This appeal under Section 30 of the is against the order of the Bar Council of India.
The State Bank of India lodged a complaint before the Bar Council of Delhi on September 4, 1978.
It was alleged in the complaint that the appellant along with two other advocates was practising under the name and style of "M/s Singh and Company" a firm of advocates and solicitors having their office at 2670, Subzi Mandi, Delhi.
It was alleged that the advocates were duly engaged by the Asaf Ali Road branch of the State Bank of India to file a recovery suit against M/s Delhi Flooring (Pvt) Ltd. for the recovery of Rs. 6,12,164.10.
"Singh and Company" (the firm) at that time was represented by Mr. D.S. Dalal, Mr. B. Singh and Ms V.Singh, Advocates, who were the partners of the said firm and were conducting cases for and on behalf of the firm.
It is the case of the complainant that in the year 1975, the file relating to the case which was to be filed against m/s Delhi Flooring (Pvt) Ltd., containing original and valuable documents, was handed over to the Firm by the complainant.
Thereafter, the Firm submitted a bill for filing the recovery suit which included the professional fees and other miscellaneous charges.
An amount of Rs. 11,475 was paid to the Firm on November 15, 1975, for filing the suit which included 1/3rd of the professional fee plus the miscellaneous charges.
This was acknowledged by the Firm under a receipt which was placed on the record.
Till December 19, 1975, the Firm did not inform the bank as to whether the suit was filed and if so what was the stage of the proceedings.
The bank wrote a letter dated December 05, 1975 to the Firm asking it to send a copy of the plaint before December 8, 1975, for signatures and verification failing which the bank would be compelled to withdraw the case from the firm.
At that stage Mr. B. Singh, Advocate, one of the partners of the Firm, in his letter dated December 15, 1975 informed the bank that the suit had been filed on December 15, 1975 in the High Court of Delhi.
Thereafter, the bank appears to have received no communication from the said advocates despite repeated reminders oral and other ,vise and the bank was kept in the dark about the fate of the case entrusted to the appellant and his associates.
492 As there was no response from the appellant, the bank engaged the services of Mr. R.P. Arora, Advocate, in order to find out as to what happened to the suit filed by the appellant and his associates on behalf of the bank.
R.P. Arora in his letter dated March 2, 1977, informed the bank that the suit which had been filed on December 15, 1975 was returned by the original Branch on January 31, 1976 to the Registry of the High Court with objections.
Mr. Arora in his letter dated March 31, 1977 further informed the bank that the entire suit paper book had been returned to Mr. B. Singh, Advocate on July 27, 1976 for removing the objection and thereafter the suit has not been re filed in the Registry of the High Court of Delhi.
The complainant, therefore, claimed that the appellant and his associates were guilty of serious professional misconduct as they failed to discharge their professional duties and responsibilities entrusted to them by the bank in its capacity as a client.
It was further claimed by the bank that the appellant and his associates had misappropriated the money paid to them for court fee, miscellaneous expenses and one third of the professional fee.
The complainant further stated that even the documents and other papers handed over to the appellant and his associates for filing the suit were not returned.
The complainant was originally registered with the Bar Council of Delhi.
On September 19, 1979, the Disciplinary Committee of the Bar Council of Delhi transferred the case to the Bar Council of India on the ground that the case had been pending for more than one year.
The Bar Council of India issued notices returnable on November 2, 1980.
On that date the respondents were not present and as such fresh notices were issued for December 20, 1980.
Mr. D.S. Dalal, though served was not present on December 20, 1980 and as such ex parte proceedings were ordered.
Notice to Mr. B. Singh, Advocate was returned with the postal endorsement "refused".
He was also ordered to be proceeded ex parte.
The case was posted for January 23, 1981 for the evidence of the complainant.
On that day the appellant moved an application for setting aside the ex parte order dated December 20, 1980.
The ex parte order was set aside conditionally permitting the appellant to participate in the proceedings and the case was adjourned to February 27, 1981.
On February 27, 1981, three witnesses were examined in the presence of the appellant and he cross examined them.
Thereafter the case was adjourned from time to time and finally fixed for evidence on August 22, 1981.
The appellant again sent an application for adjournment which was rejected.
The evidence was con 493 cluded, arguments were heard and the order reserved.
The Bar Council of India in the impugned order observed as under : "From a perusal of the order sheet of the Disciplinary Committee of the Bar Council of Delhi and also of the order sheet before us, it reveals that the respondents have throughout adopted the tactics of non cooperation purposely with a view to protract the proceedings unnecessarily '.
It may be mentioned that the complainant had given up its case against Ms. V. Singh, Advocate and as such the Bar Council of India ultimately did not proceed against her.
So far as Mr. B. Singh and Mr. D.S. Dalal are concerned, the case against them was proved beyond reasonable doubt and their names were removed from the rolls of advocates of Bar Council of Delhi and the sanads granted to them were ordered to be withdrawn.
The appeal before us is by D.S. Dalal.
We have been informed that Mr. B. Singh Advocate filed a review petition before the Bar Council of India on October 22,1989 which is still pending.
The Bar Council has also granted stay of the order dated October 24, 1981 with the result that Mr.B. Singh is continuing with his legal practise.
This appeal was argued before us by Mr.
B.Singh, Advocate.
It is not disputed before us that Mr.B.Singh and Mr. D.S.Dalal were the main partners of the Firm.
It is also not disputed that an amount of Rs.11,475 was received by these advocates towards the filing of the suit and further that the connected documents and papers were received by them.
B.Singh, learned counsel for the appellant primarily argued that the suit was filed by the appellant in the Delhi High Court on December 15, 19 '/5 but the record of the suit file was misplaced/lost by the High Court registry.
He further stated that by his letter dated August 20, 1977, he informed the bank about the suit file being not traceable and further that the record of the suit was to be re structured and refiled.
We have been taken through the copy of the letter dated August 20, 1977, written by Mr.B.Singh on behalf of the Firm to the Regional Manager, State Bank of India, Parliament Street, New Delhi.
The relevant paragraph is as under 494 "However, as already intimated two bank cases one of Delhi Flooring (P) Ltd. of Asaf Ali Road branch and second of J.M.A.I.E. Corporation of Jungpura branch filed by the undersigned in Delhi High Court have been misplaced/lost by High Court Registry and the record reconstruction petitions have already been given to the branches in March, 1976 itself.
In case the said suits have not already been got restored through some other learned counsel and the assistance the undersigned is required for the restoration/reconstruction then he is willing to cooperate fully without charging any fee and without insisting on the payment of his outstanding bills first.
The undersigned can work only when he is allowed to work in terms of his approved schedule of fees and the payment is made of all his bill, forthwith.
" The letter dated August 20, 1977, quoted above was not produced before the Bar Council of India.
It has been placed before us for the first time.
Apart from the ipse dixit of the appellant and Mr.B. Singh in the above letter, there is no evidence on the record to show that the suit file was misplaced or lost by the High Court Registry.
On the other hand, there is cogent and reliable evidence on the record to show that the Delhi High .
Court Registry returned back the papers to, Mr. B. Singh for removing the objections raised by it.
Mr. R.P. Arora, Advocate, appeared as a witness before the Bar Council of India.
The relevant part of his evidence is as under "I know the respondents in the case.
I was instructed by the complainant in case to find out as to whether the respondents had filed the suit against the Delhi Flooring (P) Ltd. in the High Court of Delhi which was entrusted by the complainant with the respondents.
Accordingly I went to Delhi High Court and made enquiries to find out whether such a suit has been filed.
On enquiry I came to know from the registers of the High Court that the suit had been filed on behalf of the complainant against Delhi Flooring (P) Ltd. on 15th December, 1975.
1 found from the records that the office has not registered the suit 495 because of certain objections raised by the office.
I also came to know that the entire suit filed had been returned to the respondents for complying with the objections and to refile the suit.
This was so returned on 27.7.76.
The enquiries that were made by me in the High Court office was during March 1977 and till that date the suit had not been refiled by the respondents." Mr. R.P. Arora, Advocate, after examining the records of the Delhi High Court had sent two reports to the State Bank of India.
In his report dated March 2, 1977 he stated as under : "As desired by you, to know the whereabouts of the above noted case, I contacted the concern clerk in the Original Branch of High Court of Delhi at New Delhi and also inspected the registers of the Original suits.
The above noted case was filed by M/s Singh & Co. on 15.12.1975, but there were certain objections by the original branch and on 31.1.76 the said case (file) was returned to the registree by the original branch.
The register of the registree in respect of the period from 31.1.1976 is not available and I shall let you know the upto date information, when the said case was returned to M/s. Singh & Co. within a short period.
" Subsequently in his report dated March 31, 1977, Mr. R.P.Arora, Advocate gave the following information to the bank: "I have enquired from the Original section of High Court of Delhi at New Delhi, that the file of the above stated case was returned to Shri B.Singh on 27.7.1976 as the said case was under objections.
So far he has not again filed the said case in High Court.
" Both the above quoted reports have been proved on the record of the Bar Council of India as evidence.
The Bar Council of India on appreciation of the evidence before it came to the conclusion that the charge against the appellant and Mr. B. Singh was proved beyond doubt.
The Bar Council of India concluded as under: 496 ".
After having gone through the evidence and the documents produced in the case carefully, we have come to the conclusion that the complainant had entrusted the suit to be filed against M/s Delhi Flooring (Pvt) Ltd. with the necessary papers and Rs. 11,400.74 for expenses etc.
to the respondent advocates.
It is also established that the respondents have filed the suit on 15.12.1975 with some objections deliberately and when the papers were returned by the High Court, they had not refiled the suit for a pretty long time and as is established tiff this day.
So, we have no hesitation to conclude that the respondents, have misappropriated the amount realised by them from the Bank without filing the suit in a proper manner.
" We have given our thoughtful consideration to the evidence on the record against the appellant.
We see no ground to interfere with the order of the Bar Council of India.
We agree with the reasoning and the conclusions reached therein.
We, therefore, dismiss the appeal.
No costs.
V.P.R. Appeal dismissed. | Respondent Bank lodged a complaint before the Bar Council of Delhi against the appellant Advocate, alleging that the appellant and two other Advocates of the M/s. Singh and Company, (a Firm of Advocates and solicitors) were guilty of serious professional misconduct, as they failed to discharge their.professional duties and responsibilities entrusted to them.
The case of the Bank was that in 1975, the Bank engaged the Firm to rile a recovery suit for the recovery of Rs. 6,12,164.10 from M/s. Delhi Flooring (P) Ltd. and handed over the case rile containing original and valuable documents.
The Firm submitted a bill for riling the recovery suit which included the professional fees and other miscellaneous charges.
On 15.11.1975 the Bank paid a sum of Rs. 11,475 which included 1/3rd of the professional fee and the miscellaneous charges.
It did not inform the Bank whether the suit was filed or not.
On 5.12.1975 the Bank wrote a letter to the Firm to send a copy of the plaint before 8.12.1975 or the Bank would be compelled to withdraw the case from the Firm.
On 15.12.1975, one of the partner of the firm informed the Bank the suit was filed on 15.12.1975 in the High Court.
Thereafter the Bank was kept in the dark about the fate of the case.
Hence the Bank engaged the services of one Mr. Arora, Advocate, in order to find out as to what happened to the suit.
On 23.1977, the Bank was informed by Mr. Arora, Advocate that 489 suit was filed on 15.12.1975 in the High Court and on 31.1.1976, it was returned by the Original Branch to the Registry with objections.
Mr. Arora, Advocate further informed the Bank on 31.3.1977 that the entire suit paper book was returned to Mr. Singh, Advocate of the Firm on 27.7.1976 for removing the object ions and thereafter the suit was not refiled.
The respondent Bank, therefore, claimed before the Bar Council of Delhi that the appellant and his associates misappropriated the money paid to them for court fee, miscellaneous expenses and one third of the professional fee.
The Disciplinary Committee of the Bar Council of Delhi transferred the case of the Bar Council of India, as the case was pending for more than one year.
The Bar Council of India issued notices returnable on 2.11.1980.
The appellant and his associates were not present on that date.
Therefore fresh notices were issued for 20.12.1980.
The appellant did not present on 20.12.1980and ex parte proceedings were ordered.
The case was posted for 23.1.1981 for the evidence of the complainant.
On 23.1.1981 the appellant moved an application for setting aside the ex parte order dated 20.12.1980, which was allowed and the case was adjourned to 27.2.1981.
The case was adjourned from time to time and finally fixed for evidence on 22.8.1981.
On 22.8.1981, the appellant 's application for adjournment was rejected.
The evidence was concluded, ar guments were heard and the order was reserved.
(The complainant had given up its case against one Ms. V.Singh, Advocate an associate of the appellant, and the Bar Council of India did not proceed against her.
One Mr. B.Singh, Advocate the other associate of the appellant, was also proceeded against.
Notice to him was returned with the postal endorsement "refused" and ex parte proceeding were ordered.) The Disciplinary Committee of the Bar Council of India held that the case against the appellant and his associate was proved beyond reasonable doubt.
Their names were removed from the rolls of Advocates of the Bar Council of Delhi and the Sanads granted to them were ordered to be withdrawn.
490 The appellant riled the appeal before this Court, while his associate, riled a review petition before the Bar Council of India, which was still pending.
The Bar Council of India granted him stay of the order dated 24.10.1981 in the review proceeding.
The appellant contended that the suit was filed by the appellant on 15.12.11975 but the record of the suit file was misplaced/lost by the Registry of the High Court; that by his letter dated 20.8.1977, he informed the Bank about the suit rile being not traceable; and that the record of the suit was to be structured and refiled.
Dismissing the appeal, this Court, HELD : 1.01.
The letter dated August 20,1977 was not produced, before the Bar Council of India.
It has been placed before this Court for the first time.
Apart from the ipse dixit of the appellant and Mr.
B.Singh in the said letter, there is no evidence on the record to show that the suit rile was misplaced or lost by the High Court Registry.
On the other hand, there is cogent and reliable evidence on the record to shows that the Delhi High Court Registry returned back the papers to, Mr. B. Singh for removing the objections raised by it.
[494D E] 1.02.
Both the reports of Mr.R.P.Arora, Advocate have been proved on the record of the Bar Council of India as evidence.
The Bar Council of India on appreciation of the evidence before it came to the conclusion that the charge against the appellant and Mr.
B.Singh was proved beyond doubt.
There is no ground to interfere with the order of the Bar Council of India.
[495H, 496D] |
Appeal No. 1890 of 1974.
From the Judgment and Order dated 6.8.1973 of the Gujarat High Court in Second Appeal No.98 of 1973.
M.V. Goswami for the Appellants.
S.K. Dholakia and P. Narasimhan for the Respondents.
The following Order of the Court was delivered: This appeal under Article 136 is against the judgment of the High Court of Gujarat in Second Appeal No.98 of 1973 dated August 6, 1973.
The appellants ' predecessor was inducted in Field Nos.439 and 676 as, an usufructuary mortgagee in the year 1945.
On expiry of the period of redemption prescribed therein, that is, 25 years, the suit for redemption was filed in 1970 by the respondents.
The trial court decreed the suit subject to payment of damages for improvements.
On appeal, the District Court confirmed the decree for redemption but set aside the decree for damages.
In second appeal, the High Court confirmed the decree of the appellate court.
Thus this appeal.
In the High Court, the appellants sought two contentions, namely, by operation of Section 2 A which was brought by way of amendment of Section 48 to the Bombay Tenancy Act, 1939, the mortgagee became a deemed tenant.
It was not permitted to argue as is not a pure question of law but is a mixed question of law and fact which need investigation of facts.
It was neither raised in the pleadings nor argued either before the trial court or the appellate court.
Therefore, the question raised in the second appeal for the first time was disallowed.
The second question namely, the jurisdiction of the civil court to declare the tenancy rights by operation of the Amendment Act 5/73 which brought Section 85 A on statute with retrospective effect.
It ousted the jurisdiction of the civil court to decide the dispute of tenancy rights in pending suit.
This contention too was negatived as when the Amendment Act came into force, the second appeal was pending and therefore the High Court held that the civil court was not ousted to exercise the jurisdiction and to refer the matter to the Revenue Court for jurisdiction for adjudication whether the appellants 580 were or were not deemed tenants.
The same contention was reiterated before us.
Placing reliance on a Division Bench judgment of the Gujarat High Court in Salman Raje vs Madhavsang Benesang, reported in ILR 1963 Guj.722, Shri M.V. Goswami, the learned counsel for the appellants contended that by operation of Section 2 A, the appellants are deemed tenants.
Once the appellants are deemed tenants, the Revenue Court has to decide that issue.
The second appeal is a continuation on the suit and therefore, the High Court is not right in rejecting the claims of the appellants.
It is not necessary to express any opinion on the correctness of the judgment of the Division Bench of the Gujarat High Court.
Suffice it to say that the appellants had not specifically pleaded that the appellants are deemed tenants by operation of Section 2 A of the Act.
What was pleaded in the written statement was that initially the appellants ' predecessor was continuing as cultivating tenant.
But by virtue of the mortgage, their tenancy right merged in the right as usufructuary mortgagee.
On redemption pre existing tenancy rights get revived.
But that plea was not pursued.
A new plea based on Section 2 A was sought to be raised for the first time in the High Court.
The High Court rightly did not permit the appellants to raise the plea of a deemed tenancy as the said claim needs investigation based on factual foundation which was lacking.
Once the right of tenancy is not permitted to be raised, the question of construction of Section 85 A whether the Civil Court had jurisdiction or not is an academic issue.
Accordingly, we are not going into that question.
The learned counsel for the appellants also contended that the appellants are entitled to the improvements.
The High Court did not go into that question as the same was not canvassed and the decree of the appellate court is quite right.
We cannot go into that question which is accordingly rejected.
The appeal, is accordingly dismissed but in the circumstances without costs.
T.N.A. Appeal dismissed. | The appellants ' predecessor was inducted as an usufructuary mortgagee of certain fields.
On the expiry of redemption period the respondents filed a suit for redemption which was decreed subject to payment of damages for improvements.
On appeal, the District Court confirmed the redemption decree but set aside the decree for damages.
In second appeal, the appellants raised a new plea: that they were deemed tenants by operation of Section 2 A of the Bombay Tenancy Act, 1939.
It was also contended on their behalf that Section 85 A of the Act ousted the jurisdiction of the Civil Court to decide the dispute of tenancy rights In pending suit.
Rejecting both the contentions the High Court confirmed the decree of the appellate court.
Against the judgment of the High Court an appeal was flied in this Court.
Dismissing the appeal, this Court, HELD: 1.
The plea based on Section 2 A was sought to be raised for the first time in second appeal before the High Court.
It was neither raised in the pleadings nor argued either before the trial Court or the appellate court.
Therefore, the High Court rightly did not permit the appellants to raise the plea of a deemed tenancy as the said claim needs investigation based on factual foundation which was lacking.
Consequently, the question whether under Section 85 A the Civil Court had jurisdiction or not need not be gone into.
[580 D E, Salman Raje vs Madhavsang Benesang I.L.R. 1963 Guj. 722, cited. |
Appeals Nos. 220 to 223 of 1953.
Appeals from the Judgment and decrees dated April 14,1943, of the Bombay High Court in Appeals Nos. 183, 184, 185 and 186 of 1942, arising out of the judgments and decrees dated February 16, 1942, of the Court of the 1st Class Sub Judge, Poona, in Suits Nos.
900/37, 392/35, 875/36 and 1202/33.
V. P. Rege and Naunit Lal, for the appellants.
N. C. Chatterjee, K. V. Joshi and Ganpat Rai, for respondents Nos.
1 to 6 (In all the Appeals).
478 1959.
March 26.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These four appeals represent the last stage of a long and tortuous litigation between the appellants Waghmares (also called Guravs) who claim the rights of hereditary worshippers in the Shree Dnyaneshwar Maharaj Sansthan, Alandi, and respondents 1 to 6 who are the trustees of the said Sansthan.
Alandi , which is a small town situated on the banks of the river Indrayani at a dis tance of about 14 miles from Poona, is regarded as a holy place of pilgrimage by thousands of Hindu devotees.
In the last quarter ' of the 13th century Shree Dnyaneshwar Maharaj, the great Maharashtra Saint and Philosopher, lived at Alandi.
He was a spiritual teacher and reformer; by his saintly life and his inspiring and illuminating commentary on the Bhagvad Gita, known as Dnyaneshwari, he helped to create a popular urge and fervour for religious and social revolution which led to the foundation of a devotional cult; the followers of this cult are known as Warkaris in Maharashtra.
They refuse to recognise any barriers of caste or class; and amongst them prevails a feeling of real and genuine spiritual brotherhood.
Every year, in the months of July and November, thousands of them proceed on pilgrimage on foot and accompany the annual palanquin procession from Alandi to Pandharpur.
Pandharpur is the chief centre of pilgrimage in Maharashtra and it is regarded by devotees as the Banares of Southern India.
About 1300 A. D. Shree Dnyaneshwar Maharaj took Samadhi at Alandi and since then Alandi also has become a place of pilgrimage.
In or about 1500 A. D. a big temple was erected in front of the idol of Shiva called Siddeshwar where the said Shree Dayaneshwar Maharaj took his Samadhi.
In due course the Mahratta Kings and the Peshwas of Poona granted the village of Alandi in inam for the upkeep of the temple and the Samadhi.
About 1760 A. D. Peshwa Balaji Baji Rao framed a budget called Beheda or Taleband in order to regulate the management and worship of the shrine and provided for proper 479 administration of its annual revenue amounting to Rs. 1,725.
The appellants claim that their ancestors were then in possession of the temple and management of its affairs especially the worship of the shrine.
The budget framed by the Peshwa shows that out of the sum of Rs. 1,725 an amount of Rs. 361 was assigned to the worshippers for some of their services.
After the fall of the Mahratta power the management of Alandi passed into the hands of the East India Company which continued the old arrangement without any interference.
In 1852, under orders from the Government of Bombay the Collector of Poona drew up a yadi or memorandum appointing six persons as Punchas (trustees) with directions to them for the management of the temple in accordance with the old tradition and practice as well as for the administration of the revenue of the village subject to the control and sanction of the Collector.
This arrangement came to be described as " the scheme of 1852".
In 1863 the Religious Endowment Act was passed, and inconsequence, in 1864 the Government of Bombay withdrew their superintendence over the affairs of the Alandi Sansthan; and the trustees continued to manage the affairs of the temple without any supervision on the part of the Government.
It was during this period that the appellants ' ancestors began to assert that they were the owners of the shrine while the trustees insisted on treating them as the servants of the shrine.
This conflict inevitably led to several disputes between the worshippers and the trustees.
Matters appear to have come to a crisis in 1911 when the trustees dismissed eleven Guravs from the temple service on the ground that they were found guilty of gross misconduct.
The Guravs nevertheless asserted that they were the owners of the shrine and that the trustees had no authority or power to dismiss them.
Taking their stand on their ownership of the shrine some of the dismissed Guravs filed Civil Suit No. 485 of 1911 in the Court of the Subordinate Judge, Poona, against the trustees and this was the beginning of the long drawn out litigation which followed between the parties.
In that suit the Guravs 480 claimed a declaration that they were the owners of the temple and not the servants of the temple committee; and as owners they were entitled to perform the worship at the shrine and to appropriate the offerings made to the idol of the Saint.
This claim was resisted by the trustees who pleaded that the Guravs were merely the servants of the temple committee and not the owners at all.
On April 20, 1917, the learned trial judge dismissed the suit because he held that the Guravs were not the owners of the shrine and were not entitled to the declarations claimed by them.
Against this decision the Guravs preferred several appeals but these appeals were dismissed on August 3, 1921.
While dismissing their appeals the High Court incidentally expressed the view that it was open to the Guravs to come to terms with the temple committee and that the terms on which the Guravs could be reinstated can be decided appropriately in a suit filed under section 92 of the Code of Civil Procedure.
It was also observed by the High Court in its judgment that the temple committee did not dispute the fact that the Guravs were the hereditary pujaris and that they had some rights in that capacity.
No doubt the committee claimed that under the scheme framed in 1852 it was competent to dismiss hereditary servants for a substantial cause such as gross misconduct.
It appears that instead of adopting the course indicated in the judgment of the High Court and filing a suit under section 92 of the Code, the Guravs chose to take the law into their own hands, and obtained forcible possession of the temple premises on July 25, 1922, and began to perform the puja and to take the offerings placed before the deity as they had been doing prior to their dismissal.
This was followed by a suit filed by the trustees on September 12, 1922 (Suit No. 1075 of 1922) under section 9 of the Specific Relief Act.
This suit terminated in a decree in favour of the committee on November 4, 1922.
In pursuance of this decree the committee recovered possession of the temple on November 16, 1922.
Thus the Guravs had occupied the temple precincts for about three and a half months.
481 When the Guravs were thus dispossessed by the committee in execution of the decree obtained by it, some of them proceeded to file Suit No. 19 of 1922 in the District Court of Poona; this suit purported to be one under section 92 of the Code but it claimed the same reliefs as had been claimed by the Guravs in theirs earlier suit of 1911.
On April 25, 1927, the District A Court dismissed this suit on the ground that the Guravs could not reagitate the same questions over again.
it was held that their claim was barred by the deci sion of the earlier Suit No. 485 of 1911.
Against this decision the Guravs appealed to the High Court (First Appeal No. 507 of 1927); but the High Court agreed with the conclusion of the District Court and dismissed the Guravs" appeal on June 20, 1933.
It was held by the High Court that the suit as framed was not properly constituted under section 92 of the Code.
It was at this stage that a properly constituted suit, No. 7 of 1934, was filed under section 92 of the Code by the general public of Alandi along with two Guravs in the District Court at Poona.
This suit claimed that a proper scheme should be framed for the management of the temple.
Even so, one of the allegations made in the plaint referred to the Guravs ' rights as hereditary worshippers.
It was apparently apprehended that this allegation would be treated as outside the scope of a scheme suit under section 92 and so the Guravs took the precaution of filing four separate suits on behalf of four branches in the Waghmare family one after the other.
These suits were numbered as 1202 of 1933, 392 of 1935, 875 of 1936 and 900 of 1937; the plaintiffs in these suits were respectively the members of the third, the fourth, the first and the second branch of the Waghmare family '.
It appears that the hearing of these suits were stayed by an order of the District Judge pending the final decision of the scheme suit which was being tried by him.
The scheme suit was taken, up for hearing in 1937.
As many as 22 issues were framed in this suit and voluminous evidence Was recorded.
In the result the learned judge substantially confirmed the original 61 482 scheme of 1852, though he issued certain directions modifying it.
This decree was passed on December 11, 1937.
The trustees felt aggrieved by this decree and challenged its propriety by preferring an appeal, No. 92 of 1938, in the Bombay High Court.
On November 16, 1939, the High Court dismissed the appeal though it made some amendments in the scheme framed by the District Judge by consent of the parties.
After the scheme suit was thus disposed of by the High Court, the four suits filed by the pujaris were taken up for trial by the learned Subordinate Judge, First Class, Poona.
In all these suits the appellants claimed their rights as hereditary vatandar Pujari Gurav Servants of the Sansthan.
They alleged that they were under a duty to perform worship according to certain rites in Shree Dayaneshwar Sansthan and that they were also under an obligation to perform other incidental duties enumerated by them in their plaints.
Likewise they claimed that for remuneration they were entitled to receive coins and perishable articles offered by the devotees and the committee as well as yearly emoluments from the committee.
On these allegations the appellants claimed a declaration about their respective rights and an injunction permanently restraining the trustees from obstructing the appellants in the exercise of the said rights.
They also claimed accounts from the trustees in regard to the offerings prior to the institution of the suit as well as those made after the institution of the suit and before the passing of the decree.
These allegations were denied by respondents 1 to 6.
Their case was that the appellants were the servants of the temple committee and as such had no hereditary rights set up, by them.
In the alternative, it was pleaded by them that even if the appellants had any hereditary rights the same had been lost by their misconduct and had been otherwise extinguished by limitation.
Against the appellants ' claim pleas of res judicata and estoppel were also raised.
On these pleadings as many as 21 issues were framed in the trial court.
The trial court found in favour 483 of the appellants on all the issues.
The learned judge held that the Guravs had established the hereditary rights set out by them and he was inclined to take the view that the respondents could not deprive the appellants of their hereditary rights of service because of the misconduct of some of their ancestors.
He also found that there was no substance in the plea of estoppel or res judicata and that the suits were not barred by limitation.
In the result the appellants ' suits were decreed on February 16, 1942.
Thereupon the respondents challenged these decrees by preferring appeals against them in the Bombay High Court.
The four suits accordingly gave rise to First Appeals Nos.
183, 184, 185 and 186 of 1942 respectively.
In these appeals the High Court agreed with the trial court in holding that on the merits the appellants had established their case and that their claim was not barred either by res judicata or by estoppel.
However, on the question of limitation the High Court took the view that the appellants ' suits were governed by article 120 of the Limitation Act and that they had been filed beyond the period of six years prescribed by the said article.
That is why the High Court set aside the decrees passed by the trial court, allowed the respondents ' appeals and dismissed the appellants ' suits.
However, in view of the special facts of the case the High Court directed that each party should bear its own costs throughout.
This judgment was pronounced on April 14, 1943.
Like the trial court the High Court also dealt with all the four cases by one common judgment.
It appears that after this judgment was pronounced by the High Court but before it Was signed, the appellants moved the High Court on July 2, 1943, for a rehearing of one of the appeals (No. 186 of 1942).
It was urged before the High Court that even if article 120 applied the claim made by the appellant in the said appeal (which arose from Suit No. 1202 of 1933) could not be held to be barred by limitation.
The High Court was not impressed by this plea and so the motion for rehearing was discharged.
Subsequently a Civil Application, No. 1039 of 1944, 484 was made by the appellant in the said appeal seeking to raise the same point over again but this application was rejected by the High Court on September 12, 1944.
The appellants then applied for leave to appeal to the Privy Council on August 15, 1944.
Their applications were heard together and were disposed of by an order passed on March 26, 1946, whereby leave was granted to them to appeal to the Privy Council and their prayer for consolidating all the appeals was also allowed.
These appeals could not, however, be disposed of by the Privy Council before the jurisdiction of the Privy Council to deal with Indian appeals came to an end and so they ultimately came to this Court and were numbered as Appeals Nos. 220 to 223 of 1953.
It may be convenient to state that these appeals arise respectively from Suits Nos.
907 of 1937, 392 of 1935, 875 of 1936 and 1202 of 1933.
It would thus be seen that the litigation which began between the parties in 1911 has now reached its final stage before us in the present appeals.
As we have already indicated, both the courts below have found in favour of the appellants on most of the issues that arose in the present litigation; but the appellants have failed in the High Court on the ground of limitation.
In the trial court the respondents had urged that the present suits were governed by article 124 of the Limitation Act and that since the Guravs had been dismissed from service in 1911 and other Guravs refused to serve in 1913 and 1914 limitatation began to run against them at least from 1914 and so the suits were beyond time.
The learned trial judge held that article 124 was inapplicable.
He also found alternatively that, even if the said article applied, the trustees did not have continuous possession of the suit properties from 1911 or 1914 for twelve years and so the suits were not barred by time.
According to him the case was really covered by section 23 of the Limitation Act, and so the plea of limitation could not succeed.
The High Court has agreed with the trial court in holding that article 124 is inapplicable.
It has, however, 485 come to the conclusion that the suits are governed by article 120 of the Limitation Act, and, according to its findings, limitation began to run against the appellants either from September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act, or, in any case from November, 1922 when, in execution of the decree passed in the said ' suit, the appellants were driven out of the temple precincts by the trustees.
The High Court has also held that section 23 can have no application to the present case.
That is how the High Court has reached the conclusion that the appellants ' suits are barred by time under article 120.
The question which arises for our decision in the present appeals, therefore, is one of limitation; it has to be considered in two aspects: Was the High Court right in holding that article 120 applies and that the cause of action accrued more than six years before the dates of the institution of the present suits ?; Was the High Court also right in holding that section 23 does not apply to the suits ? On behalf of the appellants Mr. Rege has contended that in substance, in their present suits the appellants have made a claim for possession of an hereditary office and as such they would be governed by article 124 of the Limitation Act.
In this connection he has referred us to the relevant allegations in the plaint to show that the appellants ' prayer for a declaration about their hereditary rights and for a consequential permanent injunction amount to no more and no less than a claim for possession of the said hereditary office.
In support of this argument reliance has been placed on the decision of the Bombay High Court in Kunj Bihari Prasadji vs Keshavlal Hiralal (1).
In that case the plaintiff had made a claim to the gadi of the Swaminarayan temple at Ahmedabad and had asked for a declaration that the will of the last Acharya which purported to appoint defendant 14 as his adopted son and successor was null and void.
As a consequence a perpetual injunction was also claimed restraining the defendants from offering any obstruction to the plaintiff in occupying the said gadi.
The (1) Bom.
567. 486 principal point which was decided in the case had reference to the effect of the provisions of section 42 of the Specific Relief Act.
, The plaintiff 's suit had been dismissed in the courts below on the ground that he had omitted to ask for further relief as he was bound to do under section 42 of the said Act and the High Court held that the section did not empower the court to dismiss the suit under the said section.
In considering the nature of the claim made by the plaintiff Jenkins, C. J., observed that " in the plaintiff 's view the suit was not one of possession of land appertaining to the gadi but to determine who was to occupy the gadi and thus as gadinishin become the human agent of the deity.
If that was so, then the injunction restraining all interference with the occupancy by the plaintiff of the gadi secures in the most complete manner to him the rights he claims ".
The learned Chief Justice also observed that " the plaintiff might in terms have asked for possession of the office he said was his ", but be asked " how would practical effect be given to an award of possession of office otherwise than by preventing interference with the rights of which it was made up ".
Even so, having reversed the decree passed by the courts below, when the High Court remanded the case for retrial, the plaintiff was advised to amend his plaint and to define more precisely the terms of the injunction he sought.
It is urged that, in the present appeals also, by asking for a declaration of their rights and for an appropriate injunction against the respondents, the appellants were in effect asking for possession of the hereditary office.
It is doubtful if the claims made by the appellants in their respective suits are exactly analogous to the claim made by the plaintiff in Kunj Bihari Prasad 's case (1).
The appellants have not only asked for an injunction but also for an account of the income received by the trustees from July 23, 1933, up to the date of the suit as well as for similar account from the date of the suit until the date of the decree.
A claim for accounts in the form in which it is made may not be quite consistent with the appellants ' contention that their suits are for nothing more than possession (1) Bom.
567. 487 of the hereditary office ; but in dealing with the present appeals we are prepared to assume that they have in substance claimed possession of the office.
The question which then arises is: Does this claim for possession attract the application of article 124 of the Limitation Act ? Article 124 governs suits for possession of an hereditary office.
The period of limitation prescribed by the article is twelve years and the said period begins to run when the defendant takes possession of the office adversely to the plaintiff.
This is explained to mean that the hereditary office is possessed when the profits thereof are usually received or (if there are no profits) when the duties thereof are usually performed.
It is clear that before this article can apply it must be shown that the suit makes claim for possession of an office which is hereditary; and the claim must be made against the defendant who has taken possession of the said hereditary office adversely to the plaintiff.
Unlike article 142 the fact that the plaintiff, is out of possession of the hereditary office for more than twelve years before the date of his suit would not defeat his claim for possession of the said office.
What would defeat his claim is the adverse possession of the said office by the defendant for the prescribed period.
As the explanation makes it clear usually the receipt of the profits may amount to the possession of the office; but if the defendant merely receives the profits but does not perform the duties which are usually performed by the holder of the office, the receipt of the profits by itself may not amount to the possession of office.
The cause of action for possession in suits falling under article 124 is the wrongful dispossession of the plaintiff and the adverse possession by the defendant of the office in question.
Claims for possession of hereditary offices which attract the application of this article are usually made by holders of the said offices against persons who claim adverse possession of the said offices; in other words, in suits of this kind, the contest is usually between rival claimants to the hereditary office in question.
In the present appeals the claim for possession is 488 made by the appellants against the trustees of the Sansthan.
It is significant that the persons who are actually performing the duties of the worshippers are not impleaded ; and they do not claim to hold office as hereditary officers either.
They have been appointed by the trustees as servants of the institution and they perform the duties of worship as such servants.
The trustees, on the other hand, cannot be said to have taken possession of the office themselves adversely to the appellants.
They do not take the profits themselves nor do they perform the duties associated with the said office.
They have, in exercise of their authority and power as trustees, dismissed the appellants ' predecessors from office and have made fresh appointments of servants to perform the worship at the Sansthan; and in making the said appointments, have in fact destroyed the hereditary character of the office.
The dispute in the present appeals is between the worshippers who claim hereditary rights and the trustees of the institution who claim to have validly terminated the services of some of the predecessors of the appellants and to have made valid appointments to the said office.
It is, therefore, impossible to accept the argument that the claim made by the appellants in their respective suits attracts the provision& of article 124.
It is conceded by Mr. Rege that if article 124 does, not apply, the suits would be governed by article 120 which is a residuary article.
It may prima facie appear somewhat strange that whereas a suit against a person claiming to hold the hereditary office adversely to the plaintiff is governed by a period ' of twelve years, a claim against the trustees like the respondents in the present appeals who have dismissed the hereditary worshippers should be governed by a period of six years.
It may be possible to suggest that there is a substantial difference in the nature of the two disputes ; but apart from it, it is well known that the artificial provisions of limitation do not always satisfy the test of logic or equity.
Mr. Rege, however, argued that in determining the scope of article 124 we need not consider the provisions of col. 3 to the said article.
His contention appears 489 to be that once it is shown that the suit is for possession of an hereditary office, article 124 must apply though the claim for possession may not have been made ,against a person who has taken possession of the office adversely to the plaintiff.
He also urged alternatively that the trustees should be deemed to have, taken possession of the office adversely to the appellants.
We have already held that the conduct of the trustees shows that they have not taken possession of the office adversely within the meaning of col. 3 of article 124; and we do not think it is possible, to ignore the provision of col. 3 in deciding whether or not article 124 applies.
It is true that in Jalim Singh Srimal vs Choonee Lall Johurry (1), while holding that the adjustment on which the plaintiff 's claim was based in that case was in time both under articles 115 and 120, Jenkins, C. J, has observed that the function of the third column of the second schedule is not to define causes of action but to fix the starting point from which the period of limitation is to be counted ; but this observation does not support the appellants ' case that article 124 would govern the suit even though the third column is wholly inapplicable to it.
That obviously is not the effect of the observations made in Jalim Singh 's case (1).
The question about the nature and scope of the provisions of article 124 has been considered by the Madras High Court in Thathachariar vs Singarachariar (2).
" If we take into consideration the terminology used in the three columns of article 124 ", observed Srinivasa Aiyangar, J., in that case, " it is clear that the nature of the suit intended to be covered by that article must be a suit filed by a plaintiff who claims the office from a person who at that time holds the office himself ".
In our opinion this view is correct.
We may also refer to another decision of the Madras High Court in which this question has been considered.
In Annasami vs Adivarachari (3) a Full Bench of the Madras High Court was dealing with a suit in (1) (2) A.I.R. 1928 Mad, 377.
(3) I.L.R. 62 490 which the plaintiff had claimed an injunction restraining the trustee and the archakas of the Sri Bhuvarabaswami temple at Srimushnam from interfering with the performance of the duties of his office of mantrapushpam of the temple.
This suit had been filed in 1929.
The office of mantrapushpam was a hereditary office and the plaintiff had succeeded to it on the death of his father in 1906.
The emoluments of the office consisted of a ball of cooked rice per them and twelve annas per month.
It appears that the plaintiff was a Vadagalai while the archakas of the temple were Thengalais and there was animosity between them; and as a result of this animosity the plaintiff bad never been able to perform the duties of his office.
It was common ground that the plaintiff was the lawful holder of the office and that he had been receiving its emoluments month by month until 1927.
The archakas who resisted the plaintiff 's claim did not claim that they were in possession of the office or that they had performed the duties of the said office.
The Full Bench held that, where a person is admittedly the lawful holder of the office and he is enjoying its emoluments, he must in law be regarded as being in possession of the office itself, especially where no one else is performing the duties of the said office; and so under article 124 it was enough for the plaintiff to show that he had been in receipt of the emoluments of the office to save his claim from the bar of limitation.
The Full Bench also rejected the contention that under article 120 the suit was barred because it was held that every time the trustee and the archakas prevented the plaintiff from performing his duties as a hereditary officer a. fresh cause of action arose and so there can be no bar of limitation under article 120.
It would be noticed that the basis of this decision was that, in the eyes of law, the plaintiff was in possession of the hereditary office since he was receiving the emoluments of the said office month by month, and so every act of obstruction on the part of the archakas and the trustee was in the nature of a continuing wrong which gave rise to a fresh cause of action to the plaintiff from time to time.
In other words, on the facts the Full Bench held that 491 s.23 helped the plaintiff and saved his suit from the bar of limitation.
As we will presently point out there is no scope for applying section 23 to the facts of the present cases, and so the decision in Annasami Iyengar 's case (1) cannot assist the appellants.
In this connection it is relevant to consider the decision of the Privy Council in Jhalandar Thakur vs, Jharula Das (2) in which it was held that article 124 was inapplicable.
The defendant Jharula Das had obtained a decree for money on a mortgage which bad been executed in his favour by Mst.
Grihimoni, the widow of the shebait of the temple.
In execution of the said decree the defendant had caused 3 1/2 as.
share of the judgment debtor including her right in the nett income of the daily offerings made before the idol to be put up for sale and had himself purchased it at the auction sale.
As such purchaser he was in possession of the income of the said share.
The judgment debtor attempted to challenge the said sale by two suits but her attempts failed and the ' auction purchaser continued to be in possession of the income.
On the death of Mst.
Grihimoni, Bhaiaji Thakur, who succeeded to the office of the shebait, sued the defendant for possession of certain lands and claimed a declaration that he was entitled to receive the 3 1/2 as.
share of the nett income from the offerings to the temple with other reliefs.
This claim was resisted by the defendant Jharula Das.
In regard to the plaintiff 's claim in respect of the said 3 1/2 as share, the High Court had held that article 124 applied and that the claim was barred under the said article.
That is why the decree passed by the trial court in favour of the plaintiff in respect of the said income was reversed by the High Court.
This decision was challenged by the plaintiff before the Privy Council and it was urged on his behalf that article 124 did not apply.
The Privy Council upheld this contention.
It was clear that the office of the shebait of the temple was a hereditary office which could not be held by anyone who was not a Brahmin Panda.
Jharula Das was not a Brahmin Panda.
He was of an inferior caste and was not (1) I.L.R. (2) Cal.
492 competent to hold the office of the shebait of the temple, or to provide for the performance of the duties of that office.
On these facts the Privy Council held that the appropriation from time to time by Jharula Das of the income derivable from the said 3 1/2 as share did not deprive Mst.
Grihimoni, and after her death, Bhaiaji Thakur, of the possession of the office of the shebait although that income was receivable by them .in right of the shebaitship.
The basis of this decision is that, on each occasion on which Jharula Das received and wrongfully appropriated to his own use a share of the income to which the shebait was entitled, he committed a fresh actionable wrong in respect of which a suit could be brought against him by the shebait; but it did not constitute him a shebait for the time being or affect in any way the title of the office.
Thus this decision emphasises that for the application of article 124 it is essential that the defendant to the suit must be in adverse possession of the hereditary office in question.
We must, therefore, hold that article 124 does not apply to the suits filed by the appellants; and as we have already observed, if.
article 124 does not apply, article 120 does.
The next point which arises for our decision is whether under article 120 the suits are barred by limitation.
Under article 120 time begins to run against the plaintiffs when the right to sue accrued to them, and that naturally poses the question as to when the right to sue accrued to the appellants.
In deciding this question it would be necessary to recall briefly the material facts in regard to the past disputes between the appellants and the trustees.
These disputes began in 1911.
On January 31, 1911, the trustees wrote a yadi (memorandum) to the Collector of Poona asking his permission to dismiss eleven Guravs from service.
They set out in detail several items of misconduct of which the said Guravs were guilty; and they expressed their opinion that for the proper management of the affairs of the institution it was necessary to terminate the services of the off ending Guravs (exhibit 407).
On April 1, 1911, the Collector sent a reply to the trustees and told them that, as a result of the Government 493 Resolution No. 4712 passed on November 29,1864, it was unnecessary for the trustees to obtain the Collector 's sanction because it was competent to the trustees to settle their own affairs without any such sanction.
The trustees then met in a committee on September 18, 1911, and decided to dismiss from service the said eleven Guravs.
In its resolution the committee stated that the Guravs were violent and arrogant and it was likely that they may commit riot at the time when the committee would seek to take charge from them.
The committee also apprehended that the rest of the Guravs would make a common cause with those who had been dismissed from service and would refuse to serve the Sansthan.
Even so the committee decided to appoint six Brahmins temporarily to perform the service, because the committee was prepared to allow the rest of the Guravs to render service to the Sansthan if they were ready to act according to the orders of the committee and were willing to enter into a formal agreement in that behalf.
In accordance with this resolution the committee served notice on the eleven Guravs on October 13, 1911, terminating their services and calling upon them to hand over to the committee all articles in their charge and forbidding them from entering the temple in their capacity as servants.
Notice was likewise served on the rest of the Guravs calling upon them to agree to serve the Sansthan on conditions specified in the notice.
These terms were not acceptable to the Guravs and so, on behalf of two Guravs Eknath and his brother Ramachandra, notice was served on the trustees on October 26, 1911, complaining against the trustees ' conduct in forcibly removing the Guravs from the temple and thereby wrongfully denying their rights.
The notice warned the trustees that unless they retraced their steps and gave possession to the Guravs as claimed in the notice legal steps would be taken against them.
This notice was followed by the Guravs ' Suit No. 485 of 1911.
In the suit the plaintiffs claimed declaration about their rights of ownership and asked for consequential reliefs.
This claim was denied by the 494 trustees who claimed the right to dismiss the Guravs.
It was alleged on their behalf that some of the plaintiffs had been dismissed and others had resigned their employments and so all of them had lost their rights.
This suit was seriously contested but in the end the Guravs lost and their suit was dismissed on January 31, 1918.
The Guravs then preferred appeals in the High Court but these appeals were also dismissed on August 3, 1921.
We have already pointed out that, while dismissing the said appeals, the High Court made certain observations about the Guravs ' hereditary rights of worship and suggested that these rights could be adjudicated upon in a suit filed under section 92 of the Code.
Thus at the time when the Guravs ' appeals were dismissed the position was that the claim of ownership set up by them had been rejected; but the question as to whether they were entitled to the lesser rights of hereditary worshippers was left open.
The Guravs then obtained forcible possession of the temple and that led to the trustees ' suit under section 9 of the Specific Relief Act, No. 1075 of 1922, on September 12, 1922.
In this suit the trustees specifically alleged that the relationship of the defendants as servants of the Sansthan had ceased as from September, 1911, and they averred that the defendants had therefore no right to obtain possession of the temple.
The defendants no doubt disputed this claim and pleaded that they were the hereditary vatandar pujari servants but their claim was negatived and a decree for possession was passed on November 4, 1922.
In execution of this decree the defendants were dispossessed.
On these facts the High Court has held in favour of the appellants, and rightly we think, that it was difficult to accept the respondents ' contention that the cause of action for the present suits which were expressly based upon the status of the Guravs as hereditary servants arose in 1911.
But, the High Court felt no doubt that the cause of action to file the present suits had accrued either on September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act or in any event on November 4, 495 1922, when the said suit was decreed and the Guravs were consequently dispossessed.
In our opinion this conclusion is also right.
One of the Guravs who was examined in the present litigation has stated that, " if in any year when it is the turn of any takshim to serve, if a person outside the Gurav family is appointed by the trustees, all the takshims have a right to , object ".
There is also no dispute that since the dismissal of eleven Guravs in 1911 till the institution of, the present suits none from the Gurav family has served the temple except for 3 1/2 months in 1922 when the Guravs had wrongfully obtained possession of the temple.
In 1922 the Guravs knew that their claim of ownership had been rejected and that the only right which they could set up was as hereditary worshippers of the temple and not its owners.
This right was specifically denied by the trustees in their plaint while it was specifically set up in defence by the Guravs in their written statement; and the decree that followed upheld the trustees ' case and rejected the defendant 's claim.
On these facts the conclusion is irresistible that the right to sue accrued to the Guravs at the latest on November 4, 1922, when a decree was passed under section 9 of the Specific Relief Act.
If not the plaint in the suit, at least the decree that followed clearly and effectively threatened the Guravs ' rights as hereditary worshippers and so the cause of action to sue on the strength of the said rights clearly and unambiguously arose at that time.
If that be the true position it follows that the present suits which have been filed long after the expiration of six years from 1922 are barred by time under article 120.
It is then contended by Mr. Rege that the suits cannot be held to be barred under article 120 because section 23 of the Limitation Act applies; and since, in the words of the said section, the conduct of the trustees amounted to a continuing wrong, a fresh period of limitation began to run at every moment of time during which the said wrong continued.
Does the conduct of the trustees amount to a continuing wrong under section 23 ? That is the question which this contention raises for our decision.
In other words, did the 496 cause of action arise de die in them as claimed by the appellants ? In dealing with this argument it is necessary to bear in mind that section 23 refers not to a continuing right but to a continuing wrong.
It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the 'doer of the act responsible and liable for the continuance of the said injury.
If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue.
If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong.
In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury.
It is only in regard to acts which can be properly characterised as continuing wrongs that section 23 can be invoked.
Thus considered it is difficult to hold that the trustees ' act in denying altogether the alleged rights of the Guravs as hereditary , worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong.
The decree obtained by the trustees in the said litigation had injured effectively and completely the appellants ' rights though the damage caused by the said decree subsequently continued.
Can it be said that, after the appellants were evicted from the temple in execution of the said decree, the continuance of their dispossession was due to a recurring act of tort committed by the trustees from moment to moment ? As soon as the decree was passed and the appellants were dispossessed in execution proceedings, their rights had been completely injured, and though their dispossession continued, it cannot be said that the trustees were committing wrongful acts or acts of tort from moment to moment so as to give the appellants a cause of action de die in diem.
We think there can be no doubt that where the wrongful act complained of amounts to ouster, the resulting injury to the right is complete at the date of the ouster and so there would be no scope for the application of section 23 in such a case.
That is 497 the view which the High Court has taken and we see no reason to differ from it.
We would now like to refer to some of the decisions which were cited before us on this point.
The first case which is usually considered in dealing with the application of section 23 is the decision of the Privy Council in Maharani Rajroop Koer vs Syed Abdul Hossein (1) In order to appreciate this decision it is necessary to refer, though briefly, to the material facts.
The plaintiff had succeeded in establishing his right to the pyne or an artificial watercourse and to the use of the water flowing through it except that which flowed through the branch channel; he had, however, failed to prove his right to the water in the tal except to the overflow after the defendants as owners of mouzah Morahad used the water for the purpose of irrigating their own land.
It was found that all the obstructions by the defendants were unauthorised and in fact the plaintiff had succeeded in the courts below in respect of all the obstructions except two which were numbered No. 3 and No. 10.
No. 3 was a khund or channel cut in the side of the pyne at a point below the bridge whereas No. 10 was a dhonga also below the bridge and it consisted of hollow palm trees so placed as to draw off water in the pyne for the purpose of irrigating the defendants ' lands.
It was in regard to these two obstructions that the question about the continuing wrong fell to be considered; and the Privy Council held that the said obstructions which interfered with the flow of water to the plaintiff 's mehal were in the nature of continuing nuisance as to which the cause of action was renewed de die in them so long as the obstructions causing such interference were allowed to continue.
That is why the Privy Council allowed the plaintiff 's claim in respect of these two obstructions and reversed the decree passed by the High Court in that behalf.
In fact the conduct of the defendant showed that whenever he drew off water through the said diversions he was in fact stealing plaintiff 's water and thereby committing fresh wrong every time.
Thus this is clearly not a case of exclusion or ouster.
(1) (1880) L.R. 7 I.A. 240.
63 498 Similarly, in Hukum Chand vs Maharaj Bahadur Singh (1) the Privy Council was dealing with a case where the defendants ' act clearly amounted to a continuing wrong and helped the plaintiff in getting the benefit of section 23.
The relevant dispute in that case arose because alterations had been made by the Swetambaris in the character of the charans in certain shrines and the Digambaris complained that the said alterations amounted to an interference with their rights.
It had been found by the courts in India that the charans in the old shrines were the impressions of the footprints of the saints each bearing a lotus mark.
"The Swetambaris who preferred to worship the feet themselves have evolved another form of charan not very easy to describe accurately in the absence of models or photographs which shows toe nails and must be taken to be a representation of part of the foot.
This the Digambaris refused to worship as being a representation of a detached part of the human body ".
The courts had also held that the action of the Swetambaris in placing the charans of the said description in three of the shrines was a wrong of which the Digambaris were entitled to complain.
The question which the Privy Council had to consider was whether the action of the Swetambaris in placing the said charans in three of the shrines was a continuing wrong or not; and in answering this question in favour of the plaintiffs the Privy Council referred to its earlier decision in the case of Maharani Rajroop Koer (2 ) and held that the action in question was a continuing wrong.
There is no doubt that the impugned action did not amount to ouster or complete dispossession of the plaintiffs.
It was action which was of the character of a continuing wrong and as such it gave rise to a cause of action de die in diem.
In our opinion, neither of these two decisions can be of any assistance to the appellants.
On the other hand the decision of the Patna High Court in Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadev Asram Prasad Sahi Bahadur(3) (1) (1933) L.R. 60 I.A. 313.
(2) (1880) L.R. 7 I.A. 240.
(3) Pat. 208.
499 as well as that of the Full Bench of the Punjab High Court in Khair Mohammad Khan vs Mst.
Jannat support the respondents ' contention that where the s, impugned act amounts to ouster there is no scope for the application of section 23 of the Limitation Act.
We are, therefore, satisfied that there is no substance in the appellants ' contention that section 23 helps to save limitation for their suits.
The result no doubt is unfortunate.
The appellants have succeeded in both the courts below in proving their rights as hereditary worshippers; but their claim must be rejected on the ground that they have filed their suits beyond time.
In this court an attempt was made by the parties to see if this long drawn out litigation could be brought to an end on reasonable terms agreed to by them, but it did not succeed.
In the result the appeals fail and are dismissed.
We would, however, direct that the parties should bear their own costs throughout.
Appeals dismissed. | The appellants who were the hereditary worshippers, called Guravs, of the Shree Dnyaneshwar Sansthan of Alandi, claimed to be its owners.
The respondents as trustees of the said Sansthan dismissed eleven of the Guravs in 1911, served a notice on the rest calling upon them to agree to act according to the orders of the Temple committee and appointed six Brahmins to carry on the services of the Sansthan.
The Guravs did not agree and sued the respondents for a declaration of their rights of ownership and consequential reliefs.
That litigation ended in the High Court in 1921 with the result that their claim of ownership stood rejected but their rights as hereditary worshippers were left open.
Thereafter the Guravs took forcible possession of the temple on July 25,1922.
The trustees brought a suit under section 9 of the Specific Relief Act on September 12, 1922, and obtained a decree on November 4, 1932.
In execution of that decree the Guravs were dispossessed.
The suits, out of which the present appeals arise, were filed by the appellants against the trustees for declaration of their rights as hereditary servants of the Sansthan, a permanent injunction restraining the trustees from obstructing them in the exercise of the said rights and accounts.
The respondents claimed that the appellants were servants of the Temple committee and had no hereditary rights as claimed by them; even if they had, their claim to such rights was barred by limitation.
The trial Court decreed the suits.
In appeal the High Court, while agreeing with the trial court on the merits, disagreed on the question of limitation, held the suits to be barred by limitation under article 120 Of the Limitation Act, the cause of action arising either on the filing of the section 9 suit by the respondents or, in any event, on the date when the said suit was decreed, section 23 of the Act having no application, and allowed the appeals.
It was contended on behalf of the appellants in this Court that the suits were governed by article I24 Of the Limitation Act, and even if article 120 applied, section 23 saved limitation.
Held, that the High Court was right in holding that article 120 and not article 124, of the Limitation Act applied and that section 23 had no application to the suits in question.
477 Article 124 Of the Limitation Act applies only where the cause of action for the suit is wrongful dispossession of the plaintiff and adverse possession by the defendant in respect of the hereditary office in question.
In such suits, the contest usually is between rival claimants to the hereditary office and not between such claimants and trustees.
It is impossible to ignore the provision Of Col. 3 to that article in deciding its applicability.
Kunj Bihari Prasadji vs Keshavlal Hiralal, Bom.
567 and jalim Singh Srimal vs Choonee Lall Johurry, , held inapplicable.
Thathachariar vs Singarachariar, A.I.R. 1928 Mad. 377, ap proved.
Annasami vs Advarachari, I.L.R. , distin guished.
Jhalandar Thakur vs jharula Das, Cal. 2444, referred to.
Section 23 Of the Limitation Act refers not to a continuing right but to a continuing wrong.
A continuing wrong is essentially one that creates a source of continuing injury as opposed to one that was complete and makes the doer liable for such continuance.
A completed inJury would not be a continuing wrong even though it might give rise to continuing damage.
Thus tested, the injury to the appellants resulting from the decree obtained by the trustees in the section 9 suit, which amounted to a ouster, was complete at the date of the ouster and section 23 Of the Limitation Act could not apply so as to save limitation.
Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadeu Asram Prasad Saki Bahadur, Pat. 208 and Khair Mohammad Khan vs Mst.
jannat, Lah. 22, referred to.
Maharani Rajroop Koer vs Syaed Abdul Hossein, [1880] L.R. 7 I.A. 240 and Hukum Chand vs Maharaj Bahadur Singh, [1933] L.R. 60 I.A. 313, distinguished and held inapplicable. |
(C) No. 1237 of 1988.
(Under Article 32 of the Constitution of India).
P.P. Rao and Ms. K Amreshwari, B. Rajeshwar Rao and Vimal Dave for the Petitioners.
V.R. Reddy, Addl.
Solicitor General, K. Madhaya Reddy, G. Prabhakar, B. Kanta Rao, A. Ranganathan and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The petitioners and respondents 4 to 16 are District and Sessions Judges in the State of Andhra Pradesh.
The petitioners are direct recruits whereas the respondents were promoted from the Subordinate judiciary.
The respondents were initially appointed on temporary basis in the year 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claim seniority over the respondents by way of this petition under Article 32 of the Constitution of India.
The recruitment to the Andhra Pradesh Higher Judicial Service (the Service) is governed by the Rules called "The Andhra Pradesh State Higher Judicial Service Special Rules" (the Special Rules).
Rules 1, 2, 4 and 6 of the Special Rules which are relevant are as under: "Rule 1.
Constitution: The service shall consist of the following categories: 550 Category 1 : District and Sessions Judges 1st Grade.
Category II : District and Sessions Judges, Second Grade including Chairman, Andhra Pradesh Sales Tax Appellate Tribunal, Chief Judge, City Civil Court, Additional Chief Judge, City Civil Court, Chief Judge, Court of small Causes, Chief City Magistrate, Chairman, Tribunal for Disciplinary Proceedings, Presiding Officers, Labour Courts and Addl.
District and Sessions Judges.
Rules 2.
Appointment : (a) Appointment to Category 1 shall be made by promotion from Category II and appointment to Category II shall be made: (i) by transfer from among: (a) Sub Judges in the Andhra State Judicial Service; or in the Hyderabad State Judicial Service; and (ii) by direct recruitment from the Bar: Provided that 33 1/3% of the total number of permanent posts shall be filed or reserved to be filled by direct recruitment.
Explanation: In the determination of 33 1/3% of the total number of permanent posts, fractions exceeding one half shall be counted as one and other fractions shall be disregarded.
(b) All promotions shall be made on grounds of merit and ability, seniority being considered only when merit and ability are approximately equal.
Rule 4.
Probation: Every person appointed to Category II otherwise than by transfer, shall, from the date on which he joins duty be on probation for a total period of one year on duty.
Rule 6.
Seniority: The seniority of a person appointed to Category 1 or Category 2 shall be determined with refer 551 ence to the date from which he was continuously on duty in that category.
" We may briefly notice the scheme of the Special Rules.
Rule 1 constitutes the Service.
Category 1 consists of District and Sessions Judges ' 1st grade and Category II consists of District and Sessions Judges Second grade.
Rule 1 does not say that Service shall consist of only permanent posts.
All the posts designated as District and Sessions Judges Second grade under Category II are part of the service under Rule 1.
In other words, as and when a post of District and Sessions Judge Second grade is created permanent or temporary it becomes part of the Service under Rule 1 of the special Rules.
Rule 2 provides the method of appointment.
Appointment to Category 1 is from Category II.
Appointment to Category II is from two sources.
By transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
Proviso to Rule 2 states that 33 1/3% of the total number of permanent posts shall be filled or reserved to be filled by direct recruitment.
All the posts of District and Sessions Judges Second grade are part of the Service but quota for the direct recruits is provided only in the permanent posts.
Rule 6 of the Rules provides for the fixation of seniority.
Under Rule 6 the seniority of persons appointed to Category 1 or Category II posts is fixed on the basis of continuous length of service in their respective posts.
On the plain reading of the Special Rules the salient features of the Service can be culled out as under: 1.
Rule 1 provides for the constitution of the Service.
All the posts of District and Sessions Judges Second grade created from time to time are part of the Service.
The natural corollary is that the Service consists of permanent as well as temporary posts.
The recruitment to Category II of the service is by transfer from amongst the Subordinate Judges and also by direct recruits from the Bar.
33 1/3% of the total number of permanent posts in Category II of the Service are to be filled by way of direct recruitment.
The seniority under Rule 6 is to be determined with reference to the date from which a person is continuously on duty.
Whether the person 552 is continuously on duty against a temporary post or permanent post is of no consequence.
A person is entitled to the fixation of his seniority on the basis of continuous length of service rendered either against permanent post or temporary post.
The three petitioners were appointed as District and Sessions Judges Second grade by direct recruitment on October 12, 1981.
Petitioners 1 and 2 joined service on October 23, 1981 and petitioner 3 on October 30, 1981.
Respondents 4 to 16 were appointed District and Sessions Judges Second grade by transfer from amongst the Subordinate Judges during the years 1978/79.
It is not disputed that permanent vacancies in their quota became available in the year 1983.
We, therefore, proceed on the basis that the petitioners were appointed substantive members of the Service earlier to respondents 4 to 16.
We may at this stage notice Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules (the State Rules).
The State Rules are general rules which are applicable to all the services in the State of Andhra Pradesh.
Needless to say that to the extent the Special Rules are applicable to the Service the State Rules are excluded.
Rule 10(a)(i) of the State Rules is as under: "10.
Temporary appointment.
(a)(i) Where it is necessary in the public interest to fill emergently a vacancy in the post borne on the cadre of a service, class or category and if the filling of such vacancy in accordance with the rules is likely to result in undue delay, the appointing authority may appoint a person temporarily otherwise than in accordance with the said rules.
" Mr. P.P. Rao, learned counsel for the petitioners has raised the following contentions for our consideration: 1.
That the Service consists of only permanent posts under the Special Rules.
There is no provision under the Special Rules for adding temporary posts to the cadre.
The appointment of respondents to the posts of District and Sessions Judges Second grade on temporary basis can at best be treated under rule 10(a)(i) of the State Rules.
553 2.
The temporary service rendered by respondents.4 to 16 being outside the cadre cannot be counted towards seniority.
Proviso to Rule 2 and Rule 6 of the Special Rules have to be read together and doing so the permanent vacancies having been made available for respondents 4 to 16 in the year 1983 their service prior to that date cannot be counted towards seniority.
Before dealing with Mr. Rao 's contentions, we may notice two preliminary contentions raised by Mr. K. Madava Reddy, learned counsel for the respondents.
Mr. Madava Reddy has invited our attention to the judgment of a Division Bench of Andhra Pradesh High Court in T.H.B. Chalapathi and others vs High Court of Andhra Pradesh and others, Writ Petition Nos.
1968/82, 52/83 and 12282/85 decided on December 28, 1985.
Those writ petitions were filed before the Andhra Pradesh High Court by the direct recruits to Category II of the Service claiming seniority over the persons who were appointed to category 11 on temporary basis earlier to them.
Similar questions were raised as are being raised by Mr. P.P. Rao before us.
By a well reasoned judgment the High Court rejected all the contentions of the direct recruits and dismissed the writ petitions.
It is not disputed that Special Leave Petition No.1035 of 1986 against the said judgment was dismissed by this Court on January 30, 1988.
Mr. Madava Reddy plausibly contends that all the contentions which are being raised by the petitioners in this Court, having been rejected by the High Court and special leave petition against the judgment of the High Court having been dismissed by this Court the same cannot be agitated once over again.
Mr. Madava Reddy then contended that the petitioners were appointed in the years 1981 and since then till the year 1988 twelve seniority lists have been published showing the petitioners below respondents 4 to 16.
At no point of time they challenged the seniority lists in the Court.
Even when the writ petitions filed by Chalapathi and others were pending they did not intervene before the High Court.
The petitioners, according to Mr. Madava Reddy, are guilty of gross delay and latches and as such are not entitled to get relief by way of this petition under Article 32 of the Constitution of India.
554 We see considerable force in both the contentions raised by Mr. Madava Reddy.
We are, however, of the view that it would be in the larger interest of the Service to dispose of this petition on merits.
We see no force.
in the contention of Mr. Rao that the Service consists of only permanent posts under the Special Rules.
We have already interpreted Rule 1 to mean that the Service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judges Second grade.
Even otherwise in the absence of any prohibition under the Special Rules the State Government can always create temporary posts as additions to the cadre.
Rule 10(a)(i) of the State Rules has no application to the Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant service.
The appointments of respondents 4 to 16, on the other hand, Were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
We are of the view that the Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
Rule 10(a)(i) of the State Rules has no application to the Service Constituted under the Special Rules.
We, therefore, reject the contention raised by Mr. Rao.
Having taken the view that the Service under the Special Rules consists of permanent as well as temporary posts the second contention of Mr. Rao looses its ground.
Temporary, posts of District and Sessions Judges Second grade being part of the Service the seniority has to be counted on the basis of length of service including the service against a temporary post.
The third contention of Mr. Rao is mentioned to be rejected in view of Rule 6 of the Special Rules.
Rule 6 of the Special Rules is in no way dependent on proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In the scheme of the rules the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a 555 post in the category.
Even though, the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service against temp orary as well as permanent posts respondents 4 to 16 have been rightly given seniority above the petitioners.
We, therefore, find no force in any of the contentions raised by Mr. Rao.
The writ petition is consequently dismissed.
No costs.
N.V.K. Petition dismissed. | Recruitment to the Andhra Pradesh Higher Judicial Service is governed by "The Andhra Pradesh State Higher Judicial Service Special Rules".
Rule 1 constitutes the service.
Category 1 consists of District and Sessions Judges 1st grade and Category 11 consists of District and Sessions Judges, Second Grade.
Appointment to Category 1 is from Category 11.
Appointment to Category 11 is from two sources by transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
The petitioner were direct recruits whereas respondents 4 to 16 were promoted from the Subordinate judiciary.
The respondents were Initially appointed on temporary basis in the yew 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claimed seniority over the said respondents, and riled the Writ Petition under Article 32 of the Constitution of India for relief.
It was contended on their behalf that: (1) The Service consists of only permanent posts, there is no provision under the Special Rules for adding temporary posts to the cadre, consequently the appointment of respondents 4 to 16 to the post of District and Sessions Judges, Second Grade on temporary basis can at best be treated under Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules.
(2) The temporary service rendered by the respondents 4 to 16 being outside the cadre cannot be counted towards seniority.
(3) Porviso to Rule 2 and Rule 6 of the Special Rules have to be read together, and as such the permanent vacancies having been made available for them in the year 1983 their service 548 prior to that date cannot be counted towards seniority.
The respondents constested the writ petition by contending that the petitioners were appointed in the year 1981 and since then till the year 1988, twelve seniority lists have been published showing the petitioners below respondents 4 to 16, and at no point of time they challenged the seniority lists in the Court.
Even when the Writ Petition T.H.B. Chalapathi & Ors.
vs High Court of Andhra Pradesh & Ors., was pending in the High Court they did not intervene.
The petitioners were thus guilty of gross delay and latches and as such are not entitled to get relief in the Writ Petition.
Dismissing the writ petition, this Court, HELD: 1.
(i) Rule 1 has to be interpreted to mean that the service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judge Second Grade.
Even otherwise in the absence of any prohibition under the Special Rules, the State Government can always create temporary posts as addi tions to the cadre.
[554 B] (ii) Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules has no application to the Andhra Pradesh Higher Judicial Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant Service.
[554 C D] In the instant case, the appointments of respondents 4 to 16 were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
The Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
[554 D] 2.
Temporary posts of District and Sessions Judges Second Grade being part of the Service, the seniority has to be counted on the basis of length of service including the service against the temporary posts.
[554 F] 3.
Rule 6 of the Special Rules is in no way dependent on the proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In 549 the scheme of the rules, the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a post in the category.
[554 G H] In the instant case, even though the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service.
Respondents 4 to 16 have been rightly given seniority above the petitioners.
[555 A] |
minal Appeal No. 818 of 1985.
From the Judgment and Order dated 4.7.1985 of the Kerala High Court in Criminal Appeal No. 251 of 1982.
P.S. Poti and Ms. Malini Poduval for the Appellant.
M.T. George for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The appellant along with others was put on trial for offenses under sections 302 read with 149, 148, 323 of the Penal Code on the charge of committing the murder of Moideen Kutty (hereinafter referred to as the deceased).
The Trial Court on consideration of the 695 materials on record came to the conclusion that the charges leveled against the accused persons have not been established, beyond all reasonable doubt and on that finding acquitted the appellant as well others.
On appeal being filed on behalf of the State of Kerala the High Court convicted the appellant under section 302 of the Penal Code and sentenced him to undergo rigorous imprisonment for life.
So far another accused Alavi who had been acquitted by the Trial Court was also convicted by the High Court under section 323 of the Penal Code and sentenced to pay a fine of Rs. 250 and in default thereof to suffer simple imprisonment for a term of one month.
The acquittal of other accused persons was affirmed by the High Court by dismissal of the appeal against them.
The case of the prosecution is that on 16.9.1980 Mammed Kutty at 6.00 A.M. in the morning pelted stones at the house of the deceased.
At about 12.00 in the noon while Mammed Kutty and his brother Abdulla Kutty were passing in front of the house of the deceased, a protest was made by the deceased in respect of the morning incident.
They denied that any stone had been pelted by them.
It is the further case of the prosecution that at about 2 P.M. while the deceased was sitting with his wife (PW4) and others on the varandah of his house, five persons including the appellant came to his courtyard and challenged him to come out, if he wanted to beat aforesaid Mammed Kutty and Abdulla.
The deceased stepped out into his courtyard and asked the accused persons not to create a scene.
At this the appellant and the other accused (since acquitted) gave some blows to the deceased on his hand.
Thereafter the deceased raised his hand to give a blow to the appellant.
At this very moment, the appellant took out a dagger from his waist and gave an injury on the upper part of the chest of the deceased near the left shoulder and above the armpit.
The deceased ran towards the house of PW1 and fell on the varandah.
Thereafter the accused persons escaped.
The victim was removed to the Medical Hospital Calicut, where he was examined by PW9.
But soon thereafter he expired.
The First Information Report was lodged at 7.15 P.M.
After investigation the charge sheet was submitted against five accused persons.
At the trial prosecution examined four eye witnesses PW1 to PW4.
The doctor who held the post mortem examination was examined as PW8.
He found only one incised penetrating wound vertically placed on the front of left shoulder above the left armpit 'tailing 6 cm.
in length running towards from the lower sharp end.
" According to his opinion, "The an 696 died because the artery was cut. .
This injury became dangerous only because it cut the artery. .
In the cross examination PW8 stated that it was impossible to cause an injury like one which was found on the person of the victim by the assailant standing in front of the victim.
He also stated that the tailing of the injury show that either the knife was dragged after stabing or that the injury was caused during the course of the struggle.
According to him, if the accused had given a direct blow, as is normally done, there would not have been the tailing of the injury.
The learned counsel appearing for the appellant placed the statement made in the First Information Report, the evidence of the eye witnesses, in connection with the morning incident of pelting of stones, to show that it was a concoction and none had pelted any stone on the house of the deceased.
According to the learned counsel, if this part of the prosecution case is disbelieved then it shall have a bearing on the main occurrence itself.
It was also pointed out that the prosecution has suppressed real manner of occurrence in as much as one Abdulla on the side of the accused persons was first assaulted by the prosecution party on the same day at about 1.30 P.M. and he was hospitalised after having received the injuries.
That incident was an integral part of the occurrence which has not been disclosed by the prosecution.
In this connection our attention was drawn to the evidence of DW1 who has stated that he had examined the injuries on the person of one Abdulla on 16.9.1980 at 4.30 P.M. and found three injuries on his person, (i) A contusion on the left shoulder 4 x 2 cm, (ii) abrasion below the right collar bone 3 x 5 cm.
and (iii) injury on the outer side of the left ankle 4 x 3 cm.
He has also stated that the said Abdulla had alleged that he had been assaulted with a wooden stick at 1.30 P.M. the same day.
The Trial Court while acquitting the accused persons has attached great importance to the injury found on the person of aforesaid Abdulla and has drawn adverse inference against the prosecution case.
The High Court has rightly pointed out that merely non disclosure of the aforesaid superficial injuries on the person of Abdulla even if those injuries had been caused in the same occurrence, shall not in any manner affect the prosecution case: It is well settled that if the evidence of the eye witnesses are held to be reliable and inspire confidence then the accused cannot be acquitted solely on the ground that some superficial injuries found on the person of the accused concerned, had not been explained by the prosecution.
697 According to us, if the evidence of four eve witnesses including the evidence of the son and the wife of the deceased are accepted as reliable and trust worthy then the prosecution case cannot be rejected merely on .the ground that the incident of pelting of the stones on behalf of the accused in the early morning had not been proved or established or that some minor injuries on the person of Abdulla caused in the same occurrence had not been disclosed and explained by the prosecution.
So far the four eve witnesses are concerned they have been named in the First Information Report.
The First Information Report was lodged at 7.15 P.M. the same evening, within two hours of the death of the victim.
In the First Information Report the details of the occurrence was men tioned.
The version disclosed in the First Information Report has been supported by the eye witnesses before the Court.
The learned counsel appearing for the appellant could not point out any reason why their evidence against the appellant should not be accepted.
It may be pointed out that in the First Information Report itself PW1, the informant, stated that this appellant came to the house of the deceased and challenged him as to who was there to beat Abdulla and Muhammed Kutty.
He further stated that having heard this the deceased moved towards them and asked them to go back.
At that very moment this appellant and the other co accused Alavi gave him blows on his hand.
Thereafter the deceased tried to give counter blow to the appellant.
Then the appellant took out a knife from his waist and gave a blow from the said knife, to the deceased at his left collar bone.
The prosecution very fairly admitted that accused persons were not carrying any weapon in their hands and during the protest made, a sudden quarrel and fight took place between the prosecution party and the accused persons.
Even at trial evidence the eve witnesses have admitted this part of the version and have stated that first the appellant and the other co accused gave blows on the hand of the deceased.
The knife blow was given by the appellant when the deceased was trying to give a counter blow to the appellant.
There is no dispute that the appellant suddenly took out the knife during the course of the quarrel and fight from his waist.
From the evidence of doctor PW8 referred to above it appears that injury aforesaid could not have been caused by the assailant standing in front of the victim.
It could have been caused only during the struggle.
In view of the admitted position that a sudden fight and quarrel preceded the giving of the knife 698 blow by the appellant to the victim which in all probabilities was given not while the victim and the appellant were standing face to face but during a struggle between them, causing tailing of the injury, it shall not be just and proper to hold that appellant had an intention to cause the death of the victim.
Taking the evidence of the witnesses along with circumstances of the case, according to us, the appellant had the knowledge that injury which he was causing was likely to cause death but he had no intention to cause the death of the victim.
In such a circumstances it is not possible to uphold the conviction of the appellant under section 302 of the Penal Code.
Accordingly, the conviction and sentence passed against the appellant under section 302 of the Penal Code are set aside.
The appellant is convicted under section 304 part 11 of the Penal Code and sentenced to undergo rigorous imprisonment for seven years.
The appeal is allowed in part to the extent indicated above.
The bail bond is cancelled.
N.V.K. Appeal partly allowed. | The appellant along with others was tried for offences under Section 302 read with Sections 148, 149 and 323 of the Indian Penal Code.
The case of the prosecution was that on 16.9.80 Mammed Kutty at 6.00 a.m. in the morning pelted stones at the house of the deceased.
At about 12.00 noon while Mammed Kutty and his brother Abdulla Kutty were passing in front of the house of the deceased, a protest was made by the deceased in respect of the morning incident which was denied.
At about 2.00 p.m. when the deceased was sitting with his wife (PW 4) and others on the varandah of his house, 5 persons including the appellant came to his courtyard and challenged him to come out, if he wanted to beat Mammed Kutty and Abdulla.
The deceased stepped out into his courtyard and asked the accused persons not to create a scene, when the appellant and the other accused gave some blows to the deceased on his hand.
Thereafter the deceased raised his hand to give a blow to the appellant, when the appellant took out a dagger from his waist and gave an injury on the upper part of the chest of the deceased near the left shoulder and above the armpit.
The deceased ran towards the house of PW1 and fell on the varandah.
Therefore, the accused persons escaped.
The victim was removed to the Medical Hospital where he was examined by PW 9, but soon thereafter expired.
The F.I.R. was lodged at 7.15 p.m. and after investigation the chargesheet was submitted against the five accused persons.
At the trial the prosecution examined 4 eye witnesses, PW1 to PW4, and PW8 the doctor who held the post mortem examination.
693 The trial court on consideration of the materials on record came to the conclusion that the charges leveled against the accused persons had not been established beyond all reasonable doubt, and on that finding acquitted all the accused including the appellant.
Great importance was attached to the injury found on the person of Abdulla and adverse inference was drawn against the prosecution case.
On appeal by the State, the High Court convicted the appellant under Section 302 and sentenced him to undergo rigorous imprisonment for life.
Another accused (Alavi) was convicted under Section 323 of the Penal Code and sentenced to payment of fine of Rs. 250.
The acquittal of the remaining 3 accused persons by the Trial Court was affirmed.
The High Court held that mere non disclosure of the superficial injuries on the person of Abdulla even if those injuries had been caused in the same occurrence, do not in any manner affect the persecution case.
In the appeal to this court it was contended on behalf of the appellants that the statements made in the First Information Report, the evidence of the eye witnesses in connection with the morning incident of pelting of stones, show that it was a concoction and that none had pelted any stone on the house of the deceased, and that if this part of the prosecution case is disbelieved then it has a bearing on the main occurrence itself.
It was further submitted, that the prosecution had suppressed the real manner of occurrence in as much as Abdulla was first assaulted by the prosecution party on the same day at about 130 p.m. and that he was hospitalised after receiving the injuries, reliance being placed on the evidence of DW1 who had stated that he had examined the injuries on the person of Abdulla on 16.9.80 at 430 p.m.
Allowing the appeal in part, this Court, HELD:1.
It is well settled that if the evidence of the eye witnesses is held to be reliable and inspires confidence then the accused cannot be acquitted solely on the ground that some superficial injuries found on the person of the accused concerned, had not been explained by the prosecution.
[696 H] In the instant case, so far as the four eye witness are concerned they have been named in the FIR.
The FIR was lodged at 7.15 p.m., the same evening, within two hours of the death of the victim.
The FIR mentions the 694 details of the occurrence, and the version disclosed therein had been supported by the eye witness before the Court.
No reason has been shown as to why the evidence of these P.Ws should not be accepted.
[697 C] 2.The prosecution has admitted that the accused persons were not carrying any weapon in their hands and during the protest made, a sudden quarrel and fight took place between the prosecution party and the accused persons.
This part of the version had been admitted at the trial by the eye witnesses in their evidence, who also stated that first the appellant and the other co accused gave blows on the hand of the deceased and that the knife blow was given by the appellant when the deceased was trying to give a counter blow to the appellant.
[697 F] In view of the admitted position that a sudden right and quarrel preceded the giving of the knife blow by the appellant to the victim which in all probability was given not while the victim and the appellant were standing face to face but during struggle between them, causing tailing of the injury, it shall not be just and proper to hold that the appellant had an intention to cause the death of the victim, but only knowledge that injury which he was causing was likely to cause death.
In such a circumstance it is not possible to uphold the conviction of appellant under Section 302 of the Indian Penal Code.
It is therefore set aside, and the appellant convicted under Section 304 Part 11 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for 7 years.
[697 H,698 A C] |
minal Appeal No. 629 of 1985.
From the Judgment and Order dated 25.6.1985 of the Andhra Pradesh High Court in Criminal Appeal No. 637 of 1983.
K.Madhava Reddy, A. Subba Rao and A.D.N. Rao for the Appellants.
G. Prabhakar for the Respondent.
The Judgment of the Court was delivered by DR.ANAND, J.
The curse of dowry has claimed yet another victim.
Kundula Bala Subrahmanyam, the husband of the deceased Kundula Koti Nagbani and his mother Kundula Annapurna (mother in law of the deceased) have filed this appeal under Section 2(a) of the against the judgment of the High Court of Andhra Pradesh, Hyderabad, dated 25.6.1985, setting aside the judgment of acquittal passed by the Sessions Judge, East Godavari Division and convicting both the appellants for an offence under Section 302/34 IPC and sentencing each of them to suffer imprisonment for life.
On 23rd of August, 1981, between 12.30.1.00 p.m. on hearing screams and cry of deceased Kundula Koti Nagbani, at that time aged about 18 years, Pulapa Lakshmi PW2, Vempati Paparao PW3 and Vempati Radha PW4, rushed to the house of the appellant and found both the appellants along with the father of appellant No. 1 (father in law of the deceased) hurriedly coming out of the kitchen while the deceased was lying on the floor engulfed in flames.
Since, the appellants or the father in law of the deceased were making no attempts to put off the flames, PW2 asked appellant No. 1 to give her something so that she could extinguish the fire.
He, however, did not respond.
She then requested first appellant 's father to give something to her so that the fire could be put off.
The father of appellant No. 1 enquired if he should get a bucket of water.
PW2, thereupon, requested him to give either a bed sheet or a blanket.
The father of appellant No. 1 then brought out a bed sheet (Bontha) from the cot and 675 as he was passing it on, to PW2, the mother in law of the deceased, appellant No. 2, told her husband not to give the bontha to PW2.
PW2, in the meanwhile, took the bontha from the father of the first appellant and tried to extinguish the fire.
The deceased turned her side.
She was alive.
The deceased asked PW2 for some water.
Since, the petticoat of the deceased was burning, PW3, the father of PW2, who had also rushed along with her to the house of the appellant broke the thread of the petticoat to save her from further burning and threw away the burning garments In the process, he also received some burn injuries.
PW2 poured water into the mouth of the deceased and enquired from her as to what had happened.
The deceased told her that "her mother in law had poured kerosene over her and her husband had set fire to her".
The deceased again felt thirsty and asked for more water which was again given to her by PW2.
The above statement made by the deceased to PW2 was overheard by PW3 and some others, who had also reached on hearing the cries.
Vempati Nagabhushanam PW5, another immediate neighbor of the appellants living only about 2 yards away also heard the cries of the deceased and rushed to the house of the appellant.
He noticed PW3 was pulling out the petticoat of the deceased while PW2 was attempting to extinguish fire.
He saw PW2 pouring water into the mouth of the deceased.
He also heard the statement made by the deceased to PW2 about the manner in which she had been set on fire.
PW5 thereupon went away to inform the maternal uncle of the deceased at Malakapalli.
On the way, he met one Ramakrishna coming on a motor cycle and at his request Ramakrishna gave him a ride to Malakapalli.
On reaching the house of the maternal uncle of the deceased, they found the brother of the deceased Vempati Sreerama Krishna Sreeram PWl was also present there.
He conveyed to them the information regarding the burning of the deceased and also what he had heard the deceased telling PW2.
Ramarao and PWl then went on the same motorcycle to Dharmavaram.
PWl reached the house of the appellant and saw a number of persons including PWs 2 and 3 gathered there.
The deceased was lying on the floor and at that time she had no clothes on her.
He noticed that she had received burn injuries from her breasts downwards to her legs.
On seeing her plight, PW1 started crying and hitting his head against a pillar.
When the deceased noticed that PW1 had come, she asked PW2 to call her brother PWl inside.
PW2 thereupon went out and brought PW1 to the kitchen where the deceased took the palm of PWl into her own palms and told him in Hindi "please tell mother and father as I am 676 telling you.
My mother in law poured kerosene on me and my husband set fire.
You tell father and mother about this.
Don 't fight.
Anyhow I am dying.
" She also told her brother PW1 to take back the cash given to her and divide it amongst the sisters in equal share and get them married off to nice persons.
At this juncture, the first appellant, husband of the deceased came inside the kitchen and with folded hands begged the deceased for forgiveness saying that he would not repeat what he had done and therefore he may be pardoned.
PWl got wild and caught hold of the neck of the first appellant.
PW2 and PW3 rushed towards them and released the first appellant from the hold of PW1 and sent PWl to another uncle 's house and told the uncle that since PWl was in an agitated mood he should take care of him.
Within an hour, however, PWl went back to the house of the deceased and by that time, a local Doctor PW6, Dr. R. Radha krishnamurthy had arrived at the house and was giving first aid to her and she was lying on a cot in the verandah.
PW6 at about 3.30 p.m. advised the removal of the deceased to the Government Hospital at Kovvur.
A matador van was secured and at about 4.30 p.m. PW1, Ramarao, his maternal uncle, the wife of Ramarao and some other neighbors took the deceased to the Government Hospital at Kovvur in the matador van reaching there at about 5 p.m.
At about 5.30 p.m., Dr. K. Parameswaradas PW9 examined the deceased and declared her dead.
PWl thereupon went to the police station which is adjacent to the hospital alongwith his uncle and lodged the report exhibit
P4 with the Head Constable Md. Navabjani PW12.
A case under section 302 IPC was registered and information was sent to Inspector of Police G. Scendavce Rao PW14 on telephone.
After collecting a copy of the FIR, PW14 proceeded to the Government Hospital and from there went to the scene of occurrence.
He seized M.0 's 1 to 3, drew the site plan of the scene of occurrence and examined PWs 1 to 5 and PW9 at Dharmavaram.
He also held the inquest proceedings from 6.30 a.m. to 8.30 a.m. on August 24 1981 and after getting the postmortem conducted handed over the dead body to the family of the deceased.
PW9 Dr. K. Parameswaradas who conducted the postmortem examination in his report Ex.Pl8 noted extensive burns to the extent of 90% on the body of the deceased and opined that the deceased had died due to the extensive burns all over the body and that the injuries were sufficient in the ordinary course of nature to cause death.
During the investigation, the investigating officer made a request for the preservation of viscera of the deceased so that it could be sent for chemical examination, as according to the state 677 ment of PW6, the deceased had allegedly told him that she had consumed dettol to commit suicide and since she could not bear the pain she had set herself on fire.
The report of the chemical examiner exhibit
Pl6, however, revealed that no poison was detected and that the death had been caused due to extensive burns.
Further investigation into the case was, carried out by Md. Baduruddin PW15, Inspector of the Crime Branch.
During the investigation, the father of the deceased Venkataramana handed over letters Exs.
Pl P3 to the investigating officer.
Both the appellants had made themselves scarce and were not found in the village when search for them was made by the investigating officer.
The first appellant surrendered in the court on 10.11.1981 while the second appellant surrendered in the court on 7th of December, 1981.
After the investigation was over, challan was filed and both the appellants were sent up for trial in the Court of Sessions Judge East Godavari Division at Rajahmundry.
At the trial, the prosecution inter alia relied upon the following circumstances with a view to connect the appellant with the crime: (1) Motive; (2) Two dying declarations made to PW2 and to PW1; (3) Medical Evidence; (4) Conduct of the appellant immediately and after the occurrence; (5) Absconding of the appellants.
The appellants when examined under Section 313 of the Criminal Procedure Code denied their involvement and stated the case to be a false one.
They, however, produced no defence.
The learned Trial Court did not accept the prosecution version and held that there was no motive for the appellant to commit the crime; that the evidence of PWs 2 to 4 could not be relied upon; that PWI had made improvements in his statements recorded at the trial and, therefore, the oral dying declaration made to him could not be relied upon.
The Trial court also held that there had been unexplained delay in lodging report with the police.
The Trial Court placed reliance on the testimony of hostile 678 witness PW6 and held that the case was one of suicide and not of murder.
On those findings, the learned Sessions Judge acquitted both the appellants.
On an appeal, filed by the State, a Division Bench of the High Court of Andhra Pradesh set aside the judgment of the learned Sessions Judge and convicted both the appellants for an offence under Section 302/34 IPC.
Speaking for the Division Bench, K. Ramaswamy J. (as His Lordship then was) found no hesitation to hold PWl as a witness of truth and a wholly reliable witness and also opined that the evidence of 'PWs 2 and 3 was trustworthy and reliable.
The dying declarations made by the deceased to PW2 and subsequently to PWl were believed and relied upon.
It was held that report exhibit
P4 had been given by PWl immediately after the deceased was declared dead by the Doctor and therefore there was no delay much less unexplained delay in lodging the report.
While dealing with the conduct of the appellant, it was opined that their conduct was inconsistent with their innocence and consistent only with the hypothesis that appellant No. 2 had committed the act of pouring kerosene on the deceased and appellant No. 1 had lit fire.
With regard to the existence of motive, it was held that the appellants were actuated with a motive to do away with the life of the deceased for not getting the land registered in the name of the first appellant.
Finally, the High Court found that the chain of the established circumstances was complete and the circumstances were sufficient to conclusive establish that the appellants and the appellants alone had committed the crime of murder of the deceased.
The High Court held that the consideration of evidence on record and the reasoning of the Trial Court was most unsatisfactory and could not be sustained and therefore set aside the order of acquittal and convicted both the appellants for the offence under Section 302/34 IPC and sentenced each one of them to imprisonment for life.
Appearing for the appellants before us, Mr. Madhav Reddy, the learned Senior Counsel urged that since the Trial Court had acquitted the appellants, the High Court was not justified in recording an order of conviction as the findings recorded by the Trial Court could not be said to be perverse.
It was argued that the dying declarations were not worthy of reliance and the motive was feeble and not established.
Learned counsel submitted that the surrendering of the appellants themselves in the court on 10.11.1981 and 7.12.1981 itself was enough to show that they had no 679 guilty conscious and the prosecution was not justified in relying upon the conduct as an adverse conduct against the appellants.
While explaining the conduct of the appellants at the time of and after the occurrence, he submitted that since all neighbors had become hostile, out of fear the appellants did not act either to put off the fire or remove the deceased to the hospital.
In reply, learned counsel for the State argued that the findings of the Trial Court were not only conjectural but also perverse and the evidence of the witnesses was disbelieved on mere surmises.
It was submitted that the Trial Court did not property discuss the two dying declarations mad by the deceased and since the dying declarations have been proved by reliable evidence, those by themselves could form the basis of conviction of the appellants.
It was then submitted that the High Court after a careful appraisal of the evidence had rightly set aside the judgment of the Trial Court which suffered from illegality as well as manifest error and perversity.
Learned counsel submitted that the prosecution had established the case against the appellants beyond every reasonable doubt and their appeals deserve to be dismissed.
Admittedly, there is no eye witness in the case.
The case is sought to be established by the prosecution from circumstantial evidence.
In a case based on circumstantial, evidence, the settled law is that the circumstance from which the conclusion of guilt is drawn should be fully proved an these circumstances must be conclusive in nature.
Moreover, all the established circumstances should be complete and there should be no gap in the chain of evidence.
The proved circumstances must be consistent only wit the hypothesis of the guilt of the accused alone and totally inconsistent wit his innocence.
The courts have, therefore, the duty to carefully scrutinize the evidence and deal with each circumstance carefully and thereafter fin whether the chain of the established circumstances is complete or no before passing an order of conviction.
It is in the light of the above principles that we shall deal with various circumstances relied upon by the prosecution.
(1)Motive: In a case based on circumstantial evidence, motive as sums great significance as its existence is an enlightening factor in process of presumptive reasoning.
The motive in this case is alleged to be the greed of dowry.
680 On 18.5.1979, marriage between the appellant and the deceased was solemnised.
The deceased aged about 18 years was prosecuting her Intermediate course of study at that time.
She was the eldest of the five children of one Vempati Venkataramana, who at the relevant time was working as an Assistant Engineer with the Railways at Gorakhpur.
At the time of the marriage, the parents of the deceased had agreed to give Rs. 50,000 in cash, 50 sovereigns of gold and two acres of land as dowry.
The cash was paid at the time of the marriage itself alongwith 15 sovereigns of gold.
The parents of the deceased had promised to give the remaining 35 gold sovereigns and get the land also registered subsequently, though the possession of the land measuring about 3.70 acres was given to the appellant No. 1.
The mother in law of the deceased and her husband had been pressurising the deceased all along to bring the remaining sovereigns and also to get the land registered in the name of the first appellant.
She conveyed it to her mother PW7.
While the parents of the deceased agreed to get the land registered in the name of the deceased, the first appellant and his parents were insisting that the land should be got registered in his name and not in the name of the deceased.
Since that desire was not fulfilled, the deceased was being continuously harassed and ill treated.
A strick vigil was kept on her at the house of her in laws and she was not even allowed to meet anybody nor were the neighbors permitted to come and meet or talk to her.
She was being prevented from writing letters to her family also, but stealthy, she wrote letters Exs.
Pl 3 and got them posted through a neighbor.
The contents of those letters are rather revealing and expose the extent of the harassment to which the deceased was being subjected to by her mother in law and her husband.
After seeing the contents of the letters and with a view to find out the cause of her distress, PW1, her brother went to Dharmavaram on August 22, 1981, to the house of the deceased.
The deceased, however, was so terrorised that she could not speak to him freely.
She was surrounded by her husband and her mother in law, who did not talk to PWl at all to show their indifference.
From the evidence of the prosecution witnesses and particularly that of the mother of the deceased PW7, the immediate provocation was the insistence of the appellants that the land be got registered in the name of the husband and the reluctance ' of the parents of the deceased to do so and instead their desire to get it registered in the name of the deceased.
The oral evidence led by the prosecution in this behalf is wholly consistent.
In her letter exhibit
P2, the 681 deceased had clearly mentioned that she was getting her letters posted through PW4.
She requested her sisters to write letters to her in Hindi so that her in laws, who did not know Hindi, could not know what was being written.
In one of her letters, a part of which was addressed to her sister, she wrote: ". .I am not going to anybody 's house.
One day I went to the house of sister in law Radha to deliver the letter secretly.
Their mood was changed on account of going to their house.
That is why I stopped going.
" Do not mention even a single word in your letter that I have been writing to you.
Ask mother not to worry.
On hearing about your results write a letter without fail.
If I get an opportunity I will definitely write a letter. " In her letter exhibit
P1 to her father, she wrote: Father I am feeling much bore here because no one come to our house nor I am allowed to go their house Please always write letters.
So that I may be satisfied in seeing your letters.
If I may not give reply to your letter then you please don 't mind it.
You know here 's conditions.
Rest is O.K. Father you also take care of your health.
" In the same letter while addressing her sisters, she wrote: The lock is opened.
I am writing this letter secretly.
In reply do not write that you have received the letter.
If you write like that these people will become more angry She also wrote to her sister: not at house and there is no watch over me.
I am getting the letters posted through sister in law Radha secretly.
You write letters mostly in Hindi only so that even if they chanced to fall in the hands of any one, they cannot understand The tenor of her letters disclose the distressing state of affairs at the house 682 of her in laws.
These letters coupled with the evidence of her mother go to show how the deceased was being tormented and harassed.
It is indeed a shame and pity that within just two years of her marriage, her dream of a happy married life was shattered and she found herself almost as a prisoner and 'a frightened chicken ' who had to write letters to her parents and sisters 'secretly ' for the fear that if her in laws came to know they would "become more angry '.
She had to request her sisters to reply to her letters in Hindi so that "even if they chanced to fall in the hands of anyone, they cannot understand".
One can only imagine the plight of this young bride and the sadistic behavior born out of greed for dowry of her husband and mother in law.
Not having been able to get the land registered in the name of the first appellant appears to have frustrated them to the extent of murdering the young wife.
The evidence led by the prosecution to establish the existence of motive is wholly reliable and is also consistent.
The prosecution has successfully established that the appellants had strong and compelling motive to commit the crime because of her parents not agreeing to get the land registered in the name of the first appellant and their insistence to have the land registered in the name of their own daughter instead.
The motive, has, been conclusively established by the prosecution and we have no hesitation to hold that the prosecution has succeeded in establishing the existence of the motive for both the appellants to commit the crime conclusively and positively and we agree with the finding of the High Court in that behalf.
2.Dying Declarations: The next piece of circumstantial evidence relied upon by the prosecution are two dying declarations made by the deceased.
According to the prosecution case, the deceased made the first dying declara tion before PW2 when she after hearing her cries came to the house and found both the appellants and the father of appellant No. 1 coming out of the kitchen and the deceased lying on the floor engulfed in flames.
According to PW2, the deceased told her that her mother in law had poured kerosene on her and her husband had set her on fire.
This statement was also heard by PW3 & PW5.
The second dying declaration was made by the deceased to her brother PW1, after he was called by her to the kitchen.
The deceased, according to the prosecution case, on meeting her brother, took the palm of PWl into her own palms and inter alia told to him that "her mother in law poured kerosene on her and her husband set fire to her".
The statement made by the deceased to 683 PW1 was in Hindi.
Both the statements, as noticed above, relate to the circumstances leading to the cause of her death, as according to the medical evidence, the deceased died of 90% burn injuries.
Both the dying declarations are oral.
They have been made to friends and to the brother of the deceased respectively.
In view of the close relationship of the witnesses to whom the oral dying declarations were made, it becomes necessary for us to carefully scrutinize and appreciate the evidence of the witnesses to the dying declaration.
We have already adverted to the evidence of these witnesses (PW1, PW2, PW3) while narrating the prosecution case.
Indeed, PWl is the brother of the deceased and therefore a very close relation, but mere relationship cannot be a ground to discard his testimony, if it is otherwise found to be reliable and trustworthy.
In the natural course of events, the deceased who was on the verge of her death would have conveyed to her near and dear ones the circumstances leading to her receiving the burn injuries.
PW1 has given a very consistent statement and has reproduced the words of the deceased clearly and truthfully.
Nothing has been brought out in the cross examination to discredit his testimony at all.
He had at the earliest point of time disclosed as to what the deceased had told to him.
The discrepancy pointed out by learned counsel for the appellants as to whether the dying declaration was made to him by his sister when she was lying on the cot in the verandah, as stated in FIR Ex.P4, or while she was lying on the floor of the kitchen, is of an insignificant nature and could be either out of confusion or the gap of time between the making of the two statements.
Moreover, PW1 was not at all cross examined on the alleged discrepancy when he gave evidence in Court.
No explanation whatsoever was sought from him about the so called discrepancy.
PW1, the brother of the deceased appears to us to be a truthful witness and his testimony has impressed us.
He did not implicate the father of the appellant and gave evidence only about what he was actually told by his sister.
From our appreciation of the evidence of PW1, we agree with the view expressed by the High Court that "considering the case from all perspectives we have no hesitation to hold that P.W.1 is a witness of truth worthy of acceptance and so he is wholly a reliable witness.
exhibit
P4 is a voluntary statement given by P.W.1 and it lends corroboration to the evidence of P.W.1.
" Coming now to the evidence of PWs2 and 3.
The substratum of their evidence with regard to the dying declaration is that while that they were 684 in the kitchen of their own house, taking tea, they heard the cry of a lady and rushed to the house of the deceased, being her close neighbors.
They saw the deceased engulfed in flames sprawled on the floor of the kitchen.
They also saw both the appellants as well as the father of appellant No. 1 coming out of the kitchen to the verandah.
The distance between the house of PWs2 and 3 from the house of appellant is only 2 yards.
After PW2 took a bontha from the father in law of the deceased, to the annoyance of appellant No. 2, with a view to extinguish the fire, the deceased, on enquiry by the witness as to what had happened told her that 'my mother in law poured kerosene on me and my husband set me on fire".
The deceased had not implicated her father in law, though he was also present there ' PW3, father of PW2, had assisted PW2 to extinguish the flames and it was he who broke the string of the petticoat of the deceased and threw it away.
In the process PW3 himself suffered burn injuries.
His injuries were examined by the Doctor and found to be caused by fire.
The Trial Court doubted the testimony of PW3 on the ground that he had made some improvement in his evidence in court when he stated that he had heard the deceased screaming and saying that she was "being killed".
He had not stated so in his statement recorded during the investigation.
This, in our opinion, is hardly an improvement of any consequence because both in his statement in court as well as the one recorded under Section 161 Cr.
PC he has deposed that it was on hearing the 'screams ' of the deceased that he and his daughter rushed to the house of the decased.
In any event the so called improvement was not sufficient to discard his testimony.
Despite searching cross examination of both these witnesses, nothing has been brought out in their cross examination to discredit them or doubt their veracity at all.
After carefully analysing their evidence, we find PWs 2 and 3 as witnesses worthy of credence and trustworthy.
From the evidence of PWs 1, 2 and 3, both the dying declarations are proved to have been made by the deceased.
They are the statements made by the deceased and relate to the circumstances leading to her death.
Both the dying declarations are consistent with each other and appear to have been made by the deceased voluntarily and in the natural course of events.
They have a ring of truth about them.
Section 32(1) of the Evidence Act is an exception to the general rule that hearsay evidence is not admissible evidence and unless evidence is tested by cross examination, it is not credit worthy.
Under Section 32, when 685 a statement is made by a person, as to the cause of death or as to any of the circumstances which result in his death, in cases in which the cause of that person 's death comes into question, such a statement, oral or in writing, made by the deceased to the witness is a relevant fact and is admissible in evidence.
The statement made by the deceased, called the dying declaration, falls in that category provided it has been made by the deceased while in a fit mental condition.
A dying declaration made by person on the verge of his death has a special sanctity as at that solemn moment, a person is most unlikely to make any untrue statement.
The shadow of impending death is by itself the guarantee of the truth of the statement made by the deceased regarding the causes or circumstances leading to his death.
A dying declaration, therefore, enjoys almost a sacrosanct status, as a piece of evidence, coming as it does from the mouth of the deceased victim.
Once the statement of the dying person and the evidence of the witnesses testifying to the same passes the test of careful scrutiny of the courts, it becomes a very important and a reliable piece of evidence and if the court is satisfied that the dying declaration is true and free from any embellishment such a dying declaration, by itself, can be sufficient for recording conviction even without looking for any corroboration.
If there are more than one dying declarations, then the court has also to scrutinise all the dying declarations to find out if each one of these passes the test of being trustworthy.
The Court must further find out whether the different dying declarations are consistent with each other in material particulars before accepting and relying upon the same.
Having read the evidence of PWs 1 3 with great care and attention, we are of the view that their testimony is based on intrinsic truth.
Both the dying declarations are consistent with each other in all material facts and particulars.
That the deceased was in a proper mental condition to make the dying declaration or that they were voluntary has neither been doubted by the defence in the course of cross examination of the witnesses nor even in the course of arguments both in the High Court and before us.
Both the dying declarations have passed the test of creditworthiness and they suffer from no infirmity whatsoever.
We have therefore no hesitation to hold that the prosecution has successfully established a very crucial piece of circumstantial evidence in the case that the deceased had voluntarily made the dying declarations implicating both the appellants and disclosing the manner in which she had been put on fire shortly before her death.
This circumstance, therefore, has been established by the prosecution beyond every reasonable 686 doubt by clear and cogent evidence.
3.Medical Evidence: The next circumstance relied upon by the prosecution is the medical evidence which has been provided by the testimony of Dr. Parameswaradas PW9.
He deposed that the deceased had died of 90% burns and that kerosene smell was emitting from the deadbody.
According to the report of the chemical examiner, no poison was found in the viscera.
The chemical examiner 's report, coupled with the other evidence on record belies the suggestion made by the defence during the cross examination of some witnesses that with a view to commit suicide, the deceased had drunk dettol and when she could not bear the pain on account of consumption of dettol, she herself poured kerosene oil on herself and set herself on fire.
Rightly, this defence case was not pursued before us with any amount of seriousness by the learned counsel for the appellants.
The medical evidence, therefore fully corroborates the prosecution case and lends support to the dying declaration and more particularly the manner in which the deceased had been set on fire.
Conduct of the appellant immediately and after the evidence: The conduct of the appellants, son and mother, both at the time when the deceased lay burning on the floor of the kitchen and afterwards till she succumbed to the burn injuries is the next circumstance relied upon by the prosecution to connect the appellants with the crime.
From the testimony of PWs 2, 3 and 4, who are the immediate neighbors of the appellant and the deceased, they had heard the cry of the deceased and rushed to her house.
PWs 2 and 3 found the deceased lying on the floor of the kitchen engulfed in flames while both the appellants and father in law of the deceased were coming out of the kitchen in the verandah.
None of the two appellants or the father in law made any attempt whatsoever to extinguish the fire and save the deceased.
The raised no alarm.
They stood there as if waiting for her death, rather than make any effort to save her.
Their conduct, thus, runs consistent with the hypothesis of their guilt and betrays that of an innocent persons.
In their statements under Section 313 of Cr. PC they did not deny their presence in the house at the time of the occurrence, but denied their involvement in the crime.
The normal human conduct of any person finding someone engulfed in flames would be to make all efforts to put off the flames and save the life of the person.
Though, the appellants were the closest relations 687 of the deceased, they did not do anything of the kind.
Let alone making any effort to extinguish the fire, according to PW2 when the father in law of the deceased, at her request, was giving her the bontha to extinguish the flames, appellant No. 2, the mother in law of the deceased, objected to the same.
This conduct speaks volumes about the extent of hatred which the mother in law exhibited towards her daughter in law.
They rendered no first aid to the deceased.
Their conduct at the time of the occurrence, therefore, clearly points towards their guilt and is inconsistent with their ingnocence the appellants did not even accompany the deceased to the hospital in the matador van.
Had the husband not been a party to the crime, one would have expected that he would be the first person to take steps to remove the deceased to the hospital and leave no stone unturned to save her life.
An innocent mother in law would have also done the same, even if she had no love or emotional feelings for her daughter in law.
Neither the husband nor the mother in law of the deceased took any steps to remove the deceased to the hospital, let alone accompany her to the hospital.
This conduct also is inconsistent with their innocence and consistent only with the hypothesis, as stated by the deceased in her dying declarations, that the mother in law had poured kerosene on her while her husband had lit fire and put her on flames.
Mr. Reddy, the learned senior counsel appearing for the appellants submitted that since the neighbors and other relations of the deceased had almost taken over the house and the person of the daughter in law, the appellants were afraid of being beaten and as such they rendered no aid to the deceased needs a notice only to be rejected.
No suggestion whatsoever on these lines was made to any of the witnesses and in any event such an explanation betrays common sense.
Since, the deceased had admittedly suffered burn injuries in the kitchen of her house, there was an obligation on the part of the appellants and the father in law of the deceased, who have admitted their presence in the house at the time of occurrence, to explain the circumstances leading to the deceased dying of 90% burn injuries.
None has been offered.
The theory of suicide was put up only as an argument of despair.
While discussing the motive and the dying declarations, we have come to the conclusion that the deceased died as a result of the designed move on the part of both the appellants to put an end to her life and she did not commit suicide as was sought to be suggested during cross examination by the defence to some witnesses.
The theory of suicide has no legs to stand upon.
The conduct of the appellants who did not try to extinguish the fire or 688 render any first aid to her, also totally betrays the theory of suicide and we agree with the High Court that the theory as set up by the appellants is highly unbelievable or acceptable.
The prosecution has, thus, successfully established that the conduct of both the appellants both at the time of the occurrence and immediately thereafter is consistent only with the hypothesis of the guilt of the appellants and inconsistent with their innoncence.
5) Absconding.
Prosecution has also relied upon the circumstances of the absconding of the appellants to prove its case.
A closer link with the conduct of the appellants both at the time of the occurrence and immediately thereafter is also the circumstance relating to their absconding.
Md. Badruddin PW15, the investigating officer, deposed that he had taken up the investigation of the case and having examined PWsl 4 had caused search to be made for the accused but they were not found in the village and despite search, they could not be traced.
Appellant No. 1 surrendered before the court on 10.11.1981 while appellant No. 2 surrundered in the court on 7.12.1981.
No explanation, worth the name, much less a satisfactory explanation has been furnished by the appellants about their absence from the village till they surrendered in the court in the face of such a gruesome 'tragedy '.
Indeed, absconding by itself may not be a positive circumstance consistent only with the hypothesis of guilt of the accused because it is not unknown that even innocent persons may run away for fear of being falsely involved in a criminal case and arrested by the police, but coupled with the other circumstances which we have discussed above, the absconding of the appellants assumes importance and significance.
The prosecution has successfully established this circumstance also to connect the appellants with the crime In view of the above discussion and our appraisal and analysis of the evidence on record, we have no hesitation to hold that the.prosecution has successfully established all the circumstances appearing in the, evidence against the appellants by clear, cogent and reliable evidence and the chain of the established circumstances is complete and has no gaps whatsoever and the same conclusively establishes that the appellants and appellants alone committed the crime of murdering the deceased on the fateful day in the manner suggested by the prosecution.
All the established circumstances are consistent only with the hypothesis that it was the appellants alone 689 who committed.the crime And the circumstances are inconsistent with any hypothesis other than their guilt.
It is most unfortunate that the husband of the deceased not only failed to perform his duties and obligations as husband to protect and take care of his wife as per the marriage vows and instead joined his mother in the most degrading and cold blooded murder of the young innocent bride.
Of late there has been an alarming increase in cases relating to harassment, torture, abetted suicides and dowry deaths of young innocent brides.
This growing cult of violence and exploitation of the young brides, though keeps on sending shock waves to the civilised society whenever it happens, continues unabated.
There is a constant erosion of the basic human values of tolerance and the spirit of "live and let live '.
Lack of education and economic dependence of women have encouraged the greedy perpetrators of the crime.
It is more disturbing and sad that in most of such reported cases it is the woman who plays a pivotal role in this crime against the younger woman, as in this case, with the husband either acting as a mute spectator or even an active participant in the crime, in utter disregard of his matrimonial obligations.
In many cases, it has been noticed that the husband, even after marriage, continues to be 'Mamma 's baby and the umbilical cord appears not to have been cut even at that stage.
We are here tempted to recall the observations of R.N. Mishra, J. (as His Lordship then was) in State (Delhi Administration) vs Laxman & Ors.
Appeals 93 and 94 of 1984 decided on 23.9.1985, while dealing with a bride burning case.
It was observed: "Marriage, according to the community to which parties belong, is sacramental and is believed to have been ordained in heaven.
The religious rites performed at the marriage altar clearly indicate that the man accepts the woman as his better half by assuring her protection as guardian, ensuring food and necessaries of life as the provider, guaranteeing companionship as the mate and by resolving that the pleasures and sorrows in the pursuit of life shall be shared with her and Dharma shall be observed.
If this be the concept marriage, there would be no scope to look for worldly considerations, particularly dowry.
When a girl is transplanted from her natural setting into 690 an alien family, the care expected is bound to be more than in the case of a plant.
Plant has fife but the girl has a more developed one.
Human emotions are unknown to the plant life.
In the growing years in the natural setting the girl now a bride has formed her own habits, gathered her own impressions, developed her own aptitudes and got used to a way of life.
In the new setting some of these have to be accepted and some she has to surrender.
This process of adaptation is not and cannot be one sided.
Give and take, live and let live, are the ways of life and when the bride is received in the new family she must have a feeling of welcome and by the fond bonds of love and affection, grace and generosity, attachment and consideration that she may receive in the family of the husband, she will get into a new mould; the mould which would last for her life.
She has to get used to a new set of relationships one type with the husband, another with the parents in law, a different one with the other superiors and yet a different one with the younger ones in the family.
For this she would require loving guidance.
The elders in the family, including the mother in law, are expected to show her the way.
The husband has to stand as a mountain of support ready to protect her and espouse her cause where she is on the right and equally ready to cover her either by pulling her up or protecting her willingly taking the responsibility on to himself when she is At fault.
The process has to be a natural one and there has to be exhibition of cooperation and willingness from every side.
Otherwise how would the transplant succeed?" Awakening of the collective consciousness is the need of the day.
Change of heart and, attittide is what is needed.
If man were to regain his harmony with others and replace hatred, greed, selfishness and anger by mutual love, trust and understanding and if woman were to receive education and become economically independent, the possibility of this pernicious social evit dying a natural death may not remain a dream only.
The legislature, realising the gravity of the situation has amended the laws and provided for stringent punishments in such cases and even permitted the raising of presumptions against an accused in cases of unnatural deaths of 691 the brides within the first seven years of their marriage.
, The was enacted in 1961 and has been amended from time to time, but this piece of soicial legislation, keeping in view the growing menance of the social evil also does not appear to have served much purpose as dowry seekers are hardly brought to book and convictions recorded are rather few.
Laws are not enough to combat the evil.
A wider social movement of educating women of their rights, to conquer the menance, is what is needed more particularly in rural areas where women are still largely uneducated and less aware of their rights and fall an easy prey to their exploitation.
The role of courts, under the circumstances assumes greater importance and it is expected that the courts would deal with such cases in a more realistic manner and not allow the criminals to escape on account of procedural technicalities or insignificant lacunas in the evidence as otherwise the criminals would receive encouragement and the victims of crime would be totally discouraged by the crime going unpunished.
The courts are expected to be sensitive in cases involving crime against women.
The verdict of acquittal made by the Trial Court in this cast is an apt illustration of the lack of sensitivity on the part of the Trial Court.
It recorded the verdict of acquittal on mere surmises and conjectures and disregarded the evidence of the witnesses for wholly insufficient and insignificant reasons.
It ignored the vital factors of the case without even properly discussing the same.
The High Court was, therefore, perfectly justified in convicting the appellants for the offence of murder punishable under Section 302 readwith Section 34 IPC and sentencing each one of them to suffer imprisonment for life.
We uphold the conviction and sentence of the appellants for the offence under Section 302/34 IPC and dismiss their appeal.
The appellants were directed to be released on bail by this Court on 30.3.1989.
Their bail bonds are cancelled and they are directed to be taken in to custody to suffer the remaining period of their sentence.
V.P.R. Appeal dismissed. | The prosecution case was that on 23.8.1981 between 12 30 1.00 p.m., on hearing screams and cry of the deceased, aged about 18 years, P.W.2 alongwith her father PW3, and PW4 rushed to the house of the appellant They saw the father of appellant No. 1 (father in law of the deceased) alongwith the husband and mother in law of the deceased hurriedly com ing out of the kitchen while the deceased was lying on the floor engulfed in flames.
As the appellant No. 1, did not respond to the request of PW2 to give her something to extinguish the fire, PW2 requested the father of the appellant No. 1 to give a bed sheet or blanket while the father of the appellant No. 1 was passing on a bed sheet to PW2, the appellant No. 2 (mother in law of the deceased) objected.
In the meanwhile PW2 took the bed sheet from the father of the appellant No. 1 and tried to extinguish the fire.
The deceased asked PW2 for some water.
PW3 removed the burning petticoat from the body of the deceased to save her from further burning.
While doing so he also received some burn injuries.
PW2 poured water into the deceased 's mouth and enquired from her as to what had happened.
667 The deceased told PW2 that her mother in law had poured kerosene over her and her husband had set fire to her.
The deceased asked for more water, which was again given to her by PW2.
The deceased 's statement made to PW2 was overheard by PW3 PW5 and some others who also reached the spot on hearing her cries.
PW5 went away to inform the matenal uncle of the deceased with one Ramakrishna on his motor cycle.
There PW5 found PW1, the brother of the deceased and informed about the burning of the deceased and also what he had heard the deceased telling PW2.
PW1 reached the house of the appellant with Ramakrishna on his motor cycle.
He saw a number of persons including PWs 2 and 3 gathered there.
The deceased was lying on the floor and she had no clothes on her.
PWl noticed that she had received burn injuries from her breasts downwards to her legs.
On seeing her plight, PWl started crying and hitting his head against a piller.
When the deceased noticed PW1 had come, she asked PW2 to bring her brother inside.
PW2 went out and brought PWI to the kitchen.
The deceased took the palm of her brother, PWl into her own palms and told him to tell mother and father that her mother in law poured kerosene on her and her husband set her or fire.
She requested him that he should not fight, "anyhow she was dying." She also told PWl to take back the cash given to her and to divide it amongst her sisters in equal share and to get them married to nice persons.
The appellant No. 1, the husband of the deceased came inside the kitchen with folded hands and begged her for forgiveness saying that he would not repeat what he had done.
PWI got wild and caught hold of the neck of the appellant No. 1.
FIW2 and PW3 rushed towards them and released the appellant No. 1 from the hold of PW1.
They sent PWI to another uncle 's house and told the uncle to take care of PW1.
When PWI returned to the house of the deceased after one hour he saw that PW6, a local Doctor, was giving first aid to the deceased and she was lying on a cot in the verandah.
PW6 advised at about 3.30 p.m. to remove the deceased to the Government Hospital.
The deceased was brought to the hospital at about 5 p.m.
At about 5.30 p.m., PW9, a doctor examined the deceased and declared her dead.
PWl along with his uncle went to the Police Station, adjacent to the hospital and lodged the FIR.
A case under section 302 IPC was registered 668 and police investigation was started.
Both the appellants were not found in the village when search for them was made by the investigating officer.
The appellant No. 1 surrendered in the Court on 10.11.1981 while the appellant No. 2 surrendered in the Court on 7.12.1981.
The Trial Court held that there was no motive for the appellant to commit the crime; that the evidence of PWs 2 to 4 could not be relied upon; that PW1 had made improvements in his statements recorded at the trial and, therefore the oral dying declaration made to him could not be relied upon.
The Trial Court also held that there was unexplained delay in lodging report with the policy.
It acquitted the appellants, holding that the case was one of suicide and not of murder.
The State filed appeal in the High Court.
The High Court held that the chain of the established circumstances was complete and the circumstances were sufficient to establish that the appellants alone had committed the crime of murder of the deceased.
The High Court convicted both the appellants for the offence under section 302/34 IPC and sentenced each one of them to imprisonment for life.
Hence this appeal before this Court under section 2(a) of the .
The appellants contended that since the Trial Court had acquitted the appellants, the High Court was not justified in recording an order or conviction, as the findings recorded by the Trial Court could not be said to be perverse; that the dying declarations were not worthy of reliance and the motive was feeble and not established; that the surrendering of the appellants themselves in the court on 10.11.1981 and 7.12.1981 itself was enough to show that they had no guilty conscious and the prosecution was not justified in relying upon this conduct as an adverse conduct against the appellants; and that since all neighbors had become hostile, out of fear the appellants did not act either to put off the fire or remove the deceased to the hospital.
The respondent State submitted that the findings of the Trial Court were not only conjectural but also perverse and the evidence of the wit 669 nesses was disbelieved on mere surmises; that the Trial Court did,not properly discuss the two dying declarations made by the deceased and since the dying declarations have been proved by reliable evidence, these by themselves could form the basis of conviction of the appellants; that the High Court after a careful appraisal of the evidence had rightly set aside the judgment of the Trial Court which suffered from illegality as well as manifest error and perversity,, and that the prosecution had established the case against the appellants beyond every reasonable doubt and their appeal deserved to be dismissed.
Dismissing the appeal, this Court, HELD:1.01.
In a case based on circumstantial evidence, the settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and these circumstances must be conclusive in nature.
Moreover, all the established circumstances should be complete and there should be no gap in the chain of evidence.
The proved circumstances must be consistent only with the hypothesis of the guilt of the accused alone and totally inconsistent with his innocence.
The courts have, therefore, the duty to carefully scrutinize the evidence and deal with each circumstance carefully and thereafter find whether the chain of the established circumstances is complete or not before passing an order of conviction.
[679 E F] 1.02.In a case based on circumstantial evidence, motive assumes great significance as its existence is an enlightening factor in a process of presumptive reasoning.
The motive in this case is alleged to be the greed of dowry.
[679 H] 1.03.The evidence led by the prosecution to establish, the existence of motive is wholly reliable and is also consistent.
The prosecution has successfully established that the appellants had strong and compelling motive to commit the crime because of her parents not agreeing to get the land registered in the name of the first appellant and their insistence to have the land registered in the name of their own daughter instead.
The motive, has, been conclusively established by the prosecution.
[682 D] 1.04.Both the dying declarations are oral.
They have been made to friends and to the brother of the deceased respectively.
In view of the close relationship of the witnesses to whom the oral dying declarations were 670 made, it becomes necessary for the court to carefully scruitinize and appreciate the evidence of the witnesses to the dying declarations [683.
B] 1.05.PW1 is the brother of the deceased and therefore a very close relation, but mere relationship cannot be a ground to discard his testimony, if it is otherwise found to be reliable and trustworthy.
In the natural course of events, the deceased who was on the verge of her death would have conveyed to her near and dear ones the circumstances leading to her receiving the burn injuries.
PW1 has given a very consistent statement and has reproduced the words of the deceased clearly and truthfully.
Nothing has been brought out in the cross examination to discredit his testimony at all.
[683 C D] 1.6.Despite searching cross examination of both PW2 and PW3, nothing has been brought out in their cross examination to discredit them or doubt their veracity at all.
After carefully analysing their evidence, it is found that PWs 2 and 3 as witnesses worthy of credence and trustworthy.[684 F] 1.07.From the evidence of PWs 1,2 and 3, both the dying declarations are provedto have been made by the deceased.
They are the statements made by thedeceased and relate to the circumstances leading to her death.
Both the dying declarations are consistent with each other and appear to have been made by the deceased voluntarily and in the natural course of events.
They have a ring of truth about them.
[684 G] 1.08The medical evidence, fully corroborates the prosecution case and lendssupport to the dying declaration and more particularly the manner inwhich the deceased had been set on fire.[686 D] 1.09.The normal human conduct of any person finding someone engulfed in flames would be to make all efforts to put off the flames and.
save the life of the person.
Though, the appellants were the closest relations of the deceased, they did not do anything of the kind.
They rendered no first aid to the deceased.
Their conduct at the time of the occurrence, therefore, clearly points towards their guilt and is inconsistent with their innocence.
The appellants did not even accompany the deceased to the hospital in the matador van.
Had the husband not been a party to the crime, one would have expected that he would be the first person to take steps to remove the deceased to the hospital and leave no stone unturned 671 to save her life.
An innocent mother in law would have also done the same, even if she had no love or emotional feelings for her daughter in law.
Neither the husband nor the mother in law of the deceased took any steps to remove the deceased to the hospital let alone accompany her to the hospital.
This conduct also is inconsistent with their innocence and consistent only with the hypothesis, as stated by the deceased in her dying declarations, that the mother in law had poured kerosene on her while her husband had lit fire and put her on flames.
[686 H, 687 A D] 1.10.The prosecution has, thus, successfully established that the conduct ofboth the appellants both at the time of the occurrence and immediatelythereafter is consistent only with the hypothesis of the guilt of the appellants and inconsistent with their innocence.
[688 B] 1.11.Absconding by itself may not be a positive circumstance consistent only with the hypothesis of guilt of the accused because it is not unknown that even innocent persons may run away for fear of being falsely involved in a criminal case and arrested by the police, but coupled with the other circumstances, the absconding of the appellants assumes Importance and significance.
The prosecution has successfully established this circumstance also to connect the appellants with the crime.
[688 E F] 1.12.The prosecution has successfully established all the circumstances appearing in the evidence against the appellants by clear, cogent and reliable evidence and the chain of the established circumstances is complete and has no gaps whatsoever and the same conclusively establishes that the appellants and appellants alone committed the crime of murdering the deceased on the fateful day in the manner suggested by the prosecution.
All the established circumstances are consistent only with the hypothesis that it was the appellants alone who committed the crime and the circumstances are inconsistent with any hypothesis other than their guilt.
[688 G H, 687 A] 2.01.Under Section 32, when a statement Is made by a person, as to the cause of death or as to any of the circumstances which result In his death, in cases in which the cause of that person 's death comes into question, such a statement, oral or in writing, made by the deceased to the witness is a relevant fact and is admissible in evidence.
The statement made by the deceased, called the dying declaration, falls in that category provided it has been made by the deceased while in a lit mental condition.
[684 H, 685 A B] 672 2.02.A dying declaration made by person on the verge of his death has a special sanctity as at that solemn moment, a person is most unlikely to make any untrue statement The shadow of impending death is by itself the guarantee of the truth of the statement made by the deceased regarding the causes or circumstances leading to his death.
A dying declaration, therefore, enjoys almost a sacrosanct status, as a piece of evidence, coming as it does from the mouth of the deceased victim.
Once the statement of the dying person and the evidence of the witnesses testifying to the same passes the test of careful scrutiny of the courts, it becomes a very important and a reliable piece of evidence and if the court is satisfied that the dying declaration is true and free from any embelishment such a dying declaration, by itself, can be sufficient for recording conviction even without looking for any coroboration.
If there are more than one dying declarations, then the court has also to scrutinise all the dying declarations to find out if each one of these passes the test of being trustworthy.
The Court must further find out whether the different dying declarations are consistent with each other in material particulars before accepting and relying upon the same.
[685 C E] 2.03.Both the dying declarations are consistent with each other in all material facts and particulars.
That the deceased was in a proper mental condition to make the dying declaration or that they were voluntary has neither been doubted by the defence in the course of cross examination of the witnesses nor even in the course of arguments both in the High Court and before this Court.
Both the dying declarations have passed the test of credit worthiness and they suffer from no infirmity whatsoever.
[685 F G] 2.04.The prosecution has successfully established a very crucial piece of circumstantial evidence in the case that the deceased had voluntarily made the dying declarations implicating both, the appellants and disclosing the manner in which she had been put on fire shortly before her death.
This circumstance, therefore, has been established by the prosecution beyond every reasonable doubt by clear and cogent evidence.
[685 G H] 3.01.There has been an alarming increase in cases relating to harassment, torture, abetted suicides and dowry deaths of young innocent brides.
This growing cult of violence and exploitation of the young brides, though keeps on sending shock waves to the civilised society whenever it happens, continues unabated.
There is a constant erosion of the basic 673 human values of tolerance and the spirit of "live and let live '.
Lack of education and economic dependence of women have encouraged the greedy perpetrators of the crime.
It is the woman who plays a pivotal role in this crime against the younger woman, as in this case, with the husband either acting as a mute spectator or even an active participant in the crime, in utter disregard of his matrimonial obligations.
[689 C D] 3.02.Awakening of the collective consciousness is the need of the day.
Change of heart and attitude is what is needed.
If man were to regain his harmony with others and replace hatred, greed, selfishness and anger by mutual love, trust and understanding and if woman were to receive education and become economically independent, the possibility of this pernicious social evil dying a natural death may not remain a dream only.
[690 D] 3.03.The legislature, realising the gravity of the situation has amended the laws and provided for stringent punishments in such case and even permitted the raising of presumptions against the accused in cases of unnatural deaths of the brides within the first seven years of their marriage.
[690 H] 3.04.The was enacted in 1961 and has been amended from time to time, but this piece of social legislation, keeping in view the growing menance of the social evil, also does not appear to have served much purpose as dowry seekers are hardly brought to book and convictions recorded are rather few.
[691 A] 3.05.Laws are not enough to combat the evil.
A wider social movement of educating women of their rights, to conquer the menace, is what is needed more particularly in rural areas where women are still largely uneducated and less aware of their rights and fall an easy prey to their exploitation.
[691 B] 3.06.The role of courts, under the circumstances assumes greater importance and it is expected that the courts would deal with such cases in a more realistic manner and not allow the criminals to escape on account of procedural technicalities or insignificant lacune in the evidence as otherwise the criminals would receive encouragement and the victims of crime would be totally discouraged by the crime going unpunished.
The courts are expected to be sensitive in cases involving crime against women.
[691 C] 674 State (Delhi Administration) vs Lavnan & Ors., Crl.
Appeals 93 and 94 of 1984 decided on 23.9.1985, referred to. |
ION: Civil Appeal No. 2966 of 1986.
From the Judgment and Order dated 26.9.1984 of the Allahabad High Court in Writ Petition No. 3921 of 1982.
R.N. Trivedi, Additional Advocate General, Gopal Subramaniam and Mrs. Shobha Dikshit for the Appellants.
B. Sen, D.P. Gupta, N.A. Raja Ram Aggarwal, N.R. Khaitan, E.D. Desai, Y.K. Khaitan, Jijina, Sandeep Aggarwal and T.N. Sen for the Respondents.
The following Judgments of the Court were delivered: SABYASACHI MUKHARJI, J.
This appeal by special leave is directed against the judgment and order of the High Court of Allahabad dated 26th September, 1984.
The first appellant is the State of Uttar Pradesh impleaded through the Chief Secretary to the Government of Uttar Pradesh, Lucknow.
The second appellant is the Secretary to the Government of Uttar Pradesh, Department of 635 Energy, Lucknow.
The third appellant is one Shri Yogendra Narain, presently acting as Secretary to the Chief Minister, State of Uttar Pradesh, Lucknow.
At a particular point of time Shri Yogendra Narain was the Secretary to the Department of Energy.
The fourth appellant is the Assistant Electrical Inspector, a functionary under the U.P. Electricity (Duty) Act, 1952, Mirzapur Zone, Rani Patti, Mirzapur.
The fifth appellant is the Collector of Mirzapur.
There are four respondents in this appeal.
The first respondent is Renusagar Power Company Ltd. The second respondent is M/s Hindustan Aluminium Corporation Ltd. Respondent No. 3 is Shri D.M. Mimatramka who resides at Hindalco Administrative Colony, Renukut, Mirzapur.
The fourth respondent is Shri Rajendra Kumar Kasliwal who resides at Hindustan Aluminium Corporation Ltd., Renukut, District Mirzapur.
Respondents 3 and 4 mentioned above are the shareholders of the first respondent and the second respondent, that is, Renusagar Power Company and M/s. Hindustan Aluminium Corporation Ltd. respectively.
It is stated that M/s Hindustan Aluminium Corporation Ltd., established and aluminium factory at Renukut in Mirzapur District, U.P. in 1959.
It is the case of the respondents that it was induced to do so on the assurance that cheap electricity and power would be made available at the relevant time.
In 1962, a plant of Hindustan Aluminium Corporation Ltd. for manufacture of aluminium, was commissioned.
M/s Renusagar Power Co. Ltd. a wholly owned subsidiary of M/s Hindustan Aluminium Corporation Ltd, was incorporated in 1964.
M/s Renusagar Power Company Ltd. was incorporated separately and had its own separate Memorandum and Articles of Association.
On 9th September, 1967, the first generating unit of 67.5 MW in Renusagar was commissioned by M/s Renusagar Power Company Ltd. The second generating unit of the company was commissioned on 5th October, 1968.
The U.P Electricity (Duty) Act, 1952 (hereinafter called 'the Act ') came into force from 15th January, 1953 and it sought to levy a duty on the consumption of electrical energy in the State of Uttar Pradesh.
In the Statement of Objects and Reasons, which was published in U.P. Gazette, it was stated that the programmes of development of the State involved enormous expenditure and.
thus additional resources had to be raised, the bulk of which could only be raised by means of fresh taxation.
It was stated that the object of the Bill, inter alia, provided as follows: "A tax on the consumption of electrical energy will impose 636 a negligible burden on the consumer and is a fruitful source of additional revenue.
The Bill has been so prepared as to ensure that the tax payable by a person will be related to the quantity of electricity consumed by him.
The Bill is being introduced with the above object.
" By virtue of the provisions of the U.P. Electricity (Duty) (Amendment) ordinance, 1959 various amendments were carried out in the said Act.
In section 2 of the principal Act, a new clause, clause (hh) describing a scheduled industry was inserted.
By virtue of the aforesaid newly inserted clause, the expression 'scheduled industry ' meant any of the industries specified in the schedule.
In the proviso to section 3 of the principal Act, after clause (d), a new clause (e) was inserted which provided for non levy or exemption from the payment of electricity duty on the energy consumed by a consumer in a scheduled industry.
The. expression which was added was "by a consumer in a scheduled industry".
By virtue of section 8 of the Amending Act, a schedule was added to the principal Act.
In the schedule, non ferrous metals and alloys were placed at serial No. 1 in Part of the schedule under a broad heading 'Metallurgical Industries '.
It appears, therefore, that by virtue of the aforesaid provisions electricity duty on the energy consumed by M/s Hindustan Aluminium Corporation Ltd. was exempted from 1st April, 1959, the date on which the ordinance came into force.
It was further stated that the U.P. Electricity (Duty) (Amendment) ordinance, 1959 was repealed and the provisions were incorporated into an amending Act, viz., U.P. Act No. 12 of 1959 and termed as the U.P. Electricity (Duty) (Amendment) Act, 1959.
By virtue of sub section (2) of section 1, the Amendment Act provided that the Act would be deemed to have come into force with effect from 1st April, 1959.
The amendment Act repealed the provisions of the U.P. Electricity (Duty) (Amendment) ordinance, 1959.
In section 2, after clause (d), the clause which was inserted as a new clause (e) provided that electricity duty would not be leviable on the consumption of energy by a consumer in any industry engaged in the manufacture, production, processing, or repair of goods.
Ordinance No. 14 of 1970 was promulgated on 5th August, 1970.
The provisions contained in the ordinance were subsequently incorporated in U.P. Act No. 2 of 1971.
The amended provisions of U.P. Act No. 2 of 1971 came into force from 1st April, 1970.
The Amendment Act was preceded by U.P. Ordinance No. 14 of 1970.
The ordinance was described as "the Uttar Pradesh Taxes and Fees Laws (Amendment) ordinance 1970.
"By virtue of Chapter III of the said ordinance, amendments were sought to be made to the Act.
Section 3 of the principal Act was 637 substituted by a new section which provided that there would be levied and paid to the State Government a duty called electricity duty on the energy sold to a consumer by a licensee/Board/the State Government the Central Government; there would be a duty on the consumption of energy by a licensee or the Board in or upon the premises used for commercial or residential purposes, or in or upon any other premises except "in the construction, maintenance or operation of his or its works", and there would be a duty upon the consumption of electricity by any other person from "his own source of generation.
" It was provided that a duty was to be determined at such rate or rates as may, from time to time, be fixed by the State Government by notification in the official gazette.
Sub section (2) of section 3 provided that in respect of certain classes of consumption the electricity duty would not exceed 25% of the rate charged.
It may be expedient to refer to the Prefatory Note of the Act which, inter alia, is as follows: "Prefatory Note: The minimum programme of development which this State must carry out within the next three or four years for the attainment of the objective of a welfare State is set out in the Five Year Plan drawn up by the Planning Commission.
This plan provides for an expenditure of 13.58 crores of rupees on power development projects.
Such a huge expenditure cannot be met from our present resources.
It is, however, essential for the welfare of the people that the expenditure should be incurred and that nothing should be allowed to stand in the way of the progress of the plan.
Additional resources have therefore to be found, the bulk, of which can be raised only by means of fresh taxation.
" Section 3 of the Act provides as follows: "3.
Levy of electricity duty. (1) Subject to the provisions hereinafter contained, there shall be levied for and paid to the State Government on the energy: (a) sold to a consumer by a licensee, the Board, the State Government or the Central Government; or (b) consumed by a licensee or the Board in or upon premises used for commercial or residential purposes, or in or 638 upon any other premises except in the construction, maintenance or operation of his or its works; or (c) consumed by any other person from his own source of generation; a duty (hereinafter referred to as 'electricity duty ') determined at such rate or rates as may from time to time be fixed by the State Government by notification in the Gazette, and such rate may be fixed either as a specified percentage of the rate charged or as a specified sum per unit.
Provided that such notification issued after October 1, 1984 but not later than March 31, 1985 may be made effective on or from a prior date not earlier than October 1, 1984.
(2) In respect of clauses (a) and (b) of sub section ( 1), the electricity duty shall not exceed thirty five per cent of the rate charged.
Provided that in the case of one part tariff where the rate charged is based on units of consumption, the electricity duty shall not be less than one paisa per unit or more than eight Paisa per unit.
Explanation For the purposes of the calculation of electricity duty as aforesaid, energy consumed by a licensee or the Board or supplied free of charge or at the concessional rates to his or its partners, directors, members, officers or servants shall be deemed to be energy sold to consumers by the licensee or the Board, as the case may be, at the rates applicable to other consumers of the same category.
(3) In respect of clause (c) of sub section (1), the electricity duty shall not be less than one paisa or more than six paisa per unit.
(4) The State Government may, in the public interest, having regard to the prevailing charges for supply of energy in any area, the generating capacity of any plant, the need to promote industrial production generally or any specified class thereof and other relevant factors, either fix 639 different rates of electricity duty in relation to different classes of consumption of energy or allow any exemption from payment thereof.
(5) No electricity duty shall be levied on (a) energy consumed by the Central Government or sold to the Central Government for consumption by that Government; or (b) x x x (c) energy consumed in the construction, maintenance or operation of any railway by the Central Government or sold to that Government for consumption in the construction, maintenance or operation of any railway; (d) by a cultivator in agricultural operations carried on in or near his fields such as the pumping of water for irrigation, crushing, milling or treating of the produce of those fields or chaffcutting.
(e) Energy consumed in light upon supplies made under the Janta Service Connection Scheme.
Explanation.
For the purposes of clause (e) "Janta Service Connection Scheme" means a scheme approved by the State Electricity Board for supplying Energy to Harijans, landless labourers, farmers (holding land not exeeeding one acre), members of armed forces (whether serving or retired), war widows and other weaker sections in district notified by the State Government.
" Section 4 of the Act read as follows: "4.
Payment of electricity duty and interest thereon. (1) The electricity duty shall be paid, in such manner and within such period as may be prescribed, to the State Government.
(a) where the energy is supplied or consumed by a licensee, by the licensee; 640 (b) where the energy is supplied by the State Government or the Central Government or is supplied or consumed by the Board, by the appointed authority; and (c) where the energy is consumed by any other person from his own source of generation, by the person generating such energy.
(2) Where the amount of electricity duty is not paid by the State Government within the prescribed period as aforesaid, the licensee, the Board or other person mentioned in clause (c) of sub section (1), as the case may be, shall be liable.
to pay within such period as may be prescribed, interest at the rate of eighteen per cent per annum on the amount of electricity duty remaining unpaid until payment thereof is made.
" Section 9 of the Act provides as follows: "Exemptions.
Nothing in this Act shall apply to any energy generated by a person for his own use or consumption or to energy generated by a plant having a capacity not exceeding two and a half killowatts.
" M/s. Renusagar Power Company Ltd. had in the meantime obtained a sanction under section 28 of the to engage in the business of supply of electricity to the second respondent, M/s. Hindustan Aluminium Corporation Ltd. By virtue of section 2(f) which defines a licensee for the purposes of the Duty Act to mean any person licensed under Part II of the and includes any person who has obtained sanction from the State Government under section 28.
Renusagar Power Company Ltd., the first respondent herein, was deemed to be a licensee for the purposes of the U.P. Electricity (Duty) Act.
By virtue of section 2(d) of the Act, M/s. Hindustan Aluminium Corporation Ltd. was a consumer since it was supplied energy by the licensee, M/s. Renusagar Power Company Ltd., the first respondent.
Thus, the consumption of electricity by M/s. Hindustan Aluminium Corporation Ltd. under a contract of sale by the licensee was exigible to duty.
In other words, clause (a) of sub section (1) of section 3 of the Act, as amended, came into operation and a levy of duty would take place on the energy sold, to a consumer by a licensee.
Clause (a) of sub section (1) of section 4 as newly added provided that where the energy was supplied by a 641 licensee, the licensee would be liable to pay electricity duty.
Thus, by virtue of the amended provisions of the Electricity (Duty) Act, M/s. Renusagar Power Co. Ltd. the first respondent herein was liable to pay electricity duty in respect.
Of its supplies to M/s. Hindustan Aluminium Corporation Ltd. In exercise of the powers conferred by the Amendment Ordinance (U.P. Ordinance No. 14 of 1970, the provisions of which were re enacted in U.P. Act No. 2 of 1971), the Governor on or about 25th August, 1970 passed an order that with effect from 1st September, 1970 the electricity duty on industrial consumption would be levied at one paisa per unit.
On 28th August, 1970, the Governor ordered in supersession of all the previous orders that with effect from 1st September, 1970 electricity duty on the energy consumed by the consumers would be levied at the rates specified therein.
There was further notification dated 30th September, 1970, issued in the name of the Governor modifying the terms of the notifications dated 25th August, 1970 and 28th August, 1970.
On or about 4th December, 1952 after the inauguration of the First Five Year Plan, electricity duty was imposed to gather additional revenue for attaining the objectives set out in the plan.
The U.P. Electricity (Duty) Act, 1952 was enacted on 4th December, 1952.
On 1st April, 1959 in order to mitigate the hardship which might be caused to certain industries in the State, the U.P. Electricity (Duty) (Amendment) Ordinance, 1959 (U.P. Ordinance No. 3 of 1959) was promulgated by the Governor of U.P.
By the aforesaid ordinance it was provided in the first proviso to section 3 of the principal Act that no duty shall be leviable on the energy consumed by a consumer in a Scheduled Industry, including Non ferrous Industries manufacturing Aluminium like that of respondent No. 2, Hindalco.
The aforesaid ordinance was substituted by the U.P. Electricity (Duty) (Amendment) Act, 1959 (U.P. Act No. 12 of 1959).
It substituted sub clause (e) in the first proviso of section 3 which reads as follows: "(e) by a consumer in any Industry engaged in the manufacture, production, processing or repairs of goods".
In the year 1959 respondent No. 2 looking to the profitability of establishing a factory for manufacture of aluminium, set up a plant at Renukut, District Mirzapur in the State of U.P.
On or about 29th October, 1959 an agreement was arrived at with the State Government and the Hindustan Aluminium Corporation Ltd. (Hindalco) for supply 642 of 55 M.W. electrical power at the rate of 1.997717 paise per unit inclusive of all charges.
duties and taxes of whatever nature on electricity for 25 years.
In the year 1962 Hindalco, respondent No. 2, started production of aluminium.
On 14th October, 1964 respondent No. 2 requested the State Government to grant sanction to the Renusagar Power Company Ltd., to supply electricity to respondent No. 2.
On 12th November, 1964 respondent No. 1 Renusagar Power Company Ltd. was granted sanction under section 28 of the , to engage in the business of supply of electricity to respondent No. 2 Hindalco.
There was an agreement on 29th December, 1967 with Hindalco and U.P. State Electricity Board to supply 5.5 M.W. and 7.5 M.W. Of power.
The rate of charges along with levy of sales tax, etc. were to be paid by the consumer.
On 1st July, 1970, there was an agreement between Hindalco and State Electricity Board to supply 7.5 M.W. Of power.
The rate of charges including levy such as Sales Tax etc.
were to be paid by the consumer.
On 5th August, 1970, the U.P. Ordinance No. 14 of 1970 was promulgated further to amend the U.P. Electricity (Duty) Act, 1952 which came into force from 1st September, 1970.
By the aforesaid amendment provisions of sections 3, 4 and 7 were substituted by new sections, sections 3A and 9 were omitted and there were several amendments in various sections of the original Act.
As a result of the promulgation of the ordinance, electricity duty became leviable on the industrial consumption as well as on the energy consumed by any person from his own source of generation.
The provisions of section 3 have been set out before.
Thereafter notification was issued on 25th August, 1970 under which rate of electricity duty on the energy consumed for industrial purposes was prescribed at one paisa per unit on consumption of electricity with effect from 1st September, 1970.
On 1st September, 1970, the provisions of the ordinance amending U.P. Electricity (Duty) Act, 1952 came into force.
Electricity duty became leviable on the respondent No. 1 on the energy supplied to Hindalco, respondent No. 2 for the industrial purposes.
On 28th September, 1970 respondent No. 2, Hindalco, made an application under sub section (4) of section 3 of the Act to the State Government to grant exemption on the energy supplied by respondent No. 1 to respondent No. 2 for industrial purposes.
On 17th January, 1971 ordinance No. 14 of 1970 was substituted by the U.P. Electricity (Duty) (Amendment) Act, 1970.
On 26th February, 1971 report was made by the Three Men Committee appointed to examine the request of Hindalco for grant of exemption from payment of electricity duty on the energy supplied by Renusagar Power Company Ltd. According to 643 the Committee the burden as a result of the imposition of electricity duty did not result in substantial or insufferable increase of the rate of duty for Hindalco.
On 27th August, 1971 a demand for payment of electricity duty amounting to Rs.59,13,891.80 was raised on respondent No. 1.
On 29th March, 1972 application of respondent No. 2 for grant of exemption was rejected by the State Government on the following reasons: "(a) That the intention of the legislation was clear to withdraw the exemption from payment of electricity duty on the industrial consumers with effect from 1.9.1970 the facility of which was being availed for a period of more than 11 years.
(b) That the applicant was never given any assurance that he will be exempted from electricity duty nor the applicant is entitled for any exemption as a matter of right under the provisions of the amended Act.
(c) That it was not in public interest to grant them exemption from electricity duty.
(d) That the electricity duty is also being levied on the Aluminium Industries in other States also.
(e) That the additional resources are taken into account to give the final shape of the State Development Plans and with a view to fulfil the requirement of these Development Plans the Electricity Duty Act was amended in 1970.
The expected income from this duty is essential for the execution of State Government plans.
(f) It cannot be inferred that the imposition of electricity duty will be an unbearable burden on Hindalco.
" Aggrieved by the aforesaid rejection, the respondents filed Writ Petition No. 4521 of 1972 before the High Court of Allahabad.
On 17th March, 1973 the State Government granted exemption from payment of electricity duty on the energy consumed by any person from his own source of generation.
Exemption was also granted on the energy sold to a consumer establishing a factory having capital investment upto Rs.25 laks in the backward district for five years.
644 The High Court by its judgment on 17th May, 1974 in the Writ Petition No. 4521 of 1972 quashed the order of the State Government and directed the State Government to reconsider the application of the respondents for exemption in the light of the observations made in that judgment.
On 6th September, 1975 Hindalco submitted an application again to the State Government for reconsideration of their previous application for exemption from payment of electricity duty.
In the meanwhile, the State Government filed a special leave petition to this Court against the judgment and order of the High Court of Allahabad dated 17th May, 1974 in Writ Petition No. 4521 of 1972.
In the meantime of 13th November, 1976 an agreement was entered into between the State Electricity Board and Hindalco for supply of 85 M.W. main supply.
The rate fixed was 11 paise per unit inclusive of all taxes of whatever nature on electricity.
Special leave petition was, however, dismissed on 28th March, 1977.
In compliance with the High Court 's judgment dated 17th May, 1974, on 5th April, 1977 respondents were given an opportunity of hearing by the State Government.
For the purpose of considering the representation and to verify the correctness of the data and the profit and loss accounts furnished by Hindalco in their printed Balance Sheets the matter was got examined by Shri B.B. Jindal, Controller of Banking operations, U.P. State Electricity Board who submitted his report in 1977.
The State Government, however, was not satisfied with the report of Shri B.B. Jindal.
On 6th September, 1978 the matter was got re examined by the Chief Electrical Inspector to Government, Uttar Pradesh.
He submitted his report.
The Chief Electrical Inspector in his report compared the cost of power of Hindalco with similar industries in other States.
On 5th December, 1978 Secretary of Power discussed the matter with Dr. R. Rajagopalan, Chief Advisor (Costs), Government of India.
Then a note was prepared by the Secretary, Power, Government of U.P. in which reference was made to the above report of Chief Electrical Inspector to the Government of U.P.
Thereafter the Chief Secretary to the Government of U.P.
On 26th December, 1978 wrote a letter to the Secretary, Ministry of Finance, Government of India, requesting him that the matter may be got examined by the Chief Advisor (Costs), Government of India, expeditiously.
After examination on 29th January, 1979 Dr. R. Rajagopalan, Chief Advisor (Costs), Government of India, submitted his report that the effect of imposition of electricity duty on the margin of profit available to Hindalco has been very insignificant.
It did not have any adverse effect on the profitability of Hindalco since such a levy has been included in the cost in fixing the selling prices of Hindalco 's products by the Government of India.
Imposition of electricity duty did not result in reducing the 645 normal profits of Hindalco to either an absolute loss or such a small margin of profit that Hindalco was turned into an uneconomic unit.
According to him the claim of Hindalco for exemption from levy of electricity duty is not based on justifiable grounds of either low profitability or incapacity of resources with which to pay.
Personal hearing was given to the respondents in view of the directions given by the High Court.
Report of Dr. Rajagopalan was made available to the respondents.
On 28th January, 1980 rate of electricity duty on the energy consumed for industrial purposes was revised from one paisa to two paise per unit applicable from the date of notification, that is, from 16th February, 1980.
There was an agreement on 24th April, 1980 between the State Electricity Board and the Hindalco regarding 85 M.W. main supply and 60 M.W. stand by Emergency Supply.
Rate of 28.42 paise per unit was fixed.
A personal hearing was given to the respondents in compliance with the directions issued by the High Court.
Respondents were allowed to inspect the report of the Chief Electrical Inspector and other reports available with the State Government were shown to them and they submitted their comments on the report of Dr. Rajagopalan which were duly considered by the State Government.
A personal hearing was again given to the respondents to submit their submissions in support of their application for exemption.
Respondents were represented by counsel during the course of hearing.
After giving full consideration to the submissions made in the original and additional representations and the comments dated 23rd August, 1980 on the report of Dr. Rajagopalan and to the entire material placed before the State Government, the State Government came to the conclusion that the claim for exemption from levy of electricity duty was not at all justified on any ground whatsoever.
Accordingly the request for exemption was disallowed.
On 3rd March, 1982 respondent No. 1 was asked to pay Rs.11,96,83,153.80 as the amount of electricity duty on the energy supplied by it to respondent No. 2 for industrial purposes.
Respondent No. 1.
however, failed to pay the aforesaid amount within the stipulated time.
On 22nd March, 1982, the District Magistrate, Mirzapur, was requested to recover the said amount as arrears of land revenue.
Being aggrieved by the decision of the State Government, the respondent filed a Writ Petition No. 3921 of 1982 in the High Court of Allahabad and the High Court issued stay order directing the petitioners not to take any proceedings for the recovery of the impugned electricity duty.
On 26th September, 1984 the High Court allowed the Writ Petition No. 3921 of 1982 and held that the impugned order of the State Government was not maintainable in law and hence quashed the order of the State Government as well as the notice of demand dated 3rd March, 1982.
The State 646 Government was also directed to consider the request of the respondents for exemption in accordance with the directions issued by the Division Bench in Writ Petition No. 4521 of 1972 and also in the light of the observations made in the judgment after affording an opportunity of personal hearing to the respondents.
Being aggrieved thereby the appellants have come up in appeal to this Court.
In the background of the facts and the circumstances set out.
hereinbefore, we have now to examine the correctness of the judgment and order of the High Court which is under appeal.
There are two different aspects.
One is whether the Renusagar Power Co. Ltd., was 'own ' source of generation of electricity for the Hindalco, in the facts and circumstances of the case.
The second aspect is whether the order passed by the State Government, having regard to the nature of the order passed, was in accordance with the principles of natural justice in so far as the same were applicable to the facts of this case.
As it is apparent on the state of law mentioned hereinbefore from 1952 to 1970 no duty was payable if electricity was generated from own source of energy.
From 1970 to 1973 duty of one paisa was payable in respect of electricity supplied from own source of generation.
However, after 1973 no duty was payable in respect of electricity supplied from own source of generation. 'Own source of generation is an expression connected with the question of lifting or piercing the corporate veil.
It is well settled that in interpreting items in statutes whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to the meaning attached to them by those dealing in them.
See the observations of this Court in Chiranjit Lal Anand vs State of Assam & Anr., [1985] Suppl 2 SCR 385.
As mentioned hereinbefore, the application for exemption was made after disposal of the first writ petition No. 4521/72 by the High Court on 17th May, 1974.
Thereafter, the respondent made another application for exemption under section 3(4) of the Act.
The said application was ultimately rejected, which rejection was subsequently challenged.
The High Court in the judgment under appeal on 26th September, 1984 has set aside me order of rejection passed by the State Government.
Was the High Court right, is the question involved in this appeal.
647 Examination of this question involves two aspects, namely, what is the rate of duty under which various notifications were applicable to the energy consumed by Hindalco from Renusagar.
Is Renusagar "own source of generation" of Hindalco within the meaning of section 3(1)(c) of the Electricity Duty Act, 1952 and the various notifications issued thereunder.
The question whether Renusagar was "own source of generation" of Hindalco, is a mixed question of law and facts as correctly contended by Shri Palkhiwala as well as by Shri Sen appearing on behalf of the respondents.
Shri Palkhiwala appearing for the respondents submitted before us the historical background of the setting up of Renusagar Power Plant.
It was urged that for producing aluminium by Hindalco, electricity is a raw material.
The Hindalco was set up with a capacity of 20,000 tons per annum on the basis of sole assurance according to the respondent, given by the State of U.P. that adequate power would be given at a very cheap and economical rate.
The Government of U.P. in 1959 agreed to give 55 m.w.
Of power @1.99 paise per unit.
This, according to the respondents, was in accordance with the policy of Central (Government and on the basis of the report of the various Committees set up by the Government.
Our attention was drawn to certain facts appearing in Vol.
A pages 8 9 which set out the averments made in the writ petition filed in the instant case.
It was stated therein that aluminium is an essential raw material in a large number of industries of strategic national importance and its production is of vital public interest.
60% of the production of Renusagar goes to the electric industries and an extra 16% of the production goes to the utensils manufacturing unit and all the remaining production goes to defence, ordnance, mint, transportation and packaging industry.
Aluminium is, therefore, a commodity of national importance and, as such, is mentioned in Schedule 1 of the Industries (Development and Regulation) Act, 1951 which contains only such industries which have been declared by the Parliament to be of public interest.
The Union Government was anxious to set up new units in private sector as for want of sufficient foreign exchange such units could not be set up in the public sector.
In this connection reliance was placed on the report of the Industrial Licensing Enquiry Committee known as 'Data Committee '.
In this background Shri G.D. Birla who eventually floated the Corporation was prevailed upon to explore the possibility of setting up of aluminium plant.
The Government of India appointed a Committee of Experts headed by Shri Nagarajarao in the year 1956 for recommending the location of a new Aluminium Plant.
In that report Shri Nagarajarao recommended Rihand as one of 648 the places for setting up the Aluminium Plant.
The U.P. Government was also keen to have the industry located in the State and persuaded Shri G.D. Birla to set up the plant with the assurance that sufficient electricity at constant and concessional rate would be available.
Here, it was reiterated that the agreement dated 29th October, 1959 was entered into called the parallel agreement so that at any time any one of the Thermal Power Stations could be maintained independently.
Hindalco was allowed to expand its aluminium production capacity from time to time on the condition that it would instal its own power plant subject to the further condition that this power plant could be taken over by the State at a later date.
To avoid take over complications Hindalco decided to set up captive power house through the instrumentality of Renusagar Power Co., a 100% subsidiary of Hindalco fully controlled by Hindalco in all respects to supply power to Hindalco only.
Reference may be made to page 28 of Vol.
XVI which is a letter dated 13th February, 1963 written by the Deputy Secretary, Govt.
Of India, Ministry of Commerce & Industry, to Shri D.P. Mandelia of Hindustan Aluminium Corporation, New Delhi, where on the question of power plant it was suggested that as stated by Shri Mandelia a separate Company may be formed with the power plant project and the major portion of the capital subscribed by Hindalco.
It was highlighted that setting up of a power plant project was part of the scheme for meeting the needs of Hindalco for electricity.
All planning, designing, engineering, purchase of equipments financing was done by Hindalco exclusively for Renusagar.
See Vol.
XVI Pages 20, 33, 49, 58 & 62 of the paper book.
The only object and purpose of power plant was to supply power and suit the requirements of Hindalco.
Reference may be made to pages 36 & 37 of Vol.
XVI of the Paper Book.
According to Shri Palkhiwala and Shri B. Sen from the aforesaid background the following facts emerge: (a) 1967/1968 Unit 1 & 2 of Renusagar went into operation.
(b) Renuagar was set up as part and parcel of Aluminium Expansion Scheme.
(c) All steps to set up Renusagar including expansion were taken by Hindalco.
649 (d) Agency of Renusagar was set up by Hindalco because of Take over option by the State.
(e) Renusagar is 100% subsidiary of Hindalco.
(f) Borrowings of Renusagar arranged and guaranteed by Hindalco.
(g) Renusagar supplies power to Hindalco only.
(h) There is only one transmission line from Renusagar to Hindalco.
(i) Renusagar generates power only to the extent required by Hindalco.
(j) Hindalco has complete control over Renusagar.
Hindalco has undertaken various obligations for the running of Renusagar.
(k) The agreement between Renusagar and Hindalco is not a normal sale purchase agreement.
This agreement shows complete control of Hindalco over Renusagar.
THE CONDITIONS UNDER THE APPLICABLE To NORMAL SANCTION HOLDERS AND LICENSEES WERE NOT APPLIED To RENUSAGAR BECAUSE IT WAS HINDALCO 'S CAPTIVE SOURCE OF GENERATION.
For Instance: (a) After the incorporation in 1964 Renusagar was granted sanction u/s 28 of the Electricity Supply Act, 1910 to supply power to Hindalco only.
See Vol.
XVI page 64 of the Paper Book.
(b) Since Renusagar was not public utility but a captive plant of Hindalco certain conditions applicable to normal sanction holders in the nature of public utilities but inapplicable to Renusagar were deleted from the sanction.
See Vol.
XVI page 74 of the Paper Book.
FOR THE PURPOSE OF EXPANSION OF HINDALCO AS WELL AS RENUSAGAR THE GOVT.
OF INDIA AND THE 650 STATE OF U.P. SPECIFICALLY PROCEEDED ON THE FOOTING THAT HlNDALCO HAD ITS "OWN SOURCE OF GENERATION" IN RENUSAGAR, SINCE RENUSAGAR WAS THE CAPTIVE POWER PLANT OF HINDALCO.
(a) Hence, for all practical purposes Renusagar was treated as part and parcel of the Hindalco 's expansion programme.
In 1962 Hindalco decided to expand capacity to 60,000 tons per annum.
This meant need of extra power.
The U.P. Government and the UPSEB expressed inability to give the extra power.
The U.P. Govt.
had no objection if Hindalco set up its own power house with an option to the U.P. Govt.
to take over the power plant later.
On this important basis Hindalco was granted permission to set up captive power plant.
Reliance was placed in this connection on Vol.
XVI, pages 4, 6, 7, 15 and 16 of the Paper Book.
Also see sections 34, 36, 37, & 44 of the Electricity Supply Act, 1910.
(b) Thus Hindalco was allowed to expand its aluminium production on the condition of its setting up its own power plant which was part and parcel of the expansion scheme.
See in this connection Vol.
XVI, pages 22 & 25 of the Paper Book.
(c) When Hindalco decided to expand its aluminium plant again from 60,000 to 1,20,000 tons per annum, the expansion of the powerhouse was a condition precedent to aluminium expansion.
All negotiations, requests for permission, correspondence with authorities, intimation from Government were done and received by Hindalco.
In this connection reference may be made to Vol.
XVI, pages 129 to 134, 15 1, 157 & 180 of the Paper Book.
(d) Renusagar was allowed expansion limited to power requirement of Hindalco for captive use of Hindalco.
See Vol.
XVI, pages 145, 159, 161, 185, 187 and 189 of the Paper Book.
(e) All Government authorities including Central Govt.
, State of U.P. and U.P. State Electricity Board have always treated Renusagar to be "Captive Plant" as either "Self Generation" or "own generation" or "own Plant" or "own Source of generation" or "Generation for self use" or "own use" etc.
Of Hindalco.
In this connection reference may be made to Vol.
XVI, pages 81, 90 91, 112, 135A, 139 140, 146, 150, 152, 160, 163, 167, 169, 172, 183A & 184 of the Paper Book.
It further appears that 100% power cuts stoppage of electricity from the State grid were imposed on those who had 651 50% or more of their "own source of generation".
Hindalco suffered 100% power cuts precisely on this account.
It was submitted on behalf of the respondents and in our opinion rightly that the words "own source of generation" could not have one meaning for power cuts and another meaning for concession/exemptions under the same law.
It further appears that the Secretary, Power, U.P. Govt. submitted a note to the Advisory Council for recommending 100% powercuts on Hindalco as Hindalco had more than 50% power supply from its own source of generation i.e. Renusagar.
See Vol.
XVI, page 163 of the Paper Book.
Notification under section 22B of the Act as appearing in Vol.
XIII of the Paper Book was accordingly issued.
The U.P.S.E.B. served notice on Hindalco to reduce drawal to zero.
See Vol.
XVI, page 167 of the Paper Book.
The U.P. Government refused exemption from power cut to Hindalco on the ground that it had its own source of generation.
See Vol.
XVI, page 172.
In Court proceedings Hindalco challenged power cut.
The Government filed affidavits, always asserting Renusagar to be "own source of generation" of Hindalco.
See Vol.
XXIV, pages 68 to 75 of the Paper Book.
Indeed, it appears from the observations of this Court in State of U.P. vs Hindustan Aluminium Corpn.
Ltd., ; that this Court proceeded on the basis that Renusagar had its own source of generation.
It is further said that the appellants have also admitted in the present proceedings the position that Hindalco had in Renusagar its own source of generation.
Reliance has been placed on: (a) Section 9 of the Duty Act as it existed upto 1970.
See Vol.
XVIII, page 5 of the Paper Book.
(b) Three men Committee Report on exemption treated Renusagar as own generation.
See Vol.
A page 158 at 163 of the Paper Book.
652 (c) The Government of U.P. rejected exemption application.
A page 3 of the Paper Book.
(d) Counter affidavit in the first petition.
X, pages 26, 27 & 32 of the Paper Book.
(e) Counter affidavit in second petition.
XI, pages 93 & 130 of the Paper Book.
(f) See the Judgment of the Allahabad High Court.
A, pages 7, 10 11, 13 & 19.
(g) Petition of the U.P. Government under Article 138.
XI page 134.
(h) It is also significant to note the special leave petition filed by the U.P. Government.
Reference may be made to Vol.
XI, pages 139 to 141.
(i) Reference may be made to Rajagopalan Report, Vol.
A pages 237 & 265 of the Paper Book.
(j) See the affidavit of State of U.P. in Allahabad High Court in present proceedings.
A, pages 71 72, 76 & 84.
(k) The High Court 's Judgment dated 26.9.84 in the present proceedings.
B, pages 391 397.
All these factors have to be borne in mind in considering whether Renusagar was Hindalco 's own source of generation.
Counsel for the respondents drew our attention to the fact that in the manufacture of aluminium, electrical energy is raw material and between 16,000 to 20,000 units of energy are required for the production of 1 ton of aluminium.
The impact of the imposition of duty on energy @1 paise per unit would be an increase in the cost of production of aluminium by Rs.160 to Rs.200 per ton.
The impact of the imposition of duty on energy @ 6 paise per unit will be an increase in the cost of aluminium by Rs.960 to Rs.1,200 per tan.
Hindalco was incorporated in 1959 and its aluminium plant commenced production in 1962 with a capacity of 20,000 tons of aluminium ingots p.a. Hindalco obtained electrical energy required for the manufacture of aluminium to the extent of 55 MW from the State/ 653 Board Hydle power under an agreement dated 29.10.59 @1.997717 paise per unit inclusive of all charges, duties and taxes of whatever nature on electricity.
Hindalco 's plant was located at Renukut because of their assurances for power supply at economical rates.
The first expansion of Hindalco from 20,000 to 60,000 tons p.a. required further electricity.
According to the respondent the basic planning of the power plant at Renusagar, the arrangement for its design, engineering, purchase and for importing the plant and for financing the whole project were done by Hindalco.
Renusagar, which is a 100% subsidiary of Hindalco, wholly owned and controlled by Hindalco, was incorporated in March 1964.
Hindalco established the power plant through the agency of Renusagar in order to avoid complications in the case of a take over of the power plant by the State/Board of which there could be a possibility as power generation is generally not permitted in normal conditions in private sector In this background what was highlighted on behalf of the respondent was that the sanction under section 28 of the 1910 Act given to Renusagar and its amendment established that Renusagar was not a normal type of sanction under section 23 of the 1910 Act as the holder could supply power only to Hindalco.
The first generating unit in Renusagar commenced on 9.9.67 and the second one commenced on 5.10. 68.
All steps for the expansion of the power in Renusagar so as to match the power requirement of Hindalco 's expansion were taken by Hindalco even though Renusagar had been incorporated.
Applications for all the necessary sanctions and permissions were made by Hindalco.
Permissions and sanctions were first intimated to Hindalco even though Renusagar was in existence.
See Vol.
XVI, pages 129 134 & 149 of the Paper Book.
Changes in the sanctions and/or permissions granted were obtained by Hindalco and not by Renusagar.
See Vol.
XVI, pages 157, 180 of the Paper Book.
The expansion of the power plant in Renusagar was to exactly match the requirements of Hindalco for the production of aluminium.
The expansion of the power plant in Renusagar was part and parcel of the expansion of the aluminium plant of Hindalco.
See Vol.
XVI, pages 145, 159, 161, 185, 187 & 189 of the Paper Book.
654 The third generation unit in Renusagar commenced in November 1981 and the fourth generating unit in April 1983.
Hindalco consumes about 255 MW power out of which 250 MW comes from Renusagar and 5 MW by way of main supply and 15 MW by way of emergency supply is made by the Board.
It was emphasised on behalf of Hindalco that the power plants at Renusagar were set up as part and parcel of the aluminium expansion scheme of Hindalco and the only object and purpose of the power plants in Renusagar was to supply power to suit the needs of Hindalco.
All steps to set up the power plant in Renusagar and its further expansion were taken by Hindalco.
The power plant was set up by Hindalco through the agency of Renusagar (100% subsidiary and wholly owned and controlled by Hindalco) to avoid complications in the event of take over by the State/Board.
All the borrowings of Renusagar were arranged and guaranteed by Hindalco.
Further, there is only one transmission line going out of Renusagar and the same goes to Hindalco.
Renusagar can supply power only to Hindalco.
Renusagar generates power only to the extent required by Hindalco.
Hindalco has complete control over Renusagar including its day to day operations.
This will be evident from the applications with regard to running of Renusagar Power Plant Station undertaken by Hindalco to the Board.
See Vol.
XV, pages 104, 118, 124 of the Paper Book.
The agreement between Renusagar and Hindalco indicates this was not a normal sale purchase agreement between two independent persons at arms length.
The price of electricity is determined according to the cash needs of Renusagar.
This covenant also shows complete control of Hindalco over Renusagar.
It was submitted before us that if looked at properly, Renusagar was Hindalco 's own source of generation and according to the respondent an analysis of the different provisions of the Amendment Act, makes the position clear.
Submissions were made on the construction of section 3 of the Act and also that the difference in language of section 2(g)(c) and old section 9 is significant.
Ambit of section 3(1)(c) is wider than the old section in view of the addition of the words 'source of generation ' which must be given their full meaning.
We have set out hereinbefore the provisions of sections 3(1)(c) and 9 of the Act.
Rule 2(g) referred to in the order shows that the expression 'any 655 person ' in section 3(1)(c) would mean a person other than licensee or a Board who consumes energy from his own source of generation.
Hindalco fixes in the expression 'any other person ' under section 3(1)(c) and it consumes energy from its own source of generation.
Generation being done by Renusagar, it was pointed out that Rule 2(g) of the U.P. Electricity Duty Rules, 1952 supports this plea of the respondents.
It should be borne in mind that the expression 'own source of generation ' which has not been defined in the Duty Act or 1910 Act, cannot be regarded as a term of article The various documents and letters placed before the Court and referred to hereinbefore indicate that all persons and authorities dealing and conversant with this matter had consistently treated Renusagar as own source of generation of Hindalco.
In the power cuts matter under section 22B of cut was imposed on Hindalco on the footing that it has its own source of generation.
All the authorities including the State and the Board have all along treated Renusagar as own source of generation of Hindalco.
The High Court as well as this Court had proceeded on that basis.
In a note with the Advisory Counsel dated 31.5.77 the Secretary, Power Deptt.
Of the State Govt.
treated Renusagar as own source of generation of Hindalco.
In the proceedings under the Electricity Duty Act itself, it was the case of the State that Renusagar generation was by Hindalco for its own use within the meaning of section 9 of the Duty Act.
It was also the case of the State that Renusagar was own source of generation of Hindalco and since by its amendment in 1952 the Legislature had shown an intention to levy duty on own source of generation, Hindalco was not entitled to exemption.
It was, therefore, submitted that Renusagar must be regarded as alter ego of Hindalco i.e., own source of generation of Hindalco within the meaning of section 3(1)(c) of the Duty Act.
The word "own" is a generic term, embracing within itself several gradations of title, dependent on the circumstances, and it does not necessarily mean ownership in fee simple; it means, "to possess to have or hold as property".
See Black 's Law Dictionary, 5th Edn.
p. 996.
It was further submitted that by the 1970 Amendment Act, the Legislature intended to cover a wide area under section 3(1)(c) than under the old section 9.
If Renusagar is the own source of generation of Hindalco then the consumption clearly falls within section 3(1)(c).
The three clauses of section 3(1), it was submitted, had to be read together by way of harmonious construction.
Section 3(1)(a) should 656 not be so construed as to defeat the aim of section 3(1)(c).
In the case of harmonious construction what needs to be looked at, is the dominant or the primary element in the provisions.
Thus section 3(1)(c) should not be interpreted to cover all the cases of own generation notwithstanding the fact that a sale may be involved and to that extent the transaction should be excluded from the operation of section 3(1)(a).
Alternatively, it was submitted that if the three clauses were to be treated as independent of each other then the result of construction that each provision would yield to special provisions applied should be applied as a part and parcel of harmonious construction of this section.
In this approach clause (c) of section 3(1) ought to be regarded as dealing with the special situation, namely, a person consuming from its own source of generation while provisions of clause (a) of section 3(1) should be regarded as general provisions dealing with the cases of sale and consumption generally.
The aforesaid construction would be in harmony, it was urged, with the object and purpose of the legislation.
Reliance was placed on the observations of this Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P. & Ors., ; , where at page 193 this Court insisted on harmonious construction and not on literal construction.
Also see M/s Girdhari Lal & Sons vs Balbir Nath Mathur & Ors., ; at 241 & 246; State of Tamil Nadu vs Kodaikanal Motor Union (P) Ltd., at 100 and D. Sanjeevayya vs Election Tribunal, A.P. & ors.; , at 492.
On behalf of the respondents and in support of their contention, it was urged that the harmonious construction would advance purpose and object of the legislation inasmuch as it was clearly one of the purposes of the legislation to treat captive generation or self generation as a separate category and to confer benefits on the same in public interest.
Our attention was drawn to the notification dated 17th March, 1973 which appears at Vol.
XVIII, page 34.
It was further contended on behalf of the respondents that interpretation of section 3(1)(c) of the Act would not depend on the manner in which a person might choose to organise his affairs.
Further that there was no rational distinction having a nexus with the object of the Duty Act, where a person generating electrical energy himself was consuming the same and a person who engaged another person to generate electrical energy exclusively for and on behalf of his complete control and who consumes all the electrical energy so generated.
Accordingly it was urged that such a distinction being arbitrary and irrational, it would be 657 violative of Article 14 of the Constitution.
Hence, it was contended that a construction of the Duty Act, which would make such a distinction, must be avoided.
This naturally brings us to the question of lifting the corporate veil or piercing the corporate veil as we often call it.
On behalf of the appellants, however, it was very strongly urged that in this case there was no ground for lifting the corporate veil and Shri Trivedi, learned Additional Advocate General, State of U.P., who was assisted by Shri Gopal Subramaniam, submitted before us elaborate arguments and made available to us all the relevant documents, urged that there was no warrant either in law or in fact to lift the corporate veil and to treat Renusagar 's plant as Hindalco.s own source of generation.
Shri Trivedi urged that facts in this case do not justify such a construction and the law does not warrant such an approach.
We may say that Shri Trivedi mainly relied on the proposition that normally the Court has disregarded the separate legal entity of a Company only where the Company was formed or used to facilitate evasion of legal obligations.
He referred us to the observations of this Court in Western Coalfields Ltd. vs Special Area Development Authority, Korba & Anr., ; at 17.
The facts of that case were, however, entirely different and it is useless to refer to them but at page 17 of the report, Chandrachud, C.J. speaking for the Court quoted the observations in Andhra Pradesh State Road Transport Corpn.
vs The I.T.O. & Anr., ; , where this Court had held that though the Transport Corporation was wholly controlled by the State Government it had a separate entity and its income was not the income of the State Government.
While delivering the Judgment in that case Gajendragadkar, C.J., referred to the observations of Lord Denning in Tamlin vs Hannaford, where Lord Denning had observed that the Crown and the corporation were different and the servants of the corporation were not civil servants.
Chandrachud, C.J., relied on the aforesaid observations and referred to Pennington 's Company Law 4th Edn., pages 50 51, where it was stated that there were only two cases where the Court had disregarded the separate legal entity of a Company and that was done because the company was formed or used to facilitate the evasion of legal obligations.
The learned editor of Pennington 's Company Law, 5th Edn., at page 49 has recognised that this principle has been relaxed in subsequent cases.
He states that the principle of company 's separate legal 658 entity has on the whole been fully applied by the Courts since Salomon 's case.
Corporate veil has been lifted where the principal question before the court was one of company law, and in some situations where the corporate personality of the company involved was really of secondary importance and the application of the old principle has worked hardship and injustice.
In England, there have been only a few cases where the court had disregarded the company 's corporate entity and paid attention to where the real control and beneficial ownership of the company 's undertaking lay.
When it had done this, the court had relied either on a principle of public policy, or on the principle that devices used to perpetrate frauds or evade obligations will be treated as nullities, or on a presumption of agency or trusteeship which at first sight Salomon 's case seems to prohibit.
Again at page 36 of the same Book, the learned author notes a few cases where the courts have disregarded separate legal entity of a company and investigated the personal qualities of the shareholders or the persons in control of it because there were overriding.
public interests to be served by doing so.
Indubitably, in this case there was no question of evasion of taxes but the manner of treatment of the power plant of Renusagar as the power plant of Hindalco and the Government taking full advantage of the same in the case of power cuts and denial of supply of 100% power to Hindalco, in our opinion, underline the facts and, as such, imply acceptance and waiver of the position that Renusagar was a power plant owned by Hindalco.
Shri Trivedi natually relied on several decisions which we shall briefly note in aid of the submission that Renusagar 's power plant could not be treated as Hindalco 's power plant.
He referred us to the well known case of Aron Salomon vs A. Salomon & Co. Ltd., ; at 27, 30 31, 43. 56 to emphasise the distinction between the shareholders and the company.
This point of view was emphasised by this Court also in which Chandrachud, CJ., relied on Western Coalfields Ltd. in Rustom Cavasjee Cooper vs Union of India, ; at 555, where this Court held that a Company registered under the Companies Act was a legal person, separate and distinct from its individual members.
Property of the Company was not the property of the shareholders.
These propositions, in our opinion, do not have any application to the facts of the instant case.
Shri Trivedi also drew out attention to the Bank Voor Handel En Scheepvaart N. V. vs Stalford, , where in the context of the international law property belonging to or held on behalf of a Hungarian national came up for consideration and the distinction between a shareholder and a company was emphasised and highlighted.
659 In Kodak Ltd. vs Clark, , the Court of Appeal in England while dealing with an English company carrying on business in the U.K. Owned 98% of the shares in a foreign company, which gave it a preponderating influence in the control, election of directors etc., of the foreign company.
The remaining shares in the foreign company were, however, held by independent persons, and there was no evidence that the English company had ever attempted to control or interfere with the management of.
the foreign company, or had any power to do so otherwise than by voting as shareholders.
It was held that the foreign company was not carried on by the English company, nor was it the agent of the English company, and that the English company was not, therefore, assessable to income tax.
Renusagar was not the alter ego of Hindalco, it was submitted.
On the other hand these English cases have often pierced the veil to serve the real aim of the parties and for public purposes.
See in this connection the observations of the Court of Appeal in DHN Food Distributors Ltd. & Ors., vs London Borough of Tower Hamlets, It is not necessary to take into account the facts of that case.
We may, however, note that in that case the corporate veil was lifted to confer benefit upon a group of companies under the provisions of the Land Compensation Act, 1961 of England.
Lord Denning at page 467 of the report has made certain interesting observations which are worth repeating in the context of the instant case.
The Master of the Rolls said at page 467 as follows: "Third, lifting the corporate veil.
A further very interesting point was raised by counsel for the claimants on company law.
We all know that in many respects a group of companies is treated together for the purpose of general accounts, balance sheet and profit and loss account.
They are treated as one concern.
Professor Gower in his book on company law says: 'there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group '.
This is especially the case when a parent company owns all the shares of the subsidiaries, so much so that it can control every movement of the subsidiaries.
These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says.
A striking instance is the decision of the House of Lords in Harold Holdworth & Co. (Wakefield) Ltd vs Caddies.
So here.
This group is virtually the same as a partnership in which all the three companies are partners.
They 660 should not be treated separately so as to be defeated on a technical point.
They should not be deprived of the compensation which should justly be payable for disturbance.
The three companies should, for present purposes, be treated as one, and the parent company, DHN, should be treated as that one.
So that DHN are entitled to claim compensation accordingly.
It was not necessary for them to go through a conveyancing device to get it.
I realise that the President of the Lands Tribunal, in view of previous cases, felt it necessary to decide as he did.
But now that the matter has been fully discussed in this court, we must decide differently from him.
These companies as a group are entitled to compensation not only for the value of the land, but also compensation for disturbance.
I would allow the appeal accordingly." Lord Justice Goff proceeded with caution and observed as follows at pages 468 & 469 of the report: Secondly, on the footing that that is not in itself sufficient, still, in my judgment, this is a case in which one is entitled to look at the realities of the situation and to pierce the corporate veil.
I wish to safeguard myself by saying that so far as this ground is concerned, I am relying on the facts of this particular case.
I would not at this juncture accept that in every case where one has a group of companies one is entitled to pierce the veil, but in this case the two subsidiaries were both wholly owned; further, they had no separate business operations whatsoever; thirdly, in my judgment, the nature of the question involved is highly relevant, namely whether the owners of this business have been disturbed in their possession and enjoyment of it.
I find support for this view in a number of cases, from which I would make a few brief citations, first from Harold Holdworth & Co (Wakefield) Ltd: vs Caddies where Lord Reid said: 'It was argued that the subsidiary companies were separate legal entities, each under the control of its own board of directors, that in law the board of the appellant company could not assign any duties to anyone in relation to the management of the subsidiary companies, and that, there 661 fore, the agreement cannot be construed as entitling them to assign any such duties to the respondent.
My Lords, in my judgment, this is too technical an argument.
This is an agreement in re mercatoria, and it must be construed in the light of the facts and realities of the situation.
The appellant company owned the whole share capital of British Textile Mfg. Co. and, under the agreement of 1947, the directors of this company were to be the nominees of the appellant company.
So, in fact, the appellant company could control the internal management of their subsidiary companies, and, in the unlikely event of there being any difficulty, it was only necessary to go through formal procedure in order to make the decision of the appellant company 's board fully effective.
That particular passage is, I think, especially cogent having regard to the fact that counsel for the local authority was constrained to admit that in this case, if they had thought of it soon enough, DHN could, as it were, by moving the pieces on their chess board, have put themselves in a position in which the question would have been wholly unarguable.
l also refer to Scottish Co operative Wholesale society Ltd. vs Meyer.
That was a case under section 210 of the Companies Act, 1948 and Viscount Simonds said: 'I do not think that my own views could be stated better than in the late Lord President Cooper 's words on the first hearing of this case.
He said: "In my view, the section warrants the court in looking at the business realities of a situation and does not confine them to a narrow 1egalistic view." My third citation is from the judgment of Danckwerts LJ in Merchandise Transport Ltd. vs British Transport Commission where he said that the cases 'Show that where the character of a company, or the nature of the persons who control it, is a relevant feature the court will go behind the mere status of the company as a legal entity, and will consider who are the persons as share sholders or even as agents who direct and control the 662 activities of a company which is incapable of doing anything without human assistance. ' The third ground, which I place last because it is longest, but perhaps ought to come first, is that in my judgment, in truth, DHN were the equitable owners of the property.
In order to resolve this matter, it will be necessary for me to refer in some detail to the facts." Shaw L.J. also observed at page 473 as follows: "Even if this were not right, there is the further argument advanced on behalf of the claimants that there was so complete an identity of the different companies comprised in the so called group that they ought to be regared for this purpose as a single entity.
The completeness of that identity manifested itself in various ways.
The directors of DHN were the same as the directors of Bronze; the shareholders of Bronze were the same as in DHN.
the parent company, and they had a common interest in maintaining on the property concerned the business of the group.
If anything were necessary to reinforce the complete identity of commercial interest and personality, cl. 6, to which I have referred already, demonstrates it, for DHN undertook the obligation to procure their subsidiary company to make the payment which the bank required to be made.
If each member of the group is regarded as a company in isolation, nobody at all could have claimed compensation in a case which plainly calls for it.
Bronze would have had the land but no business to disturb; DHN would have had the business but no interest in the land.
" In this connection it would be useful to refer to Harold Holdsworth & Co. (Wakefield), Ltd. vs Caddies, , where Lord Morton of Henryton in England, at page 734 of the report observed as follows: "My Lords, this clause refers to a group of companies consisting of the appellant company and their existing subsidiary companies.
I cannot read the clause as compelling the board to assign duties to the respondent in relation to the business of every company in the group.
Nor can I read it as 663 compelling the board to assign him duties in relation to the business of the appellant company.
That business is not treated as being on a different footing from the business of British Textile or of another subsidiary of the appellant company, Whalley & Appleyard, Ltd., which is mentioned in the respondent 's condescendence 3.
As I read the clause, it leaves the board of the appellant company free to assign to the respondent duties in relation to the business of one only, or two only or all of the companies in the group, and to vary the assignment and the duties from time to time.
Further, I think the clause leaves the board free to appoint another person to be "a managing director", and to divide the duties and powers referred to in the clause between the respondent and the other managing director in such manner as they think fit.
It is true that each company in the group is, in law, a separate entity, the business whereof is to be carried on by its own directors and managing director, if any; but there is no doubt that the appellant company, by taking any necessary formal steps, could make any arrangements they pleased in regard to the management of the business of (for instance) British Textile.
They owned all the issued capital and the directors were their nominees." Lord Reid at pages 737 738 observed as follows: "It was argued that the subsidiary companies were separate legal entities, each under the control of its own board of directors, that in law the board of the appellant company could not assign any duties to any one in relation to the management of the subsidiary companies, and that, therefore, the agreement cannot be construed as entitling them to assign any such duties to the respondent.
My Lords, in my judgment, this is too technical an argument.
This is an agreement in re mercatoria, and it must be construed in the light of the facts and realities of the situation.
The appellant company owned the whole share capital of British Textile Manufacturing Co., and, under the agreement of 1947, the directors of this company were to be the nominees of the appellant company.
So, in fact, the appellant company could control the internal management of their subsidiary companies, and, in the unlikely 664 event of there being any difficulty, it was only necessary to go through formal procedure in order to make the decision of the appellant company 's board fully effective.
" our attention was drawn by Shri Sen to Scottish Co operative Wholesale Society Ltd. vs Meyer and Anr., , where Viscount Simonds of House of Lords observed at pages 71 72 as follows: "My Lords, it may be that the acts of the society of which complaint is made could not be regarded as conduct of the affairs of the company if the society and the company were bodies wholly independent of each other, competitors in the rayon market, and using against each other such methods of trade warfare as custom permitted.
But this is to pursue a false analogy.
It is not possible to separate the transactions of the society from those of the company.
Every step taken by the latter was determined by the policy of the former.
I will give an example of this.
I observed that, in the course of the argument before the House, it was suggested that the company had only itself to blame if, through its neglect to get a contract with the society, it failed in a crisis to obtain from the Falkland Mill the supply of cloth that is needed.
The short answer is that it was the policy of the society that the affairs of the company should be so conducted, and the minority shareholders were con tent that it should be so.
They relied how unwisely the event proved on the good faith of the society, and in any case they were impotent to impose their own views.
It is just because the society could not only use the ordinary and legitimate weapons on commercial warfare but could also control from within the operations of the company that it is illegitimate to regard the conduct of the company 's affairs as a matter for which it had no responsibility.
After much consideration of this question, I do not think that my own views could be stated better than in the late Lord President, Lord Cooper 's words on the first hearing of this case .
He said (1954 SC at p.391); "In my view, the section warrants the court in looking at the business realities of a situation and does not confine them to a narrow legalistic view.
The truth is tnat, whenever a subsidiary is formed as in this case with an 665 independent minority of shareholders, the parent company must, if it is engaged in the same class of business, accept as a result of having formed such a subsidiary an obligation so to conduct what are in a sense its own affairs as to deal fairly with its subsidiary.
" At the opposite pole to this standard may be put the conduct of a parent company which says "our subsidiary company has served its purpose, which is our purpose.
Therefore let it die" and, having thus pronounced sentence, is able to enforce it and does enforce it not only by attack from without but also by support from within.
If this section is inept to cover such a case, it will be a dead letter indeed.
I have expressed myself strongly in this case because it appears to me to be a glaring example of precisely the evil which Parliament intended to remedy.
" Similarly, at page 84 of the report, Lord Keith 's observations are also relevant to the facts of this case.
"My Lords, if the society could be regarded as an organisation independent of the company and in competition with it, no legal objection could be taken to the actions and policy of the society.
Lord Carmont pointed this out in the Court of Session.
But that is not the position.
In law, the society and the company were, it is true, separate legal entities.
But they were in the relation of parent and subsidiary companies, the company being formed to run a business for the society which the society could not at the outset have done for itself unless it could have persuaded the respondents to become servants of the society.
This the respondents were not prepared to do.
The company, through the knowledge, the experience, the connexions, the business ability and the energies of the respondents, had built up a valuable goodwill in which the society shared and which there is no reason to think would not have been maintained, if not increased, with the co operation of the society.
The company was in substance, though not in law, a partnership consisting of the society and the respondents.
Whatever may be the other different legal consequences following on one or other of these forms of combination one result, in my opinion, followed in the present case from the method adopted, which is common to partnership, that 666 there should be the utmost good faith between the constitutent members.
In partnership the position is clear.
As stated in Lindley on Partnership (11th Edn.) p.401: "A partner cannot, without the consent of his co partners, lawfully carry on for his own benefit, either openly or secretly,.
any business in rivalry with the firm to which he belongs.
" It may not be possible for the legal remedies that would follow in the case of a partnership to follow here, but the principle has, I think, valuable application to the circumstances of this case.
" In Charterbridge Corpn.
Ltd. vs Lloyds Bank Ltd. & Anr.
at page 1194 Justice Pennycuick emphasised that the reality of the situation must be looked in.
Shri Trivedi drew out attention to the decision in Marshall Richards Machine Co. Ltd. vs Jewitt (H.M. Inspector of Taxes) , where at page 525 of the report Lord Upjohn, J. Observed that where you have a wholly owned subsidiary, and both the parent company and wholly owned subsidiary enter into trading relationships, there is, of course, a dual relation, but you cannot for the purposes of tax disregard the fact that there are, in fact, two entities and two trades, that is to say, the trade of each company.
It is normally a question of fact whether the disbursement in question is laid out wholly and exclusively and for the purposes of the trade.
In aid of this proposition and in furtherance Shri Trivedi drew our attention to the profits of the two companies which were separately computed and also referred to Vol.
C, 641 where the profits of Renusagar were separately indicated and Vol.
at page 642 where the profits of Hindalco were separately indicated.
We are, however, of the opinion that these tests are not concIusive tests by themselves.
Our attention was also drawn to the decision of the Madras High Court in M/s. Spencer & Co. Ltd., Madras vs The Commissioner of Wealth Tax, , where Veeraswami J. held that merely because a company purchases almost the entirety of the shares in another company, there was no extinction of corporate character for each company was a separate juristic entity for tax purposes.
Almost on similar facts, are the observations of P.B. Mukharji, J. in Turner Morrison & Co. Ltd. vs Hungerford Investment 667 Trust Ltd., where he held that holding company and subsidiaries are incorporated companies and in this context each has a separate legal entity.
Each has a separate corporate veil but that does not mean that holding company and the subsidiary company within it, all constitute one company.
Mr Justice o. Chinnappa Reddy speaking for this Court in Life Insurance Corpn of India vs Escorts Ltd. & Ors [1985] Suppl 3 SCR 909 had emphasized that the corporate veil should be lifted where the associated companies are inextricably connected as to be, in reality, part of one concern.
It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected.
After referring to several English and Indian cases, this Court observed that eversince A. Salomon & Co. Ltd 's case (supra), a company has a legal independent existence distinct from individual members.
It has since been held that the corporate veil may be lifted and corporate personality may be looked in.
Reference was made to Pennington and Palmer 's Company Laws.
It is hightime to reiterate that in the expanding of horizon of modern jurisprudence, lifting of corporate veil is permissible.
Its frontiers are unlimited.
It must, however, depend primarily on the realities of the situation.
The aim of the legislation is to do justice to all the parties.
The horizon of the doctrine of lifting of corporate veil is expanding.
Here, indubitably, we are of the opinion that it is correct that Renusagar was brought into existence by Hindalco in order to fulfil the condition of industrial licence of Hindalco through production of aluminium.
It is also manifest from the facts that the model of the setting up of power station through the agency of Renusagar was adopted by Hindalco to avoid complications in case of take over of the power station by the State or the Electricity Board.
As the facts make it abundantly clear that all the steps for establishing and expanding the power station were taken by Hindalco, Renusagar is wholly owned subsidiary of Hindalco and is completely controlled by Hindalco.
Even the day to day affairs of Renusagar are controlled by Hindalco.
Renusagar has at no point of time indicated any independent volition.
Whenever felt necessary, the State or the Board have themselves lifted the corporate veil and have treated Renusagar and Hindalco as one concern and the generation in Renusagar as the own source of generation of Hindalco.
In the impugned order of the profits of Renusagar 668 have been treated as the profits of Hindalco.
In the aforesaid view of the matter we are of the opinion that the corporate veil should be lifted and Hindalco and Renusagar be treated as one concern and Renusagar 's power plant must be treated as the own source of generation of Hindalco and should be liable to duty on that basis.
In the premises the consumption of such energy by Hindalco will fall under section 3(1)(c) of the Act.
The learned Additional Advocate General for the State relied on several decisions, some of which have been noted.
The veil on corporate personality even though not lifted sometimes, is becoming more and more transparent in modern company jurisprudence.
The ghost of Salomon 's case still visits frequently the hounds of Company Law but the veil has been pierced in many cases.
Some of these have been noted by Justice P.B. Mukharji in the New Jurisprudence.
(Tagore Law Lecture 183).
It appears to us, however, that as mentioned the concept of lifting the corporate veil is a changing concept and is of expanding horizons.
We think that the appellant was in error in not treating Renusagar 's power plant as the power plant of Hindalco and not treating it as the own source of energy.
The respondent is liable to duty on the same and on that footing alone; this is evident in view of the principles enunciated and the doctrine now established by way of decision of this Court in Life Insurance Corpn of India, (supra) that in the facts of this case sections 3(1)(c) and 4(1)(c) of the Act are to be interpreted accordingly.
The person generating and consuming energy were the same and the corporate veil should be lifted.
In the facts of this case Hindalco and Renusagar were inextricably linked up together.
Renusagar had in reality no separate and independent existence apart from and independent of Hindalco.
In the aforesaid view of the matter we are of the opinion that consumption of energy by Hindalco is clearly consumption by Hindalco from its own source of generation.
Therefore, the rates of duty applicable to own source of generation have to be applied to such consumption, that is to say.
I paisa per unit for the first two generating sets and nil rate in respect of 3rd and 4th generating sets.
It is appropriate to refer that having regard to the conduct of the State the power cuts matter and also the present proceedings the State should not be permitted to treat consumption of Renusagar 's energy by Hindalco as anything other than different from consumption of energy 669 by Hindalco from its own source of generation.
We are, therefore, of the opinion that in the facts of this case the corporate veil must be lifted and Hindalco and Renusagar should be treated as one concern and if that is taken the consumption of energy by Hindalco must be regarded as consumption by Hindalco from its own source of generation.
Inasmuch as the High Court upheld this contention of the respondent we are in respectful agreement of its views and the appeal directed against this finding of the High Court must, therefore, be rejected.
The electricity bill for arrears, subject to consideration of other aspects of the matter, that is to say, the validity of the order of rejection passed by the State on 16th February, 1982 rejecting the claim for exemption would be treated hereinafter.
In order to appreciate the second aspect of the matter, that is to say, the challenge to the order which has been quashed by the High Court, it is necessary to recapitulate certain facts.
Hindalco made an application to the State Government under section 3(4) of the Act for exemption on 28th September, 1970.
In spite of repeated requests made by Hindalco the State did not take any decision on the said application of Hindalco and also purported to raise and enforce demands under the Duty Act against Hindalco.
Hindalco and Renusagar filed a Writ Petition No. 368 of 1972 in the High Court of Allahabad on 21st March, 1972.
On that very date Hindalco was informed that the application previously made by it had been rejected by the State Government.
Hindalco applied for amendment of the writ petition.
Reasons for rejection were intimated on 16th June, 1972.
Thereafter Writ Petition No. 368 of 1972 was withdrawn.
On 21st July, 1972 Hindalco and Renusagar filed another Writ Petition No. 4521 of 1972 in the High Court of Allahabad challenging the order of rejection.
On 17th May, 1974 the High Court delivered judgment quashing the aforesaid rejection and asking the State Government to consider the matter afresh in accordance with law and in accordance with the directions contained in the said judgment.
Another Writ Petition being Writ Petition No. 3921 of 1982 out of which the present appeal arises was filed by Renusagar and Hindalco on 16th April, 1982.
The High Court passed an order on 26th September, 1984 quashing the order.
The High Court was of the view that the Government was under a mandatory duty to consider certain factors.
These were: (1) How did the cost of power to the Corporation compare with the cost of power to 670 similar industries in other States? (2) How the spending of huge sums A by the Government of India in foreign exchange decreased and its keenness to attain self sufficiency in the country by increasing its indigenous production in public interest attained? (3) The commitment made by the Government of Uttar Pradesh to the Hindalco to supply power at cheap rate as noticed in the report of Dr. Nagarajarao.
(4) The effect of imposition of duty on the margin of profit available to Hindalco.
The provisions of sub section (4) of section 3 have been noticed.
As we have read the said provisions, it appears to us that the dominance of public interest is significant and we refer to the various factors, namely, (a) prevailing charges for supply of energy in any area, (b) the generating capacity of any plant, (c) the need to promote industrial production generally or any specified class therof and other relevant factors and then taking all these factors into consideration, in public interest, to fix different rates of electricity duty in relation to different classes of consumption of energy or allow any exemption from payment thereof.
Various grounds have been made out.
Shri Sen for the respondents is right that in view of the ceilings prescribed the power conferred upon the State under section 3(1) of the Act by itself is valid and does not amount to excessive delegation.
See also in this connection the observations of this Court in Devi Das Gopal Krishnan & Ors.
vs State of Punjab & Ors., [1967] 3 S.C.R. 557 and Ram Bachan Lal vs The State of Bihar, ; Shri Trivedi, learned Additional Advocate General, State of Uttar Pradesh drew our attention to the case of Panama Canal Company vs Grace Line, ; 2 Lawyers ' Edn. 788, where at page 793 of the report while dealing with the facts of that case Justice Douglas observed that, as it was seen in that case, the conflict raged over questions that at heart involved problems of statutory construction and cost accounting: whether an operating deficit in the auxiliary or supporting activities was a legitimate cost in maintaining and operating the Canal for purpose of the toll formula.
These are matters on which experts might disagree; these involve nice issues of judgment and choice, which required the exercise of informed discretion.
In those circumstances Justice Douglas observed that the case was, therefore, quite unlike the situation where a statute created a duty to act and an equity court was asked to compel the agency to take the prescribed action.
What was emphasised was that the matter should be far less cloudy, much more clear for courts to intrude.
It is also in this connec 671 tion necessary that if technical considerations are involved the Court feels shy to interfere.
Reliance was placed on the observations of this Court in Vincent Panikurlangara vs Union of India and others; , There the writ petition involved the claim for withdrawal of 7000 fixed dose combinations and withdrawal of licences of manufacturers engaged in manufacture of about 30 drugs which have been licensed by the Drugs Control Authorities; the issues that fell for consideration are not only relating to technical and specialised matters relating to therapeutic value, justification and harmful side effects of drugs but also involved examination of the correctness of action taken by respondents 1 and 2 therein on the basis of advice; the matter also involved the interest of manufacturers and traders of drugs as also the interest of patients who require drugs for their treatment.
This Court reiterated that in view of the magnitude, complexity and technical nature of the enquiry involved in the matter as also the far reaching implications of the total ban of certain medicines for which the petitioner had prayed, a judicial proceeding of the nature initiated was not an appropriate one for determination of such matters.
The technical aspects which arose for consideration in a matter of that type could not be effectively handled by a court.
This Court also reiterated that similarly the question of policy which was involved in the matter was also one for the Union Government keeping the best interest of citizens in view to decide.
No final say in regard to such aspects came under the purview of the court.
The High Court in the instant case reiterated the necessity of cheap electricity and if cheap electricity was not made available, the cost of indigenous aluminium would go up.
It would necessitate import of aluminium causing drain on the foreign exchange of the country.
On the other hand, the learned Additional Advocate General for the State of U.P. contended and in our opinion rightly that primary purpose of the Act as stated in the preamble was to raise the revenue for the development projects.
Whether in a particular situation, rural electrification and development of agriculture should be given priority or electricity or development of aluminium industry should be given priority or which is in public interest, in our opinion, are value judgments and the legislature is the best judge.
The High Court in its impugned judgment referred to the order of the Government.
The said order read as follows: "The Corporation has also emphasized that the Government of India is spending a huge sum of money in foreign exchange to meet the requirements of aluminium in India, 672 with a view to increasing the aluminium production by Hindalco Electricity should be made available at cheap rate and exemption should be granted to the Corporation from payment of electricity duty.
In this connection it may again be pointed out that the imposition of electricity duty will not affect the productivity of aluminium by M/s Hindalco as electricity duty is negligible as clearly made out in the earlier paragraphs.
Accordingly, the electricity duty is not likely to have any adverse effect on foreign exchange of the country.
Referring to the aforesaid observations of the State Government, the High Court was of the view that the said observations of the State Government clearly showed that the State Government did not address itself to the need of promoting aluminium industry for increasing production of aluminium which would in the long run save foreign exchange.
We are unable to agree.
What was paramount before introduction of the development programme and how the funds should be allocated and how far the Government considers a negligible increase and rise in the cost of aluminium for the purpose of raising monies for other development activities are matters of policy to be decided by the Government.
It is true as the High Court has pointed out that the question regarding public interest and need to promote indigenous industrial production was related with the question of exemption of duty.
But what the High Court missed, in our opinion with respect, was that a matter of policy which should be left to the Government.
Reading the order of the Government, it appears to us that the Government had adverted itself to all the aspects of sub section (4) of section 3 of the Act.
It is true that certain amount of encouragement was given to Hindalco to start the industry in a backward area.
After considerable point of time the very low rate of duty was charged.
But if we need other sectors of growth and development for example, food, shelter, water, rural electrification, the need for encouragement to aluminium industry had to be subordinated by little high cost because that is a matter on which the Government as representing the will of the people is the deciding factor.
Price fixation, in our opinion, which is ultimately the basis of rise in cost because of the rise of the electricity duty is not a matter fol investigation of Court.
This question was examined by this Court in Union of India and another vs Cynamide India Ltd. and another, [1987] 2 S.C.C. 720 where one of our learned brothers who delivered the judgment of the High Court of Allahabad was a party.
There in exercise of the powers under section 3(2)(c) of the Essential Commodities Act.
the Drugs (Prices Control) order, 673 1979 was made.
The Central Government thereafter issued notification thereunder.
At page 741 of the report, Chinnappa Reddy, J. speaking for the Court referring to a passage of the Administrative Law by Schwartz with approval expressed the view that those powers were more or less legislative in character.
Fixation of electricity tariff can also to a certain extent be regarded of this category.
Chinnappa Reddy, J. Observed at page 735 of the report that price fixation is more in the nature of a legislative activity than any other.
He referred to the fact that due to the proliferation of delegated legislation, there is a tendency for the line between legislation and administration to vanish into an illusion.
Administrative, quasi judicial decisions tend to merge in legislative activity and, conversely, legislative activity tends to fade into and present an appearance of an administrative or quasi judicial activity.
Any attempt to draw a distinct line between legislative and administrative functions, it has been said, is 'difficult in theory and impossible in practice '.
Reddy, J. insisted that it is necessary that the line must sometimes be drawn as different legal rights and consequences may ensue.
It appears to us that sub section (4) of section 3 of the Act in the set up is quasi legislative and quasi administrative in so far as it has power to fix different rates having regard to certain factors and in so far as it has power to grant exemption in some cases, in our opinion, is quasi legislative in character.
Such a decision must be arrived at objectively and in consonance with the principles of natural justice.
It is correct that with regard to the nature of the power under section 3(4) of the Act when the power is exercised with reference to any class it would be in the nature of subordinate legislation but when the power is exercised with reference to individual it would be administrative.
Reference was made in this connection to the cases of Union of India vs Cynamide India Ltd. (supra) and P.J. Irani vs State of Madras; , at 179 180 and 181 182.
If the exercise of power is in the nature of subordinate legislation the exercise must conform to the provisions of the statute.
All the conditions of the statute must be fulfilled.
The High Court was right only to the limited extent that all the relevant considerations must be taken into account and the power should not be exercised on irrelevant considerations but singular consideration which the High Court, in our opinion, seems to have missed in the judgment under appeal, is these factors, namely, the prevailing charges for supply of energy in any area, the generating capacity of any plant, the need to promote industrial production generally or any specified class thereof and other relevant factors cannot be judged disjointly.
These must be judged in adjunct to the public interest and that public interest is as mentioned in the Preamble to raise revenue.
674 Reference was also made to the observations of the Judicial Committee in Ryots of Garabandho and others vs Zamindar of Parlakimedi and another, A.I.R. 1943 P.C. 164 where the Judicial Committee had to deal with the proviso to section 30 of the Act.
It read as follows: "In settling rents under this section the Collector shall presume, unless the contrary is proved, that the existing rent or rate of rent is fair and equitable and shall have regard to the provisions of this Act for determining rates of rent payable by a ryot.
" Viscount Simon L.C.
Observed that the view taken by the majority of the Collective Board of Revenue in making the order which is now complained of, is that the requirement to "have regard to" the provisions in question has no more definite or technical meaning than that of ordinary usage, and only requires that these provisions must be taken into consideration.
In their view the prime duty of the Revenue officer under Chap.
II was to fix a fair and equitable rent, and though he must be guided by the principles underlying such provisions as were contained in chap.
3, he was not strictly bound by such provisions.
The Judicial Committee observed at page 180 of the report as follows: "Having regard to the long time that had elapsed since the last tentative settlement of rent in 1867 68, to the prodigions rise in prices that had taken place since then, and to the general economic improvement of this part of the country, the Collective Board considered that an enhancement of 37 1/2 per cent, would not be oppressive and directed the Revenue officer to reduce to that figure the enhancement of 100 per cent, which he had made.
This view of the effect of the direction to "have regard to" the provisions of the Act for determining rates of rent payable by a ryot is supported by the decision of the High Court in at 506.
It is also confirmed by certain observations of Reilly J. in at p. 486, where the learned Judge said: Where the settling officer has to deal only with such questions as would arise in a suit for commutation, for enhancement, or reduction of money rent, under section 168(2) he must be guided by the appropriate principles as set out in the Act, but there is no doubt that his settlement may embrace a much wider field of 675 question and whenever he has not merely to adjust the lawful rent but to fix what is fair and equitable in variation from the lawful rent which can be exacted in a suit, his settlement is clearly something which no civil Court could do unless specially empowered.
Their Lordships find themselves on this matter in agreement with the view taken by the majority of the Collective Board.
It is not possible to peruse the proceedings of the Special Revenue officer in this case without seeing that a number of matters besides the rise in prices of staple food crops were considered by him, and had to be considered by him, if he was to carry out his duty under chap.
He observed in para.
30 of the final proceedings dated 10th December 1935: I hold that the present settlement is also a fresh and initial settlement wherein everything has to be re classified afresh and new rates of rent have to be fixed.
It is not therefore a case of enhancement but of fixing and introducing a new rate of rent based on the principles of equity and fairnes as laid down in Chap.
II, Estates Land Act.
" The High Court in the impugned judgment commented that it was a mandatory duty to separately consider these relevant factors and has committed the error against which the Judicial Committee cautioned.
The High Court was of the view at page 10 of the judgment that there was a mandatory duty to consider the factors mentioned hereinbefore.
All that the section requires was that these factors should be borne in mind but these must be subordinate to the executive decision of the need for public interest.
In Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , the Sugar (Control) order, 1966 came up for consideration.
Clause 7(2) of the Sugar (Control) order had been set out at page 958 of the report.
It read as follows: "Such price or maximum price shall be fixed having regard to the estimated cost of production of sugar determined on the basis of the relevant schedule of cost given in the Report of the Sugar Enquiry Commission (October 1965), subject to the adjustment of such rise in cost subsequent to the Report aforesaid as, in the opinion of the Central 676 Government, cannot be absorbed by the provision for contingencies in the relevant schedule to that Report.
" Beg, J. as the learned Chief Justice then was, observed that clause 7(2) set out above required the Government to fix the price "having regard to the estimated cost of production of sugar on the basis of the relevant schedule".
The expression "having regard to" only obliges the Government to consider as relevant data material to which it must have regard to.
In so far as the High Court held in this judgment that the power conferred on the State Government was of the administrative nature, the High Court may not be in error.
But the High Court held that it should be in consonance with the principles of natural justice, in our opinion it must be in accordance with natural justice to a limited extent and such principles of natural justice are enunciated by this Court in several decisions, namely, A.K. Kraipak vs Union of India, A.I.R. 1970 S.C. 150; M/s. Travancore Rayons Ltd. vs Union of India, A.I.R. 1971 S.C. 862 and Amal Kumar Ghatak vs State of Assam & others, A.I.R. 1971 Assam 32.
Keeping in view the aforesaid principles, the High Court examined the petitioners ' grievance.
Dr. Rajagopalan submitted his report to the State Government in January, 1979.
Admittedly, Dr. Rajagopalan placed reliance on the report of Working Group on Aluminium set up by the Government of India in 1970 and various other reports of Bureau of Industrial Cost and Price (hereinafter refer red to as 'BICP '), submitted to the Government from time to time.
It is based on the balance sheet of the appellants and had been made available to the respondents.
We have examined the correspondence that passed between the parties and we are of the opinion that there was no violation of the principles of natural justice because the relevant datas were made available to the appellants.
It is true that the principles of natural justice must be adhered to.
In this connection reference may be made to S.D. Hotop "Principles of Australian Administrative Law 6th Edition, Pages 210 212, Cases and Materials on Review of Administrative Action (2nd Edition) by S.D. Hotop, Wade on Administrative Law, 5th Edition, pages 506/507 and Bennion on Statutory Interpretation, 1984 Edition, pages 140 141.
The exercise of power whether legislative or administrative will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary.
Similarly, if the power has been exercised on a non consideration or non application of mind to re 677 levant factors the exercise of power will be regarded as manifestly erroneous.
If a power (whether legislative or administrative) is exercised on the basis of acts which do not exist and which are patently erroneous, such exercise of power will stand vitiated.
See Commissioner of Income Tax vs Mahindra & Mahindra Ltd. Ors., ; at 786 787.
The present case relates to the particular facts and circumstances of an individual, namely, Hindalco.
To the extent, its claim for exemption was entitled to the consideration.
In our opinion, the facts and circumstances of the case were examined in consonance with the principles of natural justice.
All relevant factors were given consideration but subject to public interest.
The High Court considered whether electricity duty was included in the prices of aluminium fixed by the Central Government.
On this aspect our attention was drawn on behalf of the respondents at pages 372 387 of the judgment in Volume B.
It was submitted that the assumption that electricity duty was included in the prices of Hindalco fixed by the Central Government formed a basic and a very important consideration in the making of the impugned order.
We are unable to agree.
It was also submitted that the said assumption was made by the State Government and Dr. Rajagopalan on the basis of the reports of BICP and the Working Group.
The High Court on a perusal of the reports of the BICP and the Working Group came to the conclusion that the said assumption of the State and Dr. Rajagopalan is based on non existent fact and/or is patently erroneous.
Apparently such examination by the High Court was not warranted.
It was pointed out that Dr. Rajagopalan had determined the adequacy of the profits of Hindalco by relating the same to the original subscribed capital only and had completely ignored the reserves of Hindalco.
The aforesaid basis, it was held by the High Court is contrary to the well accepted principles of return on capital employed/net worth.
It is true that Hindalco has made profits much more than it had before the imposition of the duty.
The adequacy of the profits or whether it made much more profits is not a consideration which must prevail over public interest and the Government having taken into consideration this factor, in our opinion, did not commit any error and the High Court was in error in setting aside the order of the Government.
It is true that the cost of power to similar industry in other State was a relevant factor and the State was under a mandatory duty to consider the same.
The State has taken note of all those factors and has observed that M/s. Hindalco is being supplied with electrical energy at a very nominal rate and taking into consideration the prevailing practice of levy of electricity duty in other States as well as the provisions stated in section 3(4), the Government have come to the conclusion that there is no justification for allowing 678 exemption from electricity duty to M/s. Hindalco.
The Government did not commit any error which required interference by the High Court in the manner it did .
The assurance of cheap power factor was there.
But the assurance of cheap power factor does not foreclose the public interest of raising public revenue.
In July, 1975 the Central Government fixed uniform prices of aluminium for all the producers of aluminium.
The Central Government also fixed uniform sale prices of aluminium applicable to all producers.
The Central Government also fixed individual retention prices (based, inter alia, on the cost of production) for each individual producer.
All producers of aluminium were to sell aluminium at the uniform sale prices.
Any producer whose retention prices were lower than the sale prices had to pay difference into the Aluminium Regulation Account.
Any producer whose retention prices were higher than the sale prices was entitled to receive the difference from the Aluminium Regulation Account.
Price, therefore, was no question of the respondent being loser or sufferer.
It is true that electricity duty was not included and was also considered in the fixation of the price.
That is the only pre dominant factor, having regard to the technical nature of the order.
The impugned order does not suffer from the vice of non application of mind or non consideration of the relevant factors and the High Court was in error in interfering with the order of the Government.
We are clearly of the opinion that the High Court was in error in interfering with the order in the manner it did.
The High Court should not have interfered for interference by the High Court the matter should have been far less cloudy and far more clear.
Natural justice in the sense that a party must be heard beforehand need not be directly followed in fixing the price.
Reference in this connection may be made to the observations of this Court in Prag Ice & oil Mills and another etc.
vs Union of India; , , where at page 325 of the report, this Court observed that in the ultimate analysis, the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases as valid.
In this connection reference may also be made to Shree Meenakshi Mills Ltd. vs Union of India, , where this Court dealing with the Cotton Textile (Control) order, 1948 at page 419 of the report observed that if fair price is to be fixed leaving a reasonable margin of profit, there is never any question of infringement of fundamental right to carry on business by imposing reasonable restrictions.
679 Unreasonableness and natural justice have to be judged in that context.
In that view of the matter non supply of the basis of the report of the BICP does not by itself, in our opinion, in the facts and circumstances of the case make the order of the State Government vulnerable to challenge.
In Laxmi Khandsari etc.
vs State of U. P. & Ors ; this Court was dealing with the and the Sugarcane (Control) order, 1966 and observed that in determining the reasonableness of restrictions imposed by law in the field of industry, trade or commerce, the mere fact that some of the persons engaged in a particular trade may incur loss due to the imposition of restrictions will not render them unreasonable because it is manifest that trade and industry pass through periods of prosperity and adversity on account of economic, social or political factors.
At page 129 of the report rejecting the plea that before fixing a price the rules of natural justice should be adhered to, this Court emphasised, referring to the observations in the case of Saraswati Industrial Syndicate Ltd. vs Union of India, ; that price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material.
There is scope for trial and error in such sphere.
Judged by that standard, the impugned order in this case, in our opinion, is not bad.
In support of the proposition that the principles of natural justice had been violated in passing the impugned order, five decisions were referred to, namely, State of Orissa vs Mr. (Miss) Binapani Dei, ; ; A.K Kraipak vs Union of India, A.I.R ; Mohd. Rashid vs State of U.P. ; ; S.L. Kapoor vs Jagmohan and others; , and Maneka Gandhi vs Union of India, A.I.R. 1978 S.C. 597.
The principles of these cases will have no application to the facts of this case.
There has been no violation of the principles of natural justice to the extent applicable to the order of this nature.
Reference was made to the observations in the case of India Sugars & Refineries Ltd. vs Amravathi Service Co operative Society Ltd.; , where at page 746 of the report, this Court observed that the power to grant exemption to factories from payment of additional price is intimately connected with the right of sugarcane growers to claim additional price.
In granting of such power, principles of natural justice should be followed.
In such a case a duty to act judicially does arise.
680 This Court in Commissioner of Income Tax, Bombay and others A vs Mahindra and Mahindra Limited & Ors., ; at page 786 of the report, dealt with the parameters of the Court 's power of judicial review of administrative or executive action or decision.
Indisputably, it is a settled position that if the action or decision is perverse or is such that no reasonable body of persons, properly informed, could come to or has been arrived at by the authority misdirecting itself by adopting a wrong approach or has been influenced by irrelevant or extraneous matters, the Court would be justified in interfering with the same.
See also the observations at page 787 of the report.
In this case the parameters had been adhered to.
All relevant factors had been borne in mind.
It is true that each factor had not been independently considered, but these had been borne in mind.
In our opinion, the Government did not act in violation either of the principles of natural justice or arbitrarily or in violation of the previous directions of the High Court.
In the premises, the High Court was in error in setting aside the order of the State Government in its entirety.
The High Court should have allowed the claim of Hindalco for the reduced rate of bill on the basis that Renusagar Power Plant was its own source of generation under section 3(1)(c) and the bills should have been made by the Board on that basis.
But the High Court was in error in upholding the respondents ' contention that the State Government acted improperly and not in terms of section 3(4) of the Act and in violation of the principles of natural justice.
We, therefore, allow the appeal to the extent indicated above and set aside the judgment of the Allahabad High Court to that extent and restore the State Government 's impugned order subject to the modification of the bills on the basis of own source of generation.
We, therefore, direct that the electricity bills must be so made as to give Hindalco the benefit of the rate applicable to its own source of generation from Renusagar Plant.
The appeal is disposed of in those terms.
The electricity bills must be computed as indicated above.
After recomputation and presentation of such bills the respondents will pay the same within two months thereof.
In view of the facts and circumstances of the case, the parties will pay and bear their own costs.
RANGANATHAN, J. I agree.
On the second issue, I think it is difficult to define the Precise nature of the power conferred on the 681 State Government under Section 3(4) of the Electricity Duty Act and l A have doubts whether the sub section can at all be interpreted as conferring a right on individual consumers to require that, in the light of the material adduced by them, the rates applicable to them should have been fixed differently or that they should have been exempted from duty altogether.
However, it is unnecessary to pursue this aspect further as I agree with the conclusion of my learned brother that, in this case, the respondent 's representations have been fully considered and the requirements of natural justice have been fulfilled and that there is no warrant to interfere with the order of the State Government.
S.L. Appeal disposed of. | Disallowing request for exemption from levy of electricity duty under sub section (4) of section 3 of the U.P. Electricity Duty Act, 1952 ( 'the Act '), as amended, the appellants issued notice of demand asking respondent No. 1, Renusagar Power Co., to pay electricity duty on the energy supplied by it to respondent No. 2, Hindalco, for industrial purposes.
Being aggrieved by the decision of the State Government, the respondents filed a writ petition in the High Court.
The High Court allowed the writ petition, holding that the impugned order of the State Government was not maintainable in law, and quashing the order as well as the notice of demand abovesaid.
The State Government was also directed to consider the request of the respondents for exemption in accordance with the directions issued by the High Court in the earlier Writ Petition No. 4521 of 1972 filed by the respondents.
Being aggrieved by the decision of the High Court the appellants moved this Court for relief.
Disposing of the appeal, the Court, ^ HELD: Per Sabyasachi Mukharji, J. There were two different aspects of the case to be considered.
One was whether the respondent No. 1, the Renusagar Power Co. Ltd., was 'own ' source of generation of electricity for respondent No. 2, the Hindalco, under section 3(1)(c) of the Act.
The second aspect was whether the order passed by the State Government was in accordance with the principles of natural justice in so far as the same were applicable to the case.
[646C] 628 From 1952 to 1970, no duty was payable if electricity was generated from own source of energy.
From 1970 to 1973, duty of one paisa was payable in respect of electricity supplied from own source of generation.
After 1973, no duty was payable in respect of electricity supplied from own source of generation.
[646D] Renusagar, a 100% subsidiary of Hindalco, wholly owned and controlled by Hindalco, was incorporated in March, 1964.
Hindalco had established the power plant through the agency of Renusagar to avoid complications in the case of a possible take over of the power plant by the State Electricity Board as power generation is generally not permitted in normal conditions in the private sector.
The respondents highlighted that the sanction under section 28 of the , given to Renusagar and its amendment established that Renusagar was not a normal type of sanction under Section 23 of the 1910 Act as the holder could supply power only to Hindalco.
All these steps for the expansion of the power in Renusagar so as to match the power requirement of Hindalco 's expansion were taken by Hindalco even though Renusagar had been incorporated.
Applications for all the necessary sanctions and permissions were made by Hindalco.
Permissions and sanctions were first intimated to Hindalco even though Renusagar was in existence.
Changes in the sanctions and/or permissions were obtained by Hindalco and not Renusagar.
The expansion of the power plant in Renusagar was to exactly match the requirements of Hindalco for the production of Aluminium.
The expansion of the power plant in Renusagar was part and parcel of the expansion of the aluminium plant of Hindalco.
All the steps to set up the power plant in Renusagar and its expansion were taken by Hindalco.
Hindalco consumed about 255 MW power out of which 250 M W came from Renusagar.
There was only one transmission line going out of Renusagar and that went to Hindalco, which had complete control over Renusagar.
The agreement between Renusagar and Hindalco indicated this was not a normal sale purchase agreement between two independent persons at arms length.
The price of electricity was determined according to the cash needs of Renusagar.
This covenant also showed complete control of Hindalco over Renusagar.
All persons and authorities dealing and conversant with this matter had consistently treated Renusagar as own source of generation of Hindalco.
In the power cuts matter under section 22B of cut was imposed on Hindalco on the footing that it had its own source of generation.
All the authorities including the State and Board had all along treated Renusagar as own source of generation of Hindalco.
It was thus contended that Renusagar must he treated as alter ego of Hindalco, i.e., 629 Own source of generation of Hindalco within the meaning of section 3(1)(c) of the Duty Act, and that consumption clearly fell within that section.
[653C H; 655C F] 'Own source of generation ' is an expression connected with the question of lifting or piercing the corporate veil.
The appellants contended that in this case there was no ground for lifting the corporate veil, urging that there was no warrant either in law or in fact to lift the corporate veil and treat Renusagar 's plant as Hindalco 's own source of generation.
[657B C] In the expanding horizon of modern jurisprudence, lifting of corporate veil is permissible.
Its frontiers are unlimited.
It must, however, depend primarily on the realities of the situation.
The aim of legislation is to do justice to all the parties.
The horizon of the doctrine of lifting corporate veil is expanding.
In this case, indubitably, it is correct that Renusagar was brought into existence by Hindalco in order to fulfil the condition of industrial licence of Hindalco through production of aluminium.
It was also manifest from the facts that the model of the setting up of power station through the agency of Renusagar was adopted by Hindalco to avoid complications in case of takeover of the power station by the State or the Electricity Board.
All the steps for establishing and expanding the power station were taken by Hindalco and Renusagar was wholly owned subsidiary of and completely controlled by Hindalco.
Even the today affairs were controlled by Hindalco.
Renusagar had never indicated independent volition.
Whenever felt necessary, the State or the Board themselves had lifted the corporate veil and treated Renusagar and Hindalco as one concern and the generation in Renusagar as the own source of generation of Hindalco.
Indubitably, the manner of treatment of the power plant of Renusagar as the power plant of Hindalco and the Government taking full advantage of the same in the case of power cuts and denial of supply of 100% power to Hindalco underlined the facts and implied acceptance and waiver of the position that Renusagar was a power plant owned by Hindalco.
In this view of the matter, the corporate veil should be lifted and Hindalco and Renusagar be treated as one concern and Renusagar 's power plant must be treated as the own source of generation of Hindalco and should be liable to duty on that basis.
In the premises the consumption of such energy by Hindalco will fall under section 3(1)(c) of the Act.
[667E H; 688A B] The veil of corporate personality even though not lifted sometimes is becoming more and more transparent in modern company juris 630 prudence.
The ghost of the case of Aron Salomon vs A. Salomon & Co. Ltd., ; at 27, 30, 31, still visits frequently the hounds of Company Law but the veil has been pierced in many cases.
However, the concept of lifting the corporate veil is a changing concept and is of expanding horizon.
[668C D] The appellant was in error in not treating Renusagar 's power plant as the power plant of Hindalco and not treating it as the own source of energy.
The respondent was liable to duty on the same and on that footing alone; this was evident in view of the principles enunciated and the doctrine now established by way of decision of this Court in Life Insurance Corpn.
Of India vs Escorts Ltd. & ors., [1985] Suppl.
3 S.C.R. 909, that in the facts of this case sections 3(1)(c) and 4(1)(c) of the Act are to be interpreted accordingly.
The person generating and consuming energy were the same and the corporate veil should be lifted.
Hindalco and Renusagar were in extricably linked up together.
Renusagar had in reality no separate and independent existence apart from and independent of Hindalco.
Consumption of energy of Hindalco is consumption of Hindalco from its own source of generation.
Rates of duty applicable to own source of generation had to be applied to such consumption 1 paisa per unit for the first two generating sets and nil rate in respect of 3rd and 4th generating sets.
In the facts of this case, the corporate veil must be lifted and Hindalco and Renusagar should be treated as one concern and the consumption of energy by Hindalco must be regarded as consumption by Hindalco from own source of generation.
The appeal directed against this finding of the High Court was rejected.
[668D H;669A B] Coming to the challenge to the order quashed by the High Court, the dominance of public interest is significant according to the provisions of sub section (4) of Section 3.
In view of the ceilings prescribed, the power conferred upon the State under Section 3(1) of the Act by itself is valid and does not amount to excessive delegation.
The primary purpose of the Act was to raise the revenue for development projects.
Whether, in a particular situation, rural electrification and development of agriculture should be given priority or electricity or development of aluminium industry should be given priority or which is in public interest, are value judgments and the legislature is the best judge.
What was paramount before introduction of the development programme and how the funds should be allocated and how far the government considers a negligible increase and rise in the cost of aluminium for the purpose of raising monies for other development activities are matters of policy to be decided by the Government.
It is 631 true that the question regarding public interest and need to promote indigenous industrial production was related with the question of exemption of duty, but a matter of policy should be left to the Government.
In its order, the Government had adverted itself to all the aspects of sub section (4) of section 3 of the Act.
Certain amount of encouragement was given to Hindalco to start the industry in a backward area.
After considerable period, a very low rate of duty was charged.
If other sectors of growth and development are needed, for example, food, shelter, water, rural electrification, the need for encouragement to aluminium industry had to be subordinated by a little high cost because it is a matter on which the Government as representing the will of the people is the deciding factor.
Price fixation, which is ultimately the basis of rise in cost because of the rise of the electricity duty is not a matter for investigation of Court, Sub section (4) of section 3 of the Act in the set up is quasi legislative and quasi administrative in so far as it has power to fix different rates having regard to certain factors and in so far as it has power to grant exemption in some cases, is quasi legislative in character.
Such a decision must be arrived at objectively and in consonance with the principles of natural justice.
With regard to the nature of the power under section 3(4) of the Act when power is exercised with reference to any class it would be in the nature of subordinate legislation but when the power is exercised with reference to individual it would be administrative.
If the exercise of power is in the nature of subordinate legislation the exercise must conform to the provisions of the statute.
The High Court was right only to the limited extent that all the relevant considerations must be taken into account and the power should not be exercised on irrelevant considerations, but singular consideration which the High Court had missed in this case is the factors, namely, the prevailing charges for the supply of energy in any area, the generating capacity of any plant, the need to promote industrial production generally or any specified class thereof and other relevant factors cannot be judged disjointly.
These must be judged in adjunct to the public interest and that public interest is as mentioned in the preamble to raise revenue.
All that the section requires is that these factors should be borne in mind but these must be subordinate to the executive decision of the need for public interest.
The power conferred on the State Government of administrative nature must be in accordance with the principles of natural justice to a limited extent.
[671F G; 672D E; 673D H] The exercise of power whether legislative or administrative will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary.
Similarly,if the power has 632 been exercised on a non consideration or non application of mind to relevant factors, the exercise will be regarded as manifestly erroneous.
If a power, legislative or administrative, is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated.
This case related to the particular facts and circumstances of an individual Hindalco.
The facts and circumstances of the case had been examined in consonance with the principles of natural justice and considered subject to public interest.
Hindalco had made profits much more than it had before the imposition of the duty.
The adequacy of the profits or whether it made much more profits is not a consideration which must prevail over public interest and the Government having taken into consideration this factor, did not commit any error and the High Court was in error in setting aside the order of the Government.
The cost of power to a similar industry in other States was a relevant factor and the State was under a mandatory duty to consider the same.
The State had taken note of all these factors, and considering the prevailing practice of levy of electricity duty in other States as well as the provisions of section 3(4), the Government came to the conclusion that there was no justification for allowing exemption from electricity duty to Hindalco, and did not commit any error.
The factor of assurance of cheap power by the Government did not fore close the public interest of raising public revenue.
The impugned order did not suffer from the vice of non application of mind or non consideration of the relevant factors.
The High Court was in error in interfering with the order of the Government in the manner it did.
[676G H; 677A H; 678A] Natural justice in the sense that a party must be heard before hand need not be directly followed in fixing the price.
l here is scope for trial and error in the sphere of price fixation which is more in the nature of a legislative measure.
Judged by that standard, the impugned order in this case was not bad.
The Government did not act in violation either of the principles of natural justice or arbitrarily or in violation of the previous directions of the High Court.
[678F; 679D; 680C] The High Court should have, allowed the claim of Hindalco for the reduced rate of bill on the basis that Renusagar Power plant was its own source of generation under section 3(1)(c) and the bills should have been made by the Board on that basis.
The High Court was in error in upholding the respondents ' contention that the State Government acted improperly and not in terms of section 3(4) of the Act and in violation of the principles of natural justice.
The Judgment of the High Court was set aside to the extent indicated above and State Government 's impugned order was restored subject to the modification of the bills on 633 the basis of own source of generation; Hindalco must be given the benefit of the rate applicable to its own source of generation from Renusagar plant.
[680D F] Per section Ranganathan, J (Concurring): Agreeing, his Lordship held that on the second issue it was difficult to define the precise nature of the power conferred on the State under Section 3(4) of the Electricity Duty Act, and expressed doubts whether the sub section could at all be interpreted as conferring a right on individual consumers to require that, in the light of the material adduced by them, the rates applicable to them should have been fixed differently or that they should have been exempted from duty altogether.
However, his Lordship observed that it was unnecessary to pursue this aspect further as his Lordship agreed with the conclusion of Sabyasachi Mukharji, J. that in this case the respondent 's representations had been fully considered and the requirements of natural justice had been fulfilled and that there was no warrant to interfere with the order of the State Government.
[680H; 681A B] Chiranjit Lal Anand vs State of Assam & Anr., [1985] Suppl.
2 S.C.R. 385; State of U.P. vs Hindustan Aluminium Corpn.
Ltd., ; ; J. K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of V.P. & Ors., ; ;M/s. Girdharilal & Sons vs
BalbirNath Mathur & Ors., ; at 241, 246; State of Tamil Nadu vs Kodaikanal Motor Union (P) Ltd., at 100; D. Sanjeevayya vs Election Tribunal, A.P. & Ors., ; , 492; Western Coalfields Ltd. vs Special Area Development Authority, Korba & Anr., ; at 17; Andhra Pradesh State Road Transport Corpn.
vs The l.T.O. & Anr.; , ; Tamlin vs Hannaford, ; Aron Salomon vs A. Salomon & Co. Ltd., ; at 27, 30, 31; Western Coalfields Ltd. in Rustom Cavasjee Cooper vs Union of India; , at 555; Bank Voordel En Scheepvaart N. V. vs Stalford, ; Kodak Ltd. vs Clark, ; DHN Food Distributors Ltd. & Ors.
vs London Borough of Tomer Hamlets, ; Harold Holdsworth & Co. (Wakefield) vs Caddies, ; Scottish Co operative Wholesale Society Ltd. vs Meyer and Anr., ; Charterbridge Corpn.
Ltd. vs Lloyds Bank Ltd. & Anr.
, ; Mrs. hall Richards Machine Co. Ltd., vs Jewitt (H.M.) Inspector of Taxes, , 52, 525, M/s. Spencer & Co. Ltd., Madras vs The Commissioner of Wealth Tax, ; Turner Morrisson & Co. Ltd. vs Hungerford Investment Trust Ltd., ; Life Insurance Corpn.
Of India vs Escorts Ltd. & Ors., [1985] 634 Suppl.
3 SCR 909; Devi Das Gopal Krishnan & Ors.
vs State of Punjab & Ors.
, ; ; Ram Bachan Lal vs The State of Bihar, ; ; Panama Canal Company vs Grace Line, ; 2 Lawyers ' Edn. 788; Vincent Panikurlangara vs Union of India & others, [1987] 2 S.C.C. 165; Union of India & Anr.
vs Cynamide India Ltd. & Anr.
, ; P.J. Irani vs State of Madras, ; at 179 180, 181, 182; Ryote of Garabandho and Ors.
vs Zamindar of Parlakimedi & Anr., AIR 1943 P.C. 164; Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , ; A. K. Kraipok vs Union of India, AIR 1970 S.C. 150; M/s. Travancore Rayons Ltd. vs Union of India, AIR 1971 S.C. 862; Amal Kumar Ghatak vs State of Assam & Ors., AIR 1971 Assam 32; Commissioner of Income Tax vs Mahindra & Mahindra Ltd. & Ors., ; at 786, 787; Prag Ice 293; Shree Meenakshi Mills Ltd. vs Union of India, ; Laxmi Khandsari, etc.
vs State of U.P. & Ors.
, ; ; State of Orissa vs (Miss) Binapani Devi, ; ; Mohd. Rashid vs State of U.P., ; ; section L. Kapoor vs Jagmohan & Ors., AIR 1979 S.C. 592; Maneka Gandhi vs Union of India, AIR 1978 S.C. 597; India Sugars & Refineries Ltd. vs Amrawathi Service Co operative Society Limited & Ors.
, ; , referred to. |
minal Appeal No. 781 of 1985.
From the Judgment and Order dated 8.8.1984 of the Kerala High Court in Crl.
R.P.No.
459 of 1981.
T.S.K. Iyer, Ms. Prasanthi Prasad and N. Sudhakaran for the Appellant.
M.T. George for the Respondents.
ANAND, J.
The appellant was convicted for an offence under Section 7(1) read with Section 16 (1 A) (i) of the (hereinafter the Act) by the Additional Judicial Magistrate, 1st Class, Trivandrum on 17.7.1981 and sentenced to suffer one year R.I. and to pay a fine of Rs. 2000 and in default to undergo imprisonment for three months.
The conviction and sentence were upheld by the Additional Sessions Judge, Trivandrum who dismissed his appeal on 28.10.1981.
Criminal Revision Petition No. 459 of 1981 filed in the High Court of Kerala also failed on 8th August, 1984.
It is, thereafter, that he has come up to this court by appeal on special leave being granted.
On 12.2.1980, the Food Inspector of the Corporation of Trivandrum after disclosing his identity purchased from the appellant 600 gms.
of 'ice stick ' and paid Rs. 1.25.
One of the samples was sent to the Public Analyst at Trivandrum, who vide report dated 6.3.1980 opined that the "said sample contains artificial sweeteners saccharin and dulcin and is therefore adulterated".
The Public Analyst also stated in his report that the use of dulcin in food articles is not permitted on account of the fact that "its consumption is injurious to health".
According to the report of the Public Analyst, dulcin to the extent of 100.0 parts per million and saccharin to the extent of 90.0 parts per million was found present in the sample sent for analysis.
A complaint was accordingly filed before the Additional Judicial 1st Class Magistrate, Trivandrum.
The appellant pleaded not guilty and also exercised his right to have the sample analysed from the Central 710 Food Laboratory.
The sample was then set to the Central Food Laboratory and after analysis of the sample, it opined that "the sample does not conform to the standards laid down for ice candy under the provisions of PFA Act 1954 and the Rules thereunder '.
It was found by the Central Food Laboratory that the sample contained "an artificial sweetener" identified as saccharin to the extent of 190 parts per million.
The sample had also tested positive for presence of cane sugar.
Before the trial court, it was urged that the 'ice stick ' sold by the appellant to the Food Inspector PWl could not be treated as ice candy and since no standard for 'ice stick ' had been prescribed in the Act, the conviction of the appellant was not warranted.
It was also argued that for the offence committed by the appellant the sentence imposed was not justified.
The trial court, negatived both the contentions and recorded a finding of fact to the effect that the appellant had sold an article of food ice stick to PWl for purposes of analysis and that the ingredients of the ice candy and the ice :;tick were the same and the standards prescribed for ice candy etc.
were applicable to the article sold by the appellant also.
It was further held that since the sample did not conform to the standards laid down for ice candy under the provisions of the Act and the Rules framed thereunder, as per the certificate of the Public Analyst, the sample was adulterated and in view of presence of dulcin, "the adulterant was injurious to health".
The trial court held that the offence of the appellant squarely fell under Section 7 read with Section 16 (I A) (i) of the Act.
The sentence imposed is the minimum prescribed for the said offence.
Similar arguments were raised in the appeal before the Sessions Court also.
It was once again found, on facts, that the ice stick sold by the appellant was an article of food and that the ingredients of the ice candy and the ice stick were the same.
It was also found that since the sample contained the prohibited artificial sweetener, saccharin it was adulterated and the conviction and sentence were justified.
Similar grounds were once again raised before the High Court which also found: "In this case, therefore, from the evidence available especially Ext.
P9 report, it is clear that the petitioner sold ice candy which is described as ice stick for, it was frozen ice containing sugar.
In this view, it did not conform to the standard prescribed under the Rules . . . . . 711 Undeterred by the finding of fact recorded by all the three courts below to the effect that the 'ice stick ' sold by the appellant was covered by the articles mentioned in Item A.07.04 of Appendix B and was required to conform to the standards laid therein, a strenuous argument was once again raised before us to the effect that the 'ice stick ' sold by the appellant could not be treated to be 'ice candy ' and, therefore, the standards prescribed in Item A.07.04 of Appendix B were not applicable to it.
We are afraid, we cannot agree with this submission.
All the three courts hive carefully gone into the matter and found that the article sold by the appellant was an article of food covered by the Item A.07.04 of Appendix B.
Their finding is supported by the entry itself.
Item A.07.04 of Appendix B, as it stood at the relevant time, reads thus: "A.07.04 'Ice candy or Ice Lollies or Edible Ice ' by whatever name it is sold, means the frozen ice produce which may contained the permitted flavors and colors, sugar, syrup, fruit, fruit juice, nuts, cocoa, citric acid, stabilizers or emulsifiers not exceeding 0.5 per cent.
It shall not contain any artificia l sweetener.
" Considering the nature of the article sold, we have no doubt in our mind that the 'ice stick ' was edible ice and sold as frozen ice in the shape of a stick.
It admittedly contained sugar and coloring as is evident from the report of the Central Food Laboratory.
It was, therefore, required to conform to the standards prescribed in Item A.07.04 of Appendix B and since according to the report of the Public Analyst as also the Central Food Laboratory the article contained an artificial sweetener, saccharin, it did not conform to the standard laid down in the entry which specifically prohibits the use of any artificial sweetener.
Faced with this situation, learned counsel for the appellant then submitted that since the report of the Public Analyst, Trivandrum, which had found the presence of dulcin in the sample stood superseded by the report of the Central Food Laboratory, which had not found the presence of dulcin, an article the consumption of which is "injurious to health", under the Rules, the conviction of the appellant for an offence under Section 16 (1 A) was not justified.
Learned counsel submitted that the mere presence of artificial sweetener like saccharin in the sample, which has not been declared as "injurious to health", could not attract the provisions of Section 712 16 (1 A) of the Act.
We find force in this submission.
The report of the Central Food Laboratory definitely excluded the presence of dulcin in the sample.
It only found presence of the prohibited artificial sweetener, saccharin.
Section 16 (1 A) provides: "(1A) If any person whether by himself or by any other person on his behalf imports into India or manufactures for sale, or stores, sells or distributes (i)any article of food which is adulterated within the meaning of any of the sub clauses (e) to (1) (both inclusive) of clause (ia) of section 2; or (ii) any adulterant which is injurious to health, he shall, in addition to the penalty to which he may be liable under the provisions of section 6, be punishable with imprisonment for a term which shall not be less than one year but which may extend to six years and with fine which shall not be less than two thousand rupees.
" It would be seen from the above provision that in order to maintain a conviction under the said provision, the article of food which is adulterated should fall either in one of the sub clauses (e) to (1) of clause (ia) of Section 2 or should contain an adulterant which is injurious to health.
The adulterated article of food sold in this case admittedly does not fall in any of the sub clauses (e) to (1) of Section 2 (ia).
According to the report of Central Food Laboratory, it also does not contain any adulterant declared as "injurious to health".
Thus, on the face of it is not possible to hold that the appellant had committed an offence punishable under Section 16(1 A) of the Act and the conviction of the appellant for an offence under Section 16(1 A) of the Act cannot be sustained.
The article of food sold by the appellant, however, has been found by the Central Food Laboratory to contain an artificial sweetener, the use whereof in such article of food is prohibited.
It, therefore, does not conform to the standards prescribed in Item A.07.04 of Appendix B. Section 16(1)(a)(i) of the Act makes a person liable to punishment if whether by himself or by any other person on his behalf, he inter alia, manufactures for sale, or stores or sells any article of food which is 713 adulterated within the meaning of sub clause (m) of clause (ia) of Section 2 of the Act.
Section 2 (ia) (m) reads thus: "2(ia) "adulterated ' an article of food shall be deemed to be adulterated "(m) if the quality or purity of the article falls below the prescribed standard or its constituents are.
present in quantities not within the prescribed limits of variability but which does not render it injurious to health:" Keeping in view the fact that the article of food, 'ice stick ' sold by the appellant did not conform to the standard prescribed for it in Appendix B and contained an artificial sweetener saccharin, it is obvious that the article of food sold by the appellant was adulterated within the Meaning of Section 2(ia)(m) of the Act and the same would, therefore, be punishable under Section 16 (1)(a)(i) of the Act.
We are unable to accept the argument of the learned counsel for the appellant that since the appellant had been charged for an offence under Section 16 (I A) of the Act, he could not be convicted for an offence under Section 16(1)(ai) of the Act.
There is no basis for such an argument.
The penalty for an offense under Section 16(1)(ai) is admittedly less than the penalty prescribed for the offence under Section 16(1 A), which is a graver offence and therefore, there is no impediment in the way of the court, on the findings of the fact recorded by it, to convert the conviction of the appellant from the one under Section 16(1 A) to the one under Section 16(1)(ai) of the Act, notwithstanding the fact that the appellant had been charge sheeted for an offence under Section 16(1 A) of the Act.
In view of our findings recorded above, we alter the conviction of the appellant from the one under Section 7(1) read with Section 16(1 A) of the Act to the one under Section 7(1) read with Section 16(1)(a)(i) of the Act.
The argument of the learned counsel for the appellant that since the appellant has been on bail in this court and the occurrence took place more than a decade ago, a sympathetic view be taken and his appeal be accepted and he be acquitted, is to say the least, a rather ambitious submission and we cannot agree.
Indeed, there has been some lapse of time since the offence was committed in 1981 but that lapse of time alone cannot come to the aid of the appellant because having found the appellant guilty of an 714 offence under Section 16(i)(a)(i) read with Section 7(1) of the Act, this Court is obliged 'to convict the appellant and not let the crime go unpunished.
The appellant has been prosecuting the case in appeal and revision and the High Court dismissed his revision petition in 1985.
The appeal has remained pending in this Court ever since and as the appellant had obtained an order of bail, he, obviously was not interested in an early disposal of the appeal and took no steps in that behalf.
The pendency of the appeal in this Court for about six years does not by itself render the conviction bad or raise any other equity in his favour.
We can take even a judicial notice of the fact that the type of adulterated article sold by the appellant is the one generally consumed by children and it is not only illegal but even immoral to serve them with articles containing artificial sweeteners use whereof has been prohibited by the statute.
Just because the appeal has remained pending here since 1985 the society cannot be made to suffer for this delay by letting the criminal go unpunished as a crime of this nature, being a crime against the society at large, cannot be ignored.
Sympathy in such cases is totally misplaced.
As a result of the above discussion, the conviction of the appellant is altered from the one under Section 16(1 A) read with Section 7(1) of the Act to the one under Section 16(1)(a)(i) read with Section 7(1) of the Act and the sentence is reduced from one year R.I. and a fine of Rs. 2000 to the minimum prescribed for the said offence i.e. to six months R.I. and a fine of Rs. 1000.
In default of payment of fine the appellant shall further suffer imprisonment for one month more.
The appeal succeeds and is partly allowed to the extent indicated above.
The appellant is on bail.
His bail bonds shall stand cancelled.
He shall be taken into custody to suffer the remaining period of the sentence.
G.N. Appeal partly allowed. | The appellant was selling ice sticks.
The Food inspector took samples and sent one sample to the Public Analyst, who opined that it contained artificial sweeteners viz. saccharin and dulcin and was therefore adulterated.
A complaint was filed before the Judicial Magistrate.
Appellant pleaded not guilty and exercised his right to have the sample analysed by the Central Food Laboratory.
According to the report of the Central Food Laboratory the sample contained artificial sweetener identified as saccharin.
The Magistrate convicted the appellant for an offence under sec.
16(1) (a) read with see.
7(1) of the Act, sentenced him to suffer one year rigorous imprisonment and to pay a fine of Rs. 2,000 and in default to undergo imprisonment for three months.
The appeal preferred by the appellant was dismissed by the Sessions Judge.
The Criminal Revision petition riled before the High Court was also dismissed.
Hence the present appeal.
On behalf of the appellant it was contended that since the report of the Public Analyst which had found the presence of dulcin in the sample stood superseded by the report of the Central Food Laboratory which had not found the presence of dulcin, the consumption of which was injurious to health under the Rules, the conviction of the appellant for an offence under Section 16(1 A) of the was not justified; and that the presence of artificial sweetener like saccharin, which has not been declared as injurious to health could not attract the provisions of S.16(1A) of the Act.
Partly allowing the appeal, this Court 708 HELD:1.
It would be seen from Section 16(1 A) of the that in order to maintain a conviction under the said provision, the article of food which is adulterated should fall either in one of the sub clauses(e) to (1) of clause (ia) of Section 2 or should contain an adulterant which is injurious to health.
The adulterated article of food sold in this case admittedly does not fall in any of the sub clauses (e) to (1) of Section 2(ia).
According to the report of Central Food Laboratory, it also does not contain any adulterant declared as 'injurious to health '.
[712 E, F] 2.However, keeping in view the fact that the Article of food, 'ice stick ' sold by the appellant did not conform to the standard as prescribed in Item A.07.04 of Appendix B and contained an artificial sweetener saccharin it is obvious that the article of food sold by the appellant was adulterated within the meaning of Section 2(ia)(m) of the Act and the same would, therefore, be punishable under Section 16(1) (a) (i) of the Act.
[713 C] 3.It cannot be said that since the appellant had been charged for an offence under Section 16(1 A) of the Act, he could not be convicted for an offence under Section 16(1) (a) (i) of the Act.
The penalty for an offence under Section 16(1) (a) (i) admittedly is less than the penalty prescribed for the offence under Section 16(1 A), which is a graver offence and therefore, there is no impediment in the way of the court, on the findings of the fact recorded by it, to convert the conviction of the appellant from the one under Section 16(1 A) to one under Section 16(1) (a) (i) of the Act, notwithstanding the fact that the appellant had been charge sheeted for an offence under Section 16(1 A) of the Act.
[713 E, F] 4.Judicial notice is taken of the fact that the type of adulterated article sold by the appellant is the one generally consumed by children and it is not only illegal but even immoral to serve them with articles containing artificial sweeteners use whereof has been prohibited by the statute.
Just because the appeal has remained pending here since 1985 the society cannot be made to suffer for this delay by letting the criminal go unpunished as a crime of this nature, being a crime against the society at large, cannot be ignored.
Sympathy in such cases is totally misplaced.
[714 B D] 5.The conviction of the appellant is altered from the one under Section 16(1 A) read with Section 7(1) of the Act to the one under Section 16(1) (a) (i) read with Section 7(1) of the Act and the sentence is reduced from one year 709 R.I. and a fine of Rs. 2,000 to the minimum prescribed for the said offence ie.
six months R.I. and a fine of Rs. 1,000 in default of which the appellant shall suffer imprisonment for one month more.
[714 E] |
l Appeal Nos. 1840 and 1841 of 1979.
From the Judgment and Order dated 24.1.1979 of the Madras High Court in Appeal Nos 67 and 68 of 1975.
J.Ramamurthy, K. Ram Kumar, N. Sridhar and Ms. Anjani for the Appellant.
891 A.T.M. Sampath, Ms. Pushpa Rajan, section Balakrishnan, Srinivasan and Ms. Revathy Raghavan for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
These appeals by grant of special leave are directed against the judgment of the Madras High Court dated 24.1.1979.
Abdul Salam and his mother Razia Begum sold their agricultural lands measuring 3 acres and 25 acres respectively by executing two sale deeds Exhibits A.2 and A.1 dated 17.4.1962 in favour of Satyanarayana Rao and his father Mahadeva Rao.
The consideration of the respective sale deeds was Rs.10,000 and Rs.75,000.
On the same day, both the vendees took Rs.500 back and executed two separate agreements in favour of the respective vendors under Exhibits A.3 and A.4 giving a right of repurchase to the vendors at any time after 17.4.1969 but before 16.4.1972.
Thereafter, Razia Begum and Abdul Salam executed agreements of sale in favour of the appellant T.M. Balakrishna Mudaliar on 4.1.1963, for a consideration of Rs.1,30,000 in all.
The appellant also paid an amount of Rs.30,000 from time to time till April 1963 to Razia Begum and Abdul Salam towards the said agreements.
For the balance of Rs.1,00,000 which was to be apportioned between Razia Begum and Abdul Salam, Exhibits A.10 dated 15.4.1963 and A.11 dated 15.3.1963 registered deeds of agreement of sale were executed by Razia Begum and Abdul Salam respectively for Rs.87,500 and Rs.12,500.
The appellant paid further sums of Rs.4,000 under Exhibit A.10 to Razia Begum and Rs.1,000 under Exhibit A.11 to Abdul Salam and Exhibits A.3 And A.4 were handed over to the appellant.
Mahadeva Rao died leaving behind his widow Pushpavathi Ammal and Satyanarayana Rao his son as his legal representatives.
In view of the fact that Satyanarayana Rao and his mother Pushpavathi Ammal refused to execute the reconveyance deed, the appellant T.M Balakrishna Mudaliar filed two suits for specific performance of the agreements of reconveyance, delivery of possession and mesne profits in the Court of Subordinate Judge, Tirupattur.
O.S. No.67 of 1969 was filed against Satyanarayana Rao, Pushpavathi Ammal and Abdul Salam and O.S.No.73 of 1969 was filed against Satyanarayana Rao, Pushpavathi Ammal and Razia Begum.
In O.S. No.67 of 1969, the appellant deposited the amount of Rs.9,900 in the Court for payment to Satyanarayana Rao and Pushpavathi Ammal and Rs. 1600 for payment to Abdul Salam.
In O.S. No.73 of 1969, the appellant deposited 892 Rs.74,500 for payment to Satyanarayana Rao and Pushpavathi Ammal and Rs.9,000 to Razia Begum.
Both the above suits were decreed ex parte on 7.1.1974.
Razia Begum and Abdul Salam did not file any application for setting aside the ex parte decree and as such the decrees passed against them became final.
On an application filed by Satyanarayana Rao and Pushpavathi Ammal, the ex parte decrees passed against them were set aside and they were allowed to contest the Suit.
The trial court after recording the evidence decreed the suit against Satyanarayana Rao and Pushpavathi Ammal also.
Satyanarayana Rao and Pushpavathi Ammal aggrieved against the judgment of the trial court filed appeal Nos.67 and 68 of 1975 in the High Court.
The High Court by its judgment dated 24.1.1979 allowed the appeals and set aside the judgments of the trial court and dismissed both the suits.
T.M. Balakrishna Mudaliar, the plaintiff aggrieved against the judgments of the High Court has filed the aforesaid two appeals.
The facts are almost admitted and there is no controversy as regards the execution of Exhibits A.4 and A.3 the deeds of reconveyance by Satyanarayana Rao and Mahadeva Rao in favour of Razia Begum and Abdul Salam respectively and Exhibits A.10 and A.11, registered deeds of agreement of sale by Razia Begum and Abdul Salam in favour of the appellant.
The High Court however, took the view that under the terms and conditions set out in Exhibit A.10 and A.11 Razia Begum and Abdul Salam had not assigned the rights of reconveyance of the properties which 'they had got under Exhibits A.4 and A.3.
According to the High Court, Exhibits A.10 and A.11 contemplated the performance of agreements of sale within a period of two years namely, 17.4.1969 to 16.4.1971, while under the terms and conditions of Exhibits A.3 and A.4 such period for reconveyance in favour of Abdul Salam and Razia Begum was three years i.e. from 17.4.1969 to 16.4.1972.
According to the High Court this difference relating to the period was important from the point of view of considering the question whether the plaintiff could stand in the shoes of Razia Begum and Abdul Salam to enforce the agreement entered into between Razia Begum and Abdul Salam on the one hand and Satyanarayana Rao and Mahadeva Rao on the other.
The High Court took the view that on account of such curtailment of the period in Exhibits A.10 and A.11 it was reasonable to infer that if the plaintiff did not enforce his rights under Exhibits A.10 and A.11 within the period of two years me 893 tioned therein, still Razia Begum and Abdul Salam in their own right would be in a position to enforce their right under Exhibits A.3 and A.4 because there was still one more year available to them to enforce the obligations undertaken by Satyanarayana Rao and Mahadeva Rao under Exhibits A.3 and A.4.
The High Court further took the view that from the terms of the documents Exhibits A.10 and A.11, it was clear that no privity was intended between the plaintiff on the one hand and Satyanarayana Rao and Mahadeva Rao directly and it was only Razia Begum and Abdul Salam who could have enforced the terms of the contract of reconveyance under Exhibits A.4 and A.3.
The High Court also took the view that the plaintiff did not fall within the expression 'representative in interest ' as contemplated under Section 15 clause (b) of the (hereinafter referred to as 'the Act ') and as such was not entitled to bring a suit for specific performance of the contract on the basis of the deeds of reconveyance Exhibits A.3 and A.4.
It was also held that having regard to the language of Exhibits A.10 and A.11, no question of assignment of any right in favour of the plaintiff can arise.
We have heard learned counsel for the parties and have thoroughly perused the record as well as the contents of Exhibits A.3, A.4 and A.10 and A.11 on which the entire case hinges.
Exhibits A.3 and A.4 are agreements of resale executed on 17.4.1962 by Mahadeva Rao and Satyanarayana Rao in favour of Abdul Salam and Razia Begum respectively.
Both the documents contained the terms of the resale at any time after 7 years, but within 10 years of the date of execution of the documents.
It was clearly stipulated that after 17.4.1969 but before 17.4.1972, Mahadeva Rao and Satyanarayana Rao shall sign the sale deed on receiving the sum of Rs.74,500 in favour of Razia Begum and on receiving Rs.9,900 in favour of Abdul Salam.
Both these documents Exhibits A.3 and A.4 do not contain any condition that such right was personal and was in favour of Abdul Salam and Razia Begum and such right could not be exercised by a stranger.
The documents also do not contain any condition that such right could be exercised by the heirs of such persons or any other named persons and that such right could not be assigned by Abdul Salam and Razia Begum in favour of any other person.
The High Court was wrong in taking the view that the plaintiff Balakrishna Mudaliar was not a representative in interest of Abdul Salam and Razia Begum even after such right being assigned in his favour by agreements Exhibits A.10 and A.11.
Exhibits A.10 is a sale agreement for Rs.87,500 executed on 15.4.1963 by Razia Begum 894 in favour of the plaintiff Balakrishna Mudaliar.
It has been clearly stated in the aforesaid deed that in order to raise funds for expenses required for the family and also for repayment of the amount of Rs.75,000 and recover back the properties from M/s Mahadeva Rao and Satyanarayana Rao and that Razia Begum (party No.1) had a right to have it reconveyed as per reconveyance agreement she agreed to assign such right in favour of Balakrishna Mudaliar (the second party).
It further provided that Razia Begum had received Rs.4,000 and out of the balance amount of Rs.83,500, an amount of Rs.74,500 shall be paid to Mahadeva Rao and Satyanarayana Rao and the balance amount of Rs.9,000 shall be paid to Razia Begum.
It was also mentioned that in case Mahadeva Rao and Satyanarayana Rao who had already executed the agreement of resale refuse to receive the sum of Rs.74,500 as per the said resale agreement, Razia Begum at her own expense shall get the sale deed executed by the said Mahadeva Rao and Satyanarayana Rao in her favour and then shall execute the sale deed in favour of the plaintiff.
At the time of executing Exhibit A.10, a copy of the sale deed made in favour of Mahadeva Rao and Satyanarayana Rao and the agreement for resale executed by them in favour of Razia Begum was also handed over to the plaintiff.
Exhibit A.11 has been executed by Abdul Salam in favour of the plaintiff and contains identical terms and conditions as in Exhibit A.10 except the difference of amount.
Thus, a combined reading of the documents Exhibits A.3, A.4, A.10 and A.11, there remains no manner of doubt that Razia Begum and Abdul Salam had made an agreement to sell the properties in favour of the plaintiff and had also given a right to make the payment of such amount to Mahadeva Rao and Satyanarayana Rao which they were entitled under the terms and conditions of Exhibits A.3 and A.4, the agreements of resale made in favour of Abdul Salam and Razia Begum respectively.
The plaintiff had filed a suit for specific performance of the agreement for sale impleading Razia Begum and Mahadeva Rao and Satyanarayana Rao as defendants in the one case and Abdul Salam and Mahadeva Rao and Satyanarayana Rao in another care and had also deposited the amount of consideration in Court which clearly proved that the plaintiff was always ready and willing to perform his part of the contract.
In our view, there was no ground or justification for the High Court to dismiss the suits filed by the plaintiff.
The High Court was wrong in taking the view that it was only Razia Begum and Abdul Salam who were entitled to get reconveyance from Mahadeva Rao and Satyanarayana Rao and the plaintiff was not entitled 895 to enforce such right by a suit for specific performance against Mahadev Rao and Satyanarayana Rao.
The High Court further erred in holding that the restriction of the period during which the plaintiff could have got the sale deeds executed in his favour was two years while Razia Begum and Abdul Salam under Exhibits A.3 and A.4 could have exercised such right within a period of three years and such difference in the period deprived the plaintiff of his right to enforce the agreement of specific performance.
Admittedly the plaintiff was exercising the right of specific performance of agreement of sale within the stipulated period of two years and we are unable to accept the reasoning of the High Court as to how the period of three years granted in favour of Razia Begum and Abdul Salam in any manner affected of took away the right of the plaintiff to bring a suit for specific performance.
It may also be noted that an ex parte decree for specific performance of sale had become final against Razia Begum and Abdul Salam and so far as Mahadeva Rao and Satyanarayana Rao are concerned, they were bound to make a resale or reconveyance of the property in favour of Abdul Salam and Razia Begum as well as their assignee under Exhibits A.3 and A.4.
So far as Mahadeva Rao and Satyanarayana Rao are concerned, they have not pleaded that they had not executed Exhibit A.3 and Exhibit A.4 or that Razia Begum and Abdul Salam had lost the right of repurchase or reconveyance of the property in question in their favour.
The Privy Council in Sakalaguna vs Munnuswami, AIR 1928 PC 174 has held that the benefit of a contract of repurchase which did not show that it was intended only for the benefit of the parties contracting, could be assigned and such contract is enforceable.
Beaumount C.J. in Vishweshwar vs Durgappa, AIR 1946 Bombay 339 held that the both under the common law as well as under Section 23 (b) of the , an option given to repurchase the property sold would prima facie be assignable, though it might also be so worded as to show that it was to be personal to the grantee and not assignable.
On the particular facts of that case, it was held that the contract was assignable.
In Sinnakaruppa vs Karuppuswami AIR 1965 Madras 506 it was held: "In our view, generally speaking, the benefits of a contract of repurchase must be assignable, unless the terms of the contract are such as to show that the right of repurchase 896 is personal to the vendor.
In the latter case it will be for the person who pleads that the contract is not enforceable, to show that the intention of the parties thereto was that it was to be enforced only by the persons named therein and not by the assignee. ' In our view, the above statement of law appears to be correct.
We have already held above that under the terms and conditions laid down in Exhibits A.3 and A.4, the right of repurchase was not given as personal to Razia Begum and Abdul Salam and they were entitled to assign such right and the plaintiff having got such right under Exhibits A.10 and A.11 was entitled to enforce such contract by filing a suit for specific performance.
The plaintiff in the present case also falls within the meaning of representative in interest as contemplated under Clause (b) of Section 15 of the Act.
On such assignment, the plaintiff appellant acquired a valid titled to claim specific performance.
In the result, we allow these appeals with costs and set aside the Judgment of the High Court and restore and Judgments and decrees passed by the trial court.
V.P.R. Appeal allowed. | On 17.4.1962, 'A ' and his mother `B ' sold their agricultural lands measuring 3 acres and 25 acres respectively by executing two sale deeds in favour of Respondent No.1 and his father for Rs.10,000 and Rs.75,000 respectively.
On the same day, the respondents vendees, taking Rs.500 back, executed two separate agreements in favour of 'A ' and 'B ' giving them the right of repurchase at any time after 17.4.1969 but before 16.4.1972.
On 4.1.1963, 'A ' and 'B ' executed agreements of sale in favour of the appellant for a consideration of Rs.1,30,000 in all.
The appellant paid Rs. 30,000 till April, 1963 to 'A ' and 'B '.
The appellant latter paid Rs. 12,500 to 'A ' and Rs.87,500 to 'B ' and the registered deeds of agreement of sale were executed by 'A ' and 'B '.
Again a sum of Rs.1,000 was paid to 'A ' and Rs. 4,000 was paid to 'B ' by the appellant. 'A ' and 'B ' handed over the agreements executed by the respondent No.1 and his father in favour of 'A ' and `B ', to the appellant.
Respondent No. 1 's father died leaving behind his widow and son, respondent No.1.
They refused to execute the reconveyance deed.
The appellant in the Court of Subordinate Judge filed two suits for specific performance of the agreements of re conveyance, delivery of possession and mesne profits one suit against the respondent No.1, his 889 mother and 'A ' and the other one against the respondent No.1, his mother and 'B '.
In the first suit the appellant deposited the amount of Rs.9,900 in the Court for payment to respondent No.1 and his mother and Rs.1,600 for payment to 'A ' and in the other suit he deposited Rs.74,500 for payment to respondent No.1 and his mother and Rs.9,000 to 'B '.
The suits were decreed ex parte.
As IV and `B ' did not rile any application for setting aside the ex parte decree, the decree passed against them became final.
Respondent No.1 and his mother filed an application to set aside the ex parte decree and the Court set aside the decree and allowed them to contest the suits.
The suits were decreed against the respondent No.1 and his mother against which they riled appeals in the High Court.
The High Court setting aside the decree and judgments of the trial Court allowed the appeals riled by the respondent No.1 and his mother.
The plaintiff aggrieved against the judgments of the High Court preferred the present appeals by special leave before this Court.
Allowing the appeals, this Court, HELD:1.01.
A combined reading of the documents Exhibits A.3, A.4, A.10 and A.11, leaves no manner of doubt that 'A ' and 'B ' had made an agreement to sell the properties in favour of the plaintiff and had also given a right to make the payment of such amount to respondent No.1 and his father which they were entitled under the terms and conditions of Exhibits A.3 and A.4, the agreements of resale made in favour of 'A ' and `B ' respectively.
The plaintiff had filed a suit for specific performance of the agreement for sale impleading 'B ' and respondent No.1 and his father as defendants in one case and 'A ' and respondent No.1 and his father in another case and had also deposited the amount of consideration in the Court which clearly proved that the plaintiff was always ready and willing to perform his part of the contract.
There was no ground or justification for the High Court to dismiss the suits filed by the plaintiff.
[894 E G] 890 1.02.The High Court was wrong, in taking the view that it was only IV and 'B ' who were entitled to get reconveyance from respondent No.1 and his father and the plaintiff was not entitled to enforce such right by a suit for specific performance against respondent No.1 and his father.
[894 H] 1.03.The High Court further erred in holding that the restriction of the period during which the plaintiff could have got the sale deeds executed in his favour was two years while 'A ' and 'B ' under Exhibits A.3 and A.4 could have exercised such rights within a period of three years and such difference in the period deprived the plaintiff of his right to enforce the agreement of specific performance.
[895 B] 1.04.The plaintiff was exercising the right of specific performance of agreement of sale within the stipulated period of two years and it is unable to accept the reasoning of the High Court as to how the period of three years granted in favour of 'Al and `B ' in any manner affected or took away the right of the plaintiff to bring a suit for specific performance.
[895 C] 1.05.Under the terms and conditions laid down in Exhibits A.3 and A.4 the right of repurchase was not given as personal to 'Al and `B ' and they were entitled to assign such right and the plaintiff having got such right under Exhibits A.10 and A.11 was entitled to enforce such contract by riling a suit for specific performance.
The plaintiff in the present case also falls within the meaning of representative in interest as contemplated under Clause (b) of Section 15 of the .
On such assignment, the plaintiff appellant acquired a valid title to claim specific performance.
[896 C] Sakalaguna vs Munnuswami, AIR 1928 PC 174; VisHweshwar vs Durgappa, AIR 1940 Bombay 339 and Sinnakaruppa vs Karuppuswami, AIR 1965 Madras 506, approved.
[895 F] |
Appeal No. 1496 of 1993.
From the Judgment and Order dated 20.2.1985 of the Orissa High Court in First Appeal No.139 of 1974 Raj Kumar Mehta for the Appellant.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Heard the counsel for the appellant.
None appears for the respondent though served.
Leave granted.
This appeal by the Orissa State Electricity Board is preferred against the judgment of the Orissa High Court allowing partly an appeal preferred .by the respondent.
The dispute pertains to the liability of the consumer (respondent in this appeal) to pay the minimum charges during the period subsequent to the date of disconnection of supply of energy to him for the non payment of electricity dues.
The respondent is an industry.
It entered into an agreement with the appellant for supply of electricity on March 5, 1965.
The agreement was valid for a period of five years.
He started availing of the energy with effect from July 31, 1965.
The supply of his industry was disconnected on April 30, 1968 for non payment of electricity charges.
Since the consumer also failed to pay the minimum charges for the period subsequent to the date of disconnection, the Board filed a suit for the amount due on account of the electricity consumed between April 1, 1968 and April 30, 1968 and for the minimum charges for the period May 1, 1968 to March 5, 1970.
(It may be remembered that the agreement between parties was valid upto March 5, 1970).
The Trial Court decreed the suit as prayed for along with interest 862 of 6% per annum on the amount decreed from the date of suit till the date of decree and also future interest at the same rate till full satisfaction.
On appeal, the High Court sustained the decree of the Trial Court only for the period upto the date of disconnection (April 30, 1968) but disallowed the claim for the period subsequent to the date of disconnection.
The reasoning of the High Court is that inasmuch as the supply was disconnected and the respondent consumer did not avail of any energy whatsoever during the period subsequent to the disconnection, it is not liable to pay the minimum charges.
In this appeal, it is contended by the learned counsel for the appellant that the question arising herein is concluded in favour of the Board by the decision of this Court in Bihar State Electricity Board, Patna and Ors.
vs M/s Green Rubber Industries and Ors., [1990] 1 S.C.C. 731.
On a perusal of the judgment, we find that was also a case where the claim inter alia pertained to the period subsequent to the date of disconnection till the expiry of the agreement.
In that case too, minimum charges were claimed by the Board even for the period during which the supply remained disconnected and no energy whatsoever was availed of by the consumer.
We also find that clause (4) of the agreement considered ' in the said decision and clauses (6) and (13) of the agreement concerned herein are substantially same.
Clause (13) of the agreement between the parties hereto does oblige the consumer to pay a certain minimum charges in any event.
The clause reads as follows: "Clause 13.
The consumer shall (subject to the provisions hereinafter contained) pay to the Engineer for the power demand and electrical energy supplied under this Agreement, the charges to be ascertained as mentioned below viz. (Government resolution on tariff to be inserted here) LARGE INDUSTRIES: For demand of 125 K.V.A. and above for supply at 11 K.V. at (i) Rs.5.50 paise per K.V.A. per month plus (ii) Rs.0.08 paise per K.W.H. per month subject to an overall maximum rate of Rs.0.09 paise per K.W.H. and 863 without prejudice to payment of minimum charge of 75 per cent of the contract demand at the above rate of Rs.5.50 paise per K.V.A. per month and subject further to absolute minimum payment on 125 K.V.A. in the first part of the tariff.
For less than 250 K.V.A the demand may be metered in K.W. and charged for at Rs.6.00 per K.W. per month.
Besides the charges for K.W.H. consumed at the rate specified above.
For supply at M.T. less than 11 K.V.A and M.T. less that 11 K.V.A. and M.T. the above rate will be increased by 10%.
" The reasons for such a stipulation and its justifiability are duly and fully explained by this Court in the aforesaid decision.
It is not necessary for us to reiterate the same.
The appeal is accordingly allowed.
The Judgment of the High Court is set aside.
The judgment and decree of the Trial Court is restored.
No costs.
T.N.A. Appeal allowed. | The respondent industry entered into an agreement with the appellant Board for supply of electricity on 5th March, 1965.
Under the agreement, which was valid for five years i.e. upto 5th March 1970, consumer was obliged to pay certain minimum charges in any event.
However, on 30th April, 1968 supply of electricity to respondent was disconnected for non payment of electricity charges.
Since the respondent also failed to pay the minimum charges for the period subsequent to the date of disconnection, the Electricity Board riled a suit for the amount due on account of the electricity consumed upto April 30, 1968 and for the minimum charges from May 1, 1968 to March 5, 1970.
The Trial Court decreed the suit.
The respondent preferred an appeal before the High Court which sustained the Trial Court 's decree only for the period upto the date of disconnection but disallowed the claim for the period subsequent to the date of disconnection on the ground that since the respondent did not avail of any energy whatsoever during the period subsequent to the disconnection it was not liable to pay the minimum charges for that person.
In appeal to this Court it was contended on behalf of the Electricity Board that in view of the judgment of this Court in the case of Bihar State Electricity Board, Patna and Ors.
vs M/s Creen Rubber Industries and Ors., [1990] 1 S.C.C. 731 the respondent was liable to pay the minimum charges for the period subsequent to disconnection.
861 Allowing the appeal and setting aside the order of the High Court, this Court, HELD: Clause (13) of the agreement between the parties does oblige the consumer to pay a certain minimum charges in any event.
The judgment and decree of the Trial Court is restored.
[862 E, 863 D] Bihar State Electricity Board, Patna & Ors.
vs M/s Green Rubber Industries and Ors., [1990] 1 S.C.C. 731, relied on. |
Appeal Nos.
1301 07 of 1991 From the Judgment and Order dated 31 3 89 of the Income Tax Settlement Commission Bombay in Settlement Application No. 10/5/41/78IT.
Ashok Desai, Debi Pal B.K. Mehta, N.K. Sahu, U.K. Sagar and P.H. Parekh for the Appellant.
Dr. V. Gaurishankar and section Rajappa for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
These appeals are preferred against the orders of the Settlement Commission dated March 31, 1989 in pursuance of the offers of settlement made by the appellant.
Civil Appeals 1301 07 of 1991 relate to the assessment years 1964 65 to 1970 71 while Civil Appeals 1288 1300 of 1991 relate to the assessment years 1970 71 to 1982 83.
Under its orders, the Settlement Commission computed the taxable income of the appellant 's father (who died on August 22, 1969) and of the appellant for the aforesaid assessment years and gave certain directions, applying which the I.T.O. was directed to compute the total income for each of the said assessment years and raise demand for the tax due.
The main issue in all these matters is the assessability of income from five foreign trusts created by the appellant 's father, Sri Vikramsinhji.
Sri Vikramsinhji, Ex ruler of Gondal executed three deeds of settlements (trusts deeds) in the United States of America on December 19, 1963 and two deeds in the United Kingdom on January 1, 1964.
The three settlements executed in U.S. are in identical terms.
Similarly, the two settlements, executed in U.K. are similar.
The two sets of settlements, however, differ from each other in certain particulars, though both the sets are meant for the benefit of the settlor and the members of his family.
We may refer to the relevant clauses in the settlements executed in U.S. in the first instance.
946 Under the U.S. settlements, The National City Bank, New York is constituted the sole trustee.
The trust is created for the benefit of the grantor/settlor, his wife and children and their spouses (referred to as family members) and their descendants.
The trustee is empowered to collect the income from the trust properties and to apply the same among the family members and/or their descendants in such manner as he thinks appropriate.
He is also authorised to terminate the trusts for any reason (including tax reasons) and to transfer, convey and pay off the property held thereunder to any person or persons then eligible to receive the income of the trusts.
On such termination, the entire assets in the hands of the trustee are to be paid over to the then Maharaja (Ruler) or to his living male descendants in equal shares per stripes.
The clause which is relevant herein, which according to the Revenue, makes the trusts revocable ones we may refer to it as para 1(2) for the sake of convenience reads thus: "Anything hereinabove to the contrary notwithstanding, at any time and from time to time the Trustee shall transfer, convey and pay over any portion of the income of the trust fund and any portion or all of the principal held in trust to or to the use of such one or more members of a class composed of the Grantor, the wife or widow of the Gran tor, the children of the Grantor living from time to time, the spouse of any child of the Grantor then living or deceased (hereinafter referred to as the "Family Members"), and the descendants of the Family Members living from time to time, in such amounts, shares and proportions, either absolutely or in trust, and upon such terms and conditions (including the grant of a further power to appoint) as the Trustee and a Maharaja who shall have attained the age of eighteen (18 years) shall at any time and from time to time appoint and direct in a written instrument which refers to and specifically exercises this power and which is duly executed by the Maharaja and by the Trustee then acting here under.
The foregoing power to appoint may be released in whole, or in part by the Maharaja or by the Trustee or by both at any time by one or more written instruments duly executed by the Maharaja or by the Trustee or by both and delivered to 947 the Trustee then acting here under, provided, however, that if either the Maharaja or the Trustee, but not both of them, shall release such power, then the party not so releasing shall continue to have the power to appointment hereinbefore provided, acting alone.
" Clauses (2) and (3) of the deeds confer an absolute discretion upon the trustee to pay over or apply in his discretion, any part or whole of income or any part of or whole of the principal to "any person then eligible to receive the income of this trust" at such time and in such manner, as he may decide in his absolute discretion.
Clause (3) says further that "the Trustee may omit eligible members of the class from any and all such payments and applications, and no such payment or application or commission of a person from participation therein shall cause a charge against or otherwise effect the future interest or share of any person here under." Any determination made by the trustee in good faith in exercising the said discretion is held to be binding and conclusive.
It is not necessary to notice other clauses of these settlements except to say that the object of these trusts is to provide for the education, maintenance and up keep of the members of the settlor 's family and their descendants.
The settlor died on August 22, 1969.
During his lifetime, the settlor, Vikramsinhji was filing returns of his income in India including therein whole of the income arising from the U.S. trusts.
The returns were filed by him for the assessment years 1964 65 to 1969 70 (both years inclusive).
Since he died in the middle of the accounting year relevant to the assessment year 1970 71, two returns were filed for the said assessment year, one upto the date of the death of the settlor and the other from the date of the death of settlor to the end of the accounting year.
These returns were filed by his elder son, Jyotendrasinhji, appellant in these appeals.
In these returns too, the appellant included whole of the income from the U.S. trusts in the respective returns.
At this stage, the appellant says.
he was advised that the income from U.S. trusts was not taxable in India either in the hands of settlor or in his hands and that inclusion of the said income in the returns by the settlor and by the appellant was a mistake.
Urging the said contention, the appellant filed appeals against the assessment orders pertaining to the A.Ys.
1965 66 and 1966 67.
Inasmuch as the appeals were barred with respect to other assessment orders, he preferred revisions 948 before the Commissioner of Income Tax.
(It may be mentioned at this stage itself that the income from U.K. trusts was included in the aforesaid returns just as the income from U.S. trusts was included.
Similarly, the plea of non taxability was urged with respect to the income from U.K. trusts on the same basis as was urged with respect to the income from the U.S. trusts) The Appellate Assistant Commissioner, Rajkot admitted additional grounds and allowed the aforesaid appeals by his orders dated April 4, 1975 and August 20, 1975.
The Revenue went up in appeal to Tribunal.
The Tribunal allowed the appeals holding that the A.A.C. acted contrary to Rule 46(2) of the Income Tax Rules in admitting the additional grounds and in looking into new material.
Accordingly it set aside his orders and remitted the appeals back to A.A.C.
It is at this stage that the appellant approached the settlement commission under chapter XIX(A) of the Income Tax Act, 1961.
We may now notice the relevant clauses in the deeds of settlements executed in U.K. Under these settlement deeds, one Mr. Robert Hampton Robertson McGill was designated as the trustee, referred to in the deeds as "the original trustees".
These trusts too were created for the benefit of the settlor, the members of his family and their descendants, referred to as 'beneficiaries '.
The deeds define the expression "the trustees" to mean and include the original trustee or the other trustees for the time being appointed in terms of the deeds of settlement.
The expression "the beneficiaries" was defined to mean and include (a) the settlor, (b) the children and remoter issue for the time being in existence of the settlor, and (c) any person for the time being in existence who is the wife or widow of the settlor or the wife or widow or husband or widower of any of them, the children and remoter issue of the settlor.
The clauses which are relevant for our purposes read thus: (We have, for the sake of convenient reference, numbered them as clauses (3) and (4)).
THE Settlor hereby directs that the Trustee shall and accordingly the Trustees shall stand possessed of the Trust Fund and the income thereof upon the trusts following that it 1 to say : 949 (1) UPON TRUST to raise and pay out of the capital thereof any further estate duty which may still be payable thereon in respect of the death of the Settlor 's father His Late Highness Shri Bhojrajji Maharaja Saheb of Gondal who died on the Thirty first day of July One Thousand nine hundred and fifty two and any interest payable on such duty and any costs incurred in connection with the ascertainment or payment of such duty and interest.
(2) Subject as aforesaid UPON TRUST for all or such one more and more exclusively of the others or other of the Beneficiaries at such age or time or respective ages or times if more than one in such shares and with such trusts for their respective benefit and such provisions for their respective advancement and maintenance and education at the discretion of the Trustees or of any other person or persons as the person who for the time being is the Maharaja or (of the title is abolished) would have been the Maharaja had the title not been abolished shall at any time during the specified period by any deed or deeds revocable or irrevocable appoint AND in default of and subject to any such appointment upon he trusts and with and subject to the powers and provisions hereinafter declared and contained concerning the same PROVIDED ALWAYS that the foregoing power of appointment shall not be capable of being exercised: (a) by anyone other than the Settlor or the Elder son or the Younger Son; or (b) in favour of the person making the appointment save with the consent of the Trustees (being at least two in number or a trust Corporation) such consent to be testified by their being parties to the deed of appointment and executing the same. . 4.
SUBJECT aforesaid the Trustees shall stand possessed of the Trust Fund and the income thereof upon the trusts 950 following that is to say : (1) The income of the Trust Fund accruing during the life of the Settlor shall belong and be paid to the Settlor (2) Subject as aforesaid the income of the Trust Fund accruing during the life of the Elder Son shall belong and be paid to the Elder Son. . (3) Subject as aforesaid the Trust Fund shall be held in Trust for the person who (being a descendant of the Elder Son) first during the specified period : (a) becomes the Maharaja or would become the Maharaja if his title had not been abolished and (b) attains the age of eighteen years. .
It is not necessary to notice the other provisions/clauses of these deeds.
During his lifetime, the settlor, Vikramsinhji, was including the whole of the income from these trusts in his returns of income just as he was doing in the case of U.S. trusts.
The said income was also included in the two returns filed by his son for the A.Y.1970 71.
Thereafter, however, the appellant took the stand, as mentioned hereinbefore, that the income from these trusts is not includable in his income.
He also took the stand that the inclusion of the said income in the returns submitted by his father for the A.Ys.1964 65 to 1969 70 and by him in the returns relating to A.Y.1970 71 was under a mistake.
This submission too was the subject matter of the appeals and the revisions filed before the A.A.C. and the Commissioner of Income Tax, referred to hereinbefore.
When the appellant approached the settlement commission with an application for settlement, it related to the income from U.K. trusts as well.
The Settlement Commission heard the arguments in extenso spread over several days and disposed of the matter under two elaborate orders.
One order relates to A.Ys.
1964 65 to 1970 71 (Vikramsinhji) and the other to A.Ys.1970 71 to 1982 83 (Appellant).
The findings of the Commission which constitute the bases for its orders may briefly be stated as the following : 951 (i)Though the U.S. settlements are in the nature of discretionary trusts, they fall within the mischief of sub clause (ii) of Clause (a) of Section 63 of the Act.
For this reason, the whole of the income arising from the trust properties was liable to be included and was rightly included in the income of the settlor/transferor, Sri Vikramsinhji.
(ii) On the death of the settlor, the U.S. settlement deeds ceased to be revocable but inasmuch as the entire income thereunder was received by the appellant, Sri Jyotendrasinhji, it constitutes his income and could be and was lawfully.
taxed in his hands.
(iii) So far as the U.K. trusts are concerned, clause (3) did never come into operation inasmuch as no additional trustees were appointed as contemplated by it.
If so, clause (4) sprang into operation where under the entire income under the settlements flowed to the settlor during his lifetime and on his death, to his elder son, the appellant herein.
In other words, these settlements are in the nature of specific trusts.
In any event, the entire income from these trusts was received by the settlor during his lifetime and after the settlor 's death, by the appellant.
Therefore, the said income was rightly included in the total income of the settlor and the assessee during the respective assessment years.
On the above bases, the Commission computed the taxable income of the settlor under both the sets of trusts for A.Ys.1964 65 to 1970 71 (upto the date of the death of the settlor) as also the income of the appellant for the A.Ys.1970 71 to 1982 83.
The appellant then preferred these two sets of appeals against the two orders.
At the stage of granting leave, this court ordered (vide the order dated March 22, 1991) that the appellant shall not be entitled to question the jurisdiction of the settlement commission to decide the issues before it and that he will "confine himself in appeal only to the questions relating to correctness or otherwise of the Commissioner 's order." Sri Ashok Desai, learned counsel for the appellant urged the following contentions ': (1)The settlement commission erred in law in holding that the U.S. trusts are revocable trusts within the meaning of Section 63 of the Act.
For attracting Section 63, the deed of transfer should give the transferor a right 952 to retransfer directly or indirectly whole or any part of the income or assets to the transferor or it must give him a right to re assum power directly or indirectly over the whole or any part of income or assets.
In this case, the relevant clause does not give the,transferor such a power.
The power is given to the trustee to be exercised with the concurrence of the transferor/settlor.
Even if, for any reason, the clause is construed as giving such a power to the settlor/transferor, Section 63 is not attracted inasmuch as the power is given: not to him a& such "but jointly to him and the trustee.
Such a power does not attract the mischief of Section 63.
(2) The U.S. trusts are discretionary trusts.
In such a case, the assessment can be made only upon the trustees and not upon the beneficiaries recipients.
The Revenue has no option in such a situation.
It must necessarily tax the trustees and trustees alone.
The Revenue cannot take advantage of the mistake of law on the part of the settlor or the appellant.
(3) At any rate, with the death of the settlor, the U.S. trusts ceased to be revocable trusts, assuming that they were so during his lifetime.
So " far as the appellant is concerned, he cannot be taxed on the income received by him from the said trust.
Only the trustee can be taxed.
(4) So far as U.K trusts are concerned, the settlement commission has committee an error of law in holding that clause (3) could come into operation only if and when the settlor appointed the additional trustees as contemplated by it.
In fact, the trust, had come into existence with the sole trustee (McGill) ;and it did not depend upon the appointment of additional trustees.
Clause (3) prevails over clause (4).
If so, the U.K. trusts/settlements are also discretionary trusts and not specific trusts as held by the Settlement Commission.
In such a case again the assessment can be made only upon the trustees and not upon, the beneficiaries recipients. (5) So far as U.K. trusts are concerned no income was received,by the settlor or the appellant either in U.K. or in India.
So long as the trustees decided not to exercise the discretion to distribute the income, no income arose to any of the beneficiaries.
The deeds, do not prescribe, a time limit within which the trustees should exercise their discretion to distribute income.
Until the trustees take a decision to distribute and distribute the income,the beneficiaries have no right to income nor can it be said that the income accrues to them.
The Settlement Commission committed a legal error in the income from the U.K. trusts in the total income of 953 the settlor and the appellant even though it was not paid out by the trustee ,nor received by the assessees.
At any rate, no income was received in India.
(6)In both the U.S. and U.K., tax has been levied upon the respective trust incomes under the laws of those countries.
Levying tax over again in this country on the very same 'income amounts to double taxation.
On this ground too, the tax levied in India must be waived.
On the other hand, Dr. Gauri Shankar, the learned counsel for the Revenue made the following submissions: (i)The Settlement Commission is not a regular Tribunal.
Its function is different from other quasi judicial authorities created by the Income Tax Act.
Where an offer of settlement has been made, the commission either accepts it or rejects it subject to such conditions and terms as it thinks fit to impose in that behalf.
As the name itself suggests, it is a settlement a sort of composition.
It need not even give reasons for its order.
Even if any principles are decided by the Commission, they do not bind the Income Tax authorities in proceedings relating to subsequent years.
The order of the commission is relevant to and is confined only to the assessment years to which it relates.
The jurisdiction of this court under Article 136 in an appeal against the orders of settlement commission must be conditioned by above considerations.
This court would not be able to go into the merits of the order.
The commission 's order cannot be dissected, inasmuch as it is a package deal.
Either it stands or falls as a whole.
(ii) The interpretation placed by the commission on both U.S. and U.K. trusts is perfectly in order and does not call for any interference by this court.
Indeed, under the impugned orders, several benefits have been conferred upon the settlor and the appellant like waiving of penalties, interest and other liabilities attaching to the assessees under the Act.
While accepting the same, the appellant cannot be allowed to disown those features of the order which go against him.
(iii) The argument,of not receiving the income from U.K. trusts is a mere after thought and should not be given any credence.
During his lifetime, the settlor had declared that he had received income from both the U.K. and U.S. trusts and had included the same in his returns of income for each of the assessment years relevant heroin.
The appellant too acted similarly.
954 (iv) A trustee or the trustees, as the case may be are expected to act reasonably and in furtherance of the object of the trusts.
They must apply the income for the purposes specified.
They cannot just accumulate it.
Applying the test of reasonableness it must be held that ordinarily, the trustee ought to distribute the income each year.
As a matter of fact, it was so distributed If so, it must be held that the income from these U.K. trusts has rightly been taken into account by the commission while passing its orders.
The first question we have to answer is the scope of these appeals preferred under Article 136 of the Constitution against the orders of the Settlement Commission.
The question is whether all the questions of fact and law as may have been decided by the commission are open to review in this appeal.
For answering this question one has to have regard to the scheme of Chapter XIX A.
The said chapter was inserted by the Taxation Laws (Amendment) Act, 1975 with effect from April 1, 1976.
A somewhat similar provision was contained sub sections (1A) to (1D) of Section 34 of the Income Tax Act, 1922 introduced in the year 1954.
The provisions of Chapter XIX A are, however, qualitatively different and more elaborate than the said provisions in the 1922 Act.
The proceedings under this chapter commence by an application made by the assessee as contemplated by Section 245 C. Section 245 D prescribes the procedure to be followed by the commission on receipt of an application under Section 245 C. Sub section (4) says: 'after examination of the records and the report of the commissioner received under sub section (1), and the report, if any, of the commissioner received under sub section (3), and after giving an opportunity to the applicant and to the commissioner to be heard, either in person or through a representative duly authorised.in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the settlement commission may,, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the commissioner under sub section (1) or sub section (3).
" Section 245 E empowers the Commission to reopen the completed proceedings in appropriate cases, while Section 245 F confers all the powers of an Income Tax authority upon the Commission.
Section 245 H empowers the Commission to grant immunity from penalty and prosecution, with or without conditions, in cases where it is satisfied that the assessee has made a full disclosure of his income and 955 its sources.
Under Section 245 HA, the Commission can send back, the matter to assessing.
officer, where it finds that the applicant is not cooperating with it.
Section 245 1 declares that every order of settlement passed under sub section (4) of, Section 245(D) shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in, Chapter XIX A, be re opened in any proceeding under the Act or under any other law for the time being in force.
Section 245 L declares that any proceedings under chapter XIX A before the settlement commission shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purposes of Section 196 of the Indian Penal Code.
It is true that the finality clause contained in Section 245 I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this court under Article 32 or under Article 136, as the case may be.
But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this court under Article 136.
A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226.
This is not a limitation inherent in Article 136; it is a limitation which this court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review.
May be, there is also some force in what Dr. Gauri Shankar says viz., that the order of commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not.
According to learned counsel, the Commission is not even required or obligated to pass a reasoned order.
Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid.
It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate.
Indeed, it would be difficult to predicate the reasons and considerations which induce the commission to make a particular order, unless of course the commission itself chooses to, give reasons for its order.
Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is,contrary 956 to any of the provisions of the Act.
In this context, it is relevant to note that the principle of natural justice (and alteram partem) has been incorporated in Section 245 D itself.
The sole overall limitation upon tire Commission thus appears, to be that it should act in accordance with the provisions of the Act.
The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud & malice which, of course, constitute a separate and independent category.
Reference in this behalf may be had to the decision of this Court in Sri Ram Durga Prasad vs Settlement Commission , which too was an appeal against the orders of the Settlement Commission.
Sabyasachi Mukharji J., speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this Court is " concerned with the legality of procedure followed and not with the validity of the order. ' The learned Judge added 'judicial review is concerned not with the decision but with the decision making process.
" Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police vs Evans, [1982] 1 W.L.R.1155.
Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders ' of the Settlement Commission.
For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised.
The commission has interpreted the trust deeds in a particular manner, Even if the interpretation placed by the commission the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be said to be a violation of the provisions of the Income Tax Act.
it is equally clear that the interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years.
In view of the above, though it is not necessary, strictly speaking, to go into the correctness of the interpretation placed upon the said deeds by the commission, and it is enough if we confine ourselves to the question whether the order of the Commission is contrary to the provisions of the 957 Act, we propose to, for the sake of completeness, examine also whether the order of Commission is vitiated by any such wrong interpretation? U. section TRUSTS.
The sole trustee under this settlement deed is the First National City Bank, New York.
The deed empowers the trustee to hold, manage, invest and reinvest the principal of the trust fund, to collect and receive the income thereof and to pay or apply so much of the net income as the trustee shall in his absolute and uncontrolled discretion deem advisable to or to the use of one or more members of the settlor 's family.
It is thus a discretionary trust.
A discretionary trust is described as a trust where the trustees have been vested with a discretion in the matter of distribution of trust income among the specified class of beneficiaries.
In the case of such trusts, the trustees have a discretion to pay whole or part of the income to such member or members of the designated class as they think fit and it such proportion as they deem appropriate.
Section 164(1) sets out the same idea in the following words: "Where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown. .
In Snell 's Principles of Equity, 25th Edn. (1965), P.129, a discretionary trust is defined in the following words: "A discretionary trust is one which gives the beneficiary no right to any part of the income of the trust property, but vests in the trustees a discretionary power to pay him, or apply for his benefit, such part of the income as they think fit. .
The beneficiary thus has no more than a hope that the discretion will be exercised in his favour.
" That these trusts are discretionary trusts is not in controversy.
The main question is whether Para 1(2), quoted hereinbefore, makes it a revocable trust within the meaning of Section 63? The said clause begins with a non obstante clause, "anything hereinabove to the contrary.
not withstanding ' thereby giving it an overriding effect over what has been said in the earlier recitals.
It then says that "at any time and from time to time, the trustee shall transfer, convey and pay over any portion or of the income 958 of the trust fund and any portion or of all the principal held in trust ', to such member of the settlor 's family 'as the trustee and a maharaja who shall have attained the age of 18 years shall at any time and from time to time appoint and direct in a written instrument which refers to and specifically exercise this power and which is duly executed by the Maharaja and the trustee then acting here under. ' In other words, the said clause empowers the settlor/transferor and the trustee, acting together to direct the trustee, at any time, to pay over the entire income and/or entire corpus.
or a pan thereof to such member of the settlor 's family or their descendants as they may direct.
The said power cannot be exercised by the settlor acting alone.
The question is whether the said clause attracts Section 63? Section 63 defines the expressions 'transfer ' and 'revocable transfer '.
It says that for the purposes of Sections 60, 61 and 62, 'a transfer shall be deemed to be revocable if (i) it contains any provisions for the retransfer directly or indirectly of the whole or any part of the, income or assets to the transferor or (ii) it in any way gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets. ' The expression "transfer" is defined to include any settlement, trust, covenant, agreement or arrangement.
The expression 'family members ' occurring in the aforesaid clause in the trust deeds is defined in the deeds to mean "the children of the grantor living from time to time, the wife or widow of the grantor, the spouse of any child of the grantor then living or deceased. ' The "descendants of the family members ' which expression also occurs in the aforesaid clause is defined 'in the deeds to mean "the descendants of the family members living from time to time during the trust term. ' The contention of Sri Ashok Desai the learned counsel for the appellant is that Section 63 will be attracted 'only where the transferor is vested with the exclusive and/or absolute power to give direction of the nature contemplated therein and not where such a power has to be exercised by the transferor jointly with another person or with the concurrence or consent of another person.
Indeed, he argues that the said power is really given to the trustee to be exercised in concert with the Settlor.
We find it difficult to agree with the learned counsel.
Firstly, the power, properly construed, is given to the settlor to be exercised together with the trustee and not to the trustee to be exercised together with the settlor.
The trustee is anyhow vested with an absolute discretion to distribute the income of or the principal of the trust to such member of the family, as he 959 thinks appropriate, under the clause preceding and paras following para 1(2).
If so, there was no point in saving that he can, together with the settlor, be empowered to pay over part or whole, of income/principal to "such one or more members of a class composed of the family members living".
It cannot also be forgotten that the trustee in this case is a Bank one of the largest in the U.S.A. and not an individual acquainted with the affairs of the settlor 's family.
Now coming to Section 63, it is equally not possible to agree with the learned counsel.
Section 63 does not say that the power of revocation vesting in the transferor should be absolute or unconditional.
As pointed out by Chagla, CJ.
in Behramji Sorubji vs Commissioner of Income Tar, Bombay, , "the only question that has got to be asked is whether the transfer is capable of being revoked by the assessee or not. . it may be that before the power is exercised, the consent of two beneficiaries might have to be taken but even so, although the revocation may be contingent or conditional, still the deed remains a revocable deed of trust.
" The same idea was reiterated by Tendulkar, J. in the said judgment, in the following words: "It is urged by Sir Jamshedji on behalf of the assessee that the words "revocable transfer" in this section require that the transfer should be revocable absolutely and uncondi tional and that by reason of the fact that the transfer in this case could not be revoked under clause 10 of the trust deed without the consent of the wife and the children or any two of them, it is not a revocable transfer within the meaning of Section 16(1)(c).
Apart from any authority, and reading the section by itself, I am unable to agree with this contention.
It would involve my reading into the section words which are not there, and the Court is not entitled to do so unless it appears that giving effect to the section as it stands would lead to an obvious absurdity or inconvenience which could not have been contemplated by the legislature.
No such position arises in this case.
" We find ourselves in agreement with the said opinions.
Section 63 of the present Act corresponds to the proviso appended to Section 16(1)(c) of the 1922 Act.
The first proviso read thus: "provided that for the purposes of this clause the settlement, disposition or a transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or 960 indirectly of the income or assets to the settlor, disponer or transferor or in any way gives settlor, disponer or transferor a right to.
reassume power directly or indirectly over the income or assets. ' Section 63(1) also does not say that the deed of transfer must confer or vest an conditional or an exclusive power in the transferor to give the power/direction of the nature contemplated by it.
, Accordingly, we hold that merely because the concurrence of the trustee had to be obtained by the transferor/settlor for giving the said direction, it cannot be said that the deed does not contain a; provision giving the transferor a; right to reassume power directly or indirectly over the whole or any part of income or assets within the meaning of Section 63(a)(ii)of the Act In this view of the matter, it is not necessary for us to refer to other decisions cited, before us in any detail.
The decision of this Court in commissioner,of Income Tax, Bombay City vs Ratilal Nathalal emphasises,that the power of revocation must be given to the settlor as settlor and not in any other capacity.
In the deeds before us, the power is indisputably conferred upon the Settlor in the very same capacity and not in any different capacity.
The other decision of this court in Sevantilal Maneklal vs C.I.T. is distinguishable for the, reason that the power of the settlor therein was merely to choose among the several objects of the trust and, therefore, it was held that it does not attract Section 63.
On the other hand, Tarunendra Nath Tagore vs Commr.
of Income Tax Calcutta was a case where the trust deed empowered the settlor to cause a re transfer of the trust assets, in certain specified contingencies.
The question was whether such a provision makes the transfer a revocable one within the meaning of the first proviso to Section 16(1)(c) of the 1922 Act.
It was held that it does, notwithstanding the fact that the power had to be exercised only in certain specified contingencies.
The decision of the Madras High Court in K Subramania Pillai vs Agricultural Income For Officer, Thukalay was also a case where the power of revocation was to be exercised in certain specified contingencies alone.
Even so, it was held that it was a revocable settlement.
Commissioner of Income Tax, Punjab vs Raghabir Singh was case where the trust deed provided, for the application of, the trust income, for satisfying the debts which the settlor was under an obligation to discharge.
The question was whether the provision makes the deed a 961 revocable one.
It was held that it did not, inasmuch as there was no provision for re transfer of the income or the assets to the settlor, It was observed that the mere fact that the settlor 's debts had to be discharged from the trust income did not bring it within the four corners of the first proviso to Section 16(1)(c).
In the light of the above discussion it must be held that during the lifetime of the settlor, the, entire income arising from the three U.S. trust deeds was bound to be and was rightly included in the income of the settlor by virtue of Section 63 read with Section 61.
The commission was right in holding so.
With the death of the settlor Section 63 ceased to apply even though the aforesaid clause empowers not only the settlor but also the Maharaja for the time being to exercise the said ;power.
Section 63 is attracted only where such power is given to the transferor and the appellant (the son of the settlor) is not and cannot be called the transferor.
It is not denied that so far as the income from the U.S. trusts is concerned, it was indeed received by the appellant.
The only argument is that inasmuch these trusts are discretionary trusts, the, income therefrom must necessarily be taxed and can only be taxed in the hands of the trustees and not in the hands of the beneficiary.
It is argued that the Revenue has no choice to tax either the trustees or the beneficiaries in such a case.
We are unable to agree The trustees in the case of a trust declared by a. duly executed instrument in writing are treated as representative assessees (Section 160(1)(iv)).
It is equally true that in the case of a discretionary trust, trustees are liable to be taxed in respect of the income received by them at the rate specified in Section 164(1).
(Section 164(1) has undergone several changes since 1962 The sub section as introduced by the Finance Act, 1970 with effect from April 1, 1970 provided that in such case "tax shall be charged (i) as if the relevant income or part of relevant income were the total income of the association of persons, or (ii) @65%, Whichever course would be more beneficial to the Revenue.
" For the purpose of this case, it is not necessary to notice the provisos appended to sub section (1) or the subsequent amendments to the sub section).
At the same time, Section 166 expressly declares that "nothing in the foregoing sections in this chapter shall prevent either the direct assessment 962 of the person, on whose behalf or for whose benefit income therein referred is receivable or the recovery from such person of the tax payable in respect of such income." Language of this section is clear.
The, opening words "nothing in the foregoing sections in this chapter" which means chapter XV, wherein Sections 159 to 165 among other sections occur give it an over riding affect over the preceding provisions in the chapter.
The Section states in unmistakable terms that nothing contained in the preceding provisions in the chapter shall preclude the Revenue from making a direct assessment upon the beneficiary and/or from recovering the tax payable from such person.
The Revenue has thus been given an option to tax the income from a discretionary trust either in the hands of the trustees or in the hands of the beneficiaries.
This Court in Nagappa vs C.I T., and the majority of High Courts have understood this Section in this manner.
In Nagappa, the appellant had executed seven separate trusts setting specific properties for the benefit of his minor children.
He appointed himself, his wife and his married daughter as the trustees.
Under each deed, a portion of the income was to be utilised immediately for the benefit of the beneficiary and the balance accumulated for his or her benefit and handed over to the beneficiary on the specified date.
The entire income of the trusts (including the income accumulated) was included in the income of the appellant (Nagappa) which was questioned by him.
His contention was that the "I.T.O. was bound to assess the income under each deed of trust separately in the hands of 'the trustees as "representative trustees and was incompetent in view of the express enactment of sub section (2) of Section 161 to assess the income in the hands of Nagappa or of the beneficiaries" The contention was rejected with reference to Section 161(1) and Section 166 by Shah, J. (speaking foe the Bench comprising Shah, Ramaswami and Grover, JJ.) in the following words: "It is implicit in the terms.
of sub section (1) that the Income tax Officer may assess a representative assessee, but he is not bound to do so.
He may assess either the representative assessee or the person represented by him.
That is expressly so enacted in section 166 which states: "Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred 963 to is receivable, or the recovery from such person of the tax payable in respect of 'such income. ' The Income tax Officer may, therefore, assess the person represented in respect of the income of the trust property and the appropriate provisions of the income tax Act relating to the computation of the total income and the manner in which the income is to be computed will apply to that assessment.
The Income tax Officer may in appropriate cases assess the representative assessee in respect of that income and limited, to that extent, and tax may be levied and recovered from him to the same extent as may, be leviable and recoverable from the person rep resented by him.
The contention, raised by counsel, for Nagappa that, since the trustees were assessable in respect of the income of the beneficiaries under Section 161(1), that income could not by virtue of sub section (2) of Section 161 be assessed in the hands of the beneficiary is contrary to the plain terms of Section 166.
Sub section (2) of Section 161 does not purport to deny the, Income tax Officer the option to assess the income in the hands of the person represented by the representative assessee;: it merely enacts that when a representative assessee is assessed to tax in exercise of the option of the revenue, he shall be assessed tinder Chapter XV and shall not 'in respect of that income be assessed under any other provision of the Act.
We will presently state the reasons why the rule was so enacted by Parliament.
But on the plain words used by Parliament the plea raised by counsel: that the.
representative assessee alone may be assessed as regards income in respect of which he is.
a representative assessee cannot be accepted.
The learned Judge then went to explain the reasons for which section 166 among other provisions was enacted.
In another case arising under the Bihar Agricultural Income Tax Act, 1948, a Bench of this Court comprising J.L. Kapur, M. Hidayatullah and 964 J.C. Shah, JJ. took a similar view in Ram Swaroop Das vs The State of Bihar , even though that Act and did not contain a provision similar to Section 166.
Section 13 of the Bihar Act provided: "Where any person holds land, from which agricultural income is derived as a common manager appointed under any law.
from the time being in force, or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested 'in such land or in the agricultural income derived therefrom the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and received by him shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income,tax so payable by each such person and shall be liable to pay the same.
" It was urged that because of Section 13, the Receiver alone can be assessed in respect of the income of the estate under his charge and that no assessment can be made upon the person who actually received such income from the receiver.
The said contention was rejected by Shah, J. speaking for the Bench in the following words: "In our view, there is no substance in the contention raised by the appellant.
The liability to pay tax is charged on the agricultural income of every person.
The income though collected by the Receiver was the income of the appellant.
By S.13, in addition to the owner, the Receiver is to be deemed to be an assessee.
But the fact that the Receiver may, because he held the property from which income was derived in the year of account, be deemed to be an ' assessee and liable to pay tax, does not absolve the appel lant, on whose behalf the income was received from the obligation to pay agricultural income tax.
Section 13 merely provides a machinery for recovery of tax, and is not a charging section.
When property is in the possession of the Receiver, common manager or administrator,, the taxing authorities may, but are not bound, to treat such 965 persons as assessee and recover tax.
The taxing authorities may always proceed against the owner of the income and assess the tax against him.
The definition in the connota tion of 'person ' undoubtedly include a Receiver, trustee, common manager, administrator or executor, and by such inclusion, it is open to the taxing authorities to assess tax against any such persons; but on that account the income in the hands of the owner is not exempt from liability to assessment of tax.
" The principle of this decision does support our view, notwithstanding certain variance between the provision concerned in the said decision and those concerned herein.
Sri Ashok Desai, however, placed strong reliance upon a Full Bench decision of the Gujarat High Court in CL T. vs Kamalini Khatau, where the majority (Divan, CJ. and B.K. Mehta, J. with P.D. Desai, J. dissenting) appears to take a contrary view.
Before we deal with the decision, it would be interesting to note that the counsel for the appellant Sri N.A. Palkhivala who appeared for the appellant before the Settlement Commission had himself repudiated this argument, though, another counsel, who appeared for the appellant at a later stage, did not agree with the view expressed by Sri Palkhivala.
The Commission has recorded the submission of Sri Palkhivala in the following words: "We may mention here that when Shri N.A. Palkhivala appeared before us on behalf of the applicant he had stated that although according to the Gujarat High Court 's decision in the case of Smt.
Kamalini Aatau, the income of a discretionary trust is assessable only in the hands of a representative assessed and not in the hands of the beneficiaries, he would not object to assessment of the amounts received by: the beneficiaries in their hands in the present case, for two reasons.
Firstly, according t o Shri N.A. Palkhivala, the Gujarat High Court 's decision in question was erroneous and it was dissently judgment in that case to the contrary, which was correct.
Secondly, in the case, before us, the representative assessees, namely, the trusts, being situated outside India, could 966 not be taxed in India and in such cases it would not be proper not to assess the beneficiaries, for that will lead to the entire income escaping the Indian 'income tax in the case of both the representative assessees and the beneficiaries.
" Be that as it may, we have been taken though both the opinions in the Full Bench decision in extensor We are told that an appeal is pending against the said decision in this Court.
In the circumstances, we are not inclined to deal with the said opinions in any detail except to say that we are inclined to agree with the dissenting.
opinion of P.D. Desai, J. and are not concerned with the reasoning of the majority.
For the above reasons, we cannot agree with Mr. Ashok Desai.
We hold that by virtue of Section 166, the Revenue has an option in the case of a discretionary trust either to make an assessment upon the trustees or to make an assessment upon the beneficiaries.
Of course, both the trustee and the beneficiary cannot be simultaneously taxed in respect of the same income.
The assessments made by the Commission on the deceased settlor and the appellant are thus unexceptionable.
U.K TRUSTS: The first contention urged with respect to U.K. trusts is that the commission has wrongly construed clause (3) which we have extracted hereinbefore.
Sri Desai argues that the trust had already come into existence with the appointment of the sole trustee, Mr. McGill, and that the coming into existence of the trust did not depend upon the appointment of additional trustees.
The commission was wrong in holding that until and unless the additional trustees are appointed, the trust in clause (3) does not come into existence.
Properly construed, says Sri 'Desai, clause (3) creates a discretionary trust.
Inasmuch as the sub clause does not prescribe any time limit within which the trustees must decide to distribute the income among the beneficiaries, says the counsel, clause (4) has, not and had never come into operation.
In this case the trustees never did decide not to exercise their discretion under clause (3).
If so, no income ever arose or accrued to the Settlor or the appellant under clause (4).
If the trustees fail to exercise their discretion under clause (3), the only remedy for the beneficiaries is to approach the court to compel the trustees to exercise their discretion one way or the other, but they cannot say that the trust 967 income has accrued to them.
Clause (4) comes into operation, says the counsel, only where the trustees decide not to distribute the income among the specified beneficiaries; only then does the trust income belongs to and has to be paid over to the settlor and after the death of the settlor to his elder son, the appellant.
Accordingly, the counsel says, the Commission was wrong in law in treating these trusts as specific trusts.
in our opinion, however, the question urged is academic in the facts and circumstances of the case.
As a matter of fact, both the settlor and the appellant have been receiving the income from these trusts during the several assessment years concerned herein.
Sri Vikramsinhji had voluntarily included the entire income from the U.K. trusts in his income in the returns filed by him for the assessment years 1964 65 to 1969 70.
It is unlikely that he would have so included unless he really received it.
The Commission treated those declarations as proof of the settlor 's real intention.
The Commission also relied upon certain other circumstances including the manner in which the accounts of these trusts were maintained in support of their opinion that all concerned with the trusts, acted on the basis that the trust income was flowing to the settlor, and after his death to the appellant.
The Commission also referred specifically to similar declarations made by the appellant in his returns.
It referred to his statements made in the two returns filed for the assessment year 1970 71, one relating to the income received by his father till his death and the other with respect to the income received by him during the accounting year after the death of his father.
Even subsequent to the death of Sri Vikramsinhji, the Commission pointed out, the appellant has been making similar declarations from time to time.
For instance, in the letter dated March 3, 1975 written by the appellant to the I.T.O., A Ward, Rajkot relating to the A.Y. 1972 73, he had stated, "as per statement of U.K. sent herewith, the trustees have arrived at income of 13,027 pounds for the benefit of Sri Jyotendrasinhji.
According to our opinion, this income is not taxable as U.K. trust is discretionary.
However, as it has been taken last, the income may be included in the hands of Sri Jyotendrasinhji subject to our appeal".
It is significant to notice the ground of non taxability put forward in the said letter.
The appellant did not say that he did not receive the income.
All he said was, since it is a discretionary trust, its income is not taxable in his hands.
If he had not received the income, he would have put forward that fact in the forefront.
But he did not.
Similarly, in the return relating to the A.Y. 1973 74, a note was appended by the appellant to the following effect: 968 "Late H.H. Maharaja Vikramsinhji of Gondal has created trusts in UK.
The assessee has been informed that income falling in the hands of the assessee is 12,627 pounds.
This is, therefore, shows as income in his return. ' (emphasis added).
It is true that the appellant had argued before the commission that the settlor as well as himself had included the said income in their returns out of ignorance and on the basis of wrong legal advice but the said explanation has not been accepted by the commission and we must go by the findings of the commission.
It is not brought to out notice that during any of the years concerned herein, did the appellant ever say that he did not receive the income from these trusts.
If so, the question of law urged is of mere academic interest and need not be dealt with by us.
Section 5 of the Act is wide enough to bring all such income to tax.
So far as the plea of double taxation is concerned, the observation made by the Commission in that behalf is quite adequate.
It has stated that in case appellant proves that any income has been taxed in U.S. or U.K., the same income shall not be taxable over again in India.
For the above reasons, the appeals fail and are dismissed.
No costs.
V.P.R. Appeals dismissed. | The appellant 's father executed on 1.1.1964, three deeds of settlements (trust deeds) in the United States of America.
The terms in them all were identical.
The object of these trusts was to provide for the education, maintenance and up keep of the members of the settlor 's family and their descendants.
He also executed two settlements in U.K. with the very same object.
The settlor (appellant 's father) was riling returns of his income in India including therein whole of the income arising from the trusts.
For the assessment years 1964 65 to 1969 70, he filed the returns.
Since he died on 22 8 1969, i.e. in the middle of the accounting year (relevant to the assessment year 1970 71), two returns were filed, one up to the date of his 938 939 death and the other from the date of his death to the end of the accounting year, by his eldest son, the appellant, including the whole of the income from the trusts.
The appellant filed appeals against the assessment orders pertaining to the assessment years 1965 66 and 1966 67 contending that the income from U.S. trusts was not taxable in India either in the hands of settlor or in his hands and that the inclusion of the said income in the returns by the settlor and by the appellant was a mistake.
The appellant preferred revisions against other assessment orders, where appeal was barred, taking the plea of non taxability with respect to the income from U.K. trusts and from the U.S. trusts.
The Appellate Assistant Commissioner allowed the appeals.
, The Revenue 's appeals to the Tribunal were allowed holding that the A.A.C. acted contrary to Rule 46(2) of the Income Tax Rules in admitting the additional grounds and in looking into new material.
The Tribunal remitted the appeals back to A.A.C.
At that stage the appellant approached the settlement commission under Chapter XIX(A) of the Income Tax Act, 1961.
The Settlement Commission went into all the aspects of the matter and computed the taxable income of appellant 's father and his income for the assessment years 1964 65 to 1970 71 and 1970 71 to 1982 83.
It directed the I.T.O. to compute the total income for each of the said assessment years accordingly and raise demand for the tax due.
The appellant preferred two sets or appeals before this Court against the two orders of the Settlement Commission.
C.A.s. 4301 07 of 1991 related to the assessment years 1964 65 to 1970 71 and C.As.12881300 of 1991 related to the assessment years 1970 71 to 1982 83.
The appellant contended that the settlement Commission erred in law in holding that the U.S. trusts were revocable trusts within the meaning of Section 63 of the Act; that for attracting Section 63, the deed of transfer must give the transferor a right to retransfer directly or indirectly whole or any part of the income or assets to the transferor or it must give him a right to reassume power directly or indirectly over the whole or any part of income or assets; that in the present case such power was not given to the transferor; that U.S. trusts were discretionary trusts and 940 therefore the assessment could be made only upon the trustees and not upon the beneficiaries recipients; that the revenue could not take advantage of the mistake of law on the part of the settlor or the appellant; that with the death of the settlor, the U.S. trusts ceased to be revocable trusts and the appellant could not be taxed on the income received by him from the said trust, because only the trustee could be taxed; that the U.K. trusts were also discretionary trusts and not specific trusts as held by the Settlement Commission and the assessment could be made only upon the trustees and not upon the beneficiaries recipients; that the Settlement Commission committed a legal error in including the income from the U.K. trusts in the total income of the settlor and the appellant even though it was not paid out by the trustee nor received by the assessees in India; that in the U.S.A and U.K, tax was levied upon the respective trust incomes under the laws of those countries; that levying tax over again in India on the very same income amounted to double taxation and therefore the tax levied in India was to be waived.
The Revenue submitted that even if any principles were decided by the Settlement Commission, they did not bind the Income Tax authorities in proceedings relating to subsequent years; that the order of the Commission was relevant to and was confined I only to the assessment years to which it related; that this Court under Article 136 of the Constitution would not be able to go into the merits of the order, that the Settlement Commission 's interpretation on the U.S. and U.K. trusts was perfectly in order and did not call for any interference by this court; that during his life time, the settlor had declared that he had received income from the U.K. and U.S. trusts and had included the same in his returns of income for each of the assessment years relevant herein; that the appellant too acted similarly and therefore the argument of not receiving the income from UK trusts was a mere after thought and should not he given any credence; that a trustee or the trustees was/were expected to act reasonably and in furtherance of the object of the trusts; that they were to apply the income for the purposes specified, because they could not just accumulate it; that applying the test of reasonableness, it was to be held that ordinarily, the trustee ought to distribute the income each year; and that it was to be held that the income from the UK trusts had rightly been taken into account by the Commission while passing its orders.
Dismissing the appeals, this Court, 941 HELD: 1.01.
The finality clause contained in Section 245 1 does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this court under Article 32 or under Article 136, as the case may be.
But that does not mean that the jurisdiction of this court in the appeal preferred directly in this court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this court under Article 136.
A party does not and cannot pin any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226.
This is not a limitation inherent in Article 136; it is a limitation which this court imposes on itself having regard to the nature of the function performed by the Commission and keeping In view the principles of judicial review.
[955 D E] 1.02.
The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud & malice which, of course, constitute a separate and independent category.
[956 B] 1.03.
The appellant power under Article 136 is similar to power of judicial review, where the appeal is directed against the orders of the Settlement Commission.
Sri Ram Durga Prasad vs Settlement Commission, 176 I.T.R. 169 and Chief Constable of the N. W. Police vs Evans,[1982] 1 W.L.R. 1155, referred to.
[956 D] 1.04.
The only ground upon which this Court can interfere in these appeals is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant.
[956 E] 1.05.
The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised.
The commission has interpreted the trust deeds in a particular manner.
Even if the interpretation placed by the commission on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be said to be a violation of the provisions of the Income Tax Act.
[956 F] 942 1.06.
The interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years.
[956 G] 1.07.
Though it is not necessary, strictly speaking, to go into the correctness of the interpretation placed upon the said deeds by the commission, and it is enough if this court confines itself to the question whether the order of the Commission is contrary to the provisions of the Act, yet, for the sake of completeness, the Court examine whether the order of Commission is vitiated by any such wrong interpretation.
[956 H, 957 A] 2.01.
A discretionary trust is described as a trust where the trustees have been vested with a discretion in the matter of distribution of trust income among the specified class of beneficiaries.
In the case of such trusts, the trustees have a discretion to pay whole or part of the income to such member or members of the designated class as they think fit and in such proportion as they deem appropriate.
[957 C D] Snell 's Principles of Equity, 25th Edn.
(1965) page 129, referred to.
[957 E] 2.02.
The US settlement deed empowers the trustee to hold, manage, invest and reinvest the principal of the trust fund, to collect and receive the income thereof and to pay or apply so much of the net income as the trustee shall in his absolute and uncontrolled discretion deem advisable to or to the use of one of more members of the settlor 's family, It is thus a discretionary trust.
Para 1(2) of the U.S. Deed empowers the settlor/transferor and the trustee, acting together to direct the trustee, at any time, to pay over the entire income and/or entire corpus or a part thereof to such member of the settlor 's family or their descendants as they may direct.
The said power cannot be exercised by the settlor acting Alone.
[958 B] 2.04.
The power, properly construed, is given to the settlor to, be exercised together with the trustee and not to the trustee to be exercised together, with the settlor.
The trustee is anyhow vested with an absolute discretion to distribute the income of or the principal of the trust to such member of the family, as he thinks appropriate, under the clause preceding and paras following para 1(2).
If so, there was no point in saying that 943 he can, together with the settlor, be empowered to pay over part or whole of income/principal to "such one or more members of a class composed of the family members living. ' It cannot also be forgotten that the trustee in this case is a Bank one of the largest in the U.SA.
and not an individual acquaited with the affairs of the settlor 's family.
[958 H, 959 A] 2.05.
Section 63 does not say that the power of revocation vesting in the transferor should be absolute or unconditional.
[959 B] 2.06.
Section 63(1) also does not say that the deed of transfer must confer or vest an unconditional or an exclusive power in the transferor to give the power/direction of the nature contemplated by it.
Merely because the concurrence of the trustee had to be obtained by the transferor/settlor for giving the said direction it cannot be said that the deed does not contain a provision giving the transferor a right to reassume power directly or indirectly over the whole or any part of income or assets within the meaning of Section 63(a)(ii) of the Act.
[960 B C] 2.07.
During the lifetime of the settlor, the entire income arising from the three U.S. trust deeds was bound to be and was rightly included in the income of the settlor by virtue of Section 63 read with Section 61.
[961.B] 2.08.
With the death of the settlor, Section 63 ceased to apply even though the aforesaid clause empowers not only the settlor but also the Maharaja for the time being to exercise the said power.
[961 C] 2.09.
Section 63 is attracted only where such power is given to the transferor and the appellant (the son of the settlor) is not and cannot be called the transferor.
It is not denied that so far as the income from the U.S. trusts is concerned, it was indeed received by the appellant.
[961 D] 2.10.
The trustees in the case of a trust declared by a duly executed instrument in writing are treated as representative assessees (Section 160(1)(iv)).
It is equally true that in the case of a discretionary trust, trustees are liable to be taxed in respect of the income received by them at the rate specified in Section 164(1).
[961 F] 2.11.
Section 166 states in unmistakable terms that nothing contained in the preceding provisions in the chapter shall preclude the Revenue from making a direct assessment upon the beneficiary and/or recovering the tax payable from such person.
[962 B] 944 2.12.
By virtue of Section 166, the Revenue has an option in the case of a discretionary trust either to make an assessment upon the trustees or to make an assessment upon the beneficiaries.
Of course, both the trustee and the beneficiary cannot be simultaneously taxed in respect of the same income.
The assessments made by the Commission on the deceased settlor and the appellant are thus unexceptionable.
[966 D] Behramji Sorabji vs Commissioner of Income Tax, Bombay, ; Commissioner of Income Tax Bombay City vs Ratilal Nathalal, ; Tarunendra Nath Tagore vs Commr.
of Income Tax, ; K. Subramania Pillai vs Agricultural Income Tar Officer, 7hukalay, ; Commissioner of Income Tar, Punjab vs Raghubir Singh, ; Nagappa vs C.I.T, and Ram Swaroop Das vs The State of Bihar, , referred to.
Sevantilal Maneklal vs C.I.T., , distinguished.
C.I.T vs Kamalini Khatau, (F.B.) Agreed with the dissenting opinion.
3.01.Both the settlor and the appellant have been receiving the income from the UK trusts during the several assessment years concerned herein.
The settlor had voluntarily included the entire income from the U.K. trusts in his income in the returns filed by him for the assessment years 1964 65 to 1969 70.
It is unlikely that he would have so included unless he really received it The Commission treated those declarations as proof of the settlor 's real intention.
The Commission also relied upon certain other circumstances including the manner in which the accounts of these trusts were maintained in support of their opinion that all concerned with the trusts, acted on the basis that the trust income was flowing to the settlor, and after his death to the appellant.
The Commission also referred specifically to similar declarations made by the appellant in his returns.
Even subsequent to the death of the settlor, the Commission pointed out, the appellant has been making similar declarations from time to time.
[967 C E] 3.02.
The appellant did not say that he did not receive the income from the U.K. trusts.
All he said was, since it is a discretionary trust, its income is not taxable in his hands.
If he had not received the income, he would have put forward that fact in the forefront.
But he did not.
Section 945 5 of the Act is wide enough to bring all such income to tax.
In case appellant proves that any income has been taxed in U.S. or U.K., the same income shall not be taxable over again in India.
[%7 H, 968 D] |
Appeal No. 1287(NT) of 1982.
From the Judgment and Order dated 22.2. 1978 of the Madras in Tax Case No. 24 of 1975.
M. Gaurishankar Murthy, C. Ramesh, P. Parmeswaran and Ms. A. Subhashini for the Appellant.
Ms. Janki Ramachandran for the Respondent.
The following Order of the Court was delivered In this appeal preferred against the Judgment of the Madras High Court, the words "whose income chargeable under the head 'salaries ' occurring in the second proviso to sub clause (iii) of clause (c) of section 40 fall for interpretation.
The assessment year concerned is 1965 66.
During the accounting year relevant to the said assessment year, the assessee paid to its foreign technical director a total remuneration of Rs. 66,000 including a sum of Rs. 28,576 paid by way of perquisites.
The Income tax Officer held that by virtue of section 40(c)(iii) perquisites exceeding one fifth amount of the salary cannot be allowed as a deduction.
He held further, the second Proviso to the said sub clause is not applicable inasmuch as the income chargeable under the head salaries was not Rs. 7,500 or less.
Accordingly he allowed only a, sum of Rs. 13,200 by way of perquisites.
He disallowed the balance of Rs. 15,376.
The Appellate Assistant Commissioner, however, allowed the assessee 's appeal holding that inasmuch as the salary of the foreign technical director was exempt from tax under section 10(6)(vii), the provision contained in section 40(c)(iii) was not applicable.
The appeal filed by the 995 Revenue was allowed by the Tribunal.
The Tribunal opined that merely because the salary is exempt under section 10(6)(vii), the provision in section 40(c)(iii) does not cease to apply.
Under the proviso to the said sub clause, only an employee whose income chargeable under the head salaries was Rs. 7,500 or less is exempted.
Inasmuch as the income chargeable under the head salaries in this case is more than Rs. 7,500, the exemption does not operate.
Since the said foreign technical director was an employee of the assessee, he was certainly governed by the provision section 40(c)(iii), said the Tribunal.
At the request of the assessee, it stated the following question for the opinion of the High Court: "Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the provisions of Section 40(c)(iii) were rightly invoked for the assessment year 1965 66 in relation to the remuneration of the Technical Director of the assessee company." Section 40(c)(iii) as applicable to the assessment year 1965 66, read as follows: "40.
Notwithstanding anything to the contrary in Sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head "profits and gains of business or profession".
(c) in the case of any company (iii)any expenditure incurred after the 29th day of February, 1964, which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee (including any sum paid by the company in respect of any obligation which but for such payment would have been payable by such employee), to the extent such expenditure exceeds one fifth of the amount of salary payable to the employe e for any period of his employment after the aforesaid date: Provided further that nothing in this sub clause shall 996 apply to any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite to an employee whose income chargeable under the head "Salaries ' is seven thousand five hundred rupees or less ' Under section 10(6)(vii) of the Act, the remuneration due to any technician, who was not a resident in any of the four financial years immediately preceding the financial year in which he arrived in India, chargeable under the head 'salaries ', for Services rendered as a technician, was exempt.
In this case, the salary paid to the foreign technical director was admittedly exempt under section 10(6)(vii).
The contention of the assessee which has been accepted by the High Court, runs thus: the salary payable to the said director was exempt by virtue of Section 10(6)(vii).
In other words, it is nil for the purposes of the Act.
If so, the second proviso to the sub clause is attracted, inasmuch as 'nil ' income, under the head 'salaries" is less than Rupees seven thousand five hundred.
By virtue of the said second proviso, the main provision in sub clause (iii) goes out of picture.
The High Court reasoned that if income of one rupee is less than Rs. 7500, there is no reason for saying that 'nil ' income is not an income less than Rs. 7,500.
Since the income exempted under Section 10 is not liable to be included in the total income, such exempted salary income should be treated as 'nil ' income for the purposes of Section 40(c)(iii), opined the High Court.
After hearing the counsel for the parties, we are of the opinion that the view taken by the High Court is a reasonable one and does not call for any interference.
The appeal accordingly fails and is dismissed.
No costs.
G.N. Appeal dismissed. | During the accounting order relevant to assessment year 1965 66, the Respondent assessee paid to its foreign technical director a total remuneration of Rs. 66,000 including a sum of Rs. 28,576 paid by way of perquisites.
The Income tax Officer allowed only a sum of Rs. 13,200 by way of perquisites and disallowed the balance of Rs. 15,376 in view of Section 40(c)(iii) of the Income tax Act, 1961.
On an appeal by the assessee, the Appellate Assistant Commissioner held that since the salary of the foreign technical director was exempt under S.10(6)(vii), the provision contained in Sec.40(c)(iii) was not applicable.
Revenue preferred an appeal and the Tribunal held that S.40(c)(iii) was applicable.
At the instance of the Assessee, Tribunal referred the question to the High Court.
Since the High Court answered the question in favour of the assessee, Revenue preferred the present appeal.
Dismissing the appeal, this Court, HELD: Under section 10(6)(vii) of the Income tax Act, 1961 the remuneration due to any technician, who was not a resident in any of the four financial years immediately preceding the financial year in which he arrived in India, chargeable under the head 'salaries ', for services rendered as a technician, was exempt.
Thus in the instant case, the salary paid to the foreign technical director was admittedly exempt under Section 10(6)(vii) of the Income tax Act, 1961.
In other words, it was nil for the purposes of the Act.
If so, the second proviso to sub clause (iii) of S.40(c) 994 is attracted, inasmuch as 'nil ' income, under the head 'salaries" is less than Rupees seven thousand five hundred.
By virtue of the said proviso, the main provision in sub clause (iii) goes out of picture.
The High Court reasoned that if income of one rupee is less than Rs. 7,500, there is no reason for saying that 'nil ' income is not an income less than Rs. 7,500.
The High Court was right in taking the view that since the income exempted under Section 10 is not liable to be included in the total income, such exempted salary income should be treated as 'nil ' income for the purposes of Section 40(c)(iii) of the Act.
[996 B E] |
Appeal No. 2169(NT).
of 1993.
From the Judgment and Order dated 10.12.1979 of the Madras High Court in Tax Case No. 398 of 1976.
Mrs. Janaki Ramachandran for the Appellant.
K.N. Shukla, Sudhir Walia and P. Parmeswaran for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Under Section 256(1) of the Income Tax Act, the Income Tax Appellate Tribunal, Madras stated the following question of law for the opinion of the Madras High Court: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 19 being the interest received on the deposits made with the 1000 Electricity company is a business receipt and accordingly deleting the additional surcharge of Rs. 81,920 charged .for the assessment year 1963 64?" The High Court returned the reference unanswered.
It directed the Tribunal to consider the case 'on all points that require consideration of the question, whether additional surcharge was attracted '.
In short, it asked the Tribunal to examine whether the additional surcharge was attracted even if the income of Rs. 19 is chargeable under the head 'Profits and gains of business '.
The learned counsel for the assessee submits that the High Court exceeded its jurisdiction in making the above direction.
It is submitted that the matter be sent back to the High Court for answering the question of law as stated by the Tribunal.
The contention of the learned counsel is that by giving the impugned direction the High Court has sought to widen the scope of enquiry which it is not empowered to do in a reference under Section 256.
The assessee is a cooperative society engaged in the business of banking.
The previous year relevant to the assessment year 1963 64 was the year ending June 30, 1962.
Its business income was exempt under the provisions of Section 81(1) as it then stood.
During the said accounting year, the assessee received a sum of Rs. 19 being the interest on the deposit made by it with the Salem Erode Electricity Distribution Company.
This deposit was made by the assessee as required by the conditions notified by the said company for supply of energy.
The deposit carried interest and it is on account of the said interest that the sum of Rs. 19 was received by the assessee.
The Income Tax Officer treated the said amount of Rs. 19 as 'income from other sources '.
On that basis, he levied additional surcharge, in a sum of Rs. 81,920, under the provisions of the relevant Finance Act.
On appeal, the Appellate Assistant Commissioner upheld the contention of the assessee that the said sum of Rs. 19 also constituted its business income and, therefore, exempt.
Accordingly, he held, the levy of surcharge was unsustainable.
The Revenue appealed to the Appellate Tribunal.
Its case was that the said receipt cannot be treated as a business receipt and that it was rightly treated by the I.T.O. as "income from other sources '.
The Tribunal recorded in its order : "Before us it is made clear by both sides that the levy of additional surcharge and interest would depend upon the classification of the head of income for this interest income of Rs. 19 and that if it fell under income from business, the appeal has to be dismissed 1001 and that if it fell under 'income from other sources ', the appeal has to be allowed and the levy of surcharge and interest restored.
So we proceed to discuss the vital issue in this case on which hangs the result of this appeal.
" The Tribunal held it 'income from business ' and accordingly dismissed the appeal filed by the Revenue.
At the instance of the revenue, the Tribunal stated the aforesaid question.
Before the High Court it was contended by the Revenue that both the A.A.C. and the Tribunal laboured under an erroneous assumption that the said sum of Rs. 19 represented business income and the liability of surcharge was not attracted.
It was submitted that whether the said sum was a business income or income from other sources, it attracted the liability of additional surcharge.
The assessee, however, submitted that it was not open to the revenue to take the said stand, inasmuch as it agreed before the Tribunal that in case the said sum constituted business income, liability of additional surcharge was not attracted.
The assessee submitted further that the High Court should not allow the revenue to shift its stand and urge a new contention.
The High Court held, after an examination of the relevant provisions of the Finance Act and of the decisions relating to the nature of jurisdiction of the High Court in such a reference, that the assumption made by the A.A.C. and the Tribunal that the liability of surcharge is not attracted in case 'the said sum of Rs. 19 represented business income may not be warranted and that in such a situation the High Court does possess the power to correct the error so long as the point arose out of the Tribunal 's order.
The High Court held: "This Court cannot look on helplessly with reference to an error which is manifested in the contention of both sides before the Tribunal.
This court has jurisdiction to correct an error in the order of the Tribunal, so long as the point arose out of its order, whoever be the author of the mistake or error in taking up an particular contention.
Having regard to the nature of the issue that was before the Tribunal and having regard to what we have stated above, we think it proper to set aside the order of the Tribunal and direct the Tribunal to consider the case on all the points that require consideration of the question whether additional surcharge was attracted.
The reference is returned unanswered.
" 1002 We find it difficult to agree with Smt.
Janaki Ramachandran, learned counsel for the assessee that the High Court has exceeded its jurisdiction under Section 256 in making the above direction.
As rightly observed by the High Court, if the Tribunal proceeds upon an assumption which is erroneous in law and refers a question to the High Court, it cannot be said that the High Court is bound by the terms of the question referred and cannot correct the erroneous assumption of law underlying the question.
If such power is not conceded to the High Court, the result would be that the answer given by the High Court may equally be erroneous in law.
Such a situation cannot certainly be countenanced.
It would not be in the interest of law or justice.
It is not as if the High Court has asked for any fresh investigation of facts in this case not that such power does not exist in the High Court in a appropriate case.
All that the High Court has asked the Tribunal to do is to consider whether the liability of surcharge is not attracted even if the said sum of Rs. 19 is treated as income from business, The fact that the revenue was also a party to the said erroneous assumption before the Tribunal cannot stand in the way of the Revenue resiling from an erroneous assumption of law.
In C.I.T., Bombay vs Scindia Steam Navigation Ltd., ; the facts were these: a steam ship belonging to the respondent company was requisitioned by the government.
The ship was lost by enemy action on March 16, 1944.
The company received a sum of Rs. 20 lacs by way of compensation on July 17, 1944, a sum of Rs. 23 lacs on December 22.
1944 and a sum of Rs. 33,333 on August 10, 1946.
The total compensation so received exceeded the cost price of the steam ship.
The difference between the cost price and written down value was Rs. 9,26,532.
In the assessment proceeding for the A.Y. 1946 47, the revenue sought to charge the said amount under the fourth proviso to Section 10(2)(vii) of the Income Tax Act, 1922, inserted by the Income Tax (Amendment) Act, 1946, which came into force on May 4, 1946.
The assessee contended that the amount should be deemed to have been received on April 16,1944 as was done for the purposes of Excess Profits Tax Act, in which case it could not fall within the accounting period July 1, 1944 to June 30, 1945, relevant to the A.Y. 1946 47.
The Tribunal was of the opinion that the material date for the purpose of the fourth proviso to Section 10(2)(vii) was the date when the compensation was in fact received and that therefore the amount was assessable in the A.Y. 1946 47.
At the instance of the assessee, the Tribunal 1003 stated the following question of law for the opinion of the High Court "whether the sum of Rs. 9,26,532 was properly included in the assessee company 's total income computed for the A.Y. 1946 47?" Before the High Court the assessee raised a new contention for the first time that the fourth proviso to section 10(2)(vii) did not apply to the assessment as it was not in force on April 1, 1946 and the liability of the company had to be determined as on April 1, 1946, when the Finance Act, 1946 came into force.
A preliminary objection was raised by the revenue that the said aspect, or question as it may be called, did not arise out of the order of the Tribunal, that it was not raised before or dealt with by the Tribunal and that it was also not referred for the opining of the High Court.
The High Court over ruled the objection opining that the form in which the question was framed was sufficiently wide 'to take in the new contention and that the company was entitled to raise it even if that aspect of the question had not been argued before the Tribunal.
It upheld the new contention raised by the assessee and answered the question in its favour.
On appeal, this court affirmed.
It was held that the High Court had jurisdiction to entertain the new contention raised by the assessee for the first time inasmuch as it was within the scope of the question framed by the Tribunal and was implicit therein.
This court enunciated several principles relating to the nature of the jurisdiction of the High Court under Section 256, of which the following principle is relevant for our purpose: "Section 66(1) speaks of a question of law that arises out of the order of the Tribunal.
Now a question of law might be a simple one, having its impact at one point, or it may be a complex one, branching over an area with approaches leading to different points therein.
Such a question might involve more than one aspect, requiring to be tackled from different standpoints.
All that Section 66(1) requires is that the question of law which is referred to the court for decision and whic h the court is to decide must be the question which was in issue before the Tribunal.
Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal.
It will be an over refinement of the position to hold that each aspect of a question is 1004 itself a distinct question for the purpose of section 66(1) of the Act. ' This decision of the Constitution Bench, in our opinion justifies and warrants the approach adopted by the High Court in the judgment under appeal.
The question in the present case is whether additional surcharge was leviable for the A.Y. 1963 64 under the relevant Finance Act.
The assessee 's contention was that it has no income which was liable to be assessed to income tax inasmuch as its entire income was exempt under Section 81(1)(a).
In tune with this submission, the assessee submitted that the said sum of Rs. 19 was also a business income and, therefore, the liability of additional surcharge did not attach to the assessee.
The I.T.O. took the view that the said sum of Rs. 19 represented income from other sources and therefore liability of additional surcharge was attracted.
On Appeal, the AAC and the Tribunal upheld the assessee 's contention that it was business income and therefore the liability of surcharge was not attracted.
The High Court, however, thought that having regard to the language of the provisions of the relevant Finance Act, the Tribunal ought to examine whether the liability to additional surcharge is attracted even if the said sum of Rs. 19 was treated as income from business.
The High Court was of the opinion that the legal submission urged by the Revenue before the High Court, no doubt for the first time, did call for serious consideration.
This was done to arrive at a correct decision in law relating to the liability to additional surcharge.
If really, additional surcharge was chargeable according to the Finance Act even in case the said sum of Rs. 19 represented business income, the High Court cannot be called upon to act on the assumption that it is not so chargeable and answer the question stated.
Such a course would neither be in the interest of law or justice.
That the Revenue was also a party to the erroneous assumption of law makes little difference to the principle.
Counsel for the parties have cited several decisions touching upon the nature of the jurisdiction of the High Court under Section 256 viz., V.R. Y.K.N. Kallappa Chettiar vs Commissioner of Income Tax, C.I.T vs Ogale Class Works Ltd., and Keshav Mills Co. Ltd. vs Commissioner of Income Tax Bombay North, Ahmedabad, by the learned counsel for the appellant and Commissioner of 'Income Tax, Bihar and Orissa vs kirkend Coal Co., and Kusunben D. 1005 Mahadevia vs Commissioner of Income Tax, Bombay City, by the learned counsel for the Revenue.
We do not, however, think it necessary to refer to them, since the situation present herein was not present in those cases.
The principles of these decisions does not in any manner run contrary to the one affirmed by us herein, which is consistent with the one enunciated in Scindia Steam Navigation.
The appeal accordingly fails and is dismissed.
No costs.
N.V.K. Appeal dismissed. | The appellant assessee was a cooperative society engaged in the business of banking The previous year relevant to the assessment year 1963 64 was the year ending June 30, 1962.
The business income of the assessee was exempt under the provisions of Section 80(1) as it then stood.
During the aforesaid accounting yew, the assessee received a sum of Rs. 19 being the interest on the deposit made by it with an Electricity Distribution Company.
This deposit had to be made by the assessee as it was required by the conditions notified by the electricity company for supply of energy, and it carried interest.
It was on account of the said deposit that the sum of Rs. 19 was received by the assessee, by way of interest.
The Income tax Officer treated the amount of Rs. 19 as income from other sources, and on that basis, he levied additional surcharge, in a sum of Rs. 81,920.
The assessee appealed to the Appellate Assistant Commissioner who upheld the assessee 's contention that the said sum of Rs. 19 constituted its business income and, was therefore, exempt.
He held that the levy of surcharge was unsustainable.
The Revenue appealed to the Appellate Tribunal which held that it was 'income from business ', and accordingly dismissed the Revenue 's 997 998 appeal.
At the instance of the Revenue, the Tribunal referred the question to the High Court.
The High Court held, that the assumption made by the Appellate Assistant Commissioner and the Tribunal that the liability of surcharge was not attracted in case the said sum of Rs. 19 represented business income may not be warranted and that in such a situation the High Court does possess the power to correct the error so long as the point arose out of the Tribunal 's order.
It returned the reference unanswered and directed the Tribunal to consider the case on all points that require consideration of the question whether additional surcharge was attracted.
In the assessee 's appeal to this Court, it was submitted that the High Court exceeded its jurisdiction in making the aforesaid direction, that the High Court widened the scope of enquiry which it was not empowered to do in a reference under Section 256 and that the matter should be sent back to the High Court for answering the question of law as stated by the Tribunal.
Dismissing the appeal, this Court, HELD : All that the High Court has asked the Tribunal to do is to consider whether the liability of surcharge is not attracted even if the said sum of Rs. 19 is treated as income from business.
The fact that the revenue was also a party to the said erroneous assumption before the Tribunal cannot stand in the way of the Revenue resiling from an er roneous assumption of law.
[1004 D F] In the instant case, the question was whether additional surcharge was leviable for the assessment year 1963 64 under the relevant Finance Act.
The assessee 's contention was that it had no income which was liable to be assessed to income tax inasmuch as its entire income was exempt under Section 81 (1) (a), and it was submitted that the sum of Rs. 19 was also a business income and, therefore, the liability of additional surcharge did not attach to the assessee.
The I.T.O. took the view that the said sum of Rs. 19 represented income from other sources and, therefore, liability of additional surcharge was attracted.
The Appellate Assistant Commissioner upheld this contention.
The High Court, however, thought that having regard to the language of the provisions of the relevant Finance Act, the Tribunal ought to examine whether the liability to additional 999 surcharge was attracted even if the said sum of Rs. 19 was treated as income from business.
The High Court was of the opinion that this legal submission, though raised for the first time, did call for serious consideration.
This was done to arrive at a correct decision in law relating to the liability to additional surcharge.
If really, additional surcharge was chargeable according to the Finance Act even In case the said sum of Rs. 19 represented business income, the High Court cannot be called upon to act on the assumption that it is not so chargeable and answer the question stated.
Such a course would neither be in the interest of law or justice.
That the Revenue was also a party to the erroneous assumption of law makes little difference to the principle.
[1004 B F] C.I.T. Bombay vs Scindia Steam Navigation Ltd., 42 I.T.R. 589, relied on.[1004 H] V.R.Y.K.N. Kallappa Chettiar vs Commissioner of Income Tax, ; C.L T. vs Ogale Glass Works Ltd., 25 I.T.R. 529; Keshav Mills Co. Ltd. vs Commissioner of Income Tax, Bombay North, Ahmedabad, ; Commissioner of Income Tax, Bihar and Orissa vs Kirkend Coal Co., 74 I.T.R. 67 and Kusumben D. Mahadevia vs Commissioner of Income Tax, Bombay City , not applicable.
[1004 H] |
Appeal No. 6120 of 1983.
From the Judgment and Order dated 25.4.1983 of the Disciplinary Committee of the Bar Council of India in B.C.I. Tr.
Case No. 32 of 1982.
Bharat Sangal for the Appellant.
V.R. Reddy, Addl.
Solicitor General, T. Ratnam and D.N. Goburdhan for the Respondents.
by MOHAN, J. This is a statutory appeal under Section 38 of the Advocates Act of 1961.
The brief facts are as under: The respondent engaged the appellant as a counsel in suit No. 510 of 1964, this was in April, 1976.
The suit was ultimately compromised on 14.6.77.
It was ordered that out of the total amount lying with the court receiver, a sum of Rs. 64,000 shall be paid over to the plaintiff; the balance was to be paid to the respondent and possession of suit property was to be handed over to the respondent by the court receiver.
During the pendency of the suit the court receiver inducted one Usman Ghani Haji Mohamed as a tenant.
He filed CS No. 7 of 1978 praying for an interim injunction restraining the court receiver from handing over possession to the respondent.
That suit was continued.
After the compromise decree was passed on 14.6.77 the appellant who was the counsel for the respondent was requested to withdraw the amount lying with the court receiver and hand over the same to the 1009 respondent.
For this purpose a, letter of authorisation to enable the appellant to receive the amount was also issued, Pursuant to the letter of authorisation and instructions, a total amount of Rs. 50,379 was withdrawn by the appellant from the court receiver.
Out of this, he paid only Rs. 18,000 and the rest was not paid.
Therefore, the respondent preferred a. complaint before the Bar Council of India on 9.1.81.
The appellant was issued a notice by the Bar Council to which he submitted his reply.
On consideration of his reply and hearing the arguments, the Disciplinary Committee of the Bar Council of India, was of the view that the burden of proving the fact that the respondent had paid a sum of Rs. 50,379 lay on the appellant.
Certain receipts produced to evidence payment to the respondent were not accepted.
The plea of the appellant that the account books had been lost was held to be untrue.
Ultimately the appellant was suspended for a period of two years and further directed to pay a sum of Rs. 500 to the complainant (the respondent herein).
It is against this order the present appeal has been preferred.
Learned counsel for the appellant took us through the impugned order and urged that the Committee had not properly appreciated the evidence especially the receipts which were produced by the appellant to evidence the payment.
It is incorrect to hold that the receipt dated 8.8.77 was a suspicious document merely because the account books were not produced, it would not follow that the payments made by the appellant could be disbelieved.
We pointed out to the learned counsel for the appellant that the order under appeal is unexceptional and there was no case for interference.
We felt that the order of suspension of two years was not commensurate with the charges of misappropriation.
Therefore, we directed the issue notice to the appellant which came to be accepted by the learned counsel Mr. Bharat Sangal.
Inspite of the fact that the appellant has not chosen to appear, in order to make over the payment of the amount voluntarily.
Therefore, we are left with no option then to decide the case ourselves on merits.
The Disciplinary Committee of the Bar Council on a proper appreciation of the evidence disbelieved the so called receipts evidencing the payment.
It has come to the correct conclusion that the receipt dated 8th of August, 1979 was got up on a blank signed paper.
Hence, the due 1010 execution of the receipt had not been proved by the appellant.
Besides, the statement of the appellant that the account books had been lost in transit had been rightly disbelieved.
Under these circumstances this is a clear case wherein the misappropriation by the appellant has been fully established.
Once this conclusion is arrived at, the question is what is the punishment to be imposed? Advocacy is not a craft but a calling; a profession wherein devotion to duty constitutes the hall mark.
Sincerity of performance and the earnestness of endeavor are the two wings that will bare aloft the advocate to the tower of success.
Given these virtues other qualifications will follow of their own account.
This is the reason why legal profession is regarded to be a noble one.
But it cannot be allowed to become a sorriest of trades.
It will be useful to quote what Sharaswood said of this profession: A lower, without the most sterling integrity, may shine for a while with meteoric splendor; but his light will soon go out in blackness of darkness.
It is not in every man 's power to rise to eminence by distinguished abilities.
It is not in every man 's power, with fe w exceptions, to attain respectability, competence, and usefulness.
The temptations, which beset a young man in the outset of his professional life, especially if he is in absolute dependence upon business for his subsistence, are very great.
The strictest principles of integrity and honour are his only safety.
Let him begin by swerving from truth or fairness, in small particulars, he will find his character gone whispered away, before he knows it.
Such a one may not indeed be irrecoverably lost; but it will be years before he will be able to regain a firm foothold.
There is no profession in which moral character is so soon fixed as in that of the law; there is none in which it is subjected to severer scrutiny by the public.
It is well that it is so.
The things we hold dearest on earth, out fortunes, reputations, domestic peace, the future of those dearest to us, nay, our liberty and life itself, we confide to the integrity of our legal counselors and advocates.
Their character must be not only without a stain, but without suspicion.
From the very commencement of a lawyer 's career, let him cultivate 1011 above all things, truth, simplicity and candor.
They are cardinal virtues of a lawyer.
Let him always seek to have a clear understanding of his object: be sure it is honest and right and then march directly to it.
The covert, indirect and insidious way of doing anything, is always the wrong way.
It gradually hardens the moral faculties, renders obtuse the perception of right and wrong in human actions, weighs everything in the balance of worldly policy, and ends most generally, in the practical adoption of the vile maxim, "that the end sanctifies the means.
" Therefore an exacting standard is what is expected of an advocate.
This court has taken the view in M. Veerabhadra Rao vs Tek Chand, [1984] Supp.
SCC 571 as to how in such a case professional misconduct has to be dealt with.
In that case, the advocate committed forgery by attesting false affidavits which was held to be a serious misconduct.
This court pointed out the duties of the members of the bar in the following passage: "Legal profession is monopolistic in character and this monopoly itself inheres certain high traditions which its members are expected to upkeep and uphold.
Members of the profession claimed that they are the leaders of thought and society.
In the words of Justice Krishna Iyer in Bar Council of Maharashtra vs M.V Dabholkar, [19751 2 SCC 702 the role of the members of the Bar can be appreciated.
He said at page 718: The bar is not a private guild, like that of 'barbers, butchers and candlestick makers ' but, by bold contrast, a public institution committed to public justice and pro bono public service.
The grant of a monopoly licence to practice law is based on three assumptions: (1) There is a socially useful function for the lawyer to perform, (2) The lawyer is a professional person who will perform that function, and (3) His performance a,, a professional person is regulated by himself and more formally, by the profession as a whole.
The central function that the legal profession must perform is nothing less than the ad 1012 ministration of justice ( 'The Practice of Law is a Public Utility ' 'The Lawyer, the Public and Professional Responsibility ' by F. Raymond Marks et al Chicago American Bar Foundation, 1972, pp. 288 289).
A glance at the functions of the Bar Council, and it will be apparent that a rainbow of public utility duties, including legal aid to the poor, is cast on these bodies in the national hope that the members of this monopoly will serve society and keep to canons of ethics befitting an honorable order.
If pathological cases of member misbehavior occur, the reputation and credibility of the Bar suffer a mayhem and who, but the Bar Council, is more concerned with and sensitive to this potential disrepute the few black sheep bring about? The official heads of the Bar, i.e. the Attorney General and the Advocates General too are distressed if a lawyer 'stoops to conquer ' by resort to soliciting, touting and other corrupt practices.
If these are the high expectations of what is describes as a noble profession, its members must set an example of conduct worthy of emulation.
If any of them falls from that high expectation, the punishment has to be commensurate with the degree and gravity of the misconduct".
Accordingly, the punishment was increased to one of suspension for a period of five years, having regard to the gravity of the misconduct and keeping in view the motto that the punishment must be commensurate with the gravity of the misconduct.
In the case on hand admittedly the complainant (respondent) does not know English.
It is equally admitted that the appellant had withdrawn the money from the Court Receiver.
None of the correspondence addressed to the respondent mentioned about the receipt dated 8th of August, 1977.
The plea taken by the appellant based on the receipt is clearly false.
The appellant has been withdrawing the money over 14 years and he has illegally retained the amount.
Out of a sum of Rs. 50,379 which was admittedly withdrawn from the court receiver only Rs. 18,000 was paid on different occasions.
The said amount was also spread over and paid on 1013 different occasions.
On a direction of this court a sum of Rs. 10,000 had been deposited by the appellant which has been withdrawn by the respondent as per order dated 3rd September, 1991.
Still a sum of Rs. 22,379 is due.
In view of the established finding of misappropriation, we think the proper punishment will be the name of the Advocate must be struck off the rolls.
We order accordingly.
In addition to this the question arises, whether we can direct the refund of the sum of Rs. 22,379 which still is pending for the appellant.
Section 38 of the Advocates Act says as follows.
"Appeal to the Supreme Court: Any person aggrieved by an order made by the disciplinary committee of the Bar Council of India under Section 36 or Section 37 [or the Attorney General of India or the Advocate General of the State concerned, as the case may be], may within sixty days of the date on which the order is communicated to him, prefer an appeal to the Supreme Court and the Supreme Court may pass such order [including an order varying the punishment awarded by the disciplinary committee of the Bar Council of India] thereon as it deems fit: [Provided that no order of the disciplinary committee of the Bar Council of India shall be varied by the Supreme Court so as to Prejudicially affect the person aggrieved without giving him a reasonable opportunity of being heard]." "when it says, ' deems fit, it must be construed as to meet the ends of justice.
We feel the respondent should not be driven to a civil court for recovery of this amount even when the appellant has been found guilty by his own peers which we have also confirmed.
Therefore, we direct that there shall be a decree in favour of the respondent (complainant) for a sum of Rs. 22,379 together with interest at 9% per annum from the date of the complaint till the date of payment.
The appeal is dismissed in the above terms with costs of the respondent which is quantified at Rs. 3000 (Rs. three thousand only).
Before we part with the case we may usefully quote Harry R. Blythe 1014 (cited in "Great God the hour has come when we must clear The legal fields from poison and from fear; We must remould our standards build them higher, And clear the air as though by cleansing fire, Weed out the damning traitors to the law, Restore her to her ancient place of awe." V.P.R. Appeal dismissed. | The respondent was defendant in a suit.
He engaged the appellant as an Advocate.
The suit was compromised on 14.6.77 ordering that out of the amount lying with the Court receiver, plaintiff was to be paid a sum of Rs. 64,000 and the balance to be paid to the defendant respondent and possession of suit property to be handed over to the respondent.
During the tendency of the suit the Court Receiver inducted a tenant in a suit property.
The tenant filed a suit praying for an interim injunction restraining the court receiver from handing over possession to the respondent.
Tenant 's suit was continued.
After the compromise decree was passed on 14.6.77, the appellant withdrew a total amount of Rs. 50,379 from the Court receiver.
Out of the amount, appellant paid only Rs. 18,000 to the respondent.
On 9.1.81 the respondent filed a complaint against the appellant before the Bar Council of India.
On receiving a notice, the appellant submitted reply.
The Disciplinary Committee of the Bar Council rejected certain receipts produced to evidence payment to the respondent and also the plea of the appellant that the account books were lost.
The Committee suspended the appellant for a period of two years and further directed to pay a sum of Rs. 500 to the respondent.
Before this Court the order of the Disciplinary Committee of the Bar Council of India was challenged contending that the Committee did not properly appreciate the evidence and that it was incorrect to hold that the 1007 receipt dated 8.8.77 was a suspicious document merely because the account books were not produced.
Dismissing the appeal, this Court, HELD : 1.01.
Advocacy is not a craft but a calling , a profession wherein devotion to duty constitutes the hall mark.
Sincerity of performance and the earnestness of endeavor are the two wings that will bare aloft the advocate to the tower of success.
Given these virtues other qualifications will follow of their own account.
This is the reason why legal profession is regarded to be a noble one.
But it cannot be allowed to become a sorriest of trades.
Therefore.
an exacting standard is what is expected of an advocate.
[1010 C D, 1011 C] 1.02.
The members of the noble profession must set an example of conduct worthy of emulation.
If any of them falls from the high expectations, the punishment has to be commensurate with the degree and gravity of the misconduct.
[1012 E] Sharasawood on legal profession, Harry R. Blythe cited if? , referred to.
M. Veerabhadra Rao vs Tek Chand, [1984] Supp.
SCC 571, referred to.[1011 C] 2.01.
The appellant had withdrawn the money from the Court Receiver.
None of the correspondence addressed to the respondent mentioned about the receipt dated 8th of August, 1977.
The plea taken by the appellant based on the receipt is clearly false.
The statement of the appellant that the account books had been lost in transit cannot be believed.
Under these circumstances this is a clear case wherein the misappropriation by the appellant has been fully established.
[1012 F] 2.02.
The appellant has been withdrawing the money over 14 years and lit has illegally retained the amount.
Out of a sum of Rs. 50,379 which was admittedly withdrawn from the court receiver only Rs. 18,000 was paid on different occasions.
Still a sum of Rs. 22,379 is due.
[1012 H, 1013 A] 2.03.
In view of the established finding of misappropriation the proper punishment will be the name of the Advocate must be struck off the rolls.
[1013 B] 1008 2.04.
When Section 38 of the Advocates Act says, 'deems fit", it must be construed as to meet the ends of justice.
The respondent should not be driven to a civil court for recovery of this amount even when the appellant has been found guilty.
Therefore, it is directed that there shall be a decree in favour of the respondent (complainant) for a sum of Rs. 22,379 together with interest at 9% per annum from the date of the complaint till the date of payment 11013 F G] |
Appeal No. 372 of 1979.
From the Judgement and Order dated 25.5.1978 of the Delhi High Court in Civil Writ Petition No. 1494 of 1973.
Dr. N.M. Ghatate and D.N. Mishra (for J.B.D. & Co.) for the Appellant.
V.C. Mahajan, C. Ramesh and C.V. Subba Rao for the Respon dents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
The appeal is preferred against the judgment of the Delhi High Court allowing the writ petition filed by the second respondent M/s Ferro Alloys Corporation Ltd. The writ petition was directed against the judgment and order of the Government of India, Ministry of Finance, dated September 19, 1973 in an appeal preferred under paragraph (9) of the Tax Credit Certificate (Exports) Scheme, 1965.
The second respondent is the manufacturer cxportcr of ferro manganese and chrome concentrates.
During the year 1964 65 (from February 28, 1965 to June 5, 1965) the second respondent entered into a number of agreements with the foreign buyers for the sale of the aforesaid two commodities.
The export was routed through the M. M.T.C. the appellant herein, to bring it within the system of private barter introduced by the Government of India with a view to encourage exports.
It would be appropriate to notice the essential features of the barter system in vogue during the relevant period at this stage.
The main objective behind the system was to provide a mechanism which would result in increased export of particular commodities which were ordinarily difficult to sell abroad and to destinations, in which the selling countries were not able to _Pet a foot hold.
This objective was sought to be achieved by linking them to imports of an equivalent or 15 lesser value of essential commodities, which, in any event, the country had to import.
All barter proposals were scrutinized in the first instance by the M.M.T.C. and then by the Barter Committee.
The essential stipulations were: "(i) All imports made under barter deals were subject to such sale price and distribution control as were laid down by the Government and (ii)All barter deals were to be routed through S.T.C./ M.M.T.C. unless otherwise decided upon by barter committee." As and when approval was given by the Government of India, a letter of indent used to be issued by the M.M.T.C. to the bartering firm or the local supplier, as the case may be.
(In this case, there was no bartering firm.
Ferro Alloys was directly sending the goods).
As far as purchase and sale contracts were concerned, the M.M.T.C. insisted that there should be one contract of sale between the local supplier and the M.M.T.C. and another contract of sale by the M.M.T.C. to the foreign buyer on principal to principal basis.
The foreign exchange so generated under this arrangement was the basis for issue of import licences, which were issued in the name of M.M.T.C. with the letter of authority in favour of the bartering firm or the local supplier, as the case may be.
This enabled the bartering firm/local supplier to import the approved commodity under its approval barter and thus he in a position to recoup the losses incurred by it in arranging the supply or in supplying, as the case may be of export commodities to the M.M.T.C.
It was agreed and understood that the ferro alloys should intimate the foreign buyer to enter into a direct contract with the M.M.T.C. treating it as the seller.
It was also agreed that G. R.I. Form prescribed by the Reserve Bank of India under the Rules framed under the Foreign Exchange Regulation Act (for accounting the receipt of foreign exchange) was to be signed by the M.M.T.C. showing it as the exporter and seller vis a vis the foreign buyer.
Letters of credit was also to be opened in the name of M.M.T.C.? which was to be assigned to the Feffo alloys.
This was done with a view to enable the Ferro alloys to receive the payment directly for the goods supplied to M.M.T.C.
The Shipping Bill, which is a document prescribed under the Customs Act, was also to be made out 16 showing M.M.T.C. as the exporter.
The transactions were gone through.
Dispute arose between the parties when the question of issuance of a tax credit certificate under Section 280 (Z) (C) of the Income Tax Act arose.
Sub section (1) of section 280 (Z) (C), as in force at the relevant time, read as follows "Tax Credit Certificate in relation to exports (1) Subjects to the provisions of this section.
a person who exports any goods or merchandise out of India after the 28th day of February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and the rules made thereunder, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding fifteen per cent on the amount of such sale proceeds.
" A reading of the sub section shows that the tax Credit Certificate is issued to the person "who exports any goods or merchandise out of India after the 28th day of February, 1965, and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947 and the Rules made thereunder.
" Question, therefore, arose who is the person, in the case of this transaction, who can be said to have exported the goods and received the sale proceeds in the shape of foreign exchange.
The matter was taken in appeal before the Government of India under paragraph (9) of the Tax Credit Certificate Exports Scheme, 1965.
On an elaborate consideration of the bartering scheme and the several documents which came into existence in connection with the transactions between the parties, the Government of India held that the M.M.T.C. must be held to be the exporter for the purpose of Section.280(Z)(C) and not the Ferro alloys.
This order was challenged by Ferro alloys by way of a writ petition in the High Court.
The High Court allowed the writ petition on the following reasoning: "While the terms of the scheme of barter and the 17 arrangement between the exporter and the Corporation visualizes in theory that the contracts to be entered into between the exporter and the foreign buyers would be duly substituted by principal to principal contracts between the foreign buyer and the Corporation as well as the Corporation and the Indian supplier of the goods, so that the Corporation virtually gets substituted for the exporter for all external appearance, in actual practice, however, it appears that the substituted contracts are rarely executed and were, in any event, not executed in the present case at either of the two ends although the letter of credits were opened by the foreign buyers in favour of the Corpo ration and the shipments were made in some cases in the name of the Corporation on account of the exporter while in the others in the name of the exporter on account of the Corporation.
No consideration, however, passed between the Corporation and the exporter on account of any sale of the commodity to the Corporation.
The letters of credit being transferable are endorsed immediately on receipt in favour of the exporter by the corporation and the sale proceeds are directly realized by the exporters through their bankers and the commission of the Corporation agreed to is paid by the exporter to the Corporation.
The declaration under Section 12 of the Foreign Exchange (Regulations) Act in Form GR I contains the name of the Corporation as the exporter.
But the form lists the name of the exporters ' banker as the banker concerned.
" In other words, the High Court 's approach was that while for external appearances, the corporation was given out as the exporters, Ferro alloys was the real exporter for all purposes and it was Ferro alloys which earned and received the foreign exchange.
M.M.T.C. got only its commission of 2% and nothing more.
Alternatively held the High Court even if it is held that the documents executed between the parties had the legal effect of transferring title in the goods to and in favour of the Corporation, even so Ferro alloys must be deemed to be 18 the real exporter for the purposes of Section 280(Z)(C), having regard to the objective underlying the said section viz., providing an additional incentive to the real exporter.
The correctness of the said view is questioned in this appeal.
Though the second respondent, Ferro alloys Corporation Ltd., has been served, no one appears on its behalf.
We are, therefore, obliged to dispose of this appeal only with the assistance of the counsel for the M.M.T.C.
May be that there are factors in this case supporting the contentions of both the parties.
In such a case, we have to decide the question on a totality of relevant factors applying the test of predominance.
It is true that there was initially an agreement or contract between Ferro alloys and the foreign buyer for export of manganese and other goods but that was substituted and superseded by the two contracts entered into with respect to the very same goods.
One contract was between Ferro alloys and M.M.T.C. for sale of the said goods to and in favour of M.M.T.C. and the other was a sale by M.M.T.C. to the foreign buyer.
It is significant to notice that these contracts were on principal to principal basis.
Apart from this fact all the statutory documents viz., G. R.I. Form prescribed under the Foreign Exchange Regulation Act, 1947 and the shipping bill prescribed by the Customs Act were made out in the name of M.M.T.C. showing it as the exporter.
We have perused the Form G.R.I.Column 1 pertains to exporter 'sname.
Against this column is shown Minerals and Metals Trading Corporation of India Limited '.
The Form contains a declaration to be signed by the exporter declaring that he is the seller/consignor of goods and a further undertaking that they will deliver to the Bank mentioned in the said Form, the foreign exchange resulting from the export of the goods mentioned therein.
It was signed by the M.M.T.C. Letters of credit were opened in the name of M.M.T.C.
All this was done as required by the system of barter.
Ferro alloys availed of this system presumably because it was to its advantage.
In fact, it appears that it was not able to sell the said goods otherwise.
Be that as it may, whether by choice or for lack of alternative, it chose to route its goods through M.M.T.C.
Is it open to the Ferro alloys now to say that all this must be ignored in the name of "external appearances" and it must be treated as the real exporter for the purposes of Section 280(Z)(C).
It wants to be the gainer in both the events.
A case of "heads I win, tails you lose.
" As against the above circumstances, the factors appearing in favour of the 19 Ferro alloys are the following: The contract between the parties spoke of "commission" of two per cent payable to the M.M.T.C. Use of the expression "commission", it is pointed out, is indicative of the fact that M. M.T.C. was only an agent.
For the M.M.T.C., it is explained that it was one way of describing the difference between the export price and the sale price.
It is submitted that the said feature must be understood in the context of the totality of the scheme, which was not a mere commercial scheme but a scheme conceived in the interest of foreign trade, economy and balance of payments.
Ferro alloys also relied upon a certificate given by the foreign buyer stating that the goods in question were sold to it by Ferro alloys.
But as rightly pointed out by the Government of India, this certificate was obtained long after the relevant transactions were over and evidently to buttress its case with respect to the tax credit certificate.
Not much significance can be attached to it, also because it is in the teeth of the contracts signed by the foreign buyer with the M.M.T.C. with respect to the very same It is also pointed out that some of the documents required to be executed according to (he system of barter were not actually executed between the parties.
May be so.
The fact yet remains that the entire export was done through M.M.T.C. in accordance with the system of barter.
There is no half way house; either it is no '? barter system or it is.
This is an undisputed fact as are the several statutory documents made out in the name of M.M.T.C., referred to here in before.
On a consideration of all the relevant factors and circumstances, we are of the opinion that the M.M.T.C. must be held to be the exporter for the purpose of Section 280(Z)(C).
The entire system of barter and the several documents executed in that behalf including those required by statutory provisions cannot be explained away as mere "external appearances".
The Ferro alloys cannot come to M.M.T.C. when it is profitable to it and disavow it when it is not profitable to it.
It cannot have it both ways.
The title to goods passed to M.M.T.C. by virtue of the several documents executed between the parties.
Indeed, that was the fulcrum of the entire scheme of Barter.
We are also not convinced with the alternative reasoning of the High Court that even if it is held that the title to the goods passed to M.M.T.C., even so Ferro alloys must be held to be the real exporter, in view of the objective underlying Section 280(Z)(C).
If M.M.T. C. has acquired the title to the goods and is the exporter for all other purposes it equally the exporter 20 for the purposes Section 280(Z)(C).
There can he no dichotomy of the nature propounded by the High Court.
We are, therefore of the opinion that the High Court was not right in holding to the contrary.
The appeal is allowed.
The judgment and order of the High Court of Delhi is set aside and the order of the Government of India dated September 19, 1973 is restored.
The writ petition filed by the second respondent in the Delhi High Court is dismissed.
No costs.
G. N. Appeal allowed. | The Second Respondent (Ferro Alloys Corporation), manufac turer exporter of ferro maganese and chrome concentrates, entered into a number of agreement .
with foreign buyers for sale of the said commodity.
The export was routed through the appellant to bring it within the system of private barter introduced by the Government of India with a view to encourage exports.
The main objective of barter system was to provide a mechanism which would result in increased export of particular commodities which were ordinarily difficult to sell abroad where the selling countries were not able to get a foot hold.
This objective was sought to he achieved by linking them to exports of an equivalent or lesser value of essential commodities which in any event had to he imported.
As for as purchase and sale contracts were concerned, M.M.T.C. insisted that there should be one contract of sale between the local supplier and the M.M.T.C. and another contract of sale by the M.M.T.C. to the foreign buyer on principal to principal basis.
It was agreed that Ferro Alloys should intimate the foreign buyer to enter into a direct contract with M.M.T.C. treating it as the seller.
, Also, the G.R.I. form prescribed by the Reserve Bank of India under the Rules framed under FERA was to be signed by M.M.T.C. showing it as the exporter and seller.
Letters of credit was opened in the name of M.M.T.C. which was to be assigned to Ferro Alloys so that Ferro Alloys could receive the payment directly.
for the goods supplied to 13 M.M.T.C.
The shipping documents also showed M.M.T.C. as the exporter.
The transactions were gone through.
Dispute arose between the parties when the question of issuance of Tax Credit Certificate u/S 280ZC of the Income tax arose as to who could be said to have exported the goods and received the sale proceeds in the shape of foreign exchange.
The matter was taken in appeal before the Government of India.
It held that M.M.T.C. was the exporter for the purpose of S.280ZC.
Ferro Alloys challenged the said order before the High Court by way of a Writ Petition.
The High Court allowed the Writ Petition, and held that the real exporter was Ferro Alloys which earned and received the foreign exchange and M.M.T.C. got only its commission of 2% and nothing more.
Aggrieved by the judgment of the High Court, M.M.T.C. preferred the present appeal.
Allowing the appeal.
this Court, HELD: 1.
The entire export was done through M.M.T.C. in accordance with the system of barter.
There is no half way house; either it is not barter system or it is in accordance with the system of barter.
This is an undisputed fact as , are the several statutory documents made out in the name of M.M.T.C.
Thus M.M.T.C. is the exporter for the purpose of Section 280ZC of the Income tax Act, 1961.
The entire system of barter and the several documents executed in that behalf including those required by statutory provisions cannot be explained away as mere "external appearances".
Ferro alloys cannot come to M.M.T.C. when it is profitable to it and disavow it when it is not profitable to it.
It cannot have it, both ways.
The title to goods passed to M.M.T.C by virtue of the several documents executed between the parties.
Indeed,that was the fulcrum of the entire scheme of Barter.
(19 E F).
This Court is not convinced with the alternative reasoning of the High Court that even if it is viewed that the title to the goods passed to M.M.T.C., even so Ferro alloys must be held to be the real exporter, in view of the objective underlying Section 280ZC.
If M.M.T.C. has acquired the title to the goods and is the exporter for all other purposes it is equally the exporter for the purpose of Section 14 280ZC.
There can be no dichotomy of the nature propounded by the High Court.
(19 H, 20 A). |
P. (C) Nos.
1189798/92 etc.
From the Judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos.
1152 & 1157 of 1992.
V.R. Reddy, Addl.
Solicitor General,, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh K. K. Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, K.N Bhat, T.R. Andhyarujina, C.V Subba Rao, P.P. Singh, Mrs. B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms. Sunanda Roy, Ms. section Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P.K. Ganguli, Manoj K. Das.
Amit Prabhat, Tripurary Roy.
K.L. Mehta, section Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N Nanjunda Reddy for the appearing parties.
The judgment of the Court was delivered by 137 K. JAYACHANDRA REDDY, J.
By our order dated 14th January, 1993 while disposing of these special leave petitions we gave our conclusions and we proposed to deliver the detailed judgment at a later stage giving all the reasons in support of those conclusions.
We hereby deliver the detailed judgment In our earlier order we stated the relevant facts and the issues involved in a concised form.
However, we think it appropriate and necessary to refer to some of them for a better appreciation of the reasons in their proper perspective.
Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons.
Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability.
There are 12 suppliers in the field who have been regularly supplying these items.
Two new firms Simplex and Beekay also entered the field.
Among them admittedly M/s H.D.C., Mukand and Bharatiya are bigger manufacturers having capacity to manufacture larger quantities.
On 25.10.91 a Iimited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well is the above two new entrants for the year namely from 1.4.92 to 31.3.93.
The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M.
It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railways reserved the right to order additional quantity upto 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The offers were to remain open for a period of 90 days.
On that day the tenders were opened in the presence of all parties.
The price quoted by the three manufacturers i.e. M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666 per bogie while other tenders quoted between 83,000 and 84.500 per bogies After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel.
The tenders were put up and placed before the Tender Committee of the Railways which considered all the aspects.
The Committee concluded 138 that three of the tenderers namely M/s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed a cartel.
The Tender Committee also noted that the rates quoted by them were the lowest.
Taking into consideration the reduction of Rs. 1500 as result of the concessions in respect of the reduction of customs duty on the import of steel scrap and dispensation of the freight equalisation fund for steel.
The Tender Committee concluded that the reasonable rate would be Rs. 76,000 per bogie.
On the question of distribution of quantities to the various manufacturers the Tender Committee decided to follow the existing procedure.
The Tender Committee signed these recommendations on 4.2.92 but on the same day the Member (Mechanical) of the Committee received letters from M/s H.D.C. and Mukand.
M/s H.D.C. in its letter stated that in view of the concessions and also on the basis that per Kg.
rate of casting per bogie could be reduced from Rs. 37.50 to Rs. 29 the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called.
M/s Mukand in its letter also offered to substantially reduce (he prices and they would like to co operate with the Railways and the Government and brings down the prices as low is possible and asked for negotiations.
Though this was post tender correspondence the Department felt that the offers made by M/s H.D.C. and Mukand could be considered.
The whole matter was examined by the Advisor (Finance) in the first instance and by an collaborate note lie observed that the need for encouraging open competition to improve quality and brings down costs his been recommended by the government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not he useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the existing policy would take time, the present tender can be decided on the basis of the existing policy.
With this noting the file was immediately sent to the Member (Mechanical), the net higher authority, The, with some observations however recommended the acceptance of the Tender Committee 's recommendations.
The file was then put up to Financial Commissioner.
He noted that the Tender Committee was convinced that the three manufacturers who quoted identical price of Rs. 77,666 had formed a cartel.
He also considered the offers made by M/s H.D.C. and Mukand and observed that these three manufacturers who quoted 139 a cartel price intended to get a larger order on the basis of such negotiated price which would eventually nullify the competition from the other manufacturers and lead to their industrial sickness and subsequently to monopolistic price situation.
He, however, approved the Tender Committee 's recommendations that a counter offer of Rs. 76,000 may he accepted but in the case of M/s H.D.C. a price lower by Rs. 11,000 may be offered as per their letter dated 4.2.92.
He also recommended that the two manufacturers M/s Cimmco and Texmaco may be given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may be applied to all manufacturers except the three who have formed a cartel.
The also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. 79,305.
He also made certain other recommendations and finally concluded that the post tender letters may be ignored and that for short term gains the Department can not sacrifice long term healthy competition.
After these recommendations of the Financial Commissioner the file was put up to the approving authority i.e. the Minister for Railways, who in general agreed with the recommendations of the Financial Advisor.
He also noted that these three manufacturers have formed a cartel.
lie also noted that subsequent to the Financial Commissioner 's note, besides M/s 1 1. D. C. and Mukand has also offered to reduce the price by 10% or more vide their letter dated 19.2.92 if called for negotiations.
Taking these circumstances into consideration the Minister ordered that all these three firms may he offered a price lower by Rs. 11,000 with reference to the counter offer recommended by the Tender Committee and the quantities also be suitably adjusted so that the cartel is broken, The Minister also noted that as a result of this a saving of about Rs. 11 crores would be effected.
In his note, the Minister also ordered redistribution of the quantities.
The also ordered that 30% option should straightaway be exercised.
After the approving authority took these decisions, the file went to the Chairman.
Railway Board for implementing the decisions.
The noted that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more.
140 The file was then again sent to and was considered by the Financial Commissioner who noticed this endorsement made by the Chairman, Railway Board.
The however noted that so far all the other firms are concerned it is Rs. 3305 less than the present contract price but it would not be equitable to offer the lower price put forward by the three manufacturers as it Would make the other units unviable and that incidentally the price of Rs. 76,000 now proposed to be counteroffered to the other firms is also in line with the recommendations of the Tender Committee.
The, however, noted that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the Tender Committee and directed that the same may be implemented.
In view of this final decision taken by the approving authority a telegram was issued to the three manufacturers giving them a Counter offer of Rs. 65,000 per bogie.
The counter offer was also made to the other nine manufacturers at the rate of Rs 76,000 per bogie namely the price worked out by the Tender Committee.
Soon after the receipt of this telegram dated 18.3.92 M/s H.D.C. and Mukand filed writ petitions in the Delhi high Court challenging the so called discriminatory counteroffer.
M/s Bharatiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court.
In the writ petitions filed by M/s H.D.C. and Mukund the High Court stayed the operation of the telegram dated 18.3.92 and issued notice to the Union of India and to the Executive Director and Director of the Railways (Stores) who figured as respondents in those writ petitions.
M/s M. D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were not prepared to accept the counter offer at the rate of ' Rs. 65,000 and instead they offered lo supply the bogies at the rate of Rs. 67,000 per bogie.
The Railways accepted this offer and intimated M/s H.D.C. and Mukand accordingly.
The High Court.
at an interlocutory stage pending the writ petitions.
passed an order on 2.4.92.
directing the Ministry to accept the allocation of bogies recommended by the Tender Committee and to pay a price at the rate of Rs. 67,000 only per bogie and that would be subject to the final decision of the writ petitions.
Being aggrieved by this order, the Railways filed a petition for special leave to appeal No. 5512/92 and this Court while refusing to interfere at that interlocutory stage made the following observations 141 on 28.4.92: "However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court (including the petitioners in the High Court in the writ petition) seek an "on account" payment representing the difference between the sum of Rs. 67,000 indicated as price by the High Court and the sum of Rs. 76,000 contemplated by the Railways; the order of the High Court shall not prohibit the government making such on account payment to such suppliers on each wagon on the condition that the said on account payment of Rs. 9.0000) per bogie should he covered by a bank guarantee for its prompt repayment together with interest at 20% per annum in the event the on account payment cannon( be observed in the price structure that may ultimately come to be determined pursuant to the final decision in the writ petitions.
The special leave petitions are disposed of accordingly.
" Thereafter the High Court took up the writ petitions for final hearings any by the impugned judgment allowed the writ petitions filed by M/s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs. 67,000 per bogie and also set aside the quantity allocation and directed that the same should he considered afresh on a reasonable basis and pending such fresh consideration future supplies should be made on the basis of the recommendations of the Tender Committee.
In the course of the judgment, the High Court also made certain observations to the effect that the decision of the approving authority is arbitrary and that the Government has no justification to offer a higher price than the market price to any supplier to rehabilitate it.
It was further observed that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations.
The learned judges of the High Court also observed that they failed to understand as to why the Railway authorities could 142 not initiate negotiations with those manufacturers who had offered to reduce their offer which could result in saving crores of 'rupees to the Railways.
Aggrieved by this judgment of the High Court the Union of India filed S.L.P. (Civil) Nos.
11897 98/02.
Before the High Court in the two writ petitions filed by M/s H.D.C and Mukand the other manufacturers figured as respondents Nos. 4 to 12 and M/s Bharatiya otherwise known as Besco figured as respondent No. 13.
The other S.L.Ps. are filed by those nine manufacturers.
M/s Bharatiya, respondent No. 13, has not questioned the judgment of the High Court.
As mentioned above M/s Bharatiya filed a separate writ petition No. 1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court.
The same also was disposed of in terms of the judgment in the other two writ petitions Nos. 1152 and 1157/92.
But they have not questioned the same.
Consequently M/s Bharatiya figures as a respondent before us in the SLP filed by the Union of India.
In our earlier order we have already referred to the various Submissions made by the learned counsel on behalf of Union of India and on behalf of the respondents particularly M/s H.D.C. Mukand and Bharatiya and other smaller manufacturers.
After considering the various submissions and issues involved we have given our conclusions in our earlier order which briefly stated are as follows: 1)There is no enough of material to conclude that M/s. H.D.C., Mukand and Bhartiya formed a cartel.
However.
there was scope for enter training suspicion by the Tender Committee that they formed a cartel since all the three of them quoted identical price and the opinion entertained by the concerned authorities including the Minister that these three big manufacturers formed a cartel was not per se malicious or was actuated by any extraneous considerations and the authorities acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel.
2)The direction of the High Court that the supply of bogie should be at Rs.67000 by every manufacturer can not he sustained and that a fresh consideration of a reasonable price is called for.
The Tender Committee shall reconsider the question of fixation of reasonable price.
While doing so it shall consider the offer of Rs. 67,000 made by 143 M/s H.D.C. and Mukand alongwith the data that would given by them in support of their offer and the percentage of profits available to all the manufacturers and other relevant aspects and then fix a reasonable price at which the manufacturers would be able to supply.
3) Dual pricing under certain circumstances may be reasonable and the stand of the railways to adopt dual pricing under the circumstances is bonafide and not malafide.
M/s H.D.C., Mukand and Bharatiya must be deemed to be in a position to supply at the rate of Rs. 67,000 per bogie and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
4) If the price that to be fixed by the Tender Committee as directed by us happens to be more than Rs. 67,000 than that would be applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bharatiya who on their own commitment have to supply at the rate of Rs. 67,000.
(5) The price thus fixed by the Tender Committee which applies only to the smaller manufacturers shall he deemed to be final and the respective contracts shall be deemed to be concluded so for the price is concerned.
(6) Coming to the allotment of quota of bogies the Tender Committee made recommendations on the basis of the existing practice.
The Minister of Railways in his ultimate decision has made some variations taking into consideration the recommendations of the Financial Commissioner and other authorities.
In making these variations, the Minister accepting the suggestion that a cartel was formed by the three manufacturers reduced the allotment of quota to them by way of reprisal.
Since we are of the view that formation of a cartel is not established, such a reduction of quota can not be justified.
The Minister of Railways as the final authority as be justified in takings a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
In allotting these quotas the Government is expected to be just and fair to one and all.
7)The three big manufacturers M/s H.D.C.,Mukandand Bharatiya 144 should be allotted the quantities as per the recommendations of the Tender Committee.
However, the quantities finally allotted by the competent authority to the smaller manufacturers need not be disturbed and the railway authorities may make necessary adjustments next year in the matter of allocation of quantities to them takings into consideration the allotments given to them this year; (8)It will be open to the Railways to exercise 30% option, if not already exercised.
(9)Taking all the circumstances and the time factor into consideration the time to complete the supply is extended upto 31.3.1993.
Before we proceed to consider each of these issues and give our reasons, we shall deal with few general submissions regarding the tender system and the economic policy of the Government in the matter of stopping monopolistic tendencies.
Shri K.K. Venugopal, learned counsel appearing for M/s H.D.C. at the outset submitted that in a case of this nature the Government must either by way of public auction or by way of inviting tenders work out (he lowest price and award the contract accordingly, as that would safeguard the interests of the public exchequer.
The further submission in this regard is that the Railways having invited tenders and having further entertained post tender correspondence offering the lower price, should have accepted the price quoted by the three big manufacturers.
Shri Sibal, learned counsel appearing for the Union of India, however, contended that it is a matter of policy decision by the Government and that where the Government realises that the lowest ,)rice offered is not reasonable and realistic, it may for a variety of good and sufficient reasons reject the same.
It is true, as it is today, that the Government in a welfare State has the wide powers in regulating and dispensing of special services like leases, licences.
and contracts etc.
The magnitude and range of such Governmental function is great.
The Government while entering into contracts or issuing quotas is expected not to act like private individual but should act in conformity with certain healthy standards and norms.
Such actions should not be arbitrary, irrational or irrelevant.
In the 145 matter of awarding contracts inviting tenders is considered to be one of the fair ways.
If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory.
In the instant case the Railways every year used to enter into contracts with the established manufacturers for the supply of cast steel bogies and there are 12 such suppliers.
On 25.10.91 a limited tender notice for the procurement of steel bogies was issued to these suppliers.
Under Clause 5 of the Tender notice the Railways reserved the right to order additional quantity of 30% of the ordered quantity during the currency of the contract on the same price and term: with suitable extension in delivery period.
Clause 7 is to the effect that the tender will be governed by the IRS conditions of the contract.
In the instructions appended to the Tender notice it is again reiterated that the contracts made under the tender would be governed by the IRS conditions of contract and also the instructions in the invitation of tender.
Clause 9.3 of the instructions lays down that the price is subject to price variation clause and the base date for the purpose of escalation is 1.9.91.
Under Clause 23 it is made clear that the Department does not pledge itself to accept the lowest or any tender and reserves to itself the right of acceptance of the whole or any part of the tender.
Pursuant to this notice and subject to (lie conditions mentioned therein, 12 manufacturers in the field a well as two new manufacturers M/s Simplex and Beekay submitted their offers and they are as follows: NAME OF THE FIRMS PRICE QUOTED FOR 20.3.T AXLE LOAD 1.
Himmat 84,510 2.
Texmaco 83,950 3.
Titaoarh 84,100 4.
BECO Ltd. 83,350 5, Anup 84,980 6.
Sri Ranga 84,600 ,750 146 8.
Bum Standard 83,000 9.
CIMMCO 84,800 10.
Mukand 77,666 II.
Bharatiya 77,666 12.
HDC 77,666 13.
Simplex 78,100 14.
BEEKAY 75,000" These offers were got technically evaluated by the Research, Development and Standard Organisation (RDSO ' for short).
Thereafter a three men Tender Committee comprising the officers of the rank of Joint Secretary designated as Executive Directors in the Railways Board considered the offers.
Since the three big suppliers namely M/s H.D.C., Mukand and Bharatiya quoted an identical price of Rs. 77,666 which was lower than the updated price of the previous contract, the base date of which was 1.9,91, the Tender Committee formed an opinion that they have formed law carte 1.
The offers made by the two new firms, however, were not accepted.
The Tender Committee made their own recommendations and fixed Rs. 76,000 as a reasonable price at which counter offer could be made.
Then as already mentioned there was post tender correspondence and ultimately a dual price was fixed.
In this regard the submission is that having entertained post tender correspondence, the Government either should have accepted the same or rejected the same and in any event the lowest offer should have been accepted.
From a perusal of the proceedings of the Tender Committee as well as the opinion expressed by the Financial Commissioner and the other members of the Board, it is clear that Rs. 76,000 per bogie can be the reasonable price and Rs. 67,000 was not a reasonable price.
It is also clear that the post tender offer at a lower price was made with the hope that they would get the entire or larger quantity allotted.
The stand taken by the Railways is that the three big manufacturers originally formed a cartel and the post tender offers at least by two of them confirmed the same and if these three big manufacturers are allotted entire or larger quantity that would result in monopoly extinguishing the smaller manufacturers.
The question is whether such a stand taken by the Government as a policy, is unfair and arbitrary as to warrant interference by the courts.
147 It must be mentioned at this stage that the validity of the conditions in the tender as such are not questioned.
Consequently the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should he on some rational and reasonable grounds.
In Eurasian Equipment and Chemicals Ltd. vs State of West Bengal ; , this court observed as under: "When the Government is trading with the public, " the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions.
The activities of the government have a public element and, therefore, there should be fairness and equality.
The State need not enter into any contract with anyone, hut if it does so, it must so fairly without discrimination and without unfair procedure.
Approving these principles, a Bench of this Court in Ramana Dayaram Shetty vs The International Air port Authority of India and Ors[1979] 3 SCR 10 14, held thus: "This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege.
It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving job so entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet 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 or the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc.
must be con fined and structured by rational, relevant and nondiscriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government 148 would be liable to be struck down, unless it can he shown by the Government that the departure %%,as not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory." ln Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr. ; an order awarding contract by the Government to a party was questioned on the ground that it was arbitrary, malafide and not in public interest and the same created monopoly in favour of that party and that the contract was awarded without affording an opportunity to others to compete and the same is not based on any rational or relevant principle and therefore was violative of Article 14 of the Constitution and also the rule of administrative law which inhibits the arbitrary action by the State.
A Bench of this Court while approving the principles laid down in the above cases further observed thus: "Though ordinarily a private individual would be guided by economic considerations of self gain any action taken by him, it is always open to under the law to act contrary to his self interest or to oblige another in entering into a contract or dealing with his property.
But the Government is not free to act is it likes in granting largess such as awarding a contractor selling or leasing out its property.
Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society.
The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good.
Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest.
Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated.
If the Government awards a contract of leases out or 149 otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid." Now coming to the test of reasonableness which pervades the constitutional scheme, this Court in several cases particularly with reference to Articles 14, 19 and 21 has considered this concept of reasonableness and has held that the same finds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and animates the Directive Principles and that Article 14 strikes at arbitrariness in State action.
(vide Maneka Gandhi vs Union of India, [1978] 2 SCR 621 and E.P. Royappa vs State of Tamil Nadu & Anr.
f After referring to these decisions it was further held in Kasturi Lal Lakshmi Reddy 's case (supra) as under: "Any action taken by the Government with a view to giving effect to any one or more of the Directive Principles would ordinarily, subject to any constitutional or legal inhibitions or other over riding consid erations qualify for being regarded as reasonable, while an action which is inconsistent with or runs counter to a Directive Principle would incur the reproach of being unreasonable.
So also the concept of public interest must as far as possible receive its orientation from the Directive Principles.
What according to the founding fathers constitutes the plainest requirement of public interest is set out in the Directive Principles and they embody par excellence the constitutional concept of public interest.
If, therefore, any governmental action is calculated to implement or give effect to a Directive Principle, it would ordinarily, subject to any other overriding considerations be informed with public interest.
Where any government action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be 150 struck down as invalid.
It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest.
The Government therefore, cannot, for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest t o do so.
Such considerations many that some Directive Principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or secretion of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property.
We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest." (emphasis supplied) On the question of courts interference in an action taken by the Government, it was further observed as under: "But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest.
This burden is a heavy one and it has 151 to be discharged to the satisfaction of the Court by proper and adequate material.
The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down government action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest.
But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. 'I his is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law." (emphasis supplied) On the question of the power of the Government in granting largess, it was also observed that: "The second limitation on the discretion of the Government in grant of largess is in regard to the persons to whom such largess may be granted.
It is now well settled as a result of the decision of this Court in Ramanad Shetty vs
International Airport Authority of India & Ors.
(supra) that the Government is not free like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion.
The law is now well established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure.
where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or 152 irrelevant.
The governmental action must not be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance.
This rule was enunciated by the Court as a rule of administrative law and it was also validated by the Court as an emanation flowing directly from the doctrine of equality embodied in article 14." (emphasis supplied) In State of Uttar Pradesh and others vs Vijay Bahadur Singh and others this Court considered the circumstances under which the Government is not always bound to accept the highest bid offered in a public auction under which a contract was to be awarded to fell trees and exploit forest produce and held as under: "It appears to us that the High Court had clearly misdirected itself.
The Conditions of Auction made it perfectly clear that (lie Government was under no obligation to accept the highest bid and that no rights accrued to the bidder merely because his bid happened to he the highest.
Under condition 10 it was expressly provided that the acceptance of bid at the time of auction was entirely provisional and was subject to ratification by the competent authority, namely, the State Government.
Therefore, the Government had the right, for good and sufficient reason, we may say, not to accept the highest bid but even to prefer a tenderer other than the highest bidder.
The High Court was clearly in error in holding that the Government could not refuse to accept the highest bid except on the ground of inadequacy of the bid.
Condition 10 does not so restrict the power of the Government not to accept the bid.
There is no reason why the, power vested in the Government to refuse to accept the highest bid should be confined to inadequacy of bid only.
There may be a variety of good and sufficient reasons, apart from inadequacy of bids, which may impel the Government not to accept the highest bid.
In fact, to give an antithetic illustration, the very enormity of a bid may make 153 it suspect.
It may lead the Government to realise that no bonafide bidder could possibly offer such a bid if he meant to do honest business.
Again the Government may change or refuse its policy from time to time and we see no reason why change of policy by the Govern ment, subsequent to the auction but before its confirmation, may not be a sufficient justification for the refusal to accept the highest bid.
It cannot be dispute that the Government has the right to change its policy from time to time, according to the demands of the time and situation and in the public interest.
If the government has the power to accept or not to accept the highest hid and if the Government has also the power to change its policy from time to time.
it must follow that a change or revision of policy subsequent to the provisional acceptance of the bid but before its final acceptance is a sound enough reason for the Government 's refusal to accept the highest bid at an auction.
that is precisely what has happened here." (emphasis supplied) In State of Orissa and Ors.
vs Harinarayan Jaiswal and Ors.
; it was observed as under: "It is for the Government to decide whether the pi ice offered in an auction sale is adequate.
While accepting or rejecting a bid, it is merely performed and executive function.
The correctness of its conclusion is not open 'to judicial review.
We fail to see how the plea of contravention of article 19 (1) (g) or article 14 can arise in these cases.
The Government 's power to sell the exclusive privileges set out in section 22 was not denied.
It was also not disputed that those privileges could be sold by public auction.
Public auctions are held to get the best possible price.
Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell then cannot decline to accept the highest bid if he thinks that the price offered is inadequate.
There is no 154 concluded contract till the bid is accepted.
Before there was a concluded contract, it was open to the bidders to withdraw their bids see Union of India and ors.
vs M/s Bhimsen Walaiti Rani ; By merely giving bids, the bidders had not acquired any vested rights.
The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded.
If the Government is the exclusive owner of those privileges, reliance on article 19 (1) (g) or article 14 becomes irrelevant.
Citizens cannot have any funda mental right to trade or carry on business in the properties or rights belonging to the Government, nor can there he any infringement of article 14, if the Government tries to get the best available price for its valuable rights.
" emphasis supplied) In G.B. Mahajan and others vs Jalgaon Municipal Council and others ; it was observed thus: " The reasonableness ' in administrative law must, therefore, distinguish between proper use and improper abuse of power.
Nor is the test the court 's own standard of 'reasonableness ' as it might conceive it in a given situation.
" In State of Madhay Pradesh & ors vs Nandlal Jaiswal & ors. ; it was observed thus: " We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method ' and, therefore, its validity cannot be tested on any rigid a priori ' considerations or on the application of any straight jacket formula.
The court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or play in the 155 'joints ' to the executive.
xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical.
The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide.
It is against the back round of these observations and keeping the mind that we must now proceed to deal with the contention of the petitioners based on article 14 of the Constitution.
" In India Cement Ltd. and others vs Union of India and others[1990] 4SCC 356 a question arose whether the fixation of Rs. 100 per tonne of cement as the uniform retention price for the entire industry with the exception of M/s Travancore Cement Ltd. was rational and reasonable.
This Court held as under: "It is.
therefore, clear that fixation of Rs. 100 per tonne as die uniform retention price for the entire industry with the solitary exception of M/s. Travancore Cement Ltd. Kottayam for which justification has been shown.
was on a rational basis taking into account all relevant data and factors including the cement industry 's acceptance of the principle of a uniform retention price for the entire industry.
the only difference being in die price actually fixed it Rs. 100 per tonne instead of Rs. 104 per tonne claimed by the cement industry.
It is obvious that the fixation of Rs. 100 per tonne being shown to be made on a principle which has not been faulted.
the actual fixation of Rs. 100 instead of Rs. 104 to be received by the industry is not within the domain of permissible judicial review, if the principle of a Uniform retention price for the entire industry cannot be faulted.
(emphasis supplied) The Bench in die above case, after referring to die decision of the Constitution 156 Bench in Shri Sitaram Sugar Co. Lid.
vs Union of India ; , observed thus: " It was pointed out that what is best for the industry and in what manner the policy should be formulated and implemented.
hearing in mind the object of supply and equitable distribution of the commodity at a fair price in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government and such matters do not ordinarily attract the power of judicial review.
It was also held (hit even if some persons are at a disadvantage and have suffered losses on account of the formulation and implementation of the government policy.
that is not by itself ' sufficient ground for interference with the governmental action.
Rejection of the principle of fixation of price unit wise on actual cost basis of ' each unit was reiterated and it was pointed out that such a policy promotes efficiency and provides and incentive to cut down the cost introducing an element of healthy competition among the units.
xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx It is.
therefore.
clear that the principle of fixation of uniform price for the industry is an accepted principle and this has to be done by fixing a uniform price on the basis of the cost of a reasonably efficient and economic representative cross section of manufacturing units and not with reference to the cost in relation to each unit.
Obviously, such a practice is in larger public interest and also promotes efficiency in the industry providing an incentive to the uneconomic units to achieve efficiency and to reduce their cost.
" Regarding the differential treatment given to M/s Travancore Cement Ltd. this Court held that: 157 The only surviving question for consideration is the argument in Civil Appeal No. 2193 of 1972 for a differential treatment to the appellant, M/s Chettinad cement Limited, on the anology of M/s Travancore Cement Ltd., Kottayam.
In the counter affidavit of Shri G. Ramanathan Under Secretary to the Government of India, the reason for treating.
Travancore Cement Limited differently has been clearly stated.
It has been stated that it is a sub standard unit with a capacity of 50,000 tonnes `per annum only without any scope for expansion while the standard capacity for a unit is two lakh tonnes per annum; so that this unit is not capable of expanding the capacity and it is on the whole an uneconomic unit deserving a special consideration.
No material has been produced by the appellant.
M/s Chettinad Cement Corporation Limited.
to show that it is a similar substandard uni t without any capacity for expansion.
so that it too must continue to be an uneconomic unit like M/s Travancore Cement Limited, Kottayam deserving, a similar treatment.
The counter affidavit.
therefore.
shows a rational basis for classifying M/s Travancore Cement Limited, Kottayam differently as a sub standard and an uneconomic unit without any scope for improvement in comparison to other units.
This argument also is untenable.
" In R.K. Garg vs Union of India, [1981]4 SCC 675, a Constitution Bench of this Court observed as under: " Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude.
than laws touching the civil rights such as freedom of speech religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait .jacket formula and this is particularly true in case of legisla 158 (ion dealing with economic matters, where having regard to the nature of the problems required to be dealt with.
greater play in the joints has to he allowed to tile legislature.
The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation then in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Doud ; where Frankfurter, J said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment.
The legislature after all has the affirmative responsibility the courts have only the power to destroy not to reconstruct.
When these are added to the complesity of economic regulation, the uncertainty, the liability to error.
the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path of judicial wisdom and institutional prestige and stability." (emphasis supplied) In Peerless General Finance and Investment Co. Limited and Another vs Reserve Bank of India etc. ; the accent of power of the Courts interfering.
in such economic policy matters was considered and it was held as under: "The function of the Court is to see that lawful authority is not abused but not to appropriate to itself ' the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function 159 of the courts to sit in judgment over matters of economic policy and it must necessarily be left to the expert bodies.
In such matters even expert can seriously and doubtlessly differ.
Courts cannot be expected to decide them without even the aid of experts.
" It was further observed thus: " The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
The Court can only strike some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any Provisions of the Constitution or any statute.
It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies.
This Court has repeatedly said that matters of economic policy ought to be left to the government." At this juncture it is also necessary to consider whether the policy of the Government in the matter of fixation of price and in allotment of the largess from the point of ' view of prohibiting monopolistic tendencies and encouraging healthy competition among the units, is in any manner unreasonable or arbitrary.
As submitted by the learned counsel, the policy of the Government is to promote efficiency in the administration and to provide an incentive to the uneconomic units to achieve efficiency.
The object underlying the C 'MRTP Act ' for short ) is to prevent the concentration of economic power and to provide for a control on monopolies prohibition of monopolistic trade practices and restrictive trade practices.
The Monopolies Inquiry Commission in its report stated that: "There are different manifestations of economic power in different fields of economic activity.
One such manifestation is the achievement by one or more units in an industry of such a dominant position that they are able to control the market by regulating prices 160 or output or eliminating competition.
Another is the adoption by some producers and distributors, even though they do not enjoy such a dominant position.
of practices which restrain competition and thereby deprive the community of the beneficent effects of the rivalry between producers and producers, and distributors and distributors to give the best service.
It is needless to say that such practices must inevitably impede the best utilisation of the nation 's means of production economic power may also manifest itself ' in obtaining control of large areas of economic activity by a few industrialists by diverse means.
Apart from affecting the economy of the country, this often results in the creation of industrial empires, tending to cast their shadows over political democracy and social values." In U.S.A. under the Sherman Act of 1890.
every contract or combination in the form of trust or otherwise or conspiracy in restraint of trade or commerce is declared to be illegal.
By that at every person who monopolised or attempted to monopolise or combined or conspired with any other person or persons to monopolise any part of the trade or commerce was guilty of mis demeanour.
Regarding the constitutionality of the said Act.
a passage in American jurisprudence 2d, vol.
54 pages 668 669 reads thus: 2.
Constitutionality.
The Sherman Act (15 USCSS 1 7) is a constitutional exercise of the commerce power.
Its general language does not render it invalid as an unconstitutional delegation of legislative power to the courts or as an unconstitutionally vague criminal statue.
Its application to a monopolistic association of newspaper publisher does not abridge freedom of the press: nor does its application to the continuance, after its enactment, of a contract made previously subject it to attack as ex post facto legislation.
" 161 In England, the Competition Act, 1980 controls anti competitive practices and if a person in the course of his business pursues a course of conduct which has or is intended to have or it likely to have the effect of restricting, distorting or preventing competition in connection with the production, supply or acquisition of goods is deemed to engage in anti competition practices, which is illegal.
Therefore, the avowed policy of the Government particularly from the point of view of public interest is to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the Community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice.
Bearing the above principles in mind, we shall now proceed to examine the action taken by the Railways in the matter of fixation of the price and distribution of quantities and see whether the same has been done pursuant to a policy and thus reasonable or whether there has been an arbitrary exercise of power.
We have already noted that it is a case of limited tender meant for the 12 manufacturers who have been supplying the railway bogies.
The offers made by the tenders were got technically evaluated by the RDSO and thereafter they were examined by the render Committee as well as by the Railways Board and finally by competent authority.
The assessed capacity of each manufacturer is the one assessed by the RDSO, a wing of the Railways and the same is based on the molten capacity of the manufacturers and other relevant factors.
After fixing the reasonable price, the quantity distribution can be determined based on the assessed actual capacity of the manufacturers, best performance, outstanding orders to be executed and on the average of previous four years ' performance.
It is not in dispute that this formula was evolved in 1983.
Later, to avoid certain inequalities and better utilisation of the installed capacity by larger units and uneconomic ordered quantity and under utilisation of capacity by smaller units, it was felt that in the interest of the economy, an equitable distribution has to he effected.
A perusal of the Tender Committee 's recommendations, the enclorsements made by the members of the Railway Board and the views expressed by the competent authority 162 could show that for the year in question they want to bring about some changes in the policy of distribution pending a permanent policy being evolved.
The 'render Committee in the first instance examined the prices quoted by the tenderers.
The Committee decided that while placing orders, only the RDSO permitted deviations will be allowed and the suppliers have to adhere to rest of the specifications as was being done in the earlier years.
Then coming to the prices, the Tender committee noted that the three big manufacturers quoted identical price in terms by forming a cartel among themselves.
Having applied the price variation formula, the updated price was fixed at Rs. 79,305 as on 1. 9.91.
However, taking into consideration the two concessions is respect of import duty and (fie freight equalisation the Committee ultimately recommended the price of Rs. 76.000.
The Tender Committee also noted that this price is very near to the lowest among the updated price.
Regarding the distribution of quantities the Tender committee recommended that the same may be distributed among the various manufacturers as shown in (he annexure to their recommenda tions.
In recommending such distribution to various manufacturers the Tender committee has taken into consideration the fact that the four wagon builders namely M/s H.D.C. Texmaco, Cimmco and Burn should be given weightage.
The Tender Committee ultimately recommended that a counter offer at the price of Rs. 76,000 for 20.3 T bogies can be made and the quantities can be distributed as indicated in the be annexure.
This was done on 4. 2. 92 and then the post tender correspondence was there %%,hereby two of the three big manufacturers offered to reduce their price if negotiations be held.
Then the file went to the Railway Board.
Advisor (Finance) particularly indicated that a view has to be taken whether a large number of manufacturers should be continued manufacturing these bogies in small quantities as at present or to permit a small number of manufacturers to expand their production at the cost of other prices and that the policy which has been followed by the Railways so far is to encourage a large number of parties to manufacture the bogies, with the idea of generation competition as also by way of encouraging small scale industries.
fie, however, pointed out that since the review of policy would take time, the tender could be decided on the basis of the existing policy.
The Member (Mechanical) agreed with this recommendation.
Then the file went to Financial Commissioner.
He noted that the three big manufacturers have formed a cartel and they have given offer to reduce their price if negotiations are held and their intention apparently is to get a 163 larger share on the basis of such negotiated price which would eventually nullify the competion from the other manufacturers and Subsequently to monopolistic price situation.
Having stated so he recommended that the wagon builders and other smaller manufacturers must he given larger quantities and that the three big manufacturers should be given the balance.
In the last paragraph.
the Financial Commissioner noted thus: " Now, due to the new economic policy, the structural changes are in a flux and as a monopoly buyer it is incumbent on the part of the Railway not to precipitate any crisis by resorting to negotiation on the basis of II DC 's letter at SN 26 but treat carefully and protect smaller firms from being gobbled up.
In other words, for short term gains, we may be sacrificing, long term healthy competition.
1, therefore, advocate that this post tender letter may be ignored as the prices quoted by firms are in the close range or prices updated by Tender Committee for counter offer.
" With these nothings, the file went to the Railway Minister and in his order, he noted that the three big manufacturers have formed a cartel and that under the circumstances all the three of them may be offered a price lower by Rs. 11.000 and the quantities also should be suitably adjusted so that the cartel is broken and he ordered 1795, 2376 and 2500 number of bogies to M/s H. D.C., Mukandand Bharativa respectively.
The Minister further observed that since the present formula suffers from serious blemishes as pointed out by the Financial Commissioner, a judicious distribution of order is called for between the other suppliers and that some of them are sick units and owe a lot of money to the nationalised banks and their cases are pending before BIFR.
and that it would be in the national interest to give them sufficient order so that they are able to rehabilitate themselves and repay the loans.
In this view of the matter, he ordered redistribution of the balance quantities as follows: Bum 500 Cimmco 1200 Texmaco 1200 164 Sri Ranga 1560 Anup TSL 1400 Himmat 1150 BECO 1600" The Minister also ordered that straight away 30% option should be exercised.
The further noted that as a result of this policy, the Railways would be effecting a saving of about Rs. 11 crores.
Then the file with this order went back to the Member (Mechanical) and others for being implemented.
he, however. noted that the Minister for Railways may consider whether the lower price could be counter offered to all the companies.
The Financial Commissioner again noted that dual pricing would be in the national interest and finally the Minister having noted these endorsements of the Member (Mechanical) as well as the Financial Commissioner made an endorsement that if some are allowed to hold monopoly instead of giving protection to smaller units, who have formed a cartel, they may gang up and fight and fritter the smaller ones and that Railways should always demonstrate of its own vision of long term Railway interest and not short terms gains and finally agreed with the recommendations of the Financial commis sioners and also the recommendation of the 'Fender Committee and directed the implementation of the same without further delay.
The above documents would show that a particular policy has been adopted by the Government, though it resulted in a change as compared to the previous one.
As held by the courts, change of policy by it self does not affect the pursuant action provided it is rational and reasonable However, the submission is that the decision taken pursuant to this policy in the matter of fixation of price and distribution of quantities is based on wrong grounds and suffers from the vice of unreasonableness.
S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. and Bharatiya respectively submitted in this context that the grounds namely that the three big manufacturers formed a cartel and that the post tender price offered by them was predatory are unfounded and that dual pricing and the ultimate allotment of the quantities in a punitive manner are based 165 on a wrong premise and the final decision arrived at is consequently unreasonable and arbitrary.
The further submission is that these manufacturers have a legitimate expectation of being treated in certain ways by the administrative authorities on the basis of practice and policy of the previous years and such a decision, which is punitive and which defeats such legitimate expectation and which is taken without affording an opportunity to these manufacturers to explain, is violative of principles of natural justice.
First we shall consider the submissions regarding the formation of cartel by these big manufacturers, The word "Cartel" has a particular meaning with reference to monopolistic control of the market.
In collins English Dictionary, the meaning of the word "Cartel" is given as under: " cartel I also called: trust, a collusive international association of independent enterprises formed to monopolize production and distribution of a product or service, control prices etc. " In Webster Comprehensive Dictionary, International Edition, the meaning of the word "Cartel" is given thus: "cartel xx 3.
An international combination of independent enterprises in the same branch of production, aiming at a monopolistic control of the market by means of weaking or eliminating competition. xx In Chambers ' English Dictionary the word "Cartel" is defined thus: "Cartel A combination of firms for certain purposes especially to keep up prices and kill competition XX In Black 's Law Dictionary, fifth edition the meaning of the word "Cartel" is given thus: 166 "Cartel A combination of producers of any product joined together to control its production, sale, and price, and to obtain a monopoly in any particular industry or commodity.
Also, an association by agreement of companies or sections of companies having common interests, designed,, to prevent extreme or unfair competition and allocate markets, and to promote the interchange of knowledge resulting from scientific and technical research, exchange of patent rights, and standardization of products.
" In American Jurisprudence 2d Vol.
54 page 677 it is mentioned thus: "A cartel is an association by agreement of companies or sections of companies having common interests, designed to prevent extreme or unfair competition and to allocate markets, and perhaps also to exchange scientific or technical knowledge or patent rights and to standardize products, with competition regulated but not eliminated by substituting computational in quality, efficiency, and service for price cutting.
An international cartel arrangement providing for a worldwide division of a market has been held a per se violation of 15 USC S 1.
An American corporation violates the Sherman Act by entering into agreements with English and French companies to (1) allocate world trade territories among themselves; (2) fix prices on products of one sold in the territory of the others; (3) co operate to protect each other 's markets and eliminate outside competition; and (4) participate in cartels to restrict imports to and exports from the United States. ' In a Dictionary of Modern Legal Usage by Bryian A.Gemer,it is noted thus: "cartlize=to organize into a cartel.
See IZE.
Yet cartel has three quite different meanings; (1) " an 167 agreement between hostile nations" ' (2) "an anticompetitive combination usu.
that fixes commercial prices"; and (3) "a combination of political groups that work toward common goals.
" Modern usage favours sense (2).
" The cartel therefore is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity.
Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest.
The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers.
However, the determination whether such agreement unreasonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same.
Dealing with the provi sions of Sherman Anti Trust Act, in National Electrical Contractors Associations, Inc. etal.
vs National Contractors Association etal Federal Reporter 2d Series, 678 page 492 it was observed as under: "We know of no better statement of the rule than that of this court in United States vs Society, of Ind. Gasoline Marketers, 624 F. 2d 461, 465 (4th Cir. 1979) cert.
101 S.Ct.
859, , , where stated: "Since in a price fixing conspiracy the conduct is illegal per se further inquiry on the issues of intent or the anti competitive effect is not required.
The mere existence of a price fixing agreement establishes the defendants ' illegal purpose since the aim and result of every price fixing agreement, if effective, is the elimination of one form of competition.
" It was also observed that: "The critical analysis in determining whether a particular activity constitutes a per se violation is whether the activity on its face seems to be such that it would always or almost always restrict competition and 168 decrease output instead of being designed to increase economic efficiency and make the market more rather than less competitive.
" Matsushita Electric Industrial Co., Ltd. et al vs Zenith Radio Corporation et al ; is a case where American manufacturers of consumer electronic products brought suit against a group of their Japanese competitors in the United States District Court alleging that these competitors had violated Sections 1 and 2 of the Sherman Act and other federal statutes.
It was alleged that the Japanese companies had conspired since 1950 to drive domestic firms from the American Market, by maintaining artificially high prices for these products in Japan while selling them at a loss in the United States.
The District Court after excluding bulk of evidence, finally granted the Japanese companies ' motion for summary judgment dismissing the claims.
The United States Court of Appeal reversed and remanded for further proceeding.
On a certiorari, the United States Supreme Court while considering the standards supplied by the Court of Appeals in evaluating the summary judgment, observed thus: "To survive petitioners motion for summary judgment respondents must establish that there is a genuine issue of material fact as to whether petitioners entered into an illegal conspiracy that caused respondents to.
suffer a cognizable injury.
" It was further observed that: A predatory pricing conspiracy by nature speculative.
Any agreement to price below the competitive level requires the conspirators to forgo profits that free competition would offer them.
The forgone profits may be considered an investment in the future.
For the investment to be rational the conspirators must have a reasonable expectations of recovering, in the form of later monopoly profits, more than the losses suffered.
169 xxxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx The alleged conspiracy 's failure to achieve its ends in the two decades of its asserted operation is strong evidence that the conspiracy does not in fact exist.
Since the losses in such a conspiracy accrue before the gains, they must be "repaid" with interest.
And because the alleged losses have accrued over the course of two decades, the conspirators could well require a correspondingly long time to recoup.
Maintaining supra competitive prices turn depends on the continued cooperation of the conspirators, an the inability of other would be competitors to enter the market, and not incidentally on the conspirator; ability to escape antitrustliability for their minimum price fixing cartel.
Each of these factors weighs more heavily as the time needed to recoup losses grows.
If the losses have been substantial as would likely be necessary in order to drive out the competition petitioners would most likely have to sustain their cartel for years simply to break even." (emphasis supplied) In this context, one of the submissions is that the price of Rs. 67,000 offered by these manufacturers during the post tender stage was not predatory and that the view taken by the authorities that such an offer of lower price was predatory one confirming the formation of a cartel, is also unwarranted.
In Matsushita 's case (supra) it was observed that predatory pricing conspiracies are by nature speculative and that the agreement to price below the competition level requires the conspirators to forgo profits that free competition would offer them.
It was also held therein as under: "To survive a motion for a summary judgment, a plaintiff seeking damages for a violation of S 1 of the Sherman Act must present evidence "that tends to 170 exclude the possibility" that the alleged conspirators acted independently.
Thus, respondents here must show that the inference of a conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents.
(emphasis supplied) Therefore mere offering of a lower price by itself, though appears to be predatory, can not be a factor for inferring formation of a cartel unless an agreement amounting to conspiracy is also proved.
In webster Comprehensive Dictionary International Edition.
The meaning of the word "Predatory" is given as under: "predatory 1. characterized by or under taken for plun dering.
Addicted to pillaging: 3.
Constituted for living by preying upon others, as a beast or bird; raptorial. " In A Dictionary of Modern Legal Usage by Bryan A. Garner, "predatory" is defined thus: "Predatory preying on other animals.
The word is applied figuratively in the phrase from antitrust law, predatory pricing.
The forms predaceous, predatorial, and predative are needless variants.
The spelling predacious has undergone differentiation and means" devouring; rapacious." In collins English Dictionary, "Predatory" is defined thus: "predatory 1.
another word for predacious (sense 12.
of, involving, or characterized by plundering, robbing, etc. . . xxxx. . . .
In Black 's Law Dictionary, "Predatory intent" is defined asunder: "Predatory intent.
"predatory intent," in purview of Robinson patmen Act, means that alleged price dis 171 criminator must have at least sacrificed present revenues for purpose of driving competitor out of market.
with hope of recouping losses through subsequent higher prices.
International Air Industries, Inc. vs American Excelsior Co., C.A. Tex. ; , 723.
" In The oxford English Dictionary Vol. VIII, "predatory" is defined thus" "Predatory 1.
Of, pertaining to, characterized by, or consisting in plundering, pillaging, or robbery xx 2.
Addicted to, or living by, plunder; plundering, marauding, thieving, in modern use sometimes applied to the criminal classes of great cities. xx 3.
Destructive, consuming, wasteful, deleterious, xx 4.
Of an animal; That preys upon other animals; that is a beast, bird, or other creature of prey; carnivorous.
Also, of its organs of capture, xx We have noticed that monopoly is the power to control prices or exclude competition from any part of the trade or commerce among the producers.
The price fixation is one of the essential factors.
In American jurisprudence.
2d Volume 54, a passage at page 695 reads thus: "The Sherman Act does not out law price uniformity.
An accidental or incidental price uniformity or even pure conscious price parallelism, is not itself unlawful.
Moreover, a competitor 's sole decision to follow price leadership is not a violation of 15 USC S 1.
On the other hand, a price fixing conspiracy does not necessarily involve an express agreement, oral or written.
It is sufficient that a concert of action is contemplated and that the defendants conform to the arrangement.
The fixing of prices by one member of 172 a group pursuant to express delegation,acquiescence, or under standing is just as illegal as the fixing of prices by direct joint action.
A price fixing combination is illegal even though the prices are fixed only by one member and without consultation with the others." (emphasisd supplied) A mere offer of a lower price by itself does not manifest the requisite intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy, the formation of a cartel among the producers who offered such lower price can not readily be inferred.
In the instant case, the fact that two of the three big manufacturers entered into post tender correspondence and also offered a lower price of Rs. 67,000 is not dispute.
Though they did not place the necessary material in support of their offer as to how it is viable and workable, they, however, sought to contend before us that the price offered by them is not predatory and is only a reasonable price.
By our earlier order dated 14th January, 1993 we directed the Tender Committee to examine the matter afresh regarding the reasonable price on the basis of the data that may be placed by these big manufacturers in support of their offer of Rs. 67,000.
Therefore no conclusion can be reached definitely that offer of the price of Rs. 67,000 by itself was predatory and the manufacturers who offered such a price consequently formed a cartel.
Therefore, whether in a given case, there was formation of a cartel by some of the manufacturers which amounts to an unfair trade practice, depends upon the available evidence and the surrounding circumstances.
In the instant case, initially the Tender Committee formed the opinion that the three big manufacturers formed a cartel on the ground that the price initially quoted by them was identical and was only a cartel price.
This, in our view, was only a suspicion which of course got strengthened by post tender attitude of the said manufacturers who quoted a much lesser price.
As noticed above it can not positively be concluded on the basis of these two circumstances alone.
In the past these three big manufacturers also offered their own quotations and they were allotted quantities on the basis of the existing practice.
However a mere quotation of identical price and an offer of further reduction by themselves would not entitle them automatically 173 to comer the entire market by way of monopoly since the final allotment of quantities vested in the authorities who in their discretion can distribute the same to all the manufacturers including these three big manufacturers on certain basis.
No doubt there was an apprehension that if such predatory price has to be accepted the smaller manufacturers will not be in a position to compete and may result in elimination of free competition.
But there again the authorities reserved a right to reject such lower price.
Under these circumstances though the attitude of these three big manufacturers gave rise to a suspicion that they formed a cartel but there is not enough of material to conclude that in fact there was such formation of a cartel.
However, such an opinion entertained by the concerned authorities including the Minister was not malicious nor was actuated by any extraneous considerations.
They entertained a reasonable suspicion based on the record and other surrounding circumstances and only acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel.
S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. and Bharatiya respectively.
contended that the Railways were bound to follow the rules and standards pertaining to the tender system and on the basis of these provisions and the course of conduct followed by the Railways in the matter of fixation of price and allotment of quota in the past let the manufacturers believe that the same course of conduct would be followed and the manufacturers legitimately expected that they would be treated equally and in a non arbitrary manner and such legitimate expectation is a right guaranteed under Article 14.
In Food Corporation of India vs M/s Kamdhenu Cattle Feed Industries JT Justice J.S. Verma Speaking for the Bench observed as under: "In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrari ness is a significant facet.
There is no unfettered discretion in public law.
A public authority possesses powers only to use them for public good.
This imposes 174 the duty to act fairly and to adopt a procedure which is fairplay in action '.
Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the state and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions.
To satisfy this requirement of non arbitrariness in a State action, it is therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bonafides of the decision in a given case.
The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by it self be a distinct enforceable right; but failure to consider and give due weight to it may render the decision arbitrary and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process.
Whether the expectation of the claimant is reasonable or Legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations, may outweigh what would otherwise have been the legitimate expectation of the claimant.
A bonafide decision of the public authority reached in this manner would 175 satisfy the requirement of non arbitrariness and withstand judicial scrutiny.
The doctrine of legitimate expectation gets assimilated in the rule of law and operates in.
our legal system in this manner and to this extent." (emphasis supplied) In Navjoti coo Group Housing Society etc.
vs Union of India & Others ; ,justice G.N. Ray speaking for the Bench observed as under: "In the aforesaid facts, the Group Housing Societies were entitled to legitimate expectation of following consistent past practice in the matter of allotment, even though they may not have any legal right in private law to receive such treatment.
The existence of legitimate expectation ' may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the 'legitimate expectation without some overriding reason of public policy to justify its doing so.
In a case of 'legitimate expectation ' if the authority proposes to defeat a person 's 'legitimate expectation ' it should afford him an opportunity to make representations in the matter.
In this connection reference may be made to the discussions on 'legitimate expectation ' it page 151 of volume 1(1) of Halsbury 's Laws of England Fourth Edition (Re issue).
We may also refer to a decision of the House of Lords in Council of civil Service Union and others versus Minister for Civil Service reported in [1985] 3 All England Reporter page 935.
It has been held in the said decision that an aggrieved person was entitled to judicial review if he could show that a decision of the public authority affected him of some benefit or advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment on such reasons.
176 It may be indicated here that the doctrine of 'legitimate expectation imposes in essence a dun, on public authority to act fairly, by taking into consideration all relevant factors relating to such 'legitimate expectation '.
Within the conspectus of fair dealing in case of 'legitimate expectation ', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent passed policy, come in.
We have not been shown any compelling reasons taken into consideration by the Central Government to make a departure from the existing policy of allotment with reference to seniority in Registration by introducing a new guideline." (emphasis supplied) Relying on these decisions, it was contended that the decision of the Railways in fixing the price and in allotment of the quantities is arbitrary and unreasonable affecting the right to such legitimate expectation.
To appreciate these contentions, it becomes necessary to refer to some of the rules governing these contracts and followed by the Railways, before we examine the impact of the doctrine of 'legitimate expectation '.
The Rules prescribed by the Minister for Railways for entering into contracts lay down certain norms and contains guidelines.
The rules provide for constitution of Tender Committee and the Procedure to be followed in the matter of inviting tenders.
They also provide for negotiations but lays down that selection of contracts by negotiations is an exception rather than a rule and can be resorted to only under certain circumstances.
Regarding splitting of tendered quantity in more than one form, we find some guidelines in Annexure 50 which reads as under: "3.0.
Where warranted, the tendered quantity may be split and tender decided in favour of one or more firms on merits of each case, in consultation with Associate Finance and with the approval of the authority competent to accept the tender having due regard to the following factors: (i) Vital/Critical nature of the items; (ii)Quantity to be procured; (iii)Delivery requirements; (iv)Capacity of the firms in the zone of consideration; (v) Past performance of firms.
xxxxxxx xxxxxxxx xxxxxxxxx 5.0 Splitting should not be done merely with a view to utilising developed capacity of the different sources but should be for valid reasons to be recorded in writing for splitting the tendered quantity.
" Annexure 213 contains the Railway Board letter dated 19.4.90 addressed to General Managers, All Indian Railways and others dealing with the subject of Non acceptance of late/delayed/post/ Tender offers.
The relevant portion reads thus: "2.
Instances have come to notice of the Board where on a strict application of the above instructions even late Tenders submitted by Public Sector firms for highly specialised equipments have been rejected.
3.The matter, has therefore been reconsidered by the Board and it has been decided that where late Tenders from established/reliable suppliers and conferring a substantial financial advantage is to be considered, notwithstanding the general ban, it will be open to the Railways to seek the Board 's approval for the consideration of such Tenders, since this should be a very exceptional situation, such cases should be recommended for consideration of the Board with the personal approval of the General Manager, duty concuffed in by the F.A. & C.A.O. 4.The Railways should not enter into any dialogue with the agency submitting a delayed Tender without obtaining Board 's prior clearance".
178 Now coming to the notice inviting tender in the instant case, we have already noted that the price quoted is subject to price variation clause and the Railways reserved a right to accept the lowest price or accept the whole or any part of the tender of portion of the quantity offered.
The notice however, mentioned that the tenderer is at liberty to tender for the whole or any portion or to state in the tender that the rate quoted shall apply only if the entire quantity is taken from him.
From these provisions it becomes clear that the tenderer can not expect that his entire tender should be accepted in respect of the quantity and that the Railways have a night to accept the tender as a whole or a part of it or portion of the quantity offered.
It is not in dispute that in the past also there were many instances where the Railways as per the procedure followed, arrived at decisions in respect of both price and quantity for good and justifiable reasons.
In the year 1991 the quantities of M/s H.D.C. and Bharatiya were in fact reduce from the allocations made by the Tender Committee which made its recommendations on the basis of certain data.
It has to be noted that the Tender Committee is not a statutory authority and its proposals are recommendatory in nature and have to be considered in the distribution procedure culminating in the decision of the approving authority who as a matter of fact, also can take decisions in respect of price and allotment of quantities taking into consideration various other aspects from the point of view of public interest.
Therefore it is evident that there is no legally fixed procedure regarding fixation of price and particularly regarding allotment giving scope to a legitimate expectation.
However, with this facture background, we shall consider the contention regarding 'legitimate expectation '.
In Halsbury 's Laws of England, Fourth Edition, Volume 1(1) 151 a passage explaining the scope of "legitimate expectations" runs thus: "81.
Legitimate expectations.
A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment.
The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past prac tice.
179 The existence of a legitimate expectation may have a number of different consequences '; it may give locus standi to seek leave to apply for `judicial review; it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person 's legitimate expectations, it must afford him an opportunity to make representation on the matter.
The courts also distinguish, for example in licensing cases, between original applications, to renew and revocations; a party who has been granted a licence may have legitimate expectation that it will be renewed unless there is some good reason not to do so, and may therefore be entitled to greater procedural protection than a mere applicant for a grant." (emphasis supplied) We find that the concept of legitimate expectation first stepped into the English Law in Schmidt vs Secretary, of State for Home Affairs wherein it was observed that an alien who had been given leave ' to enter the United Kingdom for a limited period had a legitimate expectation of being allowed to stay for the permitted time and if that permission was revoked before the time expires, that alien ought to be given an opportunity of making representations.
Thereafter the concept has been Considered in a number of cases.
In A.G. of Hong Kong vs Ng Yeun shiu, [1983] 2 A.C. 629 Lord Fraser said that "the principle that public authority is bound by its undertakings as to the procedure it will follow, provided they do not conflict with its duty, is applicable to the undertaking given by the government of Hong Kong to the respondent. . that each case would be considered on its merits.
" In Council of Civil Service Unions and others vs Minister for the Civil Service (1984) Vol.
3 All E.R. 359, a question arose whether the decision of the Minister withdrawing the right to trade union member 180 ship without consulting the staff which according to the appellant was his legitimate expectation arising from the existence of a regular practice of consultation was valid.
It was contended that the Minister had a duty to consult the staff as per the existing practice and that though the employee did not have a legal right, he had a legitimate expectation that the existing practice would be followed.
On behalf of the Minister on the basis of the evidence produced, it was contended that the decision not to consult was taken for reasons of national security.
The Court held as under: "An aggrieved person was entitled to invoke judicial review if he showed that a decision of a public authority affected him by depriving him of some benefit or advantage which in the past he had been permitted to enjoy and which he could legitimately expect to be permitted to continue to enjoy either until he was given reasons for its withdrawal and the opportunity to comment on those reasons or because he had received an assurance that it would not be withdrawn before he had been given the opportunity of making representations against the withdrawal.
The appellants legitimate expectation arising from the existence of a regular practice of consultation appellants could reasonably expect to continue gave rise to an implied limitation on the Minister 's exercise of the power contained in article 4 of the 1982 order, namely an obligation to act fairly by consulting the GCHQ staff before withdrawing the benefit of trade union membership.
xxxxxxxx xxxxxxx xxxxxxxx Once the Minister produced evidence that her decision not to consult the staff before withdrawing the right to trade union membership was taken for reasons, of national security, that overrode any right to judicial review which the appellants had arising out of the denial of their legitimate expectation of consultation.
The appeal would therefore be dismissed.
xxxxxxxx xxxxxxxx xxxxxxxx 181 Administrative action is subject to control by judicial review under three heads: (1) illegality where the decision making authority has been guilty of an error of law, e g by purporting to exercise a power it does not possess; (2) irrationality where the decision making authority has acted so unreasonably that no reasonable authority, would have made the decision, (3) procedural impropriety, where the decision making authority has failed in its duty to act fairly.
(emphasis supplied) Therefore the claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can be questioned provided the same is found to be unfair, unreasonable, arbitrary and violative of principles of natural justice.
(vide Food Corporation of India 's case and Navjyoti Coo Group Housing Society 's case (supra).
The learned counsel for these three big manufacturers, however, relied on various decision in Amarjit Singh Ahluwalia vs The State of Punjab & Ors.
; , Ramana Dayaram Shetty 's case and Peerless General Finance and Investment Co. Limited 's case (supra) and contended that failure to follow the existing procedure resulting in denial of a right directly arising out of legitimate expectation is per se arbitrary and unreasonable and therefore illegal and consequently violative of Article 14 of the constitution.
Of late the doctrine of legitimate expectation is being pressed into service in many cases particularly in contractual sphere while canvassing the implications underlying the administrative law.
Since we have not come across any pronouncement.
of this court on this subject explaining the meaning and scope of the doctrine of legitimate expectation, we would like to examine the same a little more elaborately at this stage.
Who is the expectant and what is the nature of the expectation? When does such an expectation become a legitimate one and what is the foundation for the same? What are the duties of the administrative authorities while taking a decision in cases attracting the doctrine of legitimate expectation.
Time is a three fold present: the present as we experience it, the 182 past as a present memory and future as a present expectation.
For legal purposes, the expectation can not be the same as anticipation.
It is different from a wish, a desire or a hope nor can it amount to a claim or demand on the ground of a right.
However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves can not amount to an assertable expectation and a mere disappointment does not attract legal consequences.
A pious hope even leading to a moral obligation can not amount to a legitimate expectation.
The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence.
Again it is distinguishable from a genuine expectation.
Such expectation should be justifiably legitimate and protectable.
Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense.
It has to be noticed that the concept of legitimate expectation in administrative law has now, undoubtedly, gained sufficient importance.
It is stated that "Legitimate expectation" is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action and this creation takes its place beside such principles as the rules of natural justice, unreasonableness, the fiduciary duty of local authorities and "in future, perhaps, the principle of proportionality.
" A passage in Administrative Law, Sixth edition by H.W.R. Wade page 424 reads thus: "These are revealing decisions.
They show that the courts now expect government departments to honour their published statements or else to treat the citizen with the fullest personal consideration.
Unfairness in the form of unreasonableness here comes close to unfairness in the form of violation of natural justice, and the doctrine of legitimate expectation can operate in both contexts.
It is obvious, furthermore, that this principle of substantive, as opposed to procedural, fairness may undermine some of the established rules about estoppel and misleading advice, which tend to operate unfairly.
Lord Scarman has stated emphatically that unfairness in the purported exercise of a power can amount to an abuse or excess of power, and this seems likely to develop into an important general doctrine.
" Another passage at page 522 in the above book reads thus: "It was in fact for the purpose of restricting the right to be heard that legitimate expectation was introduced into the law.
It made its first appearance in a case where alien students of 'scientology were refused extension of their entry permits as an act of policy by the Home Secretary, who had announced that no discretionary benefits would be granted to this Sect, The Court of Appeal held that they had no legitimate expectation of extension beyond the permitted time, and so no right to a hearing, though revocation of their permits within that time would have been contrary to legitimate expectation.
Official statements of policy, therefore, may cancel legitimate expectation, just as they may create it, as seen above.
In a different context, where car hire drivers had habitually offended against airport bye laws, with many convictions and unpaid fines, it was held that they had no legitimate expectation of being heard before being banned by the airport authority.
There is some ambiguity in the dicta about legitimate expectation, which may mean either expectation of a fair hearing or expectation of the licence or other benefit which is being sought.
But the result is the same in either case; absence of legitimate expectation will absolve the public authority from affording a hearing.
(emphasis supplied) In some cases a question arose whether the concept of legitimate expectation is an impact only on the procedure or whether it also can have a substantive impact and if so to what extent.
For New South Wales vs Quin (1990) Vol.
64 Australian Law Journal Reports 327 is a case from Australia in which this aspect is dealt with.
In that case the Local Courts Act abolished Courts of Petty Sessions and 184 replaced them by Local Courts.
Section 12 of the Act empowered the Governor to appoint any qualified person to be a magistrate in the new Courts System, Mr. Quin, who had been a Stipendiary Magistrate in charge of a Court of petty Sessions under the old system, applied for, but was refused, an appointment under the new system.
That was challenged.
The challenge was upheld by the appellate court on the ground that the selection committee had taken into account an adverse report on him without giving a notice to him of the contents of the same.
In the appeal by the Attorney General against that order before the High Court it was argued on behalf of Mr. Quin that he had a legitimate expectation that he would be treated in the same way as his former colleagues considering his application on its own merits.
Coming to the nature of the substantive impact of the doctrine, Brennan, J. observed that the doctrine of legitimate expectations ought not to " unlock the gate which shuts the court out of review on the merits," and that the Courts should not trespass "into the forbidden field of the merits" by striking down administrative acts or decisions which failed to fulfill the expectations.
In the same case Mason, C.J. was of the view that if substantive protection is to be accorded to legitimate expectations that would encounter the objection of entailing "curial interference with administrative decisions on the merits by precluding the decision maker from ultimately making the decision which he or she considers most appropriate in the circumstances.
" In R vs Secretary of State for the Home Department.
ex parte Ruddock and others , Taylor, J. after referring to the ratio laid down in some of the above cases held thus: "On these authorities I conclude that the doctrine of legitimate expectation in essence imposes a duty to act fairly.
Whilst most of the cases are concerned, as Lord Roskill said, with a right to be heard, I do not think the doctrine is so confined.
Indeed, in a case where ex hypothesis there is no right to be heard, it may be thought the more important to fair dealing that a promise or undertaking given by a minister as to how he will proceed should be kept.
Of course such promise or undertaking must not conflict with his statutory duty, or her duty as here, in the exercise of a preroga 185 tive power.
I accept the submission of counsel for the Secretary of State that the respondent cannot fetter his discretion.
By declaring a policy he does not preclude any possible need to change it.
But then if the practice has been to publish the current policy, it would be incumbent on him in dealing fairly to publish the new policy, unless again that would conflict with his duties.
Had the criteria here needed changing for national security reasons, no doubt the respondent could have changed them.
Had those reasons prevented him also from publishing the new criteria, no doubt he could have refrained from doing so.
Had he even decided to keep the criteria but depart from them in this single case for national security reasons, no doubt those reasons would have afforded him a defence to judicial review as in the GCHQ case." (emphasis supplied) In Breen vs Amalgamated Engineering Union and Others [1971] 2 Law Reports Queen Bench Division 175, Lord Denning observed as under: "if a man seeks a privilege to which he has no particular claim such as an appointment to some post or other then he can be turned away without a word.
He need not be heard.
No explanation need be given; see the cases cited in Schmidt vs Secretary of State for Home Affairs , 170 171.
But if he is a man whose property is at stake, or who is being deprived of his livelihood, then reasons should be given why he is being turned down, and he should be given a chance to be heard.
I go further If he is a man who has some right or interest, or some legitimate expectation, of which it would not be fair to deprive him without a hearing, or reasons given, then these should he afforded hint, according as the case may demand".
(emphasis supplied) At this stage it is necessary to consider the scope of judicial review when a challenge is made on the basis of the doctrine of legitimate 186 expectation.
In Findlay vs Secretary of State for the Home Department, 19841 3 All E R 801 it was observed as under: "The doctrine of legitimate expectation has an important place in the developing law of judicial review.
It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review.
These two applicants obtained leave.
But their submission goes further.
It is said that the refusal to accept them from the new policy was an unlawful act on the part of the Secretary of State in that his decision frustrated their expectation.
But what was their legitimate expectation? Given the substance and purpose of the legislative provisions governing parole, the most that a convicted prisoner can legitimately expect is that his case will he examined individually in the light of whatever policy the State sees fit to adopt, provided always that the adopted policy is a lawful exercise of the discretion conferred on him by the statute.
Any other view would entail the conclusion that the unfettered discretion conferred by the Statute on the minister can in some cases be restricted so as to hamper, or even prevent.
changes of policy.
Bearing in mind the complexity of the issues which the Secretary of State has to consider and th e importance of the public interest in the administration of parole, I cannot think that Parliament intended the desecration to be restricted in this way.
" In Council of Civil Service Unions case Lord Diplock observed thus: "To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons ) other than the decisions, although it may affect him too.
It must affect such other person either (a) by altering rights or 187 obligations of that person which are enforceable by or against him in private law or (b) by depriving him of some benefit or advantage which either (i) he has in the past been permitted by the decision maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational ground for withdrawing it on which he has been given an opportunity to comment or (ii) lie has received assurance from the decision maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn.
(1) prefer to continue to call the kind of expectation that qualifies a decision for inclusion in class (b) a 'legitimate expectation ' rather than a 'reasonable expectation in order thereby to indicate that it has consequences to which effect will be given in public law, whereas an expectation or hope that some benefit or advantage would continue to he enjoyed, although it might well be entertained by a 'reasonable ' man, would not necessarily have such consequences.
" In Attorney General for New South Wales case it is observed as under: "Some advocates of judicial intervention would encourage the courts to expand the scope and purpose of judicial review, especially to provide some check on the Executive Government which nowadays exercises enormous powers beyond the capacity of the parliament to supervise effectively.
Such advocacy is misplaced.
If the courts were to assume a jurisdiction to review administrative acts or decisions which are "unfair" in the opinion of the court not to product of procedural fairness, but unfair on the merits the courts would be assuming a jurisdiction to do the very thing which is to be done by the repository of an administrative power, namely, choosing among the courses of action upon which reasonable minds might differ.
188 xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx If judicial review were to trespass on the merits of the exercise of administrative power, it would put its own legitimacy at risk.
The risk must be acknowledged for a reason which Frankfurter J. stated in Trop vs Dulles [ ; at 119: All power is .in
Madison 's phrase of an encroaching nature. .
Judicial power is not immune against this human weakness.
It also must he on guard against encroaching beyond its proper bounds and not he less so since the only restraint upon it is sell restraint.
If the courts were to postulate rules ostensibly related to limitations on administrative power but in reality calculated to open to the gate into the forbidden field of the merits of its exercise, the function of the courts would be exceeded of R vs Nat Bell Liquors Ltd. at 156.
If the courts were to define the destine of legitimate expectations as something less than a legal right and were to protect what would be thus defined by striking down administrative acts or decisions which failed to fulfil the expectations, the courts would be truncating the power which are naturally apt to affect those expectations.
7o strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adript on a featureless sea of pragmatism.
Moreover the notion of a legitimate expectation (falling short o a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law.
The authority of the courts and their salutary capacity judicially to review the exercise of ' administrative power depend in the last analysis on their fidelity to the rule of law, exhibited by the articulation of general principles.
189 To lie within the limits of judicial power the nation of "legitimate expectation " must be restricted to the illumination of what is the legal limitation on the exercise of administrative power tit a particular case.
of course, if a legitimate expectation were to amount to a legal right, the court would define the respective limits of the right and any power which might be exercised to infringe it so as to accommodate in part both the right and the power or so as to accord to one priority over the other (That is a common place of cruial declarations.) but a power which might be so exercised as to affect a legitimate expectation falling short of a legal right cannot be truncated to accommodate the expectation.
So long as the notion of legitimate expectation is seen merely as indicating "the factors and kinds of factors which are relevant to any consideration of what are the things which must be done or afforded" to accord procedural fairness to an applicant for the exercise of an administrative power (see per Mahoney IA in Macrae, at 285), the notion can, with one important proviso, be useful.
but only if, the power is so created that the according of natural justice conditions its exercise, the notion of legitimate expec tation may useful focus attention on the content of natural justice in a particular case; that is, on what must be done to give procedural fairness to a person whose interests might he affected by an exercise of the power.
But if the according of natural justice does not condition the exercise of the power, the notion of legitimate expectation can have no role to play.
If it were otherwise, the notion would become a stalking horse for excesses of judicial review." (emphasis supplied) In this very case, Brennan J. after referring to Schmidt 's case (supra) observed thus: 190 "Again, when a court is decidsing what must be done in order to accord procedural fairness in a particular case it has regard to precisely the same circumstances as those to which the court might refer in considering whether the applicant entertains a legitimate expectation, but the inquiry whether the, applicant entertains a legitimate expectation is superfluous.
Again if an express promise be given or a regular practice be adopted by a public authority, and the promise or practice is the source of a legitimate expectation, the repository is bound to have regard to the promise or practice in exercising the power, and it is unnecessary to inquire whether those factors give rise to a legitimate expectation.
But the Court must stop short of compelling fulfillment of the promise or practice unless the statute so requires or the statute permits the repostitory of the power to hind itself as to the manner of the future exercise of the power.
It follows that the notion of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not unlock the gate which shuts the court out of review on the merits.
The notion of legitimate expectation wits introduced at a time when the courts were developing the common law to suit modern conditions and were sweeping away the unnecessary archaisms of the prerogative writs, but it should not be used to subvert the principled justification I or curial intervention in the exercise of administrative power." (emphasis supplied) In the same case, Dawsom.
J. observed thus: "It also follows that the required procedure may very according to the dictates of fairness in the particular case.
Thus, in order to succeed.
the respondent must be able to point to something in the circumstances of the case which would make it unfair not to extend to him 191 the procedure which he seeks.
There is no doubt that the respondent had a legitimate expectation of continuing in his position as a stipendiary magistrate such that it should, apart from statute, have been unfair to remove him from that position without according him a hearing.
If the principle of judicial independence expended to a stipendiary magistrate, then, no doubt, that would have strengthened his expectation.
But the respondent was not removed from his position of stipendiary magistrate by administrative decision.
He was removed by a statute which abolished the position of stipendiary magistrate and established the new position of magistrate.
Not only that, the statute, the Local Courts Act.
clearly contemplated that not all the former stipendiary magistrates would be appointed as magistrates pursuant to its terms.
Accordingly it made provision for those who where not so appointed.
It may be possible to deprecate the manner in which the statute removed the respondent from office, but it is not possible to deny its effect.
Any unfairness was the product of the legislation which conferred no right upon the respondent to a procedure other than that which it laid down." (emphasis supplied) On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken.
The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved.
The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise.
In other words where a person 's legitimate expectation is not fulfilled by taking a particular then decision maker should justify the denial of such expectation by showing some overriding public interest.
Therefore even if substantive protection of such expectation is contemplated that does not grant 192 an absolute right to a particular person.
It simply ensures the circumstances in which that expectation may be denied or restricted.
A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfill.
The protection is limited to that extent and a judicial review can be within those limits.
But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim.
In considering the same several factors which give rise to such legitimate expectation must be present.
The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest.
If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision.
In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact.
If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question Would be whether failure to give an opportunity of hearing before the decision affect such legitimate expectation is taken has resulted in failure of ' justice and whether on that ground the decision should he quashed.
If that be so then what should be the relief is again a matter which depends on several factors.
We find in Attorney General for New South wales ' case that the entire case law on the doctrine of legitimate expectation has been considered.
We also find that on an elaborate an erudite discussion it is held that the courts ' jurisdiction to interfere is very much limited and much less in granting any relief in a claim based purely on the ground of 'legitimate expectation '.
In Public Law and Politics edited by Carol Harlow, we find an article by Gabriele Ganz in which the learned author after examining the views expressed in the cases decided by eminent judges to whom we have referred to above, concluded thus: "The confusion and uncertainty at the heart of the concept stems from its origin.
It has grown from two separate roots, natural justice or fairness and estoppel.
, but the stems have become entwined to such an extent that it is impossible to disentangle them.
This makes it that it is very difficult to predict how the hybrid will 193 develop in future.
This could be regarded as giving the concept a healthy flexibility, for the intention behind it is being it has been fashioned to protect the individual against administrative action which is against his interest.
On the other hand, the uncertainty of the concept has led to conflicting decisions and conflicting interpretations in the same decision." However, it is generally accepted and also clear that legitimate expectation beings less than right operate in the field of public and not private law and that to some extent such legitimate expectation ought to be protected though not guaranteed.
Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities.
They shift and change so fast that the start of our list would be obsolete before we reached the middle.
By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largest by the Government and in somewhat similar situations.
For instance in cases of discretionary grant of licences, permits or the like, carries with it a reasonable expectation, though not a legal right to renewal or non revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard.
But there again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation.
If that be so.
a decision denying a legitimate expectation based on such (,rounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power.
Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply and objective standard which leaves to the decising authority the full range of choice which the legislature is presumed to have intended.
Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is 194 .
taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected.
For instance if an authority who has full discretion to grant a licence and if he prefers an existing licence holder to a new applicant, the decision can not be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice.
It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited.
It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected.
In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it.
As observed in Attornry General for New South Wales ' case "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism.
Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of power when its exercise otherwise accords with law.
" If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory unfair or based, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article 14 but a claim biased on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles.
It can be one of the ground to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference.
It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case.
It follows that the concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," particularly when the element of speculation and uncertainty is inherent in that very concept.
As cautioned in Attorney General for 195 New South Wales ' case the courts should restrain themselves and restrict such claims duty to the legal limitations.
It is a well meant caution.
Otherwise a resourceful litigant having vested interests in contracts.
licences etc,. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests.
The caution, particularly in the changing scenario, becomes all the more important.
In view of our conclusions in respect of the quantities allotted and the price fixed it may not be necessary for us to enter into further discussion on this aspect.
We have already directed 0that the Tender Committee should consider afresh as to what should be the reasonable price and to that extent the price of Rs. 67,000 fixed in respect of smaller manufacturers is set aside and directed to be revised.
So far these three big manufacturers are concerned, we held that on their own commitment they are bound to supply at the rate of Rs. 67,000 per bogie.
So far the quantities are concerned, we held that these three big manufacturers should be allotted the quantities as per the recommendations of the Tender Committee.
However, we considered this aspect to some extent only to show that the decision in respect of price fixation as well as allotment of quantities even though to some extent at variation with the procedure followed during the previous years, was not based on any irrelevant consideration.
The Railways particularly the Financial Commissioner as well as the Minister and initially the Tender Committee formed an opinion that these three big manufacturers formed a cartel and also quoted and unworkable predatory price at the post tender stage.
Therefore from the point of view of preventing monopoly in the public interest the decision in question was taken in a bonafide manner.
However, on a factual basis we held that the alleged formation of cartel was only in the realm of suspicion and in that view the decision was modified, as already indicated.
However, we make it clear that the said modifications by way of judicial review is not on the ground of legitimate expectation and violative of principles of natural justice but on the other ground namely the decision of the authorities was based on wrong assumption of formation of a cartel.
The next submission is that the decision taken by the Railways resulting in reduction of the quantities and making a counter offer of Rs. 65,000 to these three big manufacturers is punitive in nature 196 visiting with civil consequences and such a decision taken without giving an opportunity to these manufacturers is violative of principles of natural justice.
In view of our above mentioned conclusions resulting in modification of the decision of the authorities both in respect of price fixation and in allotment of quantities, there is no necessity to consider this aspect again in detail.
It was next contended that the consideration that some manufacturers are small and others are BIFR companies taken into account by the approving authority for deviating from the age old practice in allocation of quantities is irrelevant and discriminatory and therefore the decision is bad.
It may be mentioned that status of a manufacturers being a BIFR company or a small manufacturers was not taken into account so far as the fixation of the price is concerned and these considerations were deemed relevant only for the purpose of allocation of quantities.
The stand taken by the Railways is that smaller manufacturers should survive from the point of view of arresting monopolistic tendencies and from the point of view of public interest.
The Tender Committee proceedings would indicate that on the basis of certain formulae namely the past performance, capacity etc.
the allotment was being made.
Therefore these can not be said to be irrelevant considerations and as a matter of fact they had been duly given effect to and weightage was given accordingly in respect of allotment of quantities to various manufacturers within the four corners of the limited tender.
The learned counsel, however, contended that the allotment of the quantities to the smaller manufacturers also is not based on any acceptable principle and that some of them are given larger quantities without any justification rendering the decision bad because of arbitrariness.
The proceedings mentioned above particularly the nothings of the Financial commissioner as well as the competent authority would show that some of the smaller manufacturers namely M/s Himmat, Texmaco and Sri Ranga were BIFR companies.
As no price preferential treatment was given to any one of them.
the approving authority considered that enhancement in allocation of quantities was necessary.
Likewise M/s. Cimmco and Texmaco who are wagon builders and whose business in entirely with the Railways were also given some weightage.
We can not say that these are irrelevant considerations for 197 the purpose of arriving at a decision.
In the past also there were such variations based on these circumstances.
In any event for different reasons we have varied this decision and directed that the three big manufacturers should be given allotment as per the recommendations of the Tender Committee.
In our earlier order we have noticed that there has been some departure in respect of one or two smaller manufacturers in allotting the quantities.
We have already indicated that the Railways authorities should in future make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
Now coming to the question of dual pricing, the submission is that in respect of same set of manufacturers, some of them can not be made to supply at a lower price and the others namely smaller manufacturers can not be given advantage to supply at a higher price and such dual pricing is unreasonable and arbitrary.
As already noted, the Tender Committee worked out an upgraded price and taking into other relevant factors like cost of the material etc.
into consideration and applying the formula as was being done in the past and particularly taking into consideration the two concessions in respect of custom and freight fixed Rs. 76,000 as the reasonable price.
This was very close to the price quoted by the three big manufacturers.
But at a post tender stage, they entered into correspondence offering a lower price and ultimately the three big manufacturers committed themselves to supply at the rate of Rs. 67,000 per bogie.
In our earlier order we indicated that these big manufacturers formed a different category namely that they may be in a position to supply at that rate as is evident from their own commitment but to apply the same price which is much lower than the reasonable and workable price fixed by the Tender Committee to other smaller manufacturers would again result in ending the competition between the big and the small which ultimately would result in monopoly of the market by the three big manufacturers.
That is a very important consideration from the point of view of public interest.
However, as already mentioned we directed the 'render Committee to consider the matter afresh an even if it results in dual pricing, it would not be had in the circumstances mentioned above.
198 These are all the reasons in support of our conclusions given in our order dated 14th January, 1993. | These special leave petitions were disposed of by this Court 's order dated 14.1.1993.By the said order the Court gave its conclusions and certain directions observing that reasons In support thereof would be given at a later stage.
Giving the reasons in support of the conclusions, this Court, HELD: 1.1 The Government in a Welfare State has the wide powers in regulating and dispensing of special services like leases, licences, and contracts etc.
The Government while entering Into contracts or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy stan 129 dards and norms.
Such actions should not be arbitrary, irrational or irrelevant.
In the matter of awarding contracts, inviting tenders is considered to be one of the fair ways.
If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory.
(144 G H, 145 A) Erusian Equipment and Chemicals Ltd. vs State of West Bengal ; , Ramana Dayaram Shety vs The International Airport Authority of India and Ors. ; , and Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr. ; , relied on.
1.2 The concept of reasonableness rinds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and animates the Directive Principles, and Article 14 strikes at arbitrariness In State action.
(149 C) Maneka Gandhi vs Union of India.
[1978] 2 SCR 621, and E.P. Royappa vs State of Tamil Nadu & Anr. ; , relied on.
1.3 The policy of the Government is to promote efficiency in the administration, to provide an incentive to the uneconomic units to achieve efficiency, to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the community are so distributed as best to subserve the common good, and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice.
(159 F, 161 C) Monopolies Inquiry Commission 's Report, referred to.
American Jurisprudence 2 vol.
p. 668, referred to.
1.4 In view of the conditions in the tender notice, validity whereof was not questioned, the Government had the right to either accept or 130 reject the lowest offer.
From a perusal of the proceedings of the Tender Committee as well as the opinion expressed by the Financial Commissioner and the other members of Railway Board, it is clear that Rs. 76,000 per bogie could be the reasonable price and the post tender offer at a lower price was made with the hope that the three big manufacturers would get the entire or larger quantity allotted, which, if accepted, would result in monopoly extinguishing the smaller manufacturers.
(46 D G) State of Uttar Pradesh and others vs Vijay Bahadur Singh and others [1982]2 SCC365, State of Orissa and Ors.
vs Harinarayan Jaiswal and Ors.
; , G.B. Mahajan and others V. Jalgaon Municipal Council and others ; , State of Madhya Pradesh & ors.
vs Nandial Jaiswal & Ors. ; , Shri Sitaram Sugar Co. Ltd. V. Union of India ; , R.K. Garg vs Union of India ; , and Peerless General Finance and Investment Co. Limited and another etc.
vs Reserve Bank of India etc. , relied on.
2.1 The cartel is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular, industry or commodity.
It amounts to an unfair trade practice which is not in the public interest.
The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers.(167B C) Collins English Dictionary; Webster comprehensive Dictionary International Edition; chamber 's English Dictionary; Black 's Law Dictionary: A Dictionary of Modern Legal Usage by Bryan A. Garner; American Jurisprudence 2d Vol.
54, page 677 referred to.
2.2 However, the determination whether an agreement unrea sonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same.
(167 C D) 131 National Electrical contractors Associations, Inc, et, at, National constructors Associations et.
al., Federal Reporter 2d Series, 678 page 492, Matsushita Electric Industrial Co. Ltd., et.
at vs Zenith Radio Corporation et al, 89 L.Ed.
2d 538, referred to.
2.3 Monopoly is the power to control prices or exclude competition from any part of the trade or commerce among the producers.
The price fixation is one of the essential factors.
(171 E) American Jurisprudence 2d Vol.
54, referred to.
2.4 A mere offer of a lower price by itself though may appear to be predatory, does not manifest the requiste intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy, the formation of a cartel among the producers who offered such lower price cannot readily be inferred.
(172 B C) Matsushita Electric Industrial Co. Ltd. et.
vs Zenith Radio Corporation et.
; , referred to.
Webster Comprehensive Dictionary, International Edition; A dictionary of Modern Legal Usage by Bryan A. Garner; Collins English Dictionary Black 's Law Dictionary; The oxford English Dictionary Vol.
VIII, referred to.
2.5 The opinion of the Tender Committee that the identical price quoted by the three big manufacturers was a cartel price, was only a suspicion which got strengthened by post tender attitude of the said manufacturers who quoted a much lesser price, and cannot positively be concluded on the basis of these two circumstances alone.
There is not enough material to conclude that in fact there was formation of a cartel.
(173 B C) 2.6 A mere quotation of identical price and an offer of further reduction by themselves could not entitle the said manufacturers automatically to corner the entire market by way of monopoly since the final allotment of quantities vested in the authorities who in their 132 discretion can distribute the same to all the manufacturers including these three big manufacturers on certain basis.
Besides.
the authorities reserved a right to reject a lower price.
(172 F, 173 A B) 2.7 However, the opinion regarding formation of a cartel entertained by the concerned authorities including the Minister was not malicious nor was actuated by any extraneous considerations.
They entertained a reasonable suspicion based on the record and other surrounding circumstances and only acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel.
(173 C) 3.1 The legitimacy of an expectation can be Inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence.
It Is distinguishable from a genuine expectation.
Such expectation should be justifiably legitimate and protectable.
Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense, A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil.
The claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can be quashed provided the same is found to be unfair, unreasonable, arbitracy and violative of principle of natural justice.
(182 C, 192 A) Food Corporation of India vs M/s Kamdhenu Cattle Feed Industries JT , relied on.
Halsbury 's Law of England.
fourth Edition, vol.
1 (1) 151, Administrative Laws of England, Sixth Edition by H.W.R. Wade, page 424, 522, referred to.
Schmidt vs Secretary of State for Home Affairs (1969) 2 Ch.
149;A.G. of Hong Kong vs Ng Yeun Shiu (1983) 2A.C.629;In Council of Civil Service Unions and others vs Minister for the Civil Service (1984) Vol.3 All E.R. 935, Amarjit Singh Ahluwalia vs The State of Punjab & Ors. ; ; Att.
for New South Wales vs Ouin [1990] Vol.
64 Australian Law 133 Journal Reports 327; 'R. vs Secretary of State for the Home Department ex parte Ruddock & Ors.
(1987)2 All E R 518, Breen vs Amalcamated Engineering Union & Ors.
(1971) 2 Law Reports Queen Bench Division 173, referred to.
3.2 Legitimate expectation gives the applicant sufficient locus standi for judicial review and the doctrine of legitimate expectation is to be confined mostly to, right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken.
The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystalised right as such is involved.
(191 F) Navyoti Coo Group Housing Society etc.
vs Union of India & Others ; ; Findlay vs Secretary of State for the Home Department (1984) 3 All E R801 and Council of Civil Service Unions case Lord diplock 3.3 Legitimate expectation being less then right operate in the field of public and not private law and to some extent ought to be protected thought not guaranteed.
(193 C) 3.4 Legitimate expectations may come in various forms and owe their existence to different kind of circumstances.
By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations.
(193 D) 3.5 Protection of legitimate expectation would not be available where an overriding public interest requires otherwise.
The protection is limited to that extent and a judicial review can be within those limits.
(191 H; 192 A B).
3.6 A person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim.
The decision taken 134 by the authority must be found to be arbitrary, unreasonable and not taken in public interest.
It that be so then what should be the relief is again a matter which depends on several factors.
(192 C D E) 3.7 The courts jurisdiction to interfere is very Much limited and much less in granting any relief in a claim based purely on the ground of 'legitimate expectation '.
A decision denying a legitimate expectation based on a policy or change of an old policy, or in the public interest either by way of G.O., rule or is made by way of a legislation does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power.
(193 E F) Att.
Gen. for New South Wales vs Quin [1990] Vol.
64 Australian Law Journal Reports 327, referred to.
Public Law and Politics edited by Carol Harlow, referred to.
3.8 Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power.
The concept of legitimate expectation can have no role to plan and the Court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended.
Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected.
(193 G A; 194 A) 3.9 If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary,discriminatory, unfair or based, gross abuse of power or violation of principles of natural justice, the same can be questioned on ' the well known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles.
It can be one of the grounds to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference.
(194 E F) 135 3.10 The concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," particularly when the element of speculation and uncertainty is inherent in that very concept.
The courts would restrain themselves and restrict such claims duly to the legal limitations.
It is a well meant caution.
Otherwise a resourceful litigant having vested interests in contracts, licences etc.
can successfully indulge In getting welfare activities mandated by directive principles thwarted to further is own interests.
The caution, particularly in the changing scenario, becomes all the more important.
(194 G H; 195 A B) Att.
Gen. for New South Wales vs Quin 1990 Vol.
64 Austraian Law Journal Reports 327, referred to. 3.11 In the instant case, the Rules for entering into contracts lay down certain norms and contain guidelines.
They provide for constitution of Tender Committee and the procedure to be followed in the matter of inviting tenders.
They also provide for negotiations but lay down that selection of contracts by negotiations is an exception rather than a rule and can be resorted to only under certain circumstances.
As per the notice inviting tender, the price quoted is subject to price variation clause and the Railways reserved a right to accept the lowest price or accept the whole or any part or the tender or portion of the quantity offered.
The tenderer cannot expect that his entire tender should be accepted in respect of the quantity.
In the past also there were man ,, instances where the Railways as per the procedure followed, arrived at decisions in respect of both price and quantity for good and justifiable reasons.
(178 A B C) 3.12 There is no legally fixed procedure regarding fixation of price and particularly regarding allotment giving scope to a legitimate expectation.
The Tender Committee is not a statutory authority and its proposals are recommendatory in nature and have to be considered in the distribution procedure culminating in the decision of the approving authority who as a matter of fact, also can take decisions in respect of price and allotment of quantities taking into consideration various other aspects from the point of view of public interest.
(178 D E) 136 4.
The modifications In the decision of the Railways by way of judicial review are not on the ground of legitimate expectation and violation of principles of natural justice but on the other ground namely the decision of the authorities was based on wrong assumption of formation of Cartel.
(195 F G) 5.The status of a manufacturer being a BIFR company or a small manufacturer was not taken Into account so far as the fixation of the price is concerned and these considerations were deemed relevant only for the purpose of allocation of quantities.
The stand taken by the Railways is that smaller manufacturers should survive from the point of view of arresting monopolistic tendencies and from the point of view of public interest.
The Tender Committee proceedings would indicate that on the basis of certain formulae namely the past performance, capacity etc, the allotment was being made.
Therefore, these cannot be said to be irrelevant considerations and as a matter of fact they had been duly given effect to and weightage was given accordingly in respect of allotment of quantities to various manufacturers within the four corners of the limited tender.
(196 C E) |
Appeal No. 1944 of 1993.
From the Judgment and Order dated 21.1.1993 of the Kerala High Court in O.P.No. 13371 of 1992.
G. Prakash for the Appellant.
V.R. Reddy, Addl.
Solicitor General, C.V. Subba Rao, B. Parthasarthy and R. Sasiprabhu for the Respondents.
The following Order of the Court was delivered: Leave granted.
Heard counsel for the parties.
Having regard to the broader considerations of equality of opportunity, this Court directed in Dr. Pradip Jain vs Union of India [1984] 3 S.C.C. 654 that a certain percentage of seats in the post graduate medical courses should be made available to the candidates on the basis of All India Competition.
The percentage was later determined at 25%.
In Dr. Dinesh Kumar vs Motilal Nehru College [1986]3 S.C.C. 327 this Court prescribed a schedule for the All India Competitive Examination, which was modified in certain respects in Dr. Dinesh Kumar vs Motilal Nehru College [1987]4 S.C.C. 459.
In subsequent decisions, this Court has been impressing upon the concerned authorities the necessity of adhering to the time frame prescribed in the matter of holding All India Competitive Examination and for making admissions.
According to the system in vogue, a candidate who applies for admission in the All India quota is required to indicate eight medical colleges and six subjects, in the order of preference, to which he seeks admission.
There are severity medical colleges/institutions and forty specialities.
The post graduate courses comprise degree courses as well as diploma courses.
After the results of examinations are published, the admissions are made on the basis of merit cum preference cum eligibility with the aid of a computer.
In the first instance, a list of admissions is issued.
But it so happens that for one or the other reason, many of the candidates in the list do not turn up to join the course.
Hence, a second list is issued and then a third.
But while preparing the second list or the third list, the overall merit cum preference cum eligibility is not again examined, with the result that sometimes 340 a candidate with lesser score gets a better subject than a candidate with higher score.
We may illustrate what we say.
In the first list, a candidate with say 250 marks is allotted a seat in M.S. (General Surgery) and a candidate with 225 marks is allotted a seat in M.S. (Opthalomology).
Now for some reason, the candidate allotted a seat in M.S. (General Surgery) does not join.
That seat falls vacant.
When the second list is taken up, the candidates available will necessarily be those who have secured less than 225 marks.
Since the merit cum preference cum eligibility is not determined overall again, what happens is that a candidate with 220 marks gets M.S. (General Surgery), while the candidate with 225 marks has to continue in M.S. (Opthalomology), though given a choice, he would very muchlike to come into M.S. (General Surgery).
That there have been many such instances, is beyond dispute and has been commented upon by the Kerala High Court in the judgment under appeal.
Besides the above, there is yet another circumstance.
Inspite of promptings from this court, the authorities in charge of holding All India competitive examination have not been able to adhere to the prescribed schedule.
In such a situation, it is bound to happen that issuance of second and third lists delay the process of admission still further.
By the time the second and third lists are communicated, half the course is over.
This aspect has been agitating us while hearing this appeal.
We have, therefore, discussed this matter thoroughly with Sri V.R. Reddy, Additional Solicitor General for the respondents.
He, in turn, discussed the matter with the concerned authorities and has placed before us a modified scheme for allotment of the candidates declared successful in All India post graduate entrance examination for admission to M.D./M.S/Diploma and M.D.S. courses.
We must make it clear that the modification which we are proposing herewith is only with respect to the procedure to be followed in the matter of making admission and is designed to eliminate unequal results, and the delay mentioned above.
In the place of present requirement of a candidate indicating his preference for eight colleges and six subjects, on the basis of which admissions are finalised, we wish to introduce the system of what is called counselling ', which is in vogue in some of the States and is working satisfactorily.
The learned Additional Solicitor General agreed whole heartedly that this would be a definite improvement and would eliminate grievances which are arising from the present system and would also help the authorities to adhere to the time frame prescribed by this Court.
The new system, in short, is this: after the examination is over, the results would be published in the order of merit.
The selection committee will call 150 candidates a day in the order of merit.
A chart will be kept ready and displayed at all relevant places indicating the colleges and subjects wherein the seats are available.
Candidates will be called in the order of merit and asked to indicate his/her choice.
The slot chosen by him/her then gets closed.
This procedure will be gone through 341 until all the seats are filled up.
There would be no second or third list.
Any seats remaining vacant thereafter will be surrendered to the State Government.
But this modification will apply to and come into effect only for and from the admissions for the year 1994.
It will not apply to the admissions currently underway.
In approving the modifications, we have kept in mind the fact that most of the candidates for post graduate admissions are employed and have the means to come to Delhi for a day for counselling.
We, accordingly, approve the modifications, mentioned below, as suggested by the Director General of Health Services, New Delhi.
The All India PG Entrance Examination will be conducted on second Sunday of January.
The candidates will not be required to give any choices at the time of submission of the application forms.
The results will be announced by the third week of February every year.
The merit list will consists of number of candidates equal to the number of seats available for allotment.
A waiting list containing not more than 10% of the merit list will also be declared from amongst the successful candidates who have secured more than 50% marks in the competitive examination.
The allotment by personal appearance will start from the first of March every year and will continue upto 15th March.
In the Bulletin of Information the dates for allotment by personal appearance and the venue at Delhi will be notified.
The time schedule for personal appearance will also be notified alongwith the results in the newspapers.
For personal appearance, the candidates will be called in batches of 150 each day in the order of merit.
The candidates shall have the right to choose any one of the available seats at his/her rank.
The same will be allotted to him/her and the allotment letters will be issued on the next day.
In case a candidate is unable to appear in person on a notified date for personal appearance, he/she can send his/her representative with an authority letter for allotment.
The allotment made to the authorised representative shall be binding on the candidate.
342 9.Each candidate shall be given 15 days time to join the allotted college and course.
The last date of joining shall be 31st March every year.
The allotments made will be firm and final.
The candidates who will not appear for allotment on the notified dates or who will reject the available seats for allotment or those who will not join the allotted course and college by the 3 1st March shall forfeit the claim for a seat under the All India Scheme.
12.All the seats remaining vacant after the allotment shall be deemed to have been surrendered back to the respective States.
In all other respects, the scheme in vogue shall continue to be effective.
Now coming to the relief to be granted to the appellant, we regret, we are not in a position to make any positive direction.
The appellant had appeared for All India competitive examination.
He was not allotted any seat in any college according to the merit cum preference cum eligibility.
His grievance now is that students with lesser marks than him are being admitted to college in Kerala.
He says that he may be given a seat in any subject in any of the colleges in Kerala or for that matter anywhere alse.
We are afraid, we cannot do so at this stage.
After the first, second and third lists pertaining to All India seats were published, the remaining vacant seats have been surrendered to the State Government already.
The State Government has already filled almost all of them.
We cannot withdraw one seat from the State Government, at this stage the course has begun in the month of September, 1992 itself and give it to the appellant.
Even otherwise it is not certain that there are no other candidates (who had appeared in the All India competitive examination) who may have scored higher marks than the appellant.
We cannot also give any direction for his being considered against the 1993 vacancies because he has not appeared for the 1993 examination.
The only observation we can make is this: if, in case, any seat is lying vacant in any of the medical courses in Kerala, the second respondent, Director of Medical Education, Thirvananthapuram shall consider admitting the appellant against such seat relating to the year 1992.
The appeal is disposed of with the above directions and observation.
No costs.
Appeal disposed of. | The appellant had appeared for All India competitive examination.
He was not allotted any seat in any college according to the merit com preference cum eligibility.
His grievance now is that students with lesser marks than him are being admitted to Colleges in Kerala.
He says that he may be given a seat in any subject in any of the colleges in Kerala or for that matter anywhere else.
After the first, second and third lists pertaining to All India seats were published, the remaining vacant seats have been surrendered to the State Government already.
The State Government had already filled almost all of them.
Disposing of the appeal, this Court, HELD:1.1.
This Court cannot withdraw one seat from the State Government, at this belated stag course has begun in the month of September, 1992 itself and give it to the appellant.
Even otherwise it is not certain that there are no other candidates (who had appeared in the All India competitive examination) who may have scored higher marks than the appellant.
No direction can be given for his being considered against the 1993 vacancies because he has not appeared for the 1993 examination.
If, in case, any seat in lying vacant in any of the medical courses in Kerala, the second respondent, Director of Medical Education Thiruvananthapuram shall consider admitting the appellant against such seat relating to the year 1992.
(342 G) 338 1.02.
The post graduate courses comprise degree courses as well as diploma courses.
After the results of examinations are published, the admissions are made on the basis of merit cum preference cum eligibility with the aid of a computer.
(339 G) 1.03.
According to the system in vogue, a candidate who applies for admission in the All India quota is required to indicate eight medical colleges and six subjects, in the order of preference, to which he seeks admission.
(339 G) 1.04.
In the first instance, a list of admissions is issued.
But it so happens that for one or the other reason, many of the candidates in the list do not turnup to join the course.
Hence, a second list is issued and then a third.
But while preparing the second list or the third list, the overall merit cum preferencecum eligibility is not again examined, with the result that sometimes a candidate with lesser score gets a better subject than a candidate with higher score.
(339 H) 1.05.Inspite of promptings from this court, the authorities in charge of holding All India competitive examination have not been able to adhere to the prescribed schedule.
In such a situation, it is bound to happen that issuance of second and third lists delay the process of admission still further.
By the time the second and third lists are communicated, half the course is over.
(340 D) 1.06.
The new system, in short, is this: after the examination is over, the results would be published in the order of merit.
The selection committee will call 150 candidates a day in the order of merit A chart will be kept ready and displayed at all relevant places indicating the colleges and subjects wherein the seats are available.
Candidates will be called in the order of merit and asked to indicate his/her choice.
The slot chosen by him/her then gets closed.
This procedure will be gone through until all the seats are filled up.
There would be no second or third list.
Any seats remaining vacant thereafter will be surrendered to the State Government.
But this modification will apply to and come into effect only for and from the admissions for the year 1994.
It will not apply to the admissions currently underway.
(340 H, 341 A) 1.07.
In all other respects, ,the scheme in vogue shall continue to be effective.
339 Dr. Pradip Jain v Union of India, ; Dr. Dinesh Kumar Motilal Nehru college, ; and Dr. Dinesh Kumar v Motilal Nehru College, [1987]4 S.C.C.459, referred to. |
ivil Appeal Nos.
2349 61 of 1988.
From the order dated 8.7.1987 of the Customs Excise and Gold Control Appellate Tribunal, New Delhi in Appeal Nos.
E/l583 to l589/ 86 A and 1533, 1521, 1528, 1529 31/1986 A and order No. 491 to 503 of 1987.
A.K. Ganguli, Mrs. Indu Malhotra and Mrs. Sushma Suri for the Appellant.
Soli J. Sorabji, M. Chandrasekharan Mrs. V.J. Francis and N.M. Popli for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These appeals are under Section 35L,(b) of the Central Excises & Salt Act, 1944 (hereinafter called 'the Act ') directed against the decision of the Customs Excise (Gold) Control Appellate Tribunal, New Delhi, (hereinafter called 'the CEGAT ').
The respondent M/s. Indian oxygen Ltd., Visakhapatnam, are manufacturers of dissolved acetylene gas and campressed oxygen gas (hereinafter called 'the gases ').
The respondent was supplying these gases in cylinders at their factory gate.
For taking delivery of these gases, some consumers/customers used to bring their own cylinders and take the delivery, while others used to have the delivery in the cylinders supplied by the respondent.
For the purpose of such supply of cylinders, certain rentals were charged by the respondent and also to ensure that these cylinders are returned properly, certain amount of deposit used to be taken from the customers.
On those deposits notional interest @ 18% per annum was calculated.
These two amounts with which we are concerned, namely, the rentals of the cylinders and the notional interest earned on the deposit of cylinders, are the subject matters of the dispute herein.
Whether these two amounts were includible in the value under Section 4 of the Act, is the question.
The revenue 's case is that the notional income on deposit of 764 cylinders and the rental are part of the asessable value and, hence, should be included in computing the assessable value.
The respondent, however, disputed that.
They had neither included such rentals nor the interest received from the buyers in the price list for the assessment.
Therefore, the revenue issued show cause notices to the respondent.
In their reply the respondent stated that the deposits from buyers were only to ensure return of the gas clinders from the customers.
The Asstt.
Collector Central Excise, Visakhapatnam, by an order dated 3.6.1965 held that the respondent had to pay excise duty on the interest earned @ 18% during the relevant period.
He further held that since the respondent had suppressed this fact from the revenue, in the past 5 years, under Rule 8 read with Section 11A of the Act, these are includible.
He also included the rentals of these cylinders in the value.
On an appeal, the Collector of Central Excise, Madras, upheld the said order with certain modifications.
Dissatisfied with the aforesaid, the respondents appealed to the CEGAT.
In its order under appeal, the Tribunal observed, inter alia, as follows: "As regards charge on account of rental for the cylinders and the interest which accrues on account of deposit receipts for the supply of gases in returnable cylinders, we are not persuaded that either of these charges is related to the cost of manufacture of the goods as such." The Tribunal, therefore, under Section 4 deleted from the value, rentals for the cylinders and interest which accrued on account of deposit receipts for the supply of gases.
Hence, this appeal by the Collector.
It is well settled that the levy under the Act, is on the manufacture.
Under Section 4(1)(a) of the Act, excise duty is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this Section, be deemed to be the normal price thereof, that is to say, the price at which such goods are ordinarily 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.
Here the sale is of the gases.
The levy is on the manufacture of gases and the excisable goods are these gases.
765 The scope of Section 4 has been explained by this Court in Union of India & ors.
vs Bombay Tyre International Ltd., ; as well as the ramifications thereof in Asstt.
Collector of Central Excise vs Madras Rubber Factory Ltd., [19861 Supp SCC 751.
In the light of the aforesaid principles it has to be borne in mind that the supply of gas cylinders is ancillary to the supply of gases but it is strictly not incidental thereto because there are classes of persons who can take delivery of these gases without supply of cylinders by the respondent and in those cases no question of charging rental nor interest on those deposits for cylinders, would arise.
It is true that the gas being a commodity of peculiar nature, had to be delivered in cylinders but these cylinders might be supplied either by the supplier as an ancillary activity or brought by the consumer or purchasers at their own risk and cost.
For purchasers taking it in their own cylinders supplied by them, there was no charge for them.
This is not an activity for the manufacture of gases.
This is ancillary to it but not incidental.
Any income either in the shape of interest on deposits, notional or real, may be earned on the deposit for the safe return of cylinders, or any rental would be though ancillary but would not be the price for the manufacture.
These might be profits or gains, if any, of any ancillary or allied venture.
If that is the true position, then on the principle under Section 4(1)(a) of the Act, the Tribunal was right in excluding these two amounts while computing the value of the excisable goods.
Mr. A.K. Ganguli, learned counsel appearing for the revenue, sought to urge before us that there are two different classes of buyers, one class of such buyers was who used to bring their own cylinders and the others used to get their supplies through the cylinders of the suppliers.
According to him, different rates for these two classes of buyers.
, in fact, constitute two different markets and are permissible.
This, according to him, is contemplated under the first proviso to Section 4(1)(a) of the Act, which reads as follows: "(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee 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 such class of buyers. ' There may be different classes of buyers for different classes of goods.
Section 4(1)(a) of the Act emphasises that if the goods is of the 766 same type, the prices should also be the same.
The proviso to the said Section postulates that where in accordance with normal practice such goods, namely, the gases are sold to different classes of buyers then different prices may be charged.
If gases had been sold to different classes of buyers at different rates, it is possible that there might be different markets for the same.
But here the charges like rentals for the cylinders and the notional interest income, are for ancillary or allied services and that is not an activity of manufacture.
Hence, Section 4(1)(a) proviso can be of no avail to the renenue.
It is a case of two different supplies.
One is supply of gases and the other is incidental supply of cylinders for rent.
In that view of the matter, in our opinion, the Tribunal was right in the view it took.
The interest, notional or real, accruing on deposits for the safe return of cylinders as well as the rentals would not constitute part of the assessable value.
In the aforesaid view of the matter the order of the Tribunal needs no interference.
The appeals, accordingly, fail and are dismissed There will be no order as to costs.
N.V.K. Appeals dismissed. | The respondent firm are manufacturers of dissolved acetylene gas and compressed oxygen gas.
They were supplying these gases in cylinders at their factory gate.
For taking delivery some consumers/ customers used to bring their own cylinders and take the delivery.
Others, used to have the delivery in the cylinders supplied by the respondent firm.
For the purpose of such supply of cylinders certain rentals were charged by the firm, and also to ensure that these cylinders are returned, a certain amount as deposit used to be taken from the customers.
On these deposits notional interest at 18 percent per annum was calculated.
The Central Excise Authorities issued show cause notices to the respondent on the ground that the notional income on the deposit of cylinders and the rental are part of the assessable value, and hence should be included in computing the assessable value.
In their reply the respondent stated that the deposits from the buyers were only to ensure return of the gas cylinders from the customers.
The Assistant Collector by his order dated 3rd June, 1965 held that the respondent had to pay excise duty on the interest earned at 18% during the relevant period, and that as the respondent had suppressed this fact from the revenue during the past 5 years, the amount was includible and recoverable under Rule 8 read with Section 11A of the .
He also included the rentals of the cylinders in the value.
In appeal the Collector upheld the order of the Assistant Collector but with certain modifications.
762 The respondent appealed to the Central Excise and Gold Control Appellate Tribunal, which allowed the appeal, and held that the charge on account of rentals for the cylinders and the interest which accrued on the deposit for the cylinder are not relatable to the cost of manufacture of the goods, and therefore under Section 4 deleted from the value, rentals for the cylinders and the interest on the deposit.
In the appeals to this Court it was contended on behalf of the Revenue that there are two different classes of buyers, one class who brings their own cylinders, and the others who get their supply through the cylinders of the suppliers, and that different rates for these two classes of buyers constitute two different markets and are contemplated and permissible, under the first proviso to Section 4(1)(a) of the Act.
Dismissing the Appeals, ^ HELD: 1.
Section 4(1)(a) proviso can be of no avail to the Revenue.
There may be different classes of buyers for different classes of goods.
In the instant case, if the respondent company sold the gases to different classes of buyers then different prices may be charged.
If the gases had been sold to different classes of buyers at different rates, it is possible that there might be different markets for the same.
The charges like rental for the cylinders and the notional interest income are for ancillary or allied services and that is not an activity of manufacture.
[766A B] Union of India & Ors.
vs Bombay Tyre International Ltd., ; and Asstt.
Collector of Central Excise vs Madras Rubber Factory Ltd., [1986] Supp SCC 751, referred to. 2.
It is well settled that levy under the Central Excises Salt Act is on manufacture.
In the instant case, the sale is of gases.
The levy is on the manufacture of gases and the excisable goods are these gases.
[764G,H] 3.
Gas being a commodity of peculiar nature, has to be delivered by cylinders, but these cylinders might be supplied either by the supplier as an ancillary activity or brought by the consumers or purchasers at their own risk and cost.
For purchasers taking it in their own cylinders supplied by them, there was no charge for them.
This is not an activity for the manufacture of gases.
This is ancillary to it but not incidental.
[765C] In the instant case, there are two different supplies.
One is supply 763 of gases and the other is an incidental supply of cylinders on rent.
The interest notional or real accruing on deposits for the safe return of cylinders as well as the rental would not constitute part of the assessable value.
The Tribunal was right in the view it took.
[766C D] |
cement of additional security deposit.
It stands to reason that if there is a revision in the rate of tariff there must he an upward revision in the consumption security deposit since it has direct hearing to the level of supply in consumption of electricityThis being a condition of supply no reason need be given at the timeof upward revision.
[278 C, 277 A C] & CIVILAPPELLATE JURISDICTION: Civil Appeal Nos.
2117 to 2122 of 1993 etc.
From the Judgment and Order dated 28.4.1989 of the Andhra Pradesh High Court in W. P. Nos.
11162/84, 18968/87, 12007/84, 15131/87, 5050/82 and 15746/87.
Altaf Ahmed, V.R. Reddy, Addl.
Solicitor General, Narasimha murthy, K. Parasaran, Anil B. Divan, Harish N. Salve, Soli j. Sorabjee, G. Ramaswamy, P.P. Rao, Gobind Mukhoty, Dr. Shanker Ghosh, Shanti Bhushan, G.L. Sanghi, Pawan Kumar, P.S. Poti, B.M. Patnaik.
Sanjay Parikh, P. Niriop, Kailash Vasdev, section Khaitan, K. K. Khaitan, Darshan Singh, Sushi] Kumar Jain, A.P. Dhamija, section Atreya.
E.C. Agarwal, A. V. Palli.
Atul Sharma, Ms Reena Aggarwal, A. K. Mehta, R. K. Gupta, P.C Kapur, T.V.S.N Chari, B. Reddy, Ms. Pramila, Anil K. Sangal, Ajay K. Tayal.
Koka Raghava.
B. Kanta Rao, Shiv Prakash Pandey, Ms Rekha Pandey.
R.K. Priyokumar Singh, T.V. Ratlinain, K.R. Chowdhary, K. Ram Kumar, Ashok Kr.
Gupta, R.B. Misra , Pradeep Misra, Mrs. Sheil Mohini Seth, Jain Hansaria & Co, R.P. Gupta, Ms. Sarla Chandra, M/s Mitter Mitter & Co. Ms Abha Jain, Ranjit Kumar, M.P. Jha, S.K. Jain, Vinoo Bhagat, Surva Kant, Aruneshwar Gupta, Badridas Sharma, Prabhu Dayal, Sudarshan La] Aneja, R. Venkataramani, Y.P. Rao, D.K Garg, K.C. Agarwals, O.P Khaitan, P.B. Agarwala, Mohinder Rupal, Mrs. Kamakshi Mehllwal, Ms Archna Kau] (For Gagrat & Co. ), Vijay Hansaria, R. section Sodhi , D.A. Dave, Raian Karanjwala, Mrs. Manik Karanjawala, Rajesh mar, Ms. Suruchi Aggarwal, K.J. John, Ms. Deepa Dixit (For 213 Swarup John & Co.), A. T. Patra, S.R. Agarwal, Ms. Bina Gupta, Prashant Bhushan, K. Rajendra Choudhary, Rakesh K. Sharma, Shivi Shamia, Anil K. Chopra, Pallav Sisodia, Ravinder Narain (For JBD & Co. ) Praveen Kumar, Virender Kaushal, Bimal Rao Jad, Ms Malini Poduval, K.K. Lahri and section Sukumaran for the appearing parties.
The judgment of the Court was delivered by MOHAN,J.
Leave granted.
These civil appeals are directed against the judgment of the Division Bench of Andhra Pradesh High Court reported in Southern Steel Ltd. vs A. P. State Electricity Board, Hydrabad AIR 1990 Andhra Pradesh 58.
The facts briefly are as under: The Andhra Pradesh State Electricity Board is constituted under Section 5 of the Electricity Supply Act, 1948 (hereinafter referred to as the Act).
The said board is engaged in generation, distribution and supply of electricity in the State of Andhra Pradesh.
Electric energy is supplied for industrial, commercial, agricultural and domestic purposes.
To such of these industries, using energy about a particular level, it is supplied at a higher voltage.
They are classified as high tension consumers (H.T. consumers).
All the appellants herein belong to that category.
Section 49 of the Act empowers the Board to notify the terms and conditions upon which it will supply electricity to a person.
It is also empowered to frame uniform tariffs in that behalf.
Sub section 2 specifies in fixing the uniform tariff, the Board shall have regard to all or any or the following factors, namely a) the nature of the supply and the purposes for which it is required; b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time 214 being served or adequately served by the licensee; c) the simplification and standardisation of methods and rates of charges for such supplies; d) the extension and cheapening of supplies of electricity to sparsely developed areas.
Sub section 3 empowers the Board to enter into a special agreement with any consumer any prescribe different tariffs for Wm.
Under Section 4, an obligation is cast on the Board not to show undue preference to any person while fixing the tarrif and terms and conditions for the supply of electricity.
In all these cases, the appellants are covered by the general terms and conditions notified under Section 49 (1) of the Act.
The terms and conditions were notified by the Board and the B.P.M.S. No. 690 dated 17th of September, 1975.
It is not necessary to refer in detail to the various terms and conditions.
However, what requires to be noticed is the terms and conditions oblige every consumer executing an agreement in the prescribed form, undertaking to abide by the term and conditions prevailing on the date of agreement and also agreed to be bound by the terms and conditions as may be notified from time to time.
It is important to note under Section 25, the Board has unilateral right to vary the term from time to time under clause 25.1.
The terms and conditions for supply of electricity by special or general proceedings.
Condition 32. 1.
provides "the Board shall as far as possible within 15 days after the expiration of each calendar month cause to be delivered to every consumer a bill of charges stating the amounts payable by the consumer towards charges for energy supplied and any other sum in connection with supply of energy by the Board.
" Conditions 32.2.
1. obliges the consumers to pay the amount shown in the bill, within 15 days of the date of the bill in, default 'whereof they are liable to pay "an additional charge of 2% per month or part thereof for the period of delay" in paying the bill.
Condition 32.3 empowers the Board to disconnect the supply in case of default in paying the bill, without prejudice to its right to recover the amount due.
Condition 24.3 also lays down that the consumer shall pay to the Board 215 every month the charges for electrical energy supplied to him during the preceding month at the tariff in force from time to time.
Condition 28 obliges the consumers to deposit an amount equivalent to three months consumption charges with the Board.
It would be appropriate to set out condition No. 28 as far as it is necessary for our purposes, committing what is not relevant as under: 28.Consumption deposits: 28.1 Initial consumption deposit.
The consumer shall deposit with the Board a sum in cash equivalent to estimated three month 's consumption charges.
The consumer coming under the L.T. category 'domestic ' shall however pay at Rs. 30.00 per Kilowatt or part thereof connected load. "Provided that the Board may, in the case of industrial consumers, accept by way of consumption deposit a sum equivalent to two months consumption charges during a period of three years from the date of first release of supply of electricity".
28.1.2In the event of the consumer failing to pay to the Board any sum that may become due for payment to the Board on the dates fixed for payment thereof, the Board may, in addition to and without prejudice to the other rights of the Board, appropriate a part or whole of such deposit towards the sum due from the consumer.
28.2Additional Consumption Deposit All consumers other than those L.T. Domestic consumers whose monthly bills are less than Rs. 500 for a continuous period of six months, shall keep with the Board an amount equivalent to charges for three months demand and energy charges as consumption deposit.
The aduacy of the consumption deposit shall be reviewed by.
the Board usually once in every year and/ or at any time during the year if so warranted dur to upward revision of tariffs, enhancement of the con 216 tracted demand by the consumer charges in the pattern of consumption by the consumer relaxation of power restrictions or such other factors which in the opinion of the Board, warrant review of the, adequacy of the existing consumption deposit.
The review shall take into account the following factors: (i)In the case of consumers where there is no change in the contracted demand, the average consumption for the preceeding twelve months after taking into consideration the quantum and nature of restrictions imposed, if any, during that period shall be the basis.
(ii)in the case of consumers who were sanctioned additional demand and availed it during a part of the period, average recorded consumption for the period of review shall be from the date of utilisation of increased demand to the date of review after taking into consideration the nature and quantum of restrictions imposed, if any during that period.
(iii)The demand shall be contracted demand of the consumer at the time of review.
(iv)The rates, at which the demand or energy charges shall be calculated, will be tariff rates prevailing as on the date of review.
Based on such review, if the consumption deposit of the consumer is found inadequate or has fallen short on account of adjustments made as indicated in clause 28.1.2hereof the consumer shall deposit within 30 days of receipt of notice in this regard such additional amountas may be required by the Board or replenish the required amount as the case may be.
28.3 Interest on consumption deposit: Interest shall be paid by the Board on deposits of more than Rs. 60 made in cash at the rate of 3% per annum or such other 217 rate as may be fixed by the Board from time to time.
Full calender months only shall be taken into account for the purpose of calculating interest and interest shall be calculated to nearest five paisa.
The interest accruing to the credit of the consumer shall be adjusted every year in the month of April in the Electricity Supply bills.
28.4 Disconnection or non payment of consumption deposit: If the consumer does not make payment of amount of consumption deposit or additional consumption deposit or where the deposit is given in Government security or National Saving Certificate Bank guarantee etc.
, he fails to replace them by deposit in cash when so demanded by Board within the notice period of 30 days supply of consumer shall be liable for disconnection.
28.5 "The Consumption Deposit so calculated as per the Clause 28.1 and /or 28.2 above shall not be less than three times the monthly minimum charges, applicable to the consumer under the category to which he belongs".
28.6 "All consumers shall pay the Consumption Deposit or additional consumer deposit within thirty days from the date the demand notice if there be any delay in payment, the consumer shall pay surcharge thereon equal to 1 1/2% per month or such other percentage to be fixed by the Board from time to time, of the demanded amount for each month of delay or part thereof.
This will be without prejudice to the Board 's right to disconnected supply of electricity".
Clause (1) of condition 28 is general in nature.
It applies to all consumers.
(1.2) enables the Board to appropriate a part or whole of the said deposit towards any amount due to the Board and not paid within the prescribed period.
(2) applies to all consumers, except those L.T. Domestic consumers whose monthly bills are less than Rs. 218 .
500 per month for a continuous period of six months.
Such consumers are obliged to keep with the Board an amount equivalent to three months ' demand and energy charges, as consumption deposit.
The deposit is liable to be reviewed by the Board from time to time, having regard to the factors mentioned in the said clause.
(3) prescribes interest which the Board has, to pay on such deposit.
It is 3% per annum.
Clause (4) empowers the Board to disconnect the supply if consumption deposit/ additional consumption deposit is not made, or is not replaced whenever called upon to do so.
Clause (5) prescribes a certain floor below which consumption deposit shall not go.
Clause (6) says that the consumption deposit or additional deposit shall be paid within thirty days of the notice demanding such deposit.
In default, not only interest is payable but the supply also is liable to be disconnected.
The attack before the High Court was that according to Condition No. 32. 1, the bill is served within 15 days of the expiration of each calendar month.
The amount covered by the bill is payable within 15 days of the date of the bill.
The period of 15 days for payment is calculated not from the date of service of the bill but from the date of the bill.
A bill could be served even on the very first day of the succeeding month in which event it will become payable within 15 day of the date of the bill.
In such a situation, it is not correct to say that a consumer goes on availing and enjoying energy for a period of three months without paying for it.
Invariably it does not exceed six weeks or at any rate, two months.
In the event of non payment under Condition No. 32.3, supply of energy can be disconnected without seven days notice as contemplated under Section 24 of the .
Therefore: (1)It was urged that the consumption deposit should in no event exceed two months average consumption charges.
(2)The second attack was the payment of 3% interest by the Board on such consumption deposit is no longer good law in view of the judgment of Supreme Court rendered in M/s Jagdamba Paper Industries (p) Ltd. vs H.S. E. Board, ; , since this Court had taken the 'view that the interest on such deposit should be paid at the same rate as is paid by the schedule bank on fixed deposit.
219 It was generally urged that the Electricity Board being a State; within the meaning of Article 12, it has to act fairly.
Any term of condition will have to answer the test of reasonableness.
On the contrary, if it is arbitrary, it would be violative of Article 14.
The High Court after analysing the object behind Condition No,.
28 relating to the consumption deposit held: The condition requiring the consumer to pay the charges within 15 days from `the date of the bill and on such failure, a right is conferred on the Board to disconnect the supply.
The condition merely refer to the power of the Board.
Existence of power is distinct from exercise of power.
The Board cannot blindly act upon Condition 32.3 and disconnect the supply the moment 15 days time (from the date of the bill) expires.
It has to take a realistic view of the situation.
After all, these industries are engaged in production of goods essential to the community.
A blind and mechanical adherence to Condition 32.3 (instant disconnection) may indeed prove counter productive in larger sense.
It was also not possible for the Board to notice the non payment immediately in view of the large number of consumers and the extensive nature of organisation.
Besides, huge sums are required by the Electricity Board as rotating capital.
It borrows large amounts from organisations like L.I.C. and Banks, on which it pays interest to them.
Hence, it is well entitled to require the consumer to co operate by paying their bills regularly, by furnishing security deposits and by conforming to the terms and conditions of supply.
Under these circumstances, the requirement of three months deposit could not be said to be unreasonable and unjustified.
As regards, the payment of 3 % interest, the High Court was of the view that the decision of this Court in Jagdamba Paper Industries (P) Ltd. (supra) could not be read as a decision of the Supreme Court on the basis of which it could be declared that the earlier Bench decisions of the High Court were no longer binding, Accordingly, it dismissed the writ petitions.
Aggrieved by this decision, the present S.L.Ps. have come to be preferred.
Mr. R.N. Narasimha nmurthy, learned counsel for the appellant 220 after drawing our attention to clauses 28 and 32 would submit that if there is any laxity on the part of the Board in preparing the bill that cannot be a ground to make a consumer to pay three months deposit.
The tariffs of 1974 provided for the payment of bills within 14 days from the date of the bill while the quantum of deposit is three months consumption charges.
Originally, the time for payment was 30 days from the date of the bill.
That has been reduced to 15 days which is a drastic change.
The security deposit is a provision for continued default of the consumer.
The quantum of such a deposit is reckoned on the basis of the lapse of time between the consumption charges that become due after expiry of time required for reading of meter, billing, delivery of the bill to the consumer; grace time allowed and the reasonable time required for disconnecting the consumer 's service connection.
The reduction to 15 days has great relevance on the quantum of deposit as the deposit is intended to cover the defaulted amount by the time of disconnection.
However, considering that the bills of power intensive industries are prepared within 3 days of meter reading and also considering the close monitoring that is feasible in verification of payments of bills of these consumers and the small number of these consumers distributed among the several Circle Offices of the Board, any default is detectable within 20 days of the bill for appropriate action to be taken immediately.
The purpose of consumption deposit is only to safeguard the actual consumption charges that become payable by the time penal action could be initiated.
Even the judgment of the High Court indicates that a time lapse of 37 days from the date of the meter reading without considering the 7 days notice prescribed under Section 24 of the .
The balance time of 23 days to make up for 90 days is provided for the laxity in the Board administrative system which justifiably cannot be passed on to the consumer by way of consumption deposit.
In view of the high stakes involved in the case of power intensive consumers, the Board should evolve a suitable system of payments and must keep the security deposit to the minimum instead of three months.
It is further submitted that the security deposit could be in the form of bank guarantee.
There is no justification to require cash deposit.
As a matter of fact, as noted in M/s Haryana Ice Factory vs Municipal 221 Corporation of Delhi and Another AIR 1986 Delhi 78, the security in the form of Government Bond is permissible.
In Jagdamba Paper Industries Case (supra), paragraph 11 of the judgment deals with rate of interest.
That is a case where 8% was increased to 10% by consent.
If really, it is in the nature of a deposit, there is no Justification as to why bank rate should not be awarded.
It seen from The Chairman Karnataka Electricity Board and Others vs Gadag Mining Co. & Ors. etc.
AIR 1986 Karnataka 252, 10% interest had been awarded.
Mr. Anil B. Divan, learned counsel for the appellant in S.L.P. (c) No. 2564/92 would submit is under: Power intensive units like the appellant 's form a distinct class of consumers.
The Ferro Silicon plant of petitioner No. 1 is a power intensive one where the cost of electricity constitutes about 55% of the price of the ferro silicon produced.
Electricity, thus is the basic raw 'material for this industry.
On an average, the appellant is consuming electricity worth Rs. 1.6 crores per month.
If there was full supply of electricity (without there being a power cut), the monthly bill would be approximately Rs. 4 crores at a present tariff.
The power intensive plant of the appellant maintains a very high load factor of 0.9%.
Ordinary H.T. consumers work at a load factor of only 60% and the units consumed at only 50 per KVA demand.
The HT 111 tariff for power intensive consumers requires a minimum consumption of 403.3 units per KVA demand.
This means more than 8 times that of H.T. consumers.
The Electricity Board has always classified power intensive units as a separate category.
At present, there is a special tariff called HT III tariff with a fist of power intensive industries specified in the tariff notification.
The appellant No. 1 had deposited Rs. 1.07 crores in cash towards the security deposit.
A bank guarantee for Rs. 53.64 lacs had also been furnished.
A further demand of Rs. 96.5 lacs prompted the filing of the writ petition in the High Court.
As per the order of this Court in S.L.P. No. 12077/84 it was directed on 6.2.1987 that a sum of Rs. 1 crore be paid by the 3rd of every month and the balance within 7 days of the 222 presentation of the bill This order came to be modified that Rs.1 Crore was to be paid on the 30th of the month and the balance within one week of the receipt of the bill.
The said arrangement has been working satisfactorily.
There has not been any default in payment of electricity bills.
Therefore, the entire dispute is a theoretical one as to what the quantum of the security deposit can, or ought to be.
A deposit in cash of an amount equal to three months average bills at full supply at the present tariff without any power cut will amount to Rs. 12 cores on the basis of tariff revised in October 1992.
With ever increasing tariffs, the deposit demanded will also keep increasing.
Under these circumstances, the condition requiring three months security deposit is arbitrary and illegal for power intensive consumers.
The paid up share capital of appellant No. 1 is Rs. 3.8 crores.
The gross value of the plant and machinery of the power intensive unit is Rs. 7.94 crores.
The total advances made by the consortium of bankers for working capital is Rs. 4.25 crores.
The total net worth of all the divisions of appellant No. 1 that is Merine products, Sugar & Engineering, Machine Building and the power intensive Ferro Silicon Plant is Rs. 14.6 crores.
The security already furnished namely Rs. 5.7 crores is crippling the Ferro Silicon Plant division.
A demand of three months cash deposit would be in the range of Rs. 12 crores.
It is arbitrary and unjustifiable to require appellant No. 1 to deposit several times its share capital by way of security.
If this demand is enforced strictly, the plant of the appellant will become sick and ultimately, will have to be wound up.
In other States, the provision is not so harsh.
If the security deposit is 'consumption deposit ' and it is for meeting the cost of supply in advance, then the Electricity Board cannot charge penal interest at 2% per month for non payment of bills within the stipulated period.
The deposit, first must be appropriated against the dues and the interest charged only if there is balance due.
The Stand of the Electricity Board is perverse and illegal.
Equally, there can be no question of 'supply on credit ' if deposit is adjusted against consumption all the time.
The consumer has got a right to negotiate.
In The Indian Aluminum Co. vs Karnataka Electricity Board , this Court directed the Electricity Board to adopt a realistic policy.
Here also Condition No. 28 must be altered.
223 There is no power under the Electricity Supply Act to enable the Board to raise revenue or to cover its capital cost etc.
except by way of adjusting tariffs as seen from under Section 59 of the Supply Act, 1948.
Therefore, consumption deposit cannot be used for the purpose of revenue or raising revenue.
In this case, the Electricity Board had not placed any material to give interest only at 3%.
Mr. K. Parasaran, learned counsel appearing in S.L.P. No. 13004/ 89 after referring to the passage occurring at page 66 of Haryana Ice Factory case (supra) submits that the security deposit cannot go to buildup the capital or fixation or tariff.
Under Sections 49 and 59 of the Supply Act, finance is required to be adjusted including the payment of interest.
Demand of three months consumption deposit cannot be resorted to.
In support of his submission, reliance is placed on Hindustan Zinc Ltd. etc.
vs Andhra Pradesh State Electricity Board & Ors. ; Mr. Kailash Vasudev.
learned counsel for appellant in S.L.P. 13004/89 submits that under Section 49 of the Supply Act, it is enjoined upon the Board to adjust its tariffs by keeping the factors detailed in the said Supply Act.
Therefore, the Board cannot have recourse methods not provided under the said Act.
The demand for a deposit to ensure the due payment of the bills for electrical energy consumed amounts to framing an additional tariff.
The Board cannot do indirectly what it cannot do directly.
The Board being 'a state monopoly ' has to act reasonably and not arbitrarily.
The terms and conditions of supply cannot be unfair and oppressive.
Mr. R. Venkataramani, learned counsel in his written submis sions in Writ Petition Nos.
1293/89 & 1353/89 and S.L.P. (c) Nos.
4791 92/90 & 4793 94/90 would urge that Section 49 of the Supply Act is unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity.
The said Section does not specifically spell out fairness of action.
Clause 28 of the terms and conditions of supply is a clear illustration of arbitrariness and subordinate legislation.
224 The words as the Board thinks fit ought to be interpreted so as to be consistent with the fairness of State action.
They are to be construed as "reasonably thinks fit" as held in Roberts vs Hopwood, and Granite vs Minister of Housing and Local Government, Clause 28 of the terms and conditions of supply relation to fixation of 3% interest and additional charges are vitiated due to non application of mind.
Under clause 28.6 of the terms and conditions, in the event of delay in payment of consumption deposit or additional consumption deposit within the stipulated period, the consumer is obliged to pay surcharge at 18%.
The obligation to pay surcharge and the power of the Board to vary the percentage from time to time would constitute draconian provision.
Money, wherever it is held in deposit could only be used to earn some interest.
Therefore, paying 3% interest on the consumer deposit is not at all justified.
A public institution cannot be allowed to get excessive interest.
In meeting these arguments, the learned Additional Solicitor General submits that under Electricity Supply Act, the finances of the Board are controlled to the minutest detail.
Originally, prior to 1978, Section 59 required the Board as far as practicable and after taking credit for any subvention from the State Government not to carry on its operation on loss.
For this purpose, it was empowered to adjust its charges accordingly from time to time.
Section 59 was amended by Act 23 of 1978.
After the amendment, the Board after taking credit for any subvention from the State Government was required to carry on its operations and to adjust its tariffs so as to ensure that the total revenues in any year after meeting of the expenses left such surplus as state government may specify from time to time.
This Court has taken the view in Kerala State Electricity Board vs S.N. Govinda Prabhu & Bros. & Ors ; that even if the Government had, not prescribed surplus, the Electricity Board could generate surplus.
After the amendment by Act 16 of 1983 which came into force on 225 1.4.1985, the Board was to create a minimum surplus of 3% or such higher percentage as the State Government would specify in this behalf.
It is in this background.
, the matter will have to adjuged.
The reason why three months security deposit is demanded is, for two months, the consumer gets free electricity.
For supply of such electricity, the Board has to borrow and make payment of interest.
If there are no consumer deposits, the tariff shall have to be increased.
That will effect all the consumers.
Interest at 2% is charged in case of default only in order to ensure proper payment.
It is penal in character.
In the judgment under appeal, the High Court held that the burden relating to interest can be reflected either in the tariff or could be set off by calling upon the consumer to make deposit.
In fact, this Court has upheld the tariff revision effected by Andhra Pradesh Electricity Board as seen from Hindustan Zink Ltd. Etc.
v, Andhra Pradesh State Electricity Board & Others ; It cannot be contended that the three months consumption deposit is arbitrary.
This argument ignores the following important factors: i)This is not a security deposit but a consumption deposit.
ii) It in the nature of an advance payment.
iii)In the event of failure to pay, it could be proceeded against as seen from clause 28.1.2.
(iv) Consumption deposit is variable as per clause 28.2 (iv) If therefore, the object of consumption deposit is to ensure proper payment with reference to electricity supply, there is nothing arbitrary or unjustifiable.
The fact that some of the appellants pay large amounts by way of electricity charges will have nothing to do with the nature of deposit.
Merely because it is a power based unit, it cannot be treated separately.
Nor can the appellant make a virtue out of necessity.
The terms of supply relating to consumer deposit must be uniform, therefore, it is not correct to contend that the power based unit must be treated separately.
As regards payment of interest at 3%, electricity supply is made on 226 credit basis.
Therefore, it is a matter of adjustment of Board finances.
Strictly speaking, the consumer deposit is in the nature of fidelity guarantee to ensure proper payment by consumer.
The consumer may not be entitled to interest at all.
However, where the Board has so adjusted finances and pay 3% interest, the Board cannot be defaulted.
Jagdamba Paper Industries case (supra) cannot be said to be a decision as to the rate of interest payable by the Electricity Board.
Upon reading paragraph 11 of the judgment, it will be clear that it proceeded on the consent of the counsel.
RAJASTHAN The writ petitioners applied to appellant Board for the supply of high tention power for their factories.
After the execution of the necessary agreement and furnishing of security deposit, power connections were given.
Subsequently, the Board issued notice requiring the consumers to deposit the enhanced amount of cash security as well as the bank guarantee on the basis of maximum power consumption of three months.
With regard to security deposit, Part 11 of the General Conditions of Supply and Scale of Miscellaneous Charges in Note II stated that no interest will be paid by the Board on the security deposit.
Two contentions were raised in the petitions, (i) Note II providing for no interest was bad in law, (ii) the enhanced security must be calculated not on three months maximum consumption but on the basis of minimum power consumption.
These two contentions found favour with the learned Single Judge.
The Rajasthan Electricity Board filed special appeals while the consumers filed cross appeals.
The Division Bench held as under: i)The Board has power to demand additional security but the average consumption of three months should be taken as the basis for calculating the amount of such security.
ii)The clause relating to non payment of interest was not reasonable.
Interest must be allowed on the entire amount of cash security from the date of the writ petition.
The appeals by the Board were dismissed while cross appeals by the consumers were allowed.
Ag 227 grieved by this judgment, the present S.L.Ps. have come to be preferred by the Rajsthan Electricity Supply Board.
Mr. Soli J. Sorabjee, learned counsel appearing for the appellant argued as follows: There is no legal obligation to pay interest on a deposit made by the consumer with the Board in terms of Clause 20 (a) & (c) of the General Conditions of Supply.
Nor even interest is payable under common law or in equity.
In this connection, the learned counsel draws our attention to Halsbury 's 4th Edition, volume 32 pages 54 55.
There is no legal or equitable obligation to pay interest for detention of monies.
In support of this argument, learned counsel relies on Bengal Nagpur Railway company Ltd. vs RuttanjiRamji, (1937) L.R. 65 I.A. 66 and Union of India vs A.L. Rallia Ram ; , pages 187, 189 190.
There is no contract or agreement which provides for payment of interest.
On the contrary, Clause 9 (b) (ii) of the General Conditions expressly provides that no interest will be paid by the Board on security deposit.
There is no statutory provision which casts an obligation on the Board to pay interest on the security deposit.
The High Court erred in relying on the model form of draft conditions of supply because the said model form is applicable to only licensee as defined under Section 2 (h) of Electricity Act.
It is not applicable to a Board which is not a licencee.
Further, it is not necessary on the part of the Board to adopt model form.
Schedule VI of 1948 Act again cannot be pressed into service as the Board is not a licencee clause 2 (b) (v) of Schedule VI merely specifies interest on security deposit as properly incurred item of expenditure for the purpose of determining the 'clear profit ' of the licencee.
The said clause does not and cannot by itself impose an obligation on the licencee to pay interest on security deposit.
Should interest be paid, then it qualifies as an item of expenditure properly incurred.
The High Court also erred in relying on Section 4 (2) of the .
Section 4 (2) has no application where on account of contractual term or a statutory provision, payment of interest is not permitted.
Section 4 (2) of the merely enlarges the 228 categories of cases mentioned under Section 4 (1).
The said Section cannot override other statutory provisions or a contract between the parties.
The non obstante clause under Section 4 (2) is restricted only to the provisions of Interest Act, 1948.
It is submitted that under the billing practice prevalent with the Rajasthan Electricity Board the consumer has free use of electricity during the period between consumption of electricity and expiry of period after notice.
During this period which varies from 2 to 2 1/2 months, the consumer in effect enjoys a credit facility.
Therefore, if security deposit is demanded for three months, it is neither unreasonable nor arbitrary.
As a matter of fact, the security demanded by the appellant Board is in the form of cash for one month and bank or insurance guarantee for two months.
Therefore, it is all the more reasonable.
In support of this, reliance is placed on Kistna Cement Works Tadepalli vs The Secretary APSEB, Vidyut Soudha AIR 1979 A.P. 291, B.R. Oil Mills, Bharatpur vs Assistant Engineer (D) R.S.E.B., Bharatpur, AIR , .Municipal Corporation for Greater Bombay vs M/s Devidayal Metal Industries, , Haryana Ice Factory vs Municipal Corporation of Delhi, AIR 1986 Delhi 78 and Southern Steel Ltd. vs The A.P. State Electricity Board, Hyderabad, AIR 1990 A.P. 58.
On the question of the constitutionality of the provisions regarding non payment of interest and whether it is violative of Article 14, it is submitted: i)Article 14 does not mandate mathematical exactitude or scientific precision; ii)The mode and period of security should be related to the billing practice prevailing in Rajasthan Electricity Board.
iii)The consumer with open eyes has entered into the agreement and has solemnly undertaken to abide by the condition regarding nonpayment of interest.
He cannot resile from that condition.
There is nothing inherently objectionable, nor is the condition illegal or void as opposed to public policy.
Even assuming, the contract between the consumer and the Board is an adhesion contract it is not necessarily unconscionable.
In this connection, reference is invited to Black 's Law Dictionary, 6th Edition, page 40.
That passege has been cited with 229 approval in Central Inland Water Transport Corpn.
vs Brojo Nath Ganguly.
In such matters, relief is given to the party only if the contract is so unreasonable as to be unconscionable.
In this connection reliance is placed on Gillespie Brothers Ltd. vs Roy Bowles Ltd. at 200 (g), Farmsworth on Contracts, 2nd Edition, 319 & 320 para 4.27.
The rate of interest on security deposit cannot be equated with the rate of interest payable on fixed deposit because the nature and character of a security deposit is basically different from fixed deposit.
This is clearly brought out by the Companies (Acceptance of Deposits) Rules, 1975.
The said Rules expressly exempt security deposit in definition of Rule 2, clause (v) & (vi), In Jagdamba paper Industries case (supra).
the rate of interest was based on a concession by the parties.
The Court had no occasion to decide the rate of interest.
That part of the judgment proceeds sub silentio.
The argument based on surcharge levied for delayed payment is a non sequitur.
If the provision for non payment of interest is valid and not arbitrary, it does not become arbitrary and unconstitutional because surcharge is levied at 2% per month.
In fact, surcharge has not been challenged.
Surcharge is attracted only if the bill is not paid within the due date.
The submissions based on Sections 57 & 59 of the Supply Act in relation to security deposit proceed on a misconception of the nature and character of payment as a security deposit.
The object of security deposit is to secure prompt payment of electricity bills.
They are not intended to finance the Board 's transaction.
Section 57 read with sixth Schedule is meant to ensure a reasonable return.
expression 'charges ' in the Sixth Schedule clearly shows that security deposits are not included within the expression 'charges '.
There is no mutual exclusivity between increase of tariffs and earning interest on security deposits, It is also incorrect to contend that prompt payees of electricity bills are treated on par with the defaulters and thus anequals are treated alike.
The real test is, whether in the general application of law there is any discrimination.
In support of this submission, the learned counsel placed his reliance on: The Collector of Customs, Madras vs Nathella Sampathu Chetty 230 ; , Vivian Joseph Ferreira vs Municipal Corporation of Greater Bombay , B. Banerjee vs Anita Pan [975] 2 774 and Fatehchand Himmatlal vs State of Meharashtra ; The last submission of the learned counsel is that a statutory provision may be struck down as unconstitutional only if it is palpably arbitrary and irrationality is writ large.
Merely because the Court considers a particular provision to be unwise or undesirable, it is never struck down.
The learned counsel fairly concedes that the enhanced security deposit could be calculated only on the average consumption of three months of the previous years.
Mr. Altaf Ahmad, learned counsel supporting the arguments of Mr. Soli J. Sorabjee would urge: In this case, the consumers are those who use H.T. and E. H. T. lines.
Section 49 (3) gives the clue that each Board can have its own scheme.
Section 79 of the Supply Act speaks of the power to make regulation.
Clauses (i) and (j) are relevant because they talk of principles governing the making of arrangements with licensees under Section 47 and other then licensees under Section 49.
The industrial consumers constitute the majority user of the electricity amounting to 49.51 per cent.
the transmission losses for 1992 93 alone are 22 per cent.
Besides, the Board is also purchasing power from other corporations and States.
Therefore, the demand for security deposit is fully justified and there is nothing arbitrary in not providing for interest.
That is what is provided under clause 21 (a) of the agreement in relation to high tension supply.
The consumption deposit cannot be equated to the deposit in a bank and interest could be demanded as of right.
Mr. Kapil Sibal, learned counsel appearing for the Haryana Board which Board has now withdrawn payment of interest, has filed intervention application since the present day position of the Haryana Board is on a par with Rajasthan.
Mr. R.K. Mehta, learned counsel for the intervenor on behalf of 231 the Orissa Electricity Board through his written submissions.urges that it may be that the regulations in the case of Andhra Pradesh, Utter Pradesh and Bihar Provide for payment of interest at a certain rate on the security deposit.
However, the Rajasthan and Orissa regulations provide that no interest shall be payable on the securities furnished by the Board.
In the impugned judgment the Division Bench has not given any cogent or valid reason for striking down Condition No. 20 of the General Conditions of the Rajasthan Electricity Board.
The High Court had failed to appreciate the following factors while quashing the impugned clause of the regulations.
Electricity is an item which cannot be sold and supplied immediately after generation.
For the sale of electricity one has to take meter reading meant for the said purpose and, therefore, the Board sends the bill for particular duration.
It is obvious that the reading of the meter could not be taken at every point of time but only for duration/period.
In the process 2 1/2 months elapse.
The Board does not charge any interest at least for 2 1/2 month from its consumers.
At the same time, the Board needs finance for production, supply and other charges necessary for supply of electricity.
The Board is thus obliged to take loans from various financial institutions.
The consumers who are utilising electricity for 2 1/2 months without making any payment will be unjustifiably enriched at the cost of general public in the absence of security deposit.
Further taking of advance money without interest for Providing other services in the market is a general practice.
Therefore, a similar provision in the general conditions for supply of the Board cannot be treated as arbitrary or unreasonable.
A consumer is not entitled to claim interest on his security deposit having regard to the following considerations.
1.The security deposit is furnished in consideration of the performance of the consumer 's obligation for obtaining the service essential to the life and the well being of community.
The electricity supply is made to that consumer on credit withoutrequiring him to make instant payment.
The billing time taken by the Board is for the benefit and convenience of the consumer as he saves additional expenditure on 232 account of instant or shorter billing time, possibly through electronic devices which will be included in the tariffs.
4.The public revenues Ire blocked in the generation, transmission and distribution of electricity for the performance of supply on which the Board pays interest in so far as they form part of the loans borrowed by the Board for performing the public service.
On the return of the blocked moneys the Board gets no interest from the consumers.
5.The Board needs back its blocked money to carry out service with a reasonable recompense.
6.The Board is not essentially a commercial Organisation to which the consumer furnishes the security deposit to earn interest.
Having entered into a contract with open eyes it is not open to the consumer to say that interest should be paid.
The basis of supply of electricity and the conditions on which it is supplied being statutory, the provisions under the conditions of supply that the Board shall not pay interest on the security deposit has statutory basis and accordingly cannot be struck down as arbitrary on the basis of a commercial transaction governing a bank deposit.
Therefore, it is submitted that regulation 7 of the Orissa State Electricity Board General conditions of Supply Regulations, 1981 providing that no interest would be payable on security deposit is just and reasonable and is not arbitrary or violative of Article 14 of the Constitution.
Mr. Shanti Bhushan, learned counsel opposing the stand of Rajasthan Electricity Board submits that the only question in this special leave petition is whether Electricity Board is obliged to pay interest on the cash security deposits as the Board compels industrial consumers to secure against default in payment of electricity bills.
In the first place, as laid down in Jagdamba Paper Industries (Pvt.) Ltd. vs Haryana State Electricity Board ; this Court has indicated that the security amount should bear the same interest as admissible on fixed deposit of scheduled banks.
The interest rate on 10 per cent was decided not really on the basis of admission but on a positive finding.
Apart from this, this Court has in several other writ petitions ordered interest at 12 per cent.
233 It is submitted that the scheme of Indian Electricity Rules of 1956 and the scheme of the Electricity Supply Act also show that the interest on security deposit is supposed to be payable.
The Board is not entitled to use the deposits to augment its finances.
They are meant only to secure the default in payment of the bills.
Section 59 of the Supply Act indicates that the only condition in which the Board could raise the revenue is by adjustment of its tariff.
Section 49 of the Act makes provision for the sale of electricity by the Board to persons other then licensees under the terms and conditions as the Board thinks fit.
It can be seen from the definitions of the Sixth Schedule to the Supply Act that the scheme was meant to be applicable to licensees.
The place of the licensees has been taken over by the Board.
That is why clause 2 (b) (v) of Schedule VI of the definition of "clear profit" states that the interest on security deposits was to be a part of the expenditure properly incurred by licensees.
Then again, the manner in which the accounts are to be maintained by the licensees also shows that the licensees have to make a provision for payment of interest on security deposits.
The High court is right in relying on Section 4 of the Interest Act.
The contract in the instant case is between a consumer, however, high he might be and a monopolistic public utility company.
It is clearly an adhesion contract.
This Court in Central Inland Water Transport Corporation vs Brojo Nath Ganguly has clearly held that an unreasonable term of an adhesion contract will not be enforced by the Court.
Interest on security deposit is also admissible under equity or common law.
Halsbury 's 4th Edn.
32, paragraph 106 at page 53 defines "interest" as the return or compensation for the use or retention by one person of a sum of money belonging to or owing to another.
The Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumers in trust with the Board to secure the Board against default in payment of bills.
The deposit of security is like the usufructory mortgage which is provided for in Section 76 of the Transfer of property Act.
Section 76 G & H 234 provide that the mortgagee in a usufructory mortgage would have to keep account of the incomes received from the mortgagee in his use and would have to pay compensation for the benefit derived by the user of the mortgaged property.
The position here is more or less similar.
It is not correct to state that security is an advance payment.
If it is so, it would amount to Board taking three months advance payment from the consumers.
In such a case, the Board cannot disconnect the electricity until the period of three months is over.
But the rules of the Board enable it to disconnect even if the consumer fails to pay his bills on the due date.
Then again, a penal interests is charged in case of default.
If it is in the nature of an advance payment there is no scope for charging 2 1/2 per cent penal interest.
Lastly, it is submitted that even under English Law interest is payable on security for electricity as seen from Halsbury 's Volume 16 paragraph 129: "129.
Giving of security.
Security required under the Schedule to be Electric Lighting (Clauses) Act 1899 to be given to an electricity board (See the Electric Lighting (Clauses) Act 1899, Schedule, sections 25 (2), 27 (2), (3), and paras.
115, 118, ante.) may be by deposit or otherwise, and of an amount agreed or, failing agreement, determined by a magistrates ' court, and that court may deal with the caused of the proceedings and its decision is final and binding on all parties, (bid., Schedule, section 71; Electricity Act 1947, section 57 (2), 1 Sch 4, Part 111) Where security is given by way of deposit the party to whom it is given must pay interest at the rate of 4 per annum an every sop for each period of Six months during which it remains so deposited.
(Electric Lighting (Clauses) Act 1899, Schedule, section 71 proviso; Decimal Currency Act 1969, section 10 (I)." UTTAR PRADESH STATE ELECTRICITY BOARD The question raised before the High Court was as to the rate of 235 interest.
The respondent (U.P.State Electricity Board ) amended the rate of security deposit as Rs. 2 per K.V.A.
On such deposit it paid only 3 per cent interest whereas on late payment of the bills it charged more than 24 per cent surcharge from the consumer.
The appellants preferred writ petitions in so far as they were denied 12 per cent interest on the deposit taken from the consumers.
The Division Bench of the High Court held: "These petitions are dismissed with a direction that in case the Supreme Court decided that the interest at a rate higher that 3% should be paid on such security and additional security deposit, the benefit of the same judgment shall also be extended to the petitioners herein without the necessity of any further proceedings being taken by the petitioners." Hence, the special leave petitions.
Mr. G. Ramaswami learned counsel for the appellants would urge that Jagdamba 's case (supra) has decided that rate of interest.
Therefore, that should govern.
In a number of matters this Court has also ordered interest at 12 per cent.
The same principle should apply to this case as well.
1.Security Deposit is a compulsory levy.
The consumer has no option.
2.Even in contractual matters if the Board, which is a State, does not behave fairly, this Court can always interfere.
3.The Board cannot compel the consumer to make a security deposit without corresponding obligation to pay interest.
Deposit does not contemplate appropriation.
Prior to appropriation, what is the character of the deposit, requires to be determined.
It is not the payment of money by way of 236 advance.
As to the meaning of interest it could be gathered from the case in Riches vs West minister Batik Limited.
1947 Appeal Cases 390 at 400.
In Union of India vs A.L. Rallia Ram ; this Court held that interest is awardable in equity.
A distinction will have to be made between unreasonable and unconscionable.
In Administrative Law mere unreasonableness is enough to set aside a contract while unconscionable relates to private law.
If interest is not paid security deposit cannot be demanded as this will amount to unconscionable bargain.
As to the meaning of unconscionability, Black 's Law Dictionary.
(Fifth Edition) at page 1367 can be usefully referred to: "Basic test of "unconscionability" of contract is whether under circumstances existing at time of making of contract and in light of general commercial background and commercial needs of particular trade or case, clauses involved are so one sided as to oppressor unfairly surprise party.
Division of Triple 7.
Service, Inc. vs Mobil oil Corp., 60 Misc.
2d 720, , 201.
Unconscionability is generally recognized to include an absence of meaningful choice on the part of one of the parties.
to a contract together with contract terms which are unreasonably favorable to the other party.
Gordon vs Crown Central Petroleum Corn., D.C. Ga., 423F. Supp. 58, 61.
Typically the cases in which unconsionablity is found involve gross overall one sidedness or _gross one sidedness of a term disclaiming a warranty, limiting damages.
or granting procedural advantages.
In these cases one sidedness is often coupled with the fact that the imbalance is buried in small print and often couched in language unintelligible to even a person of moderate education.
Often the seller deals with a particularly susceptible clientele.
Kugler vs Romain, 58, N.J. 522, 237 As to the meaning of reasonableness it is stated in G.B Mahajan and Ors.
vs Jalgaon Municipal Council and Ors. ; at 109.
Under English Law relating to electricity supply as seen from Halsbury 's Vol. 16 at paragraph 129 it is clearly stated that interest on security deposit is payable.
Therefore, all the more the reason why here also it must be held to be payable.
Mr. Kapil Sibal, opposing the stand of Mr. G. Ramaswami arguers that there is no order of this Court adjudicating the rights of the Board on the consumer in respect of the validity of consumption security deposit being condition precedent for the supply of electricity by the Board as we II as the liability of the Board to pay interest to the consumer in respect of the consumption security deposit.
In the absence of any such adjudication the question of Board being bound by the previous orders of this Court.
does not arise.
In cases where 12 per cent interest was awarded it was only by way of ad interim measure.
The other orders are also not conclusive on this aspect.
Therefore, the matter will have to be decided afresh in the instant cases.
Far from being a compulsory levy, the consumption security deposit is not only a deposit in cash to safeguard recovery of electricity dues for the energy supplied to the consumer on credit but also a security towards payment or satisfaction of any money (For example, theft), which may become due and payable to the Board by the consumer.
The obligation to pay interest to the consumer proceed on the assumption that the Board is keeping the security deposit and depriving the consumer of tile use of the money which is alleged to be earning interest with the Board.
This assumption is not warranted for the followings reasons: 1, The cycle of billing demonstrates that in the very nature of things the consumer is supplied energy on credit.
The security deposit is hardly sufficient to secure the payment to the Board by the time the formal bill by the Board is raised on the consumer.
2.The consumption security deposit indeed represents only part of he money which is payable to the Board at the end of the billing 238 cycle. ' The said amount can be appropriated at any time towards the payments that are due to the Board and reflected in the formal bill.
3.In the nature of billings cycle it is the Board which has to receive interest on the energy supplied to the consumers on credit.
4.The concept of interest earned on a fixed deposit is alien to the issue.
The liabilities of the consumer increase on a daily basis depending on the level of supply and consumption.
Therefore, the amounts due are liable to be appropriated forthwith.
That is not possible where moneys are placed either on fixed deposit or a savings bank account.
It is incorrect to contend that the amount is lying in trust with the Board.
The amount lying with the Board could also be appropriated for satisfaction of any amount liable to he paid by the consumer for violation of any conditions of supply in the context of wide scale theft of energy and tempering with meters.
Therefore, the security deposit serves not only to secure the interest of the Board but also serves as a deterrent on the consumer in discharging his obligation towards the Board.
Under section 49 the Board is enabled to supply electricity upon such terms and conditions, as it thinks fit under Article 226 of the constitution, the Court is to conduct a limited scrutiny whether by imposing such a condition the Board has not acted as a private trader and there by shd off its public utility character.
Should the Coust come to the conclusion that the Board has not acted as a private trader and tile nature of ' deposit has a rational relationship, the issue will fall outside the scope of judicial purview.
Section 49 must be read alongwith Section 59.
The contention that the Board can achieve a surplus by adjusting its credit does not flow from the language of Section 59.
The requirement of consumption security deposit is a condition of supply.
It has a direct bearing on the operation of the Board.
Hence it is 'per se ' reasonable and constitutional.
If there is a revision in the rate of tariff there has to be an upward revision of the consumption security deposit since it has a direct bearing on the level of supply in consumption of electricity.
In October 239 1986, the tariffs in the State of Uttar Pradesh were adjusted upwards.
The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987.
These facts would suggest the rationale in the imposition of additional security deposit.
This being a condition of supply no reasons need be given at the time of upward revision.
Union of India vs A.L Rallia Ran ; relates to the award of interest by an Arbitrator.
The nature of consumption security deposit is such that it represents the moneys of the Board.
There is no relationship of debtor and creditor.
There is no deprivation of property which alone will entail the consequences like payment of interest.
The learned counsel has also filed a tabulated statement to show that the security deposit made by the appellant is 72.42 lakh for all industries while the affairs in electricity come to 965.73 lakh.
A formal chart has been filed based on the figures for August.
September and October 1991 to show that after the third month the consumption charges total to 45.09 lakh.
While security that is offered is 15.95.
The same is the position with reference to other industries as well concerning whom the learned counsel has filed a tabulated statement.
This so to establish how the Electricity Board has supplied electricity on credit to the various consumers and the security deposit is hardly sufficient even for one month 's consumption.
BIHAR SLP 11799 of 1989 The appellant (Bihar Electricity Board) provided 4 per cent interest per annum on security deposit.
When this was questioned in C.W.J.C. No. 3000 of 1987 in the matter of Dhanbad Flour Mills, a Division Bench of the High Court was of the view that an interest at 4 per cent appeared to be unreasonable and directed the Board to examine the question of enhancement of the rate of interest.
Similar directions were issued in another case.
The appellant Board after examining the matter issued a Notification on 27th of May, 1988 and enhanced the rate of simple interest to 5 per cent per annum.
This was because the amount of security deposit was kept in the savings account which earned 5 per cent interest which was passed on the consumer.
The said notification was questioned before the High Court by seeking 240 a writ of mandamus claiming interest at the rate payable on fixed deposit by a nationalised bank in view of the decision by this court in Jagdamba 's case (supra).
By the impugned judgment the High Court directed payment of interest on security deposit at the rate payable on fixed deposit by nationalised banks.
Aggrieved by this judgment the Bihar State Electricity Board has preferred the special leave petition.
Mr. G. L. Sanghi learned counsel appearing for the Bihar Board draws our attention to clause 15.3 of the tariff notification and submits that the consumption security deposit is not only for the supply of energy on credit but also for satisfaction of any money payable by him.
If the consumer does not pay the dues in time the arrears of consumption charges will have to be adjusted against the security deposit.
Therefore, the security deposit can never be kept in bank under fixed deposit.
This is the reason why the amount is kept in savings bank account and whatever interest is earned thereon.
that is passed on to the consumer.
Therefore, the High Court was not right in awarding a higher rate of interest.
In other respect, the learned counsel adopts the argument of the other learned counsel appearing for the various Boards including the contention that Jagdamba 's case (supra) did not lay down the rate of interest.
Normally, in market transaction when any one supplies on credit to a consumer a guarantee is taken for the payment on dues.
Such a guarantee may be in the shape of a bank guarantee, fixed deposit.
Similarly, the Board when it supplies electricity on credit it keeps tile security for the amount of supply of the electricity.
According to Board 's standing order No. 433 dated 31.12.74, dues at any time are not allowed to exceed amount of security deposit and adjustment is to be made against the security deposit after the disconnection of supply.
Therefore, it is not correct to state that the security is not adjusted towards the bill and is kept in tact.
Section 24 of the Electricity Act is the only provision to ensure payment is indicated in Bihar State Electricity Board Patna vs M/s. Green Rubber Industries and other [1990] 1 SCC 731.
In meeting these arguments it is submitted by Mr. M.P. Jha, learned counsel for the respondent that the stand of the Board in 241 making payment of interest at 4/5 per cent is clearly arbitrary.
The security aspect of the Board requirement can easily be satisfied by the board resorting to liquidation of security deposit.
As a matter of fact, the security deposit was never adjusted by the appellant Board.
As a result large amounts were kept without investing them in fixed deposit.
Learned counsel for the respondent relies on the orders issued by this Court and submits that the question of interest is settled by the ruling in Jagdamba 's case (supra).
Section 24 is of no help for payment of a lower percentage of interest.
W.P. No. 578 of 1987 In this writ petition, under Article 32 of the Constitution, the challenge is to the increase of security deposit for L and H power consumers above 100 B.H.P.
It has been increased from Rs. 170 to Rs. 200.
No reason whatever has been assigned for such an increase of security deposit.
That will he bad in law as laid down in Central Inland Water Transport Corporation Limited (supra).
This is the argument of Mr. Gobind Mukhoty. 'This is countered saying that when there is an increase in tariff the security deposit also is liable to be increased.
PUNJAB W.P. NO.
1317 of 1990 In this writ petition, the challenge is to the validity of Sections 49 and 79 of the Supply Act.
According to the respondent (Punjab State, Electricity Board), the writ petition is not maintainable.
A challenge to the imposition of advance consumption of deposit does not involve any fundamental right.
The Punjab State Electricity Board is a licensee of the State of Punjab.
The electrical energy is generated through hydro as well as thermal plants for ultimate sale to consumers.
50% of powers generated through hydro while the remaining through thermal plants which consume coal/oil.
The coal companies and those major suppliers of power plants are demanding cost of coal in advance.
On these advances no interest is payable to the Board.
Therefore, while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity 242 on credit ranging from 2 to 3 months depending upon the category of consumers.
To off set part of the amount that the consumer owes to the Board constantly and also to ensure timely payment of advances by the Board to its suppliers an advance consumption deposit is insisted upon before commencing supply to the consumer.
If this is not so taken the Board will be left with no other option than to increase the tariff.
This advance deposit cannot be termed as a fixed deposit as the amount cannot be utilized against non payment of dues from consumers.
Besides,the consumers can also ask for the refund.
Sections 49(1) and 79 (j) cannot be termed as arbitrary.
In fact, this Court has upheld the validity of Section 49 (1) in Jagdamba 's case (supra).
Lastly, it is submitted that the Board is generating electricity and each unit so generated costs the Board rupee one per unit.
The Board is selling at an average rate of 50 paisa per unit to the consumer which includes the agricultural sector.
Therefore, the amendment to clause 23 of abridged conditions of supply requiring to pay advance consumption deposits is perfectly reasonable.
Mr. P.P. Rao, learned counsel appearing as intervenor on behalf of Calcutta Electricity Supply Corporation supplements the submissions of Mr. Soli J. Sorabjee.
The deposit though called security deposit is really an adjustable advance payment of consumption charges.
The amount is revisable from time to time depending upon the average consumption charges on the basis of actual consumption over a period.
The true nature of transaction in these cases is one of advance for consumption of electricity estimated for a period of three months subject to adjustment /revision, if necessary.
Such an advance is liable to be made good and kept at a stipulated level from month to month.
It is open to the consumer to permit adjustment of the advance in the first instance.
Thereafter, make good the shortfall in consumption charges and the security deposit before actual disconnection of supply which takes at least about three months.
In short, it is in the nature of a running account.
The security deposit does not remain in tact like a fixed deposit but gets depleted day after day depending on the extent of consumption More often than not, the consumption charges and other dues exceed the security deposit.
That necessitates calling for 243 additional advance to make up a shortfall.
In the absence of any usage or contract or any provision of law requiring payment of interest is not payable for wrongful detention of money.
In this case, there is no wrongful detention of even.
Section 4 (2) of the Interest Act has no application to this deposit.
When electricity supply is duly made with a consequential liability to pay for each day 's consumption, the so called security deposit is not a deposit in the real sense for the consumers to claim the benefit of Interest Act.
We will now proceed to consider the correctness of the above submissions with reference to the following aspects: (i) Whether Section 49 is bad for want of guidelines.
(ii)The nature of consumption deposit, irrespective of the nomenclature by which it is called.
(iii)(a) The liability of the Electricity Board to pay interest.
(b) Whether the clause in the terms of supply providing for nonpayment of interest is unconstitutional or arbitrary.
(iv)The demand for additional consumer deposit Whether valid? VALIDITY OF SECTION 49 The law relating to electricity is principally contained in two Acts.
(i)The of 1910 (hereinafter referred to as the "Electricity Act"). 'Ms provides for grant of licences in relation to supply of electricity and the projects of undertakings.
It also provides for supply of electricity including the protective clauses.
(ii)The of 1948 (hereinafter referred to as the "Supply Act") provides for constitution of State Electricity Boards, the powers and duties of such Boards.
Certain important 244 provisions of the Act may now be seen.
Section 2 is interpretation Section, Under Section 2 (2) the Board means a State Electricity Board constituted under Section 5.
Under Section 2 (10) states that regulation means regulations made by the Board under Section 79.
Section 5 deals with the constitution and composition of State Electricity Board.
Section 49 is the provision for sale of electricity by the Board to persons other than the licensees.
Sub section (1) of the said Section commences with the words "Subject to the provisions of this Act and of Regulations".
This means if there are any provisions regulating the Board in the matter of supplying electricity to any persons not being a licensee then the supply by the Board will he subject to all those provisions.
It has been so laid down in Mysore State Electricity Board vs Bangalore Woollen, Cotton and Silk Mills Ltd., 28 at page 1136: "The expression "Subject to the provisions of this Act" merely that if there are any provisions regulating the Board in the matter of supplying electricity to any person not being a licensee, then the supply by the Board will be subject to those provisions.
No provision has been brought to our notice which regulates the Board in the matter of the charges which it may fix for the supply of electricity." This Court had occasion to deal with the scope of the said Section and Section 59.
In Hindustan Zinc Ltd. vs Andhra Pradesh State Electricity, Board ; at pages 317 319 it has been observed thus: "Section 49 makes provision for the sale of electricity by the Board to persons other than licensees.
Sub 245 section (1) starts with the words "Subject to the provisions of this Act and of regulations, if any, made in this behalf '.
This means that the provision made therein is subject to other provisions of the Supply Act and the regulations.
It then proceeds to say that the Board may supply electricity to any person not being a licensee upon 'such terms and conditions as the Board thinks fit and may for the purposes of such supply frame 'uniform tariffs '.
Sub section (2) then enumerates several factors which the Board is required to 'have regard to ' in fixing the uniform tariffs.
The meaning of the expression have regard to is well settled, it means that the factors specifically enumerated shall be taken into account while performing the exercise which in this case is fixation of the uniform tariffs.
Ordinarily, therefore, uniform tariffs are required to be framed by the Board for making such supply.
Sub section (3) then proceeds to say that nothing in the earlier enacted provisions shall derogate from the power of the Board, "if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person", having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required an d any other relevant factors '.
Sub section (4) then says that in fixing the tariffs and terms and conditions for the supply of electricity, 'the Board shall not show undue preference to any person.
, In other word, subsection (4) provides against any unreasonable dis crimination in fixing the tariffs and terms and conditions for supply of electricity.
The power of fixation of tariffs in the Board is provided in this manner by Section 49 of the Supply Act which requires the fixation of uniform tariffs ordinarily having regard particularly to the specified factors and enables fixation of such tariffs for any person having regard to the factors expressly stated and any other relevant factors, providing further that no unreasonable or undue preference shall be shown to any person by the Board in exercise of its powers of fixin the tariffs.
246 The next important provision is Section 59 of the Supply Act.
For appreciating the argument based on Section 59, it is necessary to bear in mind the distinction in Section 59 as it stood prior to 1978, as amended by Act 23 of 1978 and finally as amended by Act 16 of 1983, quoted earlier.
Prior to 1978, Section 59 required the Board, as far as practicable and after taking credit for any subventions from the State Government under Section 63, not to carry on its operations under this Act at a loss and for this purpose, it was empowered to adjust its charges accordingly from time to time.
Under the provision as it then existed, the main thrust was to avoid the Board incurring any loss and for that purpose, it could adjust its charges accordingly from time to time.
Section 59 as amended by Act 23 of 1978 required the Board, after taking credit for any subventions from the State Government under Section 63, to carry on its operations under this Act and to adjust its tariffs so as to ensure that the total revenues in any year after meeting all expenses properly chargeable to revenue including those specified,left such surplus as the State Government specified from time to time.
The shift was, therefore, towards having a surplus.
as the State Government specified from time to time.
Sub section (2) then provided guidelines for the State Government in specifying the surplus under sub section (1) and mentioned the factors to which regard was to be had for this purpose.
The effect of the amendment made in Section 59 by Act 16 of 1983, which came into effect from April 1, 1985, was to provide for a minimum surplus, of three per cent or such higher percentage as the State Government is to specify in this behalf.
In other words, prior to 1978 amendment, the requirement from the Board was towards ensuring a surplus as specified by the State Government, and after the 1983 amendment the Board is required to ensure a surplus of at least three per cent unless the State Government specifies a higher.
sur 247 plus.
This is the scheme of Section 59 and it is Section 59 as amended by 1978 Act but prior to its amendment by the 1983 Act, with which we are concerned in the present case.
It cannot be doubted that Section 59 requiring the Board to adjust its tariffs for the purpose of Board 's finance is to be read along with Section 49 which provides specifically for fixation of tariffs and the manner in which that exercise has to be performed while dealing with any question relating the revision of tariffs.
into force from April 1, 1985, is that the Board entitled to adjust its tariffs to ensure generating a surplus of not less than three per cent even without such specification by the State Government and when the State Government specifies a higher surplus, then the Board must ensure generating the higher specified surplus.
This is, of course, subject to the accepted norm of the Board acting in consonance with its public utility character and not entirely with a profit motive like that of a private trader.
The pre 1978 concept of the Board 's functioning to merely avoid any loss is replaced by the shift after 1978 amendment towards the positive approach of requiring a surplus to be gener ated, the quantum of Surplus being specified by the State Government, with a minimum of three per cent surplus in the absence of the specification by the government of a higher surplus, after the 1983 amendment.
This construction made of Section 59, as it stood at different times in Govinda prabhu case ; indicated earlier cannot be faulted in any manner.
In Govinda Prabhu case the same argument which is advanced before us was expressly rejected.
We are of the same view.
" The next Section is Section 79 which talks of power to make 248 regulations.
Clause (j) deals with the principles governing the supply of electricity by the Board to persons other than the licensees under Section 49.
In accordance with this, each of the Boards has framed regulations.
All consumers are required to execute agreements governing the supply of energy.
The attack against Section 49 is that it does not contain any norm of guideline with regard to framing of terms and conditions for the supply of electricity and in particular, the demand of payment of interest on the amounts due to the Board.
Further, the principle of fairness of action has not been explicitly set out so as to make it a visible guide.
The words occurring in the Section "as the Board thinks fit" must be construed as "reasonably thinks fit".
We are unable to countenance this argument.
A careful reading of Section 49 clearly discloses as was noted in Hindustan Zinc Ltd. vs A.P.S.E.B. ; at 317 sub section (1) of the said section starts with the words "Subject to the provisions of the Act and all regulations, if any, made in this behalf '.
Therefore, the Board has to conform to the various provisions of the Act and the regulations.
Section 49 contains two powers: 1.
To prescribe terms and conditions of supply; and 2. fix the tariff.
No guidelines are required in this regard.
In Jagdamba Paper Industries Pvt. Ltd. vs Haryana State Electricity Board ; at 513 14 it was pointed out as follows: "We are of the view that the Board has been conferred statutory power under Section 49 (1) of the Act to determine the conditions on the basis of which supply is to be made.
This Court in Bisra Stone Lime Company Ltd. vs Orissa State Electricity Board ; , took the view that enhancement of rates by way of surcharge was well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.
What applied to the tariff would equally apply to the security, that being a condition in 249 the contract of supply.
Each of the petitioning consumers had agreed to furnish security in cash for payment of energy bills at the time of entering into their respective supply agreements.
There was no challenge in these writ petitions that the demand of security at the time of entering into supply agreements has to be struck down as being without jurisdiction.
Section 49 (1) of the Act clearly indicates that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit.
In exercise of this power the Board had initially introduced the condition regarding security and each of the petitioners had accepted the term." (Emphasis supplied) Where, therefore, under Section 49 read with Section 79 (j) regulations are made, the validity of the regulations could be examined by the Court, whether they are reasonable or not.
In Southern Steel Ltd. Hyderabad vs The Andhra Pradesh State Electricity Board AIR 1990 Andhra Pradesh 58 at 66 67, it was observed: "Before we proceed to deal with the rival contentions, it would be appropriate to notice the scope of judicial scrutiny by this Court in such matters.
Acting under article 226 of the Constitution, this Court does not sit as an appellate authority over the Electricity Board.
Indeed, the Act has not chosen to provide an appeal against the terms and conditions under S.49.
The jurisdiction exercised by this Court under article 226 is supervisory in nature.
It is to ensure the observance of fundamental right the rule of law, and to keep the authorities within their bounds.
Undoubtedly, the Electricity Board is a 'State ' within the meaning of article 12 and hence it is subject to Parts III and IV of the Constitution.
The scope of enquiry, therefore, would be to examine whether the power conferred 250 upon the Board by S.49 of the Act has been exercised so unreasonably and arbitrarily that interference by this Court is called for.
For the purpose of this enquiry it is not necessary for us to go into the question whether the terms and conditions notified under S.49 are statutory, in nature or not.
We shall proceed on the assumption that they are not statutory.
We shall also proceed on the assumption that the terms and conditions notified under section 49 ought to be reasonable, in the sense that they must be related to the object and purpose for which they are issued.
We are equally aware that the power under section 49 cannot be allowed to be used for oblique purposes, or for purposes unrelated to the one sought to be achieved by a given condition.
" In M/s Mills, Bharatpurv Assistant Engineer(D) R.S.E .B. ,Bharatpur AIR at 109, it was observed: "Where demand for deposit of cash security for one month 's estimated consumption charges and bank security equal to two months estimated charges as contemplated by Regulation 20 read with the Schedule theret o was made by the Electricity Board from a consumer of high tension electricity, the demand could not be said to be unreasonable and the consumer would not be entitled to continuation of the energy under Sec.
24 of the Electricity Act on his failure to deposit such security, even if no agreement had been entered.
into between the consumer and the Board after the commencement of high tension supply.
Once the supply for electricity had commenced the consumer was bound by the terms and conditions of supply contained in the Regulations.
Further, in such a case, merely because the Board did not encase or could not encash a small portion of the security deposited in the form of National Saving Certificates before coming into force of the Regulations, it could 251 not be said that the demand of cash security in the form of Bank guarantee by the Board under the Regulations was unreasonable.
furthermore, the demand of security from the consumer which was in accordance with the Regulations framed by the Board could not be said to be unreasonable merely because no interest is paid on the cash security deposited by the consumer.
" In other words, the terms and conditions notified under Section 49 must relate to the object and purpose for which they are issued.
Certainly, that power cannot be exercised for a collateral purpose.
In this view, we hold Section 49 as valid.
NATURE OF CONSUMPTION SECURITY DEPOSIT Each of the Electricity Boards before us is a State within the mening the meaning of Article l2 the Constitution of India.
The Boards are different from licensees.
(Emphasis supplied) Each of the Board has framed the tern is and conditions of supply.
One such condition relates to security deposits.
Such a deposit varies from Board to Board.
For example, under the terms and conditions notified by Andhra Pradesh Electricity Board under Condition No. 28. 1.1 the consumer is required to deposit with the Board a sum in cash equivalent to estimated three months consumption charges.
In the case or Rajasthan, the security is in the form of cash for one month and bank or insurance guarantee for two months.
The legislative Sanction behing the power of the Board to direct a consumer to furnish security may be examined.
It has already been seen that the Supply Act is complementary to the Electricity Act, 1910.
Section 26 of the supply Act states that the Board shall have all the powers and obligations of a licensee under the Electricity Act.
And this shall be deemed to be a licence of the Board for the purpose of the Act.
Under the regulations framed by the Board in exercise of powers of Section 49 read with Section 79 (j) the consumer is only entitled and the Board has an obligation to supply energy to the consumer upon such terms and conditions as laid down in the regulations.
If, therefore, the regulations prescribed a security deposit that will have to be complied with.
It also requires to be noticed under clause (6) of Schedule II of 252 the Electricity Act that the requisition for supply of energy by the Board is to be made under proviso (a) after a written contract is duly executed with sufficient security.
This, together with the regulations stated above, could be enough to clothe it with legal sanction.
In cases where regulations have not been made Rule 27 of the Rules made under the Electricity Act enables the adoption of model form of draft conditions of supply.
Annexure VI in clause 14 states that the licensee may require any consumer to deposit security for the payment of his monthly bills for energy supplied and for the value of the meter and other apparatus installed in his premises.
Thus, the Board has the power to make regulations to demand security from the consumers.
The next question will be: what is the object in demanding security? The deposit though called security deposit is really an adjustable advance payment of consumption charges.
The payment is in terms of the agreement interpreting the conditions of supply.
This security deposit is revisable from time to time on the basis of average consumption charges depending upon the actual consumption over a period.
This is the position under the terms of supply of energy with reference to all the Boards.
As a matter of fact, electricity is supplied in anticipation of payment.
In almost every case it takes nearly 2 1/2 months for the recovery of the amount before action for disconnection could be taken.
We will give one illustration as is in the case of Rajasthan.
The following.is the billing cycle: (a) Consumption period 30 days (b) Period consumed after taking the meter readings to issue bills.
10 days (c) Period allowed for payment 17 days (d) Notice for disconnecting 253 supply if consumer fails to deposit energy bill in 7 days time.
(e) Period taken in actual disconnection after expiry of notice.
10 days Total: 74 days In practice, some time is also taken between the period allowed for payment and the notice of disconnection.
At the same time, there is no obligation that the consumer must use only a particular quantum of electricity.
He could even consume more than the average consumption.
The Board after 2 1/2 months recovers amount for the electricity supplied by it.
It could charge late surcharge in case of high tension tariff after the expiry of the said period.
Thus, it will be clear that the true nature of the transaction in these cases is one of advance payment of charges for consumption of electricity estimated for a period of approximately three months.
Such an advance is liable to be made good and kept at the stipulated level from month to month.
It is open to the consumer to permit adjustment of the advance in the first instance.
Thereafter, he could make good the shortfall in consumption charges and the security deposit before actual disconnection.
Actually speaking, it is only after three months the disconnection takes place.
Hence, it is like a running current account.
The cycle of billing by the Board demonstrates that in the very nature of things, the consumer is supplied energy on credit.
The compulsory deposit in the context of billing cycle is hardly adequate to secure payments to the Board by the time the formal bill by the Board is raised on the consumer.
In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer.
Thus, the Board secures itself by resorting to such deposit to cover part of the liability.
For supply of electricity the Board needs finance for production, supply and other charges necessary for supply of electricity.
For this purpose, it takes loans from various financial institutions.
This is best 254 illustrated if one looks at the transactions of Punjab Electricity Board where electric energy is generated through hydro as well as thermal plants for ultimate sale to the consumers of the total power generated about 50 per cent is through hydro plants.
The remaining energy is generated through thermal power plants which are operated on coal/ oil.
Due to limited hydro resources within the State of Punjab the dependency on power on thermal plants is on the increase.
The present requirement for working of thermal plants is more than 52 lakh tonnes of coal per annum.
In addition, 60 thousand kolo litre of furnace oil is required.
The coal companies/Coal India Limited together with major suppliers of power plant like M/s. BHEL demand cost of coal/ spares/projects in advance for the supply of material.
The Board is also required to purchase power from Central projects N.T.P.C., N.H.P.C. in order to meet the demand for power by the consumers.
For purchase of such power again advance payment are made by the Board.
On such advances the Board is not paid any interest.
The effect is, the Board is obliged to bear the liability of hundreds of crores of rupees per annum.
It has no option but to pay the charges and deposits in order to keep the power available at a level to meet with the demand of the consumers.
It is the case of the Board that it has opened letters of credit by making advance deposits in favour of National Thermal Power Corporation and the suppliers.
Coal India Limited has also asked the Board to open revolving letters of credit in favour of Coal companies/Coal India Limited.
Despatch of coal is only against the letter of credit.
From the above, it is clear that while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers.
To off set part of the amount the consumer owes to the Board continually to ensure timely payment of bills by the Board to its suppliers, the advance consumption deposit is required to be kept with the Board before commencing supply to the consumer.
The clauses in the contract in relation to conditions of supply of electric energy enable the Board to adjust the bill against such deposits.
Therefore, this is not a case of mere deposit of money as in commercial transaction.
In demanding security deposit it is open to the Court to take note of pilferage as laid down in Ashok Soap Factory vs Municipal Corporation of Delhi J.T. at page 137: 255 ". .
The variation in the electricity consumed by different consumers indicated that the charge of pilferage of electricity and gross under utilisation or consumption of electricity compared to the sanctioned load was not without foundation. .
The meaning of he term "deposit" is given in Corpus Juris Secundum, Vol.
quoted in Davidson vs U.S., CCA.Pa., , 752 as follows: "In the sense of an Act.
A deposit has been described as a mere incident of custody, and, in its ordinary signification, implies something more than mere possession, negatives all idea of loan with contemplation of use for profit, and has been defined as an act by which a person receives the property of another, binding himself to preserve it and return it in kind; the act of one person giving to another, with his consent the possession of personal property to keep for the use and benefit of the first or of a third party.
It may mean a permanent disposition of the thing placed or deposited, or a mere temporary disposition or placing of the thing.
In these circumstances, we conclude that the object of security deposit is to ensure proper payment of bills.
Three months ' security deposit cannot be characterised either unreasonable or arbitrary.
This Court had occasion to point out in Jagdamba Paper industries Pvt.
(supra) at paragraph 10 which reads as under: "We agree however, on the facts placed that the stand of the Board that a demand equal to the energy bill of two months or a little more is not unreasonable.
Once we reach the conclusion that the Board has the power to unilaterally revise the conditions of supply, it must follow that the demand of higher additional security for payment of energy bills is unassailable, provided 256 that the power is not exercised arbitrarily or unreasonably." Several High Court decisions also had taken this view as seen from K.C Works vs Secretary APSEB.
Vidyut Soudha AIR 1979 Andhra Pradesh 291 at 294: "The reasonableness of such a requirement is explained by the Board in its counter in W.P. No. 2359/ 75 out of which W.A. No. 156 of 1977 arises.
In the counter it was stated as follows: "The consumer is billed for such month separately.
The consumers electricity consumption during the month is billed at the end of the succeeding month and 30 days time is given to him for payment of the bill.
If he does not pay the bill his supply is liable to be disconnected after giving one week 's notice under Section 24 of the .
Meanwhile he will be consuming the power.
So by the time the supply is disconnected to a defaulting consumer the would have consumer energy for 3 months.
The Board 's interest requires that there should be some protection by way of security of advance payment in respect of the consumption of this three months period.
" This is how the Board sought to explain the reasonableness of the requirement of security representing three months average consumption charges.
Nobody can say that this is unreasonable.
For three months a consumer can go on consuming electrical power without paying any charges.
It is therefore, eminently reasonable for the Board to require the consumer to furnish security for three months charges.
Therefore, we are satisfied that the requirement of security for three months consumption charges is reasonable.
" At page 295 it was observed thus: 257 "As a matter of fact it may be that the writ appellant and the writ petitioner before us are prompt in paying their electrical dues.
but the Board alees with lakhs and lakhs of consumers and it should have a uniform policy in demanding security.
It cannot make a dis tinction or discrimination from one consumer to another.
That is why a uniform policy has been laid down by incorporating it in the conditions aforesaid.
For these reasons we are satisfied that the requirement of security for three months average consumption charges by way of cash deposit is reasonable.
" In Municipal Corporation for Greater Bombay vs M/s D.M Industries at 256 it was observed thus: "This brings us to the last argument advanced by Mr. Hidayatullah that Clause 12 of the draft agreement is arbitrary and unreasonable.
The argument was that the power to impose conditions cannot be exercised to impose unreasonable conditions and it must also be ascertained whether the condition achieves the object for which it is imposed.
On principle, the proposition is undisputable.
Clause 12 which can be described as unreasonable and whether this Clause has no nexus with the object of the Act and the Rules.
The argument ,appears to be that if the object of security is to secure payment of bills, then insistence on cash deposits would be unreasonable because the object could also be served by furnishing of any security and it is said that the consumer was willing to furnish a bank guarantee.
In addition, it is urged that the period of.
consumption for which these security is required should not exceed two months and, therefore, the determination of three months is arbitrary.
" In Haryana Ice Factory vs Municipal Corporation of Delhi AIR 1986 Delhi 78, It was held thus: "Also, the demand of the security was corelated to the 258 consumption Pattern of the consumers and to cover the energy charges from the date of its consumption till the date of ultimate disconnection as a result of non payment of the changes due.
The court cannot enter into mathematical calculations to come to a conclusion that in stead of three months it should be 21/2 months.
The fixing of the period of security equal to energy consumption of three months is reasonable.
It may be that the Haryana Electricity Board has fixed the period of security deposit equal to the amount of energy consumed for a period of two months but that would depend upon the billing cycle adopted by the Haryana State Electricity Board.
" In Southern Steel Ltd. Hvderabad V. The A.P. State Electricity Board AIR 1 990 Andhra Pradesh 58 at pages 68 69 it was observed: "It is also stated by the Board that huge sums are required by it as rotating capital; that it borrows large amounts from organisations like L.I.C. and Banks; that it pays interest to them, and that in such circumstances it is well entitled to require the consumer to co operate by paying their bills regularly, by giving security deposits, and by conforming to the terms and conditions of supply.
It is argued that this consideration was also one of the bases of condition No. 28.
We do not think it necessary to express any opinion on this question, though the truth of the matter cannot be denied.
There are two views upon the matter.
The petitioners say that the interest burden should be reflected in the tariffs, while the Board says that interest burden can be reflected in consumption deposits, and not necessarily in tariffs.
All that can say is that there no hard and fast rule in this behalf.
The interest burden can be reflected either in tariffs, or can be sought to be set off by calling upon the consumers to make deposits.
In this case, however.
It is unnecessary to go into this aspect, since the requirement of three months deposit, in our opinion, cannot be said to be unreasonable and unjustified having regard to the facts mentioned above.
It cannot be said that the said condition is so unreasonable and.
arbitrary as to call for interference by this Court under article 259 226 of the Constitution.
We reiterate that even if this court comes to the conclusion that the deposit should not be 3 months, but 2 months 7 days, or 2 1/2 months, it would not be entitled to interfere in the matter, not being an appellate authority.
It cannot substitute its own opinion for the opinion of the Board.
It can interfere only when the exercise of power is shown to be arbitrary, and unrelated to the object sought to be achieved.
" We are in agreement with the above extracts.
The liability of Electricity Board to pay interest on Security Deposit: Now, we come to the crucial question as to whether interest is payable on security deposit or advance consumption deposit.
We will examine from the following angle: (a) The scheme of Electricity Acts.
(b) Schedule VI of the Supply Act.
(c) (d) Equity or Common Law.
(a & 6) Scheme of Electricity Acts & Schedule VI of Supply Act: It is the submission of Mr. Shanti Bhushan, learned counsel appearing for the respondent against Rajasthan Electricity Board that the scheme of the Electricity Act and Supply Act together with the rules suggest the payment of interest.
The Board is 'not entitled to utilize the security deposits for augmenting its finances as they are meant to secure the Board against default in payment of the bills.
The correctness of this argument may now be seen: There is no statutory provision which casts an obligation on the Board to pay interest on security deposit.
However, reliance is placed on model form of draft conditions of supply as is found in Annexure VI, traceable to Role 27 of Indian Electricity Rules, 1956.
Clause 14 relating to security deposit of the said Annexure reads: 260 ".
Interest at the rate of per cent per annum will be paid by the licensee on deposits exceeding Rs. 251/ ".
(Emphasis supplied) The model form is applicable only to a licensee as defined in Section 2 (4) of the Electricity Act.
Though Rule 27 prescribes a model form it is not compulsory,even for a lincesee to adopt the model condition of supply.
This is because Rule 27 itself Stipulates the model conditions of supply contained in Annexure VI, may with such variations as the circumstances of each case require, be adopted by the licensee.
" Therefore, there is an option available to adopt with such modifications.
In such a case, the adoption of the model form becomes permissive.
In this connection, Section 26 of the Supply Act, to which we have made a reference earlier, must be looked at.
Though the Board is to have powers and obligations of a licensee under the Electricity Act, the second proviso to this Section assumes importance.
It reads: "Provided further that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of energy through any of them has commenced." Second proviso of the Supply Act leads us to Schedule VI.
This Schedule has been framed in exercise of powers under Sections 57 and 57A.
In defining "clear profit" paragraph (2) of clause XVII, Item (v) makes a reference, as interest of security deposits which is a part of expenditure properly incurred by the licensee.
From this it is impossible to hold that this clause imposes an obligation on the licensee to pay interest on security deposits.
All that would mean is, if interest is paid then it qualifies as an item of expenditure properly incurred.
This is the position with regard to licensee.
But this cannot apply to the Board, which as stated above, is not a licensee.
For the same reason Item L 1 (c) of Form IV of the Electricity Rules relating to interest paid and accrued on consumers ' security deposits is of no avail because that relates to the manner of keeping accounts by the licensee, not being applicable to a Board.
261 In the above premises, it follows that there is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Supply Act that interest must be paid on the security deposit.
(c) : applicability.
As regards the applicability of , we find that the Division Bench of Rajasthan High Court has erred in holding that it is applicable.
Section 4(2) (g) of the of 1978 reads as under: "Notwithstanding the aforesaid and without prejudice to the generality of the provisions of sub section (1), the Court shall in each of the following cases allow interest from the dates specified below to the date of institution of the proceedings at such rate as the Court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed namely: (a)Where money or other property has been deposited as security for the performance of an obligation imposed by law or contract from the date of the deposit.
" This section has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted, A careful reading of Section 4(2) of the would disclose that it merely enlarges the category of cases mentioned in Section 4(1).
Even otherwise, there is nothing to indicate that section 4(2) could override other statutory provisions or a contract between the parties.
No doubt, Section 4(2) contains a non obstante clause.
But such a clause is restricted to the provisions of and cannot extend to other laws or a contract between the parties.
Accordingly we overrule the judgment of Rajasthan High Court which holds the is applicable.
262 The deposit made cannot be equated to a fixed deposit.
It has already bee In seen that in the case of daily supply of electricity, there is a consequential liability to pay for each day 's consumption of electricity.
To ensure that payment, the security deposit is furnished.
Hence ' it cannot be equated to a deposit at all.
It is in the nature of a running current account.
(d) Position in Equity or Common Law If this be the position, could interest be claimed either on equity or common law? The argument on behalf of the consumers is, if money belonging to any person is used by someone else he is oblilsed to pay interest for the period of its user.
Halsbury 's Volume 32 (page 53 para 106) defines "interest" as "the return or compensation for the use or retention by one person of a sum of money belonging or owed to another".
Therefore, it is contended that the Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumer in trust with the Board to secure the Board against default in payment of interest.
The object of the deposit is to secure the payment of consumption charges.
These charges may very depending upon the daily consumption, depending on the level of supply.
The amount due by way of consumption charges would also be liable to be appropriated.
Therefore, it is incorrect to state that the Board is a trustee.
The relationship between the Board and consumer is not that of a trustee and a beneficiary but a depositor and deposited.
This is not even a case of a constructive trust under Section 90 of the Indian Trust Act, since no advantage is gained by the Electricity Board in derogation of the rights of the consumer in, view of what we have observed above.
Strictly speaking, the word "interest" would apply only to two cases where there is a relationship of debtor and creditor.
A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds.
He does so because he charges interest which may be described as a kind of rent for the use of the funds.
For example, a bank or a lender lending out money on payment of interest, In this case, as already noted, there is no relationship of debtor and creditor.
We may now refer to Halsbury 's Vol.
32 para 108: 26 "108.
When interest is payable at common law.
At common law interest is payable (1) where there is an express agreement to pay interest; (2) where an agreement to pay interest can be implied from the course of dealing between the parties or from the nature of the transaction or a custom or usage of the trade or profession concerned; (3) in certain cases by way of damages for breach of a contract (other than a contract merely to pay money) where the contract, if performed, would to the knowledge of the parties have entitled the plaintiff to receive interest.
Except in the cases mentioned, debts do not carry interest at common law.
" Consumption security deposit does not fall under any of categories mentioned above.
Para 109 says: "Equitable right to interest.
In equity interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor, such a mortgagor and mortgagee, obligor and obliged on a bond, personal representative and beneficiary, prin cipal and surety, vendor and purchaser, principal and agent, solicitor and client, trustee and beneficiary, or where the debtor is in a fiduciary position to the creditor, Interest is also allowed on pecuniary legacies not paid within a certain time, on the dissolution of a partnership, on the arrears of an annuity where there has been misconduct or improper delay in payment, or in the case of money obtained or retained by fraud.
It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law, or has Wrongfully prevented the plaintiff from doing something which have so entitled him." This Paragraph is also inapplicable to the present case.
264 Even a case of wrongful detention of money cannot arise.
In Bengal Nagpur Railway vs
RuttanjiRamji AIR 1938 PC67 the question arose whether interest was payable on damages on account of wrongful detention of money.
It was held: "The however contains a proviso that "interest shall be payable in all cases in which it is now payable by law.
" This proviso applies to cases in which the Court of equity exercises jurisdiction to allow interest: As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. Ltd. vs Hart, 1: "In order to invoke a rule of equity, it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as for example, non performance of a contract of which equity can give specific performance." "The present case does not however attract the equitable jurisdiction of the Court and cannot come within the purview of the proviso.
" The very passage was noted by this Court in Union of India vs A.L. Rallia Ram ; at 188 189.
The argument of Mr. G., Ramaswami, learned counsel, that the deposit does not contemplate appropriation is not correct because in the nature of contract it is liable to be appropriated for the satisfaction of any amount liable to be paid by the consumer to the Board for violation of any conditions of supply in the context of wide scale theft of energy, tempering with the meters and such other methods adopted by the consumers.
Therefore, the said consumption security deposit serves not only to secure the interest of the Board for any such violation but should serve as a, deterrent on the consumer in discharging his obligations towards the Board.
Mr. G. Ramaswami would rely on Riches vs Westminster Batik Limited 1947 Appeal Cases 390 at 400.
265 That is a case which arose under Income Tax Act.
That has no application to this case.
What came up for consideration in A.L Rallia Ram 's case (supra) was the power of the Board to award interest.
Hence, that case has no application.
Accordingly, it is held that the claim for interest cannot be legally founded either on common law or equity.
As is rightly contended by Mr. Kapil Sibal, learned counsel and the other learned counsel appearing for the various Boards, it is the Board which should be entitled to receive interest on energy supplied to the consumers on credit as the consumers enjoy a credit facility as noted already.
We are also unable to accept the argument advanced on behalf of consumers that because the Electricity Boards charge interest on belated payments, interest must be paid on security deposit.
Interest on belated payments is by way of penalty.
That has no bearing, Clause providing for non payment of interest: Whether unrea sonable? While the terms and conditions of supply of Andhra Pradesh, Uttar Pradesh and Bihar provide for payment of interest at certain rate, in the case of Rajasthan and Orissa the Boards have clearly stipulated that no interest shall be payable on the securities furnished to the Board.
Whether that clause could be considered unconstitutional or arbitrary? In examining the constitutionality of this provision, in that it is violative of Article 14 of the Constitution of India, the following factors have to be borne in mind: 1.Article 14 does not mandate mathematical exactitude or scientific precision.
2.The mode and the period of security vis a vis the billing practice must form the consideration.
3.The consumer with open eyes has entered into the agreement and solemnly undertaken to abide by the conditions regarding nonpayment of interest.
He cannot resile from the condition because there is nothing inherently objectionable about such a condition nor is such a condition per se illegal or void as opposed to public policy.
It is not uncommon in commercial transaction, such a provision is entered into.
266 The argument that the Board is monopolistic in character and therefore, the consumers have no other option but to enter into contract appears to be misconceived.
The Board under Section 49 of the Supply Act is entitled, apart from framing uniform tariff, to insist upon such terms and conditions as the Board thinks fit.
This has also been so stated in.
Jagdamba case (Supra).
The consumption security deposit whether or not it carries interest is a condition precedent for the supply of electric energy.
We are clearly of the view that the scrutiny by the Court in determining the unconstitutionality of a provision not providing for interest must be tested on the following touchstone: In imposing such a condition has the Board acted as a private trader and thereby shed off its public utility character '? By referring to Hindustan Zinc Ltd. (supra) we have earlier pointed out the interrelationship between Sections 49 and 59 as noted by this Court.
We are therefore.
of the view that in imposing such a condition the Board has not acted as a private trader.
The nature of deposit has a rational relationship to the object which is incorporated as a condition of supply.
Some of the learned counsel appearing for the consumers would draw our attention to Section 59 of the Supply Act as well.
Under the said section the Board is obligated to carry on its operation as to ensure that it generates a surplus of 3 per cent or as specified by the State Government.
The Board is obligated to adjust its tariffs for ensuring such surplus.
The condition of supply requiring a consumption security deposit has a direct bearing on the operations of the Board which are to be conducted in such a manner as to ensure a surplus.
The language in Section 59 of the Supply Act is "carry, on its operations under this Act and adjust its tariffs.
" The language of the said section is not by adjusting tariff.
Therefore, the argument that the only manner in which the Board can achieve a surplus is to adjust its tariffs does not flow from the language of Section 59.
So read, in the context of the insistence of a security deposit which has direct bearing on the operations of the Board is per se reasonable and constitutional.
We will assume, for a moment, that the contract is an adhesion contract.
But still, it is not unconscionable.
267 In Central Inland Water Transport Corporation vs Brojo Nath Ganguly at 208 "adhesion contract" is defined quoting Black 's Law Dictionary, Fifth Edition, at page 38, as follows: "Adhesion contract.
Standardized contract form offered to consumers of goods and services on essentially 'take it or leave it ' basis without affording consumer realistic opportunity to bargain and under such condition that consumer cannot obtain desired product or services except by acquiescing in forth contract.
Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms is.
Not every such contract is unconscionable." With reference to these contracts the Court offered relief to the parties against such a clause if it is so unreasonable as to be unconscionable.
As a matter of fact at page 21 1, paragraph 83 of Central Inland Water Transport Corporation vs Brojo Nath Ganguly it stated thus: "Yet another theory which had made its emergence in recent years in the sphere of the law of contracts is the test of reasonableness or fairness of a clause in a contract where there is inequality of bargaining power.
Lord Denning, MR, appears to have been the pro pounder, and perhaps the originator at least in England, of this theory.
In Gillespie Brothers & Co. Ltd. vs Roy Bowled Transport Ltd. , 416 where the question was whether an indemnity clause in a contract, on its true construction, relieved the indemnifier from liability arising to the identified from his own negligence, Lord Denning said (at pages 415 416): The time may come when this process of 'construing ' the contract can be pursued no further.
The words are too clear to permit of it.
Are the courts then powerless? Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, 268 or applied so unreasonably, as to be unconscionable? When it gets to this point, I would say, as I said many year ago:. 'there is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused ' John Lee & Son (Grantham) Ltd. vs Railway Executive , 584.
It will not allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so.
(emphasis supplied,)" Farms worth on Contracts, 2nd Edn. 319, 320 para 4.27 states: "4.27 Precursors of Unionscionability.
Courts of equity did not share the reluctance of common law courts to police bargains for substantive unfairness.
Though mere "inadequacy of consideration" alone was not a ground for with holding equitable relief, a contract that was "inequitable" or "unconscionable" one that was so unfair as to "shock the conscience of the court ' would not be enforced in equity.
In one such case, a man promised to give a 20 percent interest in all property that he might later acquire in Alaska in return for the Promisee 's payment of $1,000 and his cancellation of an $11,225 debt of questionable collectability.
When the promiser acquired property worth over $ 750,000, the promises sought specific Performance.
The court refused to grant it.
Though the fairness of the bargain was to be judged as of the time that the bargain was made, in equity as at common law, here the "inadequacy of consideration" for the promise sought to be enforced was "so gross as to render the contrast unconscionable." In dealing with the validity of the agreement containing a clause 269 relating to minimum guarantee this Court had occasion to observed in Bihar State Electricity, Board vs Green Rubber Industries [1990] 1 SCC 731 at page 740 as follows: "It is true that the agreement is in a standard form of contract.
The standard clauses of this contract have been settled over the years and have been widely adopted because experience shows that they facilitate the supply of electric energy.
Lord Diplock has observed: "If fairness or reasonableness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would arise a strong presumption." That their terms are fair and reasonable.
Schroeder(A.) Music Publishing Co. Ltd. vs Macaulayr ,624.
in such contracts a standard form enables the supplier to say: "If you want these goods or services at all, these are the only terms on which they are available.
Take it or leave it.
"It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone.
The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion.
It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them, even though he is ignorant of the precise legal effect.
" In the light of the above discussion we hold that the clause not providing for interest is neither arbitrary nor palpably unreasonable, nor even unconscionable.
In holding so we have regard to the following: 1.The consumer made the security deposit in consideration of the performance of Ms obligation for obtaining the service which is essential to Wm.
2.The electricity supply is made to the consumers on credit as has been noted above.
270 3.
The billing time taken by the Board is to the advantage of the consumer.
4.Public revenues are blocked in generation, transmission and distribution of electricity for the purpose of supply.
The Board pays interest on the loans borrowed by the Board.
This is in order to perform public service.
On those payment made by the Board it gets no interest from the consumers.
5.The Board needs back its blocked money to carry out public service with reasonable recompense.
6.The Board is not essentially a commercial Organisation to which the consumer has fumished the security to earn interest thereon.
Weshould also observe that the rate of interest on security deposit cannotbe equated with the rate of interest on the fixed deposit.
First of all, if the consumption charges are to be appropriated the moneys accrued by way of deposits cannot be held in fixed deposits.
Nor all deposits need carry interest in every transaction.
Secondly, the nature and character of the security deposit is essentially different from fixed deposit.
It is worthwhile, in this connection, to refer to Companies Acceptance of Deposits) Rules, 1975.
In Rule 2 it is stated: "2.
Definitions.
In these Rules, unless the context otherwise requires. (a) (b) "deposit" means any deposit of money with, and includes any amount borrowed by, a company, but does not include (i) (ii) (iii) 271 (iv). . . (v) any amount received from an employee of the company by way of security deposit; (vi) any amount received by way of security or as an advance from any purchasing agent, selling agent, or other agents in the course of or for the purposes of the business of the company or any advance received against orders for the supply of goods or properties or for the rendering of any service;. .
We may add that merely because the English Acts provide for interest, it is not necessary the same should be adopted here as well.
Thus, we hold that the Division Bench of the Rajasthan High Court erred in striking down Condition No. 20 of the General Conditions of the Rajasthan Electricity Board as violative of Article 14 of the Constitution of India.
Has this Court decided the question of rate of interest in jagdamba Paper Industries (Pvt.) Ltd. vs Haryana State Electricity Board ; In that case the following two points were raised as seen from paragraph 3 at page 51 1: 1.The enhancement made in the security amount towards the meter is without any justification.
The enhancement of security deposit was not warranted.
On the question of interest in paragraph 11 at page 515 in Jagdamba 's case (supra) it is stated thus: "On the security amount interest at the rate of 4 per cent was initially payable.
The same has already been enhanced to 8 per cent per annum.
Since the amount is held as security, we indicated to the counsel for the Board that security amount should bear the same 272 interest as admissible on fixed deposits of Scheduled Banks for a term of years and we suggested keeping the present rate of interest in view that it should be enhanced to 10 per cent.
Board 's counsel has now agreed that steps would be taken to enhance the present rate of interest of 8 percent to 10 percent 'with effect from October 1, 1983.
" It requires to be carefully noted that the question of interest on security was not raised before the Court.
Therefore, the Court had no occasion to decide this issue of interest.
That part of the judgment, as rightly contended by Mr. Soli J. Sorabeejee, learned counsel, is sub silentio.
However, the learned counsel for the consumers pressed into service the various orders passed by this Court in relation to interest and urged that it is concluded by those orders.
We are unable to accept his argument.
All the orders have their root in Interlocutory Application No.1 of 1989 in Writ petition No. 578 of 1987.
That order is extracted in full: "We have heard counsel for the parties.
Mr. Gopal Subramaniam ' counsel for the State Electricity Board on instructions states that the initial deposit which has been made by the consumer petitioner, to the tune of Rs. 10,07,378.81 was intended as security for pay ment of energy dues.
In terms of our order of 5th May. 1988.
the petitioner would be entitled to the interest on that amount from the date of the deposit at the rate of 12% per annum.
Mr. Gobind Mukhoty, counsel for the petitioner now agrees to deposit the balance amount of Rs. 691,621 minus the interest which is said to be the additional security and while making the deposit of the additional amount, the petitioner is entitled to deduct the interest already accrued on the deposit of Rs. 10,07,378.81 from the date of the deposit at the rate of 12% per annum.
The balance amount after deduction of the interest shall be deposited in two equal quarterly instalments, the first being due by 15.10.89.
273 The application for directions is disposed of accordingly.
" Based on this, in Writ Petition No. 613 of 1990 it was stated thus: "In view of the order made by this Court in the connected matters on September 7, 1989, after hearing parties in Writ Petition No. 578/87 on the amount deposited by the consumer as security, interest at the rate of 12% would be admissible.
The Writ petition is disposed of accordingly.
" Two other orders remain to be seen.
One rendered in W.P. 5582 of 1989 which was disposed of by consent and the other in W.P.No.576 of 1990 where the writ petition was disposed of in the following manner: "If the Electricity Board has been directed to allow interest at the rate of 12% per annum on the security deposited with the Board by the petitioners similarly situated, the claims of the petitioners should similarly be dealt with by the Board.
The Writ Petition is disposed of.
" On careful examination of the above orders, we do not think the Court ever intended to adjudicate upon the rate of interest or render a decision on that question.
Therefore, it cannot be contended that the disposal of Writ Petition No. 613 of 1990, though by a Bench of 3 judges would be binding on us because, as pointed out above.
It was entirely based on Interlocutory order.
We are of the view that we are free to decide the question on its merits.
The argument of Mr. Anil Divan, learned counsel that unequals are treated equals has no basis.
It may be that the consumers of electricity, where it is raw material, would be prompt in their payment .in their own interest.
On that basis, it cannot be contended that they 274 cannot be treated in the same way as defaulters.
The test, in our considered opinion, is whether in the general application of law there is any discrimination.
Merely because some of the consumers are prompt those related cases cannot render the provision constitutional.
We may usefully refer to the following cases: The Collector of Customs, Madras vs Nathella ; at 829 30 it was observed? "The deleterious effects of smuggling, as pointed out in the extract from the Report, are real and it is not in dispute that the prevention and eradication of smuggling is a proper and legally attainable objective and that this is sought to be achieved by the relevant law.
If therefore for the purpose of achieving the desired objective and to ensure that the intentions of Parliament shall not be defeated a law is enacted which operates somewhat harshly on a small section of the public, taken in conjunction with the position that without a law in that form and with that amplitude smuggling might not be possible of being effectively checked, the question arises whether the law could be held to be violative of the freedom guaranteed by article 19 (1) (f) & (g) as imposing an unreasonable restrain.
That the restrictions are in the "interest of the general public" is beyond controversy.
" In Vivian Joseph vs Municipal Corporation, Bombay, ; at 276 77 it was observed: "The levy of the cess under section 27 of the Act is not based on the principle of quid pro quo.
Its object is not to repair all residential premises, but to preserve and prolong their lives in order to avert the dilema caused by the acute shortage of residential accommodation on the one hand, and the reluctance and/or inability of the owners to carry out repairs resulting from the Rent Act, on the other and to establish an agency so that structural repairs to buildings in dangerous or ruinous 275 conditions can be carried out.
The finances for these objects are provided from a fund from the impugned cess and contributions by the State and the Corporation.
The contention that some of the buildings falling in categories B and C would not need structural repairs throughout the life of the Act or that such repairs would carried out in buildings not cared for by defaulting landlords, takes no notice of the fact that the primary object of the Act is not to repair all buildings subject to cess but to prevent the annually recurrent mischief of house collages and the human tragedy and deprivations they cause.
The cess being thus levied to prevent such disasters, there is no question of unequal treatment between one class of owners and another.
The classification of buildings into three categories is based, as already stated, on their age and the construction current during the periods of their erection.
It is,therefore, based on an intelligible differentia and is closely related to the objects of the legislation.
There is, therefore no question of unequals being treated as equals, as each building of the Board and has to be structurally repaired if the need were to arise." In B. Banerjee vs Anita Pan, ; at 787 88 it was observed: "Moreover, what is the evil corrected by the Amendment Act? The influx of a transferee class of evictors of tenants and institution of litigation to eject and rack rent or re build to make larger profits.
Apparently, the inflow of such suits must have been swelling slowly over the years and when the stream became a flood the Legislature rushed with an amending bill.
Had it made the law merely prospective these who had in numbers, already gone to Court and induced legislative intention would have escaped the inhibition.
This would defeat the object and so the application of 276 the additional than to pending actions could not be called unreasonable.
To omit to do so would have been unreasonable folly.
The question is whether those cases which were filed several years ago should have been carved out of the category of transferees hit by the act? Where do you draw the line? When did the evil assume proportions? These are best left to legislative wisdom and not court 's commensense although there may be grievances for some innocent transferees.
If this be the paradigm of judicial review of constitutionality, we have to ignore exceptional cases which suffer misfortune unwittingly.
The law is made for the bulk of 'the community to produce social justice and isolated instances of unintended injury are inevitable martyre for the common good since God Himself has failed to make perfect laws and perfect justice, Freaks have to be accepted by the victims rightly or wrongly as froensic fate" In Fatelichand Himmatlal vs State of Maharashtra, ; at 851 it was observed: "May be, some stray money lender,. may be good souls and to stigmatize the lovely and unlovely is simplistic betise.
But the legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations, not singular individualisations.
so viewed pragmatics overrule punctilious and unconscionable money lenders fall into a defined group.
Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment.
After all, the law makers representatives of the people, are expected to know the socioeconomic conditions and customers.
Since nice distinctions to suit every kindly creditor is beyond the law making process, we have to uphold the grouping as reasonable and the restrictions as justified in the circumstances of, the case.
In this 277 branch, there are no finalities.
" The attack on additional consumer deposit is that no reasons have been adduced for additional demand.
It stands to reason that if there is a revision in the rate of tariff there must be an upward revision in the consumption security deposit since it has direct bearing to the level of supply in consumption of electricity.
For example,in the State of Uttar Pradesh, the tariffs were adjusted upwards in October 1986.
The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987.
These facts indicate the rationale in the demand of additional security deposit.
As stated above, this being a condition of supply, no reason need be given at the time of upward revision.
Therefore.
we reject the argument of Mr. Govind Mukhoty, learned counsel in this regard.
In view of the above finding, upholding the clause relating to nonpayment of interest, for example, Rajasthan and Orissa, what is to happen to such of those cases where interest is provided like Andhra Pradesh, Utter Pradesh and Bihar? In all those cases wherever the electricity boards have framed a provision for payment of interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause.
The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position.
Further, keeping in view the quantum and made of security deposit and billing and recovery practice.
Nor again, could the Board withhold payment of interest on the basis of this judgment.
However, if there is any change in the circumstances affecting the budgetary and financial position, the Board can examine the case and decide the future course of action.
But any change resulting in non payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case.
We also add that not withstanding Jagdamba 's case (supra) as on today, Haryana Electricity Board has dispensed with payment of interest.
We make it clear by this judgment that we are not deciding the validity of such provision since the matter is stated to be pending.
Inconclusion, We hold: 278 (1) Section, 49 of the Supply Act is valid.
(2) The nature of consumption deposit is to secure prompt payment and is intended for appropriation.
(3)There is no liability on the Electricity Board either tinder the statute or common law or equity to pay interest.
(4)Conditions and the terms of supply providing for non payment of interest is not so unconscionable as to shock the conscience of the Court.
(5)No reason need be given for.
enhancement of additional security deposit.
Accordingly we uphold the judgment of Andhra Pradesh High Court and reverse the judgment of Rajasthan High Court.
In the result, the following cased filed against Andhra Pradesh Electricity Board are dismissed: S.L.P. (c) Nos.
13004/89, 14995/89,14629/89,14899/89,15739/ 89,15817/89,7475/90,6374/90,9661 65/90,5461/90,6371/00,5294/ 90, 6779/90, 5492/90, 5921/90, 5559/90, 4793 94/90, 4791 91/90, 6375/90.
6570/90, 12270/90, 9926/90, 11548/90, 2600/90, 6372.73/90, 6035 44/90, 6505/90,6374/90, 6094/00, 6765 68/90,6462/90, 5306 08/90, 9132/00, 12424/90, 6370/90, C.A. No. 1779/90, S.L.P. (c) Nos.
17465/91, 17679/91, 17865 66/91, 20125/91, 19532/91, 18043/91, 19586 93/91, 19597 600, 20076/91, 21/92, 649/92, 2564/92,5782 83/92,8336/92,9124 25/92,9488/92,12318/92,12506/ 92, 12610/92, 12805/92, 12804/92, 12814/92, 14439/92, 14449/92, 14555/92, 1739 43&43A/92, 13593/92, C.A. No. 2409/92, W.P. (c) Nos.
603/92,455/92, 3558/83, 566/92, 1353/89, 48/92, 362/92, 1293/ 89, 6770/90.
The Transfer Petition (c) No. 366/92 filed by the Andhra Pradesh Electricity Board is allowed.
279 The following cases filled by Rajasthan State Electricity Board are allowed: C.A. Nos.
4714/91 &4028 43/91,S1,P(c) Nos.446/92.703/92, 12941/90.
433 36/92, 439 42/92, ( '.A. Nos.
5342/92.
1187 88/92, 4512/92, 45 10/92.
4511/92, 2800/92.
1204/92, 406 436/92, section L. P. (c) No. 20/92,46/02.47/92,50/92,53/02,449 452/92,494/02,516/92,48/92.49/92.51/02.52/92,54/92,55/92,43 45/92,56 72/92,428 432/92, 443 444/92,453 457/92,503 08/92.
512 14/92.530 33/92,14450/92.
The following cases filed by the Bihar Electricity Board are allowed: SLP(c) Nos.
11799/89, 1856/90, 8318/92, 16028/92.
The following, cases against Uttar Pradesh Electricity Board are dismissed.
W.P. (c) Nos, 513/87, 804/87, 1144/87.
743/87, 531/87, 725/87.
739/87, 526/91.
576/87, 577/87, 801/87, 833/87.
769/87, 676/87, 578, 87, 728/87, 762/87.
818/87, 526/87, 744/87.
742/87.
540/87, 1238/87, 738/87.684/87, S.L.P. (c) Nos, 2952 56/1987, 15885/91, & 12902/9 1.
The W.P. (c) No. 1317/90 filed against Punjab Electricity Board is dismissed.
All the I.A.s are allowed.
However, there shall he no order as to costs.
T. N. A. Petitions disposed of. | Under the General Terms and Conditions for supply of electricity notified by the Andhra Pradesh State Electricity Board, under Section 49(1) of the , the consumers were obliged to keep with the Electricity Board an amount equivalent to three month 's demand and energy charges as consumption deposit on which Interest at the rate of 3% per annum was payable by the Board.
In the event of delay in payment of consumption deposit within the stipulated period not only surcharge was payable by consumer but also the supply was liable to be disconnected.
Various petitions were riled before Andhra Pradesh High Court challenging the validity of terms and conditions contending that the consumption deposit should In no event exceed two months average consumption charges and that In view of the judgment of Supreme Court In M/s. Jagdamba Paper Industries vs H.S.E.B. Board, [1983] 4 S.C.C. 508, the Board was liable to pay Interest at the game rate as Is paid by a Scheduled Bank on fixed deposit.
The High Court dismissed the petitions.
In appeals to this Court, It was contended on behalf of the consumers that: (1) Section 49 of the is ,unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity; (2) in view of the fact that in case of power intensive consumers the cost of Electricity is very high the condition requiring 3 months ' security deposit is arbitrary and illegal for power intensive consumers; and (3) there is no power under the Electricity Supply Act to enable the Board to raise revenue or to cover its capital cost etc.
except by way of adjusting tariffs as seen from under Section 59 of the Supply Act, 1948.
Therefore, consumption deposit cannot be used for the purpose of revenue or raising revenue.
On behalf of the Electricity Board it was contended that: (1) In view of the fact that the object of consumption deposit (which is In the nature of advance payment and not a security deposit) Is to ensure prompt payment of electricity supply, It cannot be contended that 3 201 month 's consumption deposit Is arbitrary; (2)the fact that some of the consumers pay large amounts by way of electricity charges has nothing to do with the nature of deposit.
Merely because a unit Is power based it cannot be treated separately for the terms of supply relating to consumer deposit must be uniform.
In the case of Rajasthan Electricity Board the General Conditions expressly provided that no Interest will be paid by the Electricity Board on security deposit.
Futher, the Electricity Board issued notices requiring the consumers to deposit the enhanced amount of cash security as well as bank guarantee on the basis of maximum power consumption.
The consumers flied petitions In the Rajasthan High Court contending that provision for no Interest was bad In law and that the enhanced security deposit must he calculated not on three months maximum consumption but on the basis of minimum power consumption.
A Single Judge of the High Court allowed the petitions.
On appeal, the Division Bench held that the clause relating to nonpayment of interest was not reasonable.
Relying on Section 4 of the as well as on the Model Form of draft conditions contained In Schedule VI of the 1948 Act, the Division Bench held that interest was payable on the security deposit.
In appeals to this Court, it was contended on behalf of the Rajasthan State Electricity Board that: (1) there is no statutory provision which casts an obligation on the Board to pay Interest on the security deposit; nor even Interest is payable under common law or in equity; (2) the High Court erred In relying on the Model Form conditions as well as on the ; (3) the security deposit for three months is neither unreasonable nor arbitrary; (4) even if the contract between the Board and consumer is adhesion contract, it is not necessarily unconsciable; (5) in Jagdamba Paper Industries case the right of Interest was based on the concession of parties and the Court had no occasion to decide the rate or interest.
On behalf of the consumers it was contended that: (1)the scheme of the Electricity Act and Supply Act together with the Rules suggest the payment of interest; (2) since the money is deposited but the consumers with the Board to secure the Board against default In payment of bills, the Board Is in the position of a trustee in respect of 202 this money; (3) even under English Law, interest was payable on security for electricity.
For the intervenor on behalf of the Electricity Board of Orissa, it was submitted that Regulation 7 of the Orissa State Electricity Board General Conditions of Supply Regulations 1981 providing that no interest would be payable on security deposit is just and reasonable and is not arbitrary or violative of Article 14 of the Constitution.
The Uttar Pradesh State Electricity Board was also paving 3% interest on consumption deposit.
The consumers preferred writ petitions before the Allahabad High Court claiming 12% interest ,but the same were dismissed.
In appeals to this Court it was contended on behalf of the consumers that in a number of matters this Court has also ordered interest at the rate of 12% on security deposit and the same principle should apply to this case; (2) if interest is not paid, security deposit cannot be demanded as this will amount to unconscionable bargain; and (3) the security deposit does not contemplate appropriation.
On behalf of the Electricity Board it was contended that: (1) in cases where 12 per cent interest was awarded it was only by way of ad interim measure.
Therefore, orders are not conclusive on this aspect; (2) under Article 226 of the Constitution, the court is to conduct a limited scrutiny whether by imposing a condition the Board has not acted as a private trader and thereby shed off its public utility character.
If the Court comes to the conclusion that the Board has not acted as a private trader and the nature of deposit has a rational relationship, the issue will fall outside the scope of judicial purview.
The Bihar State Electricity Board was paying 5 % interest on the security deposit.
The consumers claimed interest at the rate payable on fixed deposit by a nationalised bank and the High Court allowed the same.
The Electricity Board filed petition in this court contending that the High Court erred in awarding a higher rate of interest.
On behalf of the consumers it was contended that the increase in security deposit without assigning any reason was had in law.
203 In the connected writ petition, the challenge is to the validity of Sections 49 and 79 of the Supply Act.
According to the Punjab State Electricity Board, while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers.
To off set part of the amount that the consumer owes to the Board constantly and also to ensure timely payment of advances by the Board to its suppliers an advance consumption deposit is insisted upon before commencing supply to the consumer.
If this is not so taken the Board will be left with no other option than to increase the tariff.
Thus advance deposit cannot be termed as a fixed deposit as the amount cannot be utilised against nonpayment of dues from consumers.
Besides, the consumers can also ask for the refund.
Therefore, Sections 49(1) and 79 (j) cannot be termed as arbitrary.
It was also contended on behalf of the Punjab State Electricity Board that the amendment to clause 23 of abridged conditions of supply requiring consumers to pay advance consumption deposits is perfectly reasonable.
For the intervenor on behalf of Calcutta Electricity Supply Corporation, it was submitted that the deposit though called security deposit is really an adjustable advance payment of consumption charges.
The amount is revisable from time to time depending upon the average consumption charges on the basis of actual consumption over a period.
In short, it is in the nature of a running account.
The security deposit does not remain in tact like a fixed deposit but gets depleted day after day depending on the extent of consumption.
More often than not.
the consumption charges and other dues exceed the security deposit.
That necessitates calling for additional advance to make up a shortfall.
In the absence of any usage or contract or an,*, provision of law requiring payment of interest is not payable for wrongful detention of money.
In this case, there is no wrongful detention [of even.] Section 4(2) of the has no application to this deposit.
204 Disposing the petitions, this Court, HELD:1.
Section 49 of the is valid Sub section(1) of the said section starts with the words "Subject to the provisions of the Act and all regulations, if any, made in this behalf".
Therefore, the Board has to conform to the various provisions of the Act and the regulations.
Section 49 contains two powers; (1) to prescribe terms and conditions of supply; and (2) fix the tariff.
No guidelines are required in this regard.
[278A 248CE] Hindustan Zinc Ltd. vs A.P.S.E.B., ; ; Mysore State Electricity Bought vs Bangalore Woolen Cotton and Sill Mills Ltd. A.I.R. 1963S.C. 1128, Jagdamba Paper Industries Pvt. Ltd. vs Haryana State Electricity Board, ; , referred to.
Roberts vs Hopwood, ; Pyx Granite vs Minister of Housing and Local Government, , cited.
1.1.Where regulations are made under Section 49 read with Section 79 (j), the validity of the regulations could be examined by the court, whether they are reasonable or not.
[249 D] Southern Steel Ltd., Hyderabad vs The Andhra, Pradesh State Electricity Board, A.I.R. 1990 Andhra Pradesh 58, and M/s. B.R. Oil Mills.
Bharatpur vs Assistant Engineer (D) R.S.E.B. Bharatpur, A.I.R , referred to.
1.2The terms and conditions notified under Section 49 must relate to the object and purpose for which they are issued.
Certainly, that power cannot be exercised for a collateral purpose.
In this Section 49 is valid.
[251 C] 2.The nature of consumption deposit is to secure prompt payment and is intended for appropriation.
The deposit though called security deposit is really an adjustable advance payment of consumption charges.
The payment is in terms of the agreement interpreting the conditions of supply.
This security deposit is revisable from time to time on the basis of average consumption charges depending upon the actual consumption over a period.
This is the position under the 205 terms of supply of energy with reference to all the Boards.
[278 A, 252 D E] 2.1The cycle of Billing by the Board demonstrates that in the very nature of things, the consumer is supplied energy on credit.
The compulsory deposit in the context of billing cycle is hardly adequate to secure payments to the Board by the time the formal hill by the Board is raised on the consumer.
In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer.
Thus, the Board secures itself by resorting to such deposit to cover part of the liability.
[253 F G] 2.2The deposit made cannot be equated to a fixed deposit.
In the case of daily supply of electricity, there is a consequential liability to pay for each day 's consumption of electricity.
To ensure that payment the security deposit is furnished.
Hence, it cannot he equated to a deposit at all.
It is in the nature of a running current account.
[262 A] 2.3The argument that the deposit does not contemplate appro priation is not correct because in the nature of contract it is liable to be appropriated for the satisfaction of any amount liable to be paid by the consumer to the Board for violation of an), conditions of supply in the context of wide scale theft of energy tempering with the meters and such other methods adopted by the consumers.
Therefore, the said consumption security deposit serves not only too secure the interest of the Board for any such violation but should serve as a deterrent on the consumer in discharging his obligations towards the Board.
[264 F 6) Union of India vs A.L. Rallia Ram, ; ; Riches vs West minister Bank Ltd. 1947 Appeal Cases 390, held inapplicable.
2.4While the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers.
To off set part of the amount the consumer owes to the Board continually to ensure 206 timely payment of bills by the Board to its suppliers, the advance consumption deposit is required to he kept with the Board before commencing supply to the consumer.
The clauses in the contract in relation to conditions of supply of electric energy enable the Board to adjust the bill against such deposits.
Therefore, this is not a case of mere deposit of money as in commercial transaction.
In demanding security deposit, it is open to the court to take note of pilferage.
[254 F H] Ashok Soap Factory vs Municipal Corporation of Delhi, J.T. , referred to.
Corpus Juris Secundum, Vol.26A,p.194,Davidson vs U.S., C.C.A. Pa., , 752, referred to.
2.5Three month 's security deposit cannot be characterised either unreasonable or arbitrary.
1255 F] Jagdama Paper Industries P. Ltd. vs Haryana State Electricity Board, [1993] 4S.C.C.508; K.C. Works vs Secretary A.P.S.E.B., Vidyut Soudha, A.I.R. 1979 Andhra Pradesh 291; Municipal Corporation for Greater Bombay vs M/s D.M. Industries, ; Haryana Ice Factory vs Municipal Corporation of Delhi, A.I.R. 1986 Delhi 78, referred to.
Southern Steel Ltd., Hyderabad vs The A.P. State Electricity Board, A.I.R. 1990 Andhra Pradesh 58, approved.
Indian Aluminium Company vs Karnataka Electricity Board ; , cited.
2.6Under the regulations framed by the Board in exercise of powers of Section 49 read with Section 79 (j) the consumer is only entitled and the Board has an obligation to supply energy to the consumer upon such terms and conditions as laid down in the regulations.
If, therefore.
the regulations prescribed a security deposit that will have to be complied with.
In cases where regulations have not been made Rule 27 of the Rules made under the Electricity Act enables the adoption of model form of draft conditions of supply.
207 Annexure VI in clause 14 states that the licensee may require any consumer to deposit security for the payment of his monthly bills for energy supplied and for the value of the meter and other apparatus installed in his premises.
Thus, the Board has the power to make regulations to demand security from the consumers.
[251F H, 252A B] 2.7Under Section 59 the Board is obligated to carry on its operation as to ensure that it generates a surplus of 3 per cent or as specified by the State Government.
The Board is obligated to adjust its tariffs for ensuring such surplus.
The condition of supply requiring a consumption security deposit has a direct bearing on the operations of the Board which are to be conducted in such a manner as to ensure a surplus.
The language in Section 59 of the Supply Act is "carry on its operations under this Act and adjust its tariffs.
" The language of the said Section is not by adjusting tariff.
Therefore, the argument that the only manner in which the Board can achieve a surplus is to adjust its tariffs does not flow from the language of Section 59.
So read, in the context of the insistence of a security deposit which has direct bearing on the operations of the Board is per se reasonable and constitutional.
[266 E 6] Kerla State Electricity Boaed vs S.N. Govinda Prabhu & Bros. 3.There is no liability on the Electricity Board either under the statute or common law or equity to pay interest on security deposit.
[278 B] 3.1There is no statutory provision which casts an obligation on the Board to pay interest on security deposit.
Model form of draft conditions of supply containing Clause 14 relating to interest on security deposit) as found in Annexure VI.
traceable to Rule 27 of Indian Electricity Rules, 1956, is applicable only to a licensee as defined in Section 2 (4) of the Electricity Act.
Even for a licensee it is not compulsory to adopt the model condition of supply.
These is an option available to adopt the model conditions of supply with such modifications as the circumstances of each case require.
[259G H, 260 A C] 208 3.2Schedule VI has been framed in exercise of powers under Sections 57 and 57A.
In defining "clear profit" paragraph (2)of clause XVII, Item (v) makes a reference, as interest on security deposits which is a part of expenditure properly incurred by the licensee.
From this, it is impossible to hold that this clause imposes an obligation on the licensee to pay interest on security deposits, All that would when is, if interest, is paid then it qualifies as an item of expenditure properly incurred.
This is the position with regard to licensee.
But this cannot apply to the Board, which is not a licensee.
For the same reason Item L 1 (c) of Form IV of the Electricity Rules relating to interest paid and accrued on consumers ' security deposits is of no avail because that relates to the manner of keeping accounts by the licensee, not being applicable to a Board.
Therefore, there is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Supply Act that interest must be paid on the security deposit.
Accordingly the Division Bench of Rajasthan High Court has erred in holding that is applicable.
[260 F H, 261 A B] 3.3Section 4(2) of the has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted.
A careful reading of Section 4(2) would disclose that it merely enlarges the category of cases mentioned in Section 4(1).
Even otherwise, there is nothing to indicate that Section 4(2) could override other statutory provisions or a contract between the parties.
No doubt, Section 4(2) contains a non obstante clause.
But, such a clause is restricted to the provisions of and cannot extend to other laws or a contract between the parties.
[261 F 6] Civil Special Appeal No. 83 of 1987, decided on 30th July, 1991 by a Division Bench of the Rajasthan High Court, overruled.
3.4The word 'interest ' would apply only to cases where there is a relationship of debtor and creditor.
A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds.
He does so because he charges interest which may be described as a kind of rent for the use of the funds.
For example, a bank or a lender lending out money on payment of interest.
In this case, there is no relationship of debtor and creditor.
Accordingly, the claim for 209 interest cannot be legally founded either on common law or equity.
[262 G, 265 A] Halshury 's Vol.
32 para 108: (Discussing cases where interest is payable under common law) para 109 (Discussing cases where there is equitable rights to interest), held inapplicable.
Bengal Nogpur Railway vs Ruttanji Ramji, A.I.R. 1939 P.C. 67, referred to.
3.5The object of the deposit is to secure the payment of consumption charges.
These charges may vary depending upon the daily consumption, depending on the level of supply .The amount due by way of consumption charges would also be liable to he appropriated.
Therefore, it is incorrect to state that the Board is a trustee.
The relationship between the Board and consumer is not that of a trustee and a beneficiary but a depositor and deposits.
This is not event case of a constructive trust under Section 90 of the Indian Trust Act, since no advantage is gained by the Electricity Board in derogation of the rights of the consumer.
1262 D F] 4.The clause not providing for interest on security deposit is neither arbitrary nor palpably unreasonable not even unconscionable for the following reasons: (a)The consumer made the security deposit in consideration of the performance of his obligation for obtaining the service which is essential to him.
(b The electricity supply is made to the consumers on credit.
(c)The billing time taken by the Board is to the advantage of the consumer.
(d)Public revenues are blocked in generation, transmission and distribution of electricity for the purpose of supply.
The Board pays interest on the loans borrowed by the Board.
This is in order to perform 210 public service.
On those payments made by the Board it gets no interest from the consumers.
(e) The Board needs back its blocked money to carry out public service with reasonable recompense.
(f) The Board is not essentially a commercial organisation to which the consumer has furnished the secu rity to earn interest thereon.
[269 F H, 270 A C] 4.1The argument that the Board is monopolistic in character and therefore, the consumers have no other option but to enter contract appears to be misconceived.
The consumption security deposit whether or not it carries interest is a condition precedent for the supply of electric energy.
The scrutiny by the Court In determining the uncon stitutionality of a provision not providing for interest must be tested on the touchstone whether in imposing such a condition the Board has acted as a private trader and thereby shed off Its public utility character? In imposing such a condition the Board has not acted as a private trader.
The nature of deposit has a rational relationship to the object which is Incorporated a condition of supply.
[266 A D,] Jagdamba Paper Industries (Pvt. ) Ltd. vs Haryana State Electric in Board; , , referred to.
4.2Assuming that the contract Is an adhesion contract, still it is not unconscionable.
Conditions and the terms of supply providing for non payment of interest is not so unconscionable as to shock the conscience of the Court.
[266 H] Central Inland Water Transport Corporation vs Brojo Nath Ganguly ; Bihar State Electricity Board vs Green Rubber Industries, [1990] 1 S.C.C. 731, referred to.
Farmsworth on Contracts, 2nd Edn.
319.320, para 4.27, referred to.
Gillespie Brothers Ltd. vs Roy Bowles Ltd. (1973) 1 A. E. R. 193; 211 G.B Mahajan and Ors.
vs Jalalgaon Municipal Council and Ors.
; cited.
4.3In Jagdamba Papers the question of Interest on security was not raised before the Court.
Therefore, the Court had no occasion to decide this issue of interest.
That part of the judgment is sub silentio.
[271 E, 272 A C] Jagdamba Paper Industries (Pvt.) Ltd. vs Haryana State Electricity.
Board, ; , explained and held inapplicable.
4.4This Court never Intended to adjudicate upon the rate of interest or render a decision on that question.
Therefore, it cannot be contended that the disposal of the Writ Petition though by a Bench of 3 Judges would be binding on a Bench of two Judges because it was entirely based on interlocutory order.
Therefore, this Court is free to decide the question on Its merits.
[273 F 6] 4.5The Division Bench of the Rajasthan High Court erred in striking down condition No. 20 of the General Conditions of the Rajasthan Electricity Board as violative of Article 14 of the Constitution of India.
[271 D] 4.6The rate of interest on security deposit cannot be equated with the rate of interest on the fixed deposit.
Firstly, if the consumption charges are to be appropriated the moneys accrued by way of deposits cannot be held in fixed deposits.
Nor all deposits need carry Interest In every transaction.
Secondly, the nature and character of the security deposit is essentially different from fixed deposit.
[270 D E] 5.It may be that the consumers of electricity, where it is raw material, would be prompt in their payment in their own interest.
On that basis, it cannot be contended that they cannot be treated in the same way as defaulters.
The test, in Court 's considered opinion, is whether in the general application of law there is any discrimination.
Merely because some of the consumers are prompt those isolated cases cannot render the provision unconstitutional.
[273 H, 274 Al 212 The Collector of Customs Madras v, Nathella Sampathu Chetty; , ; Vivian Joseph vs Municipal Corporation.
Bonmbay ; , Fatehchand Himmatlal vs State of Maharashtra, [1977]2 S.C.R. 828 and; B. Banerjee vs Anita Pam, [1975]2 S.C.R. 774, referred to. |
Appeal No. 542 of 1962.
Appeal from the judgment and order dated April 7, 1960, of the Andhra Pradesh High Court in Tax Revision case No. 27 of 1958.
Setalvad, K. Srinivasamurthy and Naunit Lal, for the appellant.
A.Ranganadham Chetty and B. R. G. K. Achar, for the respondent.
February 6, 1964.
The Judgment of the Court was delivered by SHAH, J.
With certificate of fitness granted by the High Court of Andhra Pradesh this appeal is preferred by Shree Bajrang Jute Mills Ltd. The appellant is engaged in the manufacture of jute goods, and is a registered dealer under the Madras General Sales Tax Act.
For the assessment year 1954 55 the appellant submitted its return for sales tax claiming a deduction of Rs. 21,80,118 1 3 from the turnover in respect 693 of the jute goods supplied by rail to the Associated Cement Company Ltd. hereinafter for the sake of brevity called 'the A.C.C. under despatch instructions from that Company.
The Commercial Tax Officer rejected the claim of the appellant for deduction and that order was confirmed in appeal to the Deputy Commissioner of Commercial Taxes.
In appeal to the Sales Tax Appellate Tribunal, the order was reversed, the Tribunal holding that the appellant was entitled to exemption in respect of the turnover for the goods supplied to the A.C.C. A revision petition presented against the order to the High Court of Andhra Pradesh was heard with a large number of other petitions which raised certain common questions.
The High Court reversed the order of the Tribunal and restored the order passed by the Deputy Commissioner of Commercial Taxes.
The factory of the appellant is situated at Guntur.
The A.C.C. owns cement factories at many places (including one at Tadepalli in the State of Andhra called the Krishna Cement Works) and for the purpose of marketing its products it requires jute packing bags.
For securing a regular supply of jute bags, the A.C.C. entered into a contract with the appellant of which the following four conditions are material : "1.
All the goods are sold F.O.R. Guntur unless otherwise expressly stated in this contract.
Goods to be packed . well pressed and marked in. bound bales of. per each.
Payments to be, made in cash, in exchange for Mills Delivery Order on sellers on due date or for Railway receipts or for Dock receipts, or for Mate 's receipts, (which Dock receipts or Mate 's receipts are to be handed by a Dock 's or Ship 's Officer to the seller 's representative).
The buyers agree that the property in the goods sold shall not pass from the sellers to the buyers so long as the sellers are in possession of any bills of lading, railway receipts, dock warrants or Mate 's receipts or any other document of 694 title whether such documents are in the names of sellers or buyers, until payment is made in full.
(a) The buyers agree that the risk of loss, deterioration or damage in the goods during transit whether by land or canal or sea or when the goods are in the custody of the seller or any third person in a warehouse, dock or any premises shall be borne by the buyers notwithstanding that the property in the goods does not pass to the buyers during such transit or custody." As and when the gunny bags were needed for packing its products the A.C.C. issued despatch instructions calling upon the appellant to send jute bags by railway to the cement factories of the A.C.C. outside the State of Andhra.
Pursuant to those instructions the appellant loaded the goods in the railway wagons, obtained railway receipts in the name of the A.C.C. as consignee and against payment of the price, delivered the receipts to the Krishna Cement Works, Tadepalli which, it is common ground, was for the purpose of receiving the railway receipts and making pay ment, the agent of the A.C.C.
It is also common ground that the jute bags were sold to the A.C.C. for the purpose of packing cement by the factories of the A.C.C. to which they were sent and not for any other purpose.
The assessing authority and the Deputy Commissioner held that as the railway receipts were delivered to the agent of the buyer within the State of Andhra, and price was also realized from the agent of the buyer within the State, the goods must be deemed to have been delivered to the buyer in the State of Andhra, and the appellant was liable to pay sales tax on the price of the goods sold.
With that view the High Court agreed Under the Government of India Act, 1935, the Legislatures of every Province could legislate for levying tax on sales of goods in respect of all transactions, whether the property in the goods passed within or without the Province, provided the Province had a territorial nexus with one or more elements constituting the transaction of sale : Poppat 695 Lal Shah vs The State of Madras(1) and The Tata Iron & Steel Company Ltd. vs State of Bihar(1).
But this resulted in simultaneous levy of sales tax by many Provinces in respect of the same transaction each fixing upon one or more element constituting the sale, with which it had a territorial nexus.
With the dual purpose of maintaining an important source of revenue to the States, and simultaneously preventing imposition of an unduly heavy burden upon the consumers by multiple taxation upon a single transaction of sale, the Constitution made a special provision imposing restrictions upon the legislative power of the States in article 286 which as originally enacted ran as follows : "(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce : Provided that the President may by order direct that any tax on the sale or purchase of goods which (1) ; (2) ; 696 was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty first day of March, 1951.
(3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." After the enactment of the Constitution, by a Presidential Order the Provincial Sales Tax Acts were made to accord with the restrictions imposed by article 286 of the Constitution.
It is manifest that by article 286 the legislative authority of the States to impose taxes on sales and purchases was restricted by four limitations in respect of sales or purchases outside the State, in respect of sales or purchases in the course of imports into or exports out of India, in respect of sales or purchases which take place in the course of interState trade or commerce and in respect of sales and purchases of goods declared by Parliament to be essential for the life of the community.
These limitations may overlap, but the power of the State to tax sale or purchase transactions may he exercised only if it is not hit by any of the limitations.
The restrictions are cumulative.
The sales in the present case are not sales, which have taken place in the course of inter State trade or commerce.
The only point of contest is whether they are "outside the State ' of Andhra.
It is now well settled that by article 286(1) (as it stood before it was amended by the Constitution Sixth Amendment Act, 1956) sales as a direct result of which goods were delivered in a State for consumption in such State i.e. the sales falling within the Explanation to article 286(1) were fictionally to be regarded as inside that State for the purpose of cl.
(1) (a) and so within the taxing 697 power of the State in which such delivery took place and being outside all other States exempt from sales tax by those other States : Tobacco Manufacturers (India) Ltd. vs The Commissioner of Sales tax, Bihar, Patna(1): Indian Copper Corporation Ltd, The State of Bihar and others (2) and The State of Kerala and others vs The Cochin Coal Com pany Ltd.(3).
But the Explanation is not exhaustive of what may be called "inside sales".
Clause (1)(a) excludes from the reach of tile power of the States sales outside the State but it does not follow from the Explanation that it localises the situs of all sales.
The power of the State under Entry 54 List II of the Seventh Schedule to tax sales [not falling within cls.
(1)(b), (2) and (3)] which are outside the Explanation, and which may for the sake of brevity be called 4non Explanation ' sales, remains unimaired.
It is not necessary for the purpose of this case to express an opinion, whether the theory of territorial nexus of ;the taxing State, with one or more elements which go to make a completed sale authorises since the promulgation of the Constitution the exercise of legislative power under Entry 54, List II of the Seventh Schedule to tax sales, where property in goods has not passed within the taxing State.
The question which then falls to be determined is whether the sales to the A.C.C. by the appellant may be regarded as "non Explanation sales".
There can be no doubt that if the goods were delivered pursuant to the contracts of sale outside the State of Andhra for the purpose of consumption in the State into which the goods were delivered, the State of Andhra could have no right to tax those sales by virtue of the restriction imposed by article 286(1) (a) read with the Explanation.
The facts found by the taxing authorities clearly establish that property in the goods despatched by the appellant passed to the A.C.C. within the State of Andhra when the railway receipts were handed over to the agent of the A.C.C. against payment of price.
The question still remains : were (1) ; (2) ; (3) ; 698 the transactions 'non Explanation sales ' i.e. falling outside the Explanation to article 286(1)? To attract the Explanation, the goods had to be actually delivered as a direct result of the sale, for the purpose of consumption in the State in which they were delivered.
It is not disputed that the goods were supplied for the purpose of consumption outside the State of Andhra, and in the States in which they were supplied.
It is submitted that the goods were actually delivered within the State, when the railway receipts were handed over to the agent of the buyer.
But the expression "a actually delivered" in the context in which it occurs, can only mean physical delivery of the goods, or such action as puts the goods in the possession of the purchaser : it does not contemplate mere symbolical or notional delivery e.g. by entrusting the goods to a common carrier, or even delivery of documents of title like railway receipts.
In C. Govindarajulu Naidu & Company vs State of Madras(1) Venkatarama Ayyar, J., dealing with the concept of actual delivery of goods, so as to attract the application of the Explanation to article 286(1) (a) rightly observed: "In the context it can mean only physical delivery and not constructive delivery such as by transfer of documents of title to the goods.
The whole object of the Explanation is to give a power of taxation in respect of goods actually entering the State for the purpose of use therein and it will defeat such a purpose if notional delivery of goods as by transfer of documents of title to the goods within the State is held to give the State a power to tax, when the good are actually delivered in another State.
" A similar view has been expressed in two other cases M/s. Capco Ltd. vs The Sales Tax Officer and another (2 ) and Khaitan Minerals vs Sales Tax Appellate Tribunal for Mysore (3).
(1) A.I.R. 1953 Mad.
(3) A.I.R. (2) A.I.R. 1960 AM.
699 Counsel for the respondent State relied upon section 39ofthe Indian , which provides inso far as it is material, by the first sub section that where,in pursuance of a contract of sale, the seller is authorisedto send the goods to the buyer, delivery of the goods toa carrier, for the purpose of transmission to the buyer, is prima facie deemed to be delivery of the goods to the buyer.
But that provision will not make mere delivery of the railway receipts representing title to the goods, actual delivery of goods for the purpose of article 286.
The rule contained in section 39(1) of the Indian raises a prima facie inference that the goods have been delivered if the conditions prescribed thereby are satisfied: it has no application in dealing with a constitutional provision which while imposing a restriction upon the legislative power of the States entrusts exclusive power to levy sales tax to the State in which the goods have been actually delivered for the purpose of consumption.
The High Court was therefore in error in inferring from the fact that the property had passed within the State of Andhra against delivery of the railway receipts, that the goods were actually delivered within the State.
If the inference raised by the High Court that the goods were actually delivered within the State of Andhra cannot be accepted, on the facts found there is no escape from the conclusion that the State of Andhra had no authority to levy tax in respect of those sale transactions in which the goods were sent under railway receipts to places outside the State of Andhra and actually delivered for the purpose of consumption in those States.
The appeal must therefore be allowed.
The order of the High Court is set aside and the order of the Appellate Tribunal is restored.
The appellant to get its costs in this Court and the High Court from the respondent State. | The appellant, carrying on business as a manufacturer of jute goods with its factory at Guntur, used to send jute bags by railway to the cement factories of the A.C.C. outside the State of Andhra.
For securing a regular supply of jute bags, the A.C.C. entered into a contract with the appellant and under the despatch instructions from that company, the appellant loaded the goods in the railway wagons, obtained railway receipts in the name of the A.C.C. as consignee and against payment of the price, delivered the receipts to the Krishna Cement Works, Tadepalli, which was for the purpose of receiving the railway receipt and making payment, the agent of the A.C.C. From the amounts shown as gross turnover in the return for the assessment year 1954 55, the appellant claimed reduction of certain amounts in respect of the goods supplied by rail to the A.C.C. outside the State of Andhra Pradesh under its despatch instructions.
The Commercial Tax Officer and the Deputy Commissioner of Commercial Taxes disallowed the claim and held that as the railway receipts were delivered to the agent of the buyer within the State of Andhra, and price was also realized from the agent of the buyer within the State, goods must be deemed to have been delivered to the buyer in the State of Andhra Pradesh, and the appellant was liable to pay tax on the sales.
On appeal, this order was reversed by the Appellate Tribunal.
In revision the High Court restored the order of the Deputy Commissioner of Commercial Taxes.
The question for determination in this appeal was whether the sales to the A.C.C. by the appellant may be regarded as "non Explanation sales", i.e. falling outside the Explanation to article 286(1).
Held:(i) If the goods were delivered pursuant to the contracts of sale outside the State of Andhra for the purpose of consumption in the State into which the goods were delivered, the State of Andhra could have no right to tax those sales by virtue of the restriction imposed by article 286(1)(a) read with Explanation.
To attract the Explanation, the goods had to be actually delivered as a direct result of the sale, for the purpose of consumption in the State in which they were delivered.
The expression "actually delivered ' in the context in which it occurs, can only mean physical delivery of 692 the goods, or such action as puts the goods in the possession of the purchaser; it does not contemplate mere symbolical or notional delivery.
C.Govindarajulu Naidu & Co. vs State of Madras, A.I.R. 1953 Mad.
116, M/s. Capco Ltd. vs Sales Tax Officer, A.I.R. 1960 All.
62 and Khaitan Minerals vs Sales Tax Appellate Tribunal for Mysore, A.I.R. followed.
Poppat Lal Shah vs State of Madras, ; , Tata Iron & Steel Co. Ltd. vs State of Bihar, ; , Tobacco Manufacturers(India) Ltd. vs Commissioner of Sales Tax, Bihar, [1961] 2 S.C.R.106, Indian Copper Corporation Ltd. vs State of Bihar, [1961] 2 S.C.R.276 and State of Kerala vs Cochin Coal Co. Ltd., [1961] 2 S.C.R. 219, referred to.
(ii)Section 39 of the Indian will not make mere delivery of the railway receipts representing title to the goods, actual delivery of goods for the purpose of article 286.
The rule contained is section 39(1) has no application in dealing with a constitutional provision which while imposing a restriction upon the legislative power of the States entrusts exclusive power to levy sales tax to the State in which the goods, have been actually delivered for the purpose of consumption. |
Appeal No. 3908 (NT)/ 1983.
From the Judgment and Order dated 20.11.1979 of the Madras High Court in Tax Case No. 330 of 1976.
A. Raghuvir and Ms. A. Subhashini for the Appellant.
T.A. Ramachandran and Mrs. Janaki Ramachandran for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
This appeal is preferred against the Judgment of the Madras High Court answering the question referred to it in the affirmative i.e., in favour of the assessee and against the Revenue.
The question referred under section 256 (1) of the Income tax Act reads as follows: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the total sum of Rs. 22.000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax?" The assessment year concerned is 1974 75.
The assessee, G.R. Karthikeyan, assessed as an individual, was having income from various sources including salary and business income.
During the accounting year relevant to the said assessment year, he participated in the All India Highway Motor Rally.
He was awarded the first prize of Rs. 20,000 by the Indian Oil Corporation and another Sum of Rs. 2,000 by the All India Highway Motor Rally.
The Rally was organised jointly by the Automobile Association of Eastern India and the Indian Oil Corporation and was supported by several Regional Automobile Associations as well as Federation of Indian Motor Sports Clubs and the Federation of Indian Automobile Associations.
The rally was restricted to private motorcars, the length of the rally route was approximately 6,956 kms.
One could start either from Delhi, Calcutta, Madras or Bombay, proceed anti clock wise and arrive at the starting point.
The rally was designed to test endurance driving and the reliability of the 331 automobiles.
One had to drive his vehicle observing the traffic regulations at different places as also the regulations prescribed by the Rally Committee.
Prizes were awarded on the basis of overall classification.
The method of ascertaining the first prize was based on a system of penalty points for various violations.
The competitor with the least penalty points was adjudged the first prize winner.
On the above basis, the assessee won the first prize and received a total sum of Rs. 22,000.
The Income Tax Officer included the same in the income of the respon dent assessee relying upon the definition of 'income ' in clause (24) of section 2.
On appeal, the Appellate Assistant Commissioner held that inasmuch as the rally was not a race, the amount received cannot be treated as income within the meaning of section 2 (24) (ix).
An appeal preferred by the Revenue was dismissed by the Tribunal.
The Tribunal recorded the following findings: (a)That the said rally was not a race.
It was predominantly a test of skill and endurance as well as of reliability of the vehicle.
(b) That the rally was also not a 'game ' within the meaning of section 2(24) (ix).
(c) That the receipt in question was casual in nature.
It was nevertheless not an income receipt and hence fell outside the provisions of section 10 (3) of the Act.
At the instance of the Revenue, the question aforementioned was stated for the opinion of the Madras High Court.
The High Court held in favour of the assessee on the following reasoning: (a) The expression 'winnings ' occuring at the inception of sub clause (ix) in section 2(24) is distinct and different from the expression 'winning '.
The expression 'winnings ' has acquired a connotation of its own.
It means money won by gambling or betting.
The expression 'winnings ' controls the meaning of several expressions occurring in the sub clause.
In this view of the matter, the sub clause cannot take in the receipt concerned herein which was received by the assessee by participating in a race which involved skill in driving the vehicle.
The rally was not a race.
In other words the said receipt does not represent 'winnings '.
(b) A perusal of the memorandum explaining the provisions of the Finance Bill,.
1 972, which inserted the said sub clause in section 2(24), also shows that the idea behind the sub clause was to rope in windfalls from lotteries, races and card games etc.
332 (c) Section 74 (A) which too was introduced by the Finance Act, 1972 supports the said view.
Section 74 (A) provides that any loss resulting from any of the sources mentioned therein can be set off against the income received from that source alone.
The sources referred to in the said section are the very same sources mentioned in sub clause (ix) of section 2(24) namely lotteries, crossword puzzles, races including horse races, card games etc.
The correctness of the view taken by the High Court is questioned herein.
The definition of 'income ' in section 2(24) is an inclusive definition.
The Parliament has been adding to the definition by adding sub clause (s) from time to time.
Sub clause (ix) which was inserted by the Finance Act, 1972 reads as follows: "(ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever;" We may notice at this stage a provision in section IO.
Section 10 occurs in chapter HI which carries the heading "Incomes which do not form part of total income".
Section 10 in so far as is relevant reads thus: " 10, Incomes not included in total income: In computing the total income of a previous year of any person, any income failing within any of the following clauses shall not be included: (d) any receipts which are of a casual and non recurring nature, not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate".
(The clause has been amended by Finance Act, 1986 but we are not concerned with it.
Similarly it is not necessary to notice the proviso to the said clause.) It is not easy to define income.
The definition in the Act is an inclusive one.
As said by Lord Wright in Kamakshya Narayan Singh vs C.I.T. P. C. "income. . . is a word difficult and perhaps impossible to define in any precise general formula.
It is a word of the broadest connotation".
In Gopal Saran Narain Singh vs Commissioner of Income Tax 3.I.T.R. 237 P.C., the Privy Council pointed out that "anything than can properly be described as income is taxable under the Act unless expressly exempted." This Court had to deal with the ambit of the expression 'income 'in Navin Chandra Mafatlal vs C.I T.Bombay 26 I.T.R. (S.C.) 333 The Indian Income tax and Excess Profits Tax (Amendment) Act, 1947 had inserted section 12 (B) in the Indian Income tax Act, 1922.
Section 12(B) imposed a tax on capital gains.
The validity of the said Amendment was questioned on the ground that tax on capital gains is not a tax on 'income 'within the meaning of entry 54 of list 1, nor is it a tax on the capital value of the assets of individuals and companies within the meaning of entry 55, of list 1 of the seventh schedule to the Government of India Act, 1935.
The Bombay High Court repelled the attack.
The matter was brought to this Court.
After rejecting the argument on behalf of the assessee that the word 'income ' has acquired, by legislative practice, a restricted meaning and after affirming that the entries in the seventh schedule should receive the most liberal construction the Court observed thus: "What.
then, is the ordinary, natural and grammatical meaning of the word "income"? According to the dictionary it means "a thing that comes in." (See Oxford Dictionary, Vol.
V,p. 162; Stroud, vol.
II, pp.
14 16).
In the United States of America and, in Australia both of which also are English speaking countries the word "income is understood in a wide sense so as to include a capital gain.
Reference may be made to 'Eisner vs Macomber '; , ; 'Merchants ' Loan and Trust Co. vs 'Smietanka '[1920] ; ( L) and 'United States of America vs Stewart ', ; and 'Resch vs Federal Commissioner of Taxation '; , In each of these cases very wide meaning was ascribed to the word "income" as its natural meaning.
The relevant observations of learned Judges deciding those cases which have been quoted in the judgment of Tendolkar J. quite clearly indicate that such wide meaning was put upon the word "income" not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word "income".
Its natural meaning embraces any profit or gain which is actually received.
This is in consonance with the observations of Lord Wright to which reference has already been made.
The argument founded on an assumed legislative practice being thus out of the way, there can be no difficulty in applying its natural and grammatical meaning to the ordinary English word "income '.
As already observed, the word should be given its widest connota 334 tion in view of the fact that it occurs in a legislative head conferring legislative power.
Since the definition of income in section 2(24) is an inclusive one, its ambit, in our opinion, should be the same as that of the word income occurring in entry 82 of list 1 of the Seventh Schedule to the Constitution (corresponding to entry 54 of list 1 of the Seventh Schedule to the Government of India Act).
In Bhagwandas Jain vs Union of India S.C. The challenge was to the validity of section 23(2) of the Act which provided that where the property consists of house in the occupation of the owner for the purpose of his own residence, the annual value of such house shall first be determined in the same manner as if the property had been let and further be reduced by one half of the amount so determined or Rs. 1,800 whichever is less.
The contention of the assessee was that he was not deriving any monetary benefit by residing in his own house and, therefore, no tax can be levied on him on the ground that he is deriving income from that house.
It was contended that the word income means realisation of monetary benefit and that in the absence of any such realisation by the assessee, the conclusion of any amount by way of notional income under section 23(2) of the Act in the chargeable income was impermissible and outside the scope of entry 82 of list 1 of the Seventh Schedule to the Constitution.
The said contention was rejected affirming that the expression income is of the widest amplitude and that it includes not merely what is received or what comes in by exploiting the use of the property but also that which can be converted into income.
Sub clause (ix) of section 2(24) refers to lotteries, crossword puzzles, races including horse races, card games, other games of any sort and gambling or ' betting of any form or nature whatsoever.
All crossword puzzles are not of a gambling nature.
Some are; some are not.
See State of Bombay vs R.M.D. Chamarbaugwala A.I.R. 1957 S.C.699.Even in card games there are some games which are games of skill without an element of gamble (See State of Andhra Pradesh vs
K. Satyanarayan[1968] 2 S.C.R. 515.
The words other games of any sort" are of wide amplitude.
Their meaning is not confined to games of a gambling nature alone.
It thus appears that sub clause (ix) is not confined to mere gambling or betting activities.
But, says the High Court, the meaning of all.
the aforesaid words is controlled by the word 'winnings ' occurring at the inception of the subclause.
The High Court says, relying upon certain material, that the expression winnings ' has come to acquire a particular meaning viz, receipts from activities of a gambling or betting nature alone.
Assuming that the High Court is right in its interpretation of the expression 'winnings ', does it follow that merely because 335 winnings from gambling/betting activities are included within the ambit of income,the monies received from non gambling and non betting activities are not so included? What is the implication flowing from insertion of clause (ix)? If the monies which are not earned in the true sense of the word constitute income why do moneies earned by skill and toil not constitute income? Would it not look odd.
if one is to say that monies received from games and races of gambling nature represent income but not those received from games and races of non gambling nature? The rally in question was a contest, if not a race.
The respondent assessee entered the contest to win it and to win the first prize.
What he got was a return ' for his skill and endurance.
Then why is it not income which expression must be construed in its widest sense.
Further, even if a receipt does not fall within subclause (ix), or for that matter, any of the sub clauses in section 2(24), it may yet constitute income.
To say otherwise, would mean reading the several clauses in section 2(24) as exhaustive of the meaning of 'income ' when the Statute expressly says that it is inclusive.
It would be a wrong approach to try to place a given receipt under one or the other sub clauses in section 2(24) and if it does not fall under any of the sub clauses, to say that it does not constitute income.
Even if a receipt does not fall within the ambit of any of the sub clauses in section 2(24), it may still be income if it partakes of the nature of the income.
The idea behind providing inclusive definition in section 2(24) is not to limit its meaning but to widen its net.
This Court has repeatedly said that the word 'income ' is of widest amplitude, and that it must be given its natural and grammatical meaning.
Judging from the above standpoint, the receipt concerned herein is also income.
May be it is causal in nature but it is income nevertheless.
That even the casual income is 'income ' is evident from section 10 (3).
Section 10 seeks to exempt certain 'incomes ' from being included in the total income '.
A casual receipt which should mean, in the context, casual income is liable to be included in the total income if it is in excess of Rs. 1,000, by virtue of clause (3) of section 10.
Even though it is a clause exempting a particular receipt/income to a limited extent, it is yet relevant on the meaning of the expression 'income '.
In our respectful opinion, the High Court, having found that the receipt in question does not fall within sub clause (ix) of section 2(24), erred in concluding that it does not constitute income.
The High Court has read the several sub clauses in section 2(24) as exhaustive of the definition of income when in fact it is not so.
In this connection it is relevant to notice the finding of the Tribunal.
It found that the receipt in question was casual in nature but it opined it was nevertheless not an income receipt and fell outside the provision of section 10 (3) of the Act.
We have found it difficult to follow the logic behind the argument.
For the above reasons we hold that the receipt in question herein does 336 constitute 'income ' as defined in clause (24) of section 2 of the Act.
The appeal is accordingly allowed and the question referred by the Tribunal under section 256(1) of the Act is answered in the negative i.e., in favour of the Revenue and against the assessee.
There shall be no order as to costs.
Appeal allowed. | The assessee participated in an All India Highway Motor Car Rally and on being declared a winner, received an amount of Rs. 22,000 as prize money.
The Income tax officer included the prize money in his income for the relevant assessment year relying upon the definition of 'income 'in clause (24) of Section 2 of Income Tax Act.
On an appeal preferred by the respondent assessee the Appellate Assistant Commissioner held that as the Rally was not a race, the prize money cannot be treated as income within the meaning of section 2(24) (ix).
The Tribunal on an appeal by the Revenue, held that the Rally was not a race and as it was a test of skill and endurance, it was not a 'game ' within the meaning of Sec. 2 (24) (ix).
As the prize money received was casual in nature it fell outside Sec.
10(3) of the Act.
The High Court on a reference at the instance of the Revenue,upholding the findings of the Tribunal,observed that the expression 'winnings ' cannotes money won by betting or gambling and therefore the prize money not represent 'winnings '.
Inasmuch as the amount in question was obtained by participating in a rally which involved skill in driving the vehicle, it held, it cannot he included in the assessee 's income, also because it fell outside the preview of s.10 (3).
Allowing the Appeal, the Court, HELD:1.
The expression 'income ' must be construed in its widest sense.
The definition of 'income ' is an inclusive one.
Even if a receipt does not fall within sub clause (ix) or any of the sub clauses of Sec.2(24) of the Act it may yet constitute income.
Hence the prize money received by the respondent 329 assessee constitutes 'income ' as defined in clause (24) of Section 2 of the Act.
(335 C) 2.The High Court erred in reading several sub clauses in Sec.
2(24) as exhaustive when the statute expressly says that the definition is inclusive.
Even if a receipt does not fall within the ambit of any of the sub clauses in Sec.
2(24) it may still he income if it partakes of the nature of income.
The idea behind providing inclusive definition in Sec.
2(24) is not to limit its meaning but to widen its net.
This Court has repeatedly said that the word 'income ' is of widest amplitude and that it must he given its natural and grammatical meaning.
(335 D) Kamakshya Narayan Singh vs C.LT P.C., Navin Chandra Mafatlal vs C.I.T, Bombay 26 ITR (SC)and Bhagwan Das Jain vs Union of India SC, followed.
Gopal SaranNarain Singh vs Commissioner of Income Tax, 3ITR237 P.C., referred to.
3.If the monies which are not earned in the true sense of the word Constitute income, it is difficult to appreciate why do monies earned by skill and to not constitute income? The Rally was a contest, if not a race.
The Respondent assessee entered the contest to win it.
The Prize money which he got in return for winning the contest was a reward for his skill and endurance.
It does constitute his income which expression must be construed in its widest sense.
(335 B) 4.The sub clause (ix) of Sec.
2(24), is not confined to games of gambling nature alone.
Some of them are games of skill.
State of Bombay vs R.M. D. Chamarbaugwala ; ; and Stale of Andhra Pradesh vs K. Satyanarayan ; , followed.
5.As the definition of income in Sec.
2(24) is an inclusive one, its ambit should be the same as that of the word 'income ' occurring in Entry 82 of list 1 of the Seventh Schedule of the Constitution of India.
(334 B) 6.Even casual income is 'income 'as is evident from Sec.
10(3).
A casual receipt which should mean in the context, casual income is liable to be included in the total income, if it is in excess of Rs. 1,000 by virtue of clause (3) 330 of Sec. 10.
The Tribunal erred in its finding that the prize money fell outside the purview of Sec.
10 (3) inspite of holding that the receipt in question was casual in nature.
(335 E) |
APPEAL NOS. 2107 1 1993.
From the Judgment and Order dated 9.3.1992 of the Punjab and Haryana High Court in Civil Writ Petition Nos.13587, 13588, 13926 of 1991 and L.P.A. No. II 8 of 1992.
Dipankar Prasad Gupta, Solicitor General, N.N. Goswami and H.K. Puri for the Appellants.
Ranjit Kumar, Deepak Sibal, Ms. Binu Tamta and Tarun Aggarwal for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
Leave granted.
All these appeals raise the identical issue as to the interpretation of the Regulations relating to Diploma in Homeopathic Course.
Hence, they are dealt with under one and the same judgment.
We will refer to the facts of C.W.P. No. 13587/91 which will be enough for appreciating the issues involved.
The respondents joints the Homeopathic Medical College, Chandigarh in the year 1987 to secure a diploma in Homeopathic Medicine and Surgery (hereinafter referred to as 'DHMS ').
The said course is of a duration of four years.
It is divided into 3 1/2 years of academic study and six months of internship.
The course of study, their duration and the scheme of examination are regulated by the Homeopathy (Diploma Course) DHMS Regulations, 1983 (hereinafter called the 'Regulations ').
These Regulations have been framed by the Central Council of Homeopathy under Section 20 of the Homeopathy Central Council Act, 1973.
Part VI of the Regulations deals with examination.
Regulations 8 to 10 occurring in part VI are relevant for our purpose.
Regulation 8 talks of first First D.H.M.S. examination.
That examination has to be held at the end of 12 months of the Course.
Regulation 9 deals with second D.H.M.S. examination to be held at the end of second year.
Regulation 10deals with 3rd D.H.M.S examination, 11/2years subsequent to the passing of the second D.H.M.S. examination.
The respondents appeared in the first year D.H.M.S. annual examination in 312 June, 1988.
Since, they did not get required percentage of pass marks two or more subjects, they had to re appear.
They were permitted to join the 2nd year class after June, 1988.
Under the interim orders of the High Court made in C.W.P.No 437510/1990, they appeared in the examination.
The respondents simultaneously took their third chance for the first year D.H.M.S. examination and finally,cleared all the papers.
They also got re appeared in one or more subjects in the 2nd year D.H.M.S. examination and accordingly, took supplementary examination in June, 1990.
They were declared 'pass ' in that examination.
The respondents joined the third year D.H.M.S. examination and completed the course of study.
In view of that, the Principal of the college in August, 1991 recommended and forwarded their examination forms for the third year Examination to the appellant namely, the Council of Homeopathic System of Medicines, Punjab.
The appellant declined to permit the respondents to take the examination since they had not completed one year course of study between passing the first D.H.M.S. examination and appearing in the second one; hence, they were not eligible to appear in the third year examination.
In other words, the examination has not been passed in accordance with the scheme prescribed under Regulations 8 & 9.
It was under these circumstances, the writ petitions came to be preferred before the High Court of Punjab & Haryana in C.W.P. No. 13587/91 praying for a direction to permit them to take third year D.H.M.S. examination commencing from 3.9. 1991.
The writ petition came up before a Division Bench.
By judgment dated 9.3.1992 allowing that writ petition on the reasoning that if the minimum course of study as provided by Regulations 9 and 10 if held to be mandatory, such a provision would be liable to be struck down in view of the decision of the Court in C.W.P. No. 2307/88, Gurinder Pal Singh vs Punjabi University & Ors. which in turn has followed Single Judge decision reported in Harinder Kaur Chandok (Minor) vs The Punjab School Education Board through its Secretory It is the correctness of this judgment, which has been questioned in all these appeals.
The learned Solicitor General took us through Regulations at length.
Part II deals with course of study.
Regulation 3 states that a Diploma Course in Homeopathy shall be spread over a period of four years.
Those four years include six months compulsory internship after the passing of the final year diploma examination.
When we look at Regulations 8 to 10, three concepts emerge from them: 313 i) Subjects; ii) Time; ii) Marks.
The duration of the examination is, first year: 12 months, Second Year: 12 months; and third year: 18 months.
Regulation 8 states that a candidate may be admitted to the first D.H.M.S. examination.
Similarly, Regulation 9 also states that a candidate shall be admitted to the second D.H.M.S. examination.
Identical language is used under Regulation 10 for Third D.H.M.S. examination.
The submission of the learned Solicitor General is, admission to these examinations is entirely different from 'admission to a course '.
With reference to admission to each of the examination, First, Second and Third year, the respective Regulations 8,9 & 10 prescribe the eligibility.
Unless and until, that eligibility is possessed, admission to an examination is impossible.
The High Court has taken a view that since the duration of the Course is four years, this Regulation must be so construed as to fit in within those four years.
This is wrong.
Regulation 11 talks of re admission to an examination.
That Regulation has nothing to do with the eligibility prescribed under Regulation 8 to 10.
In other words, Regulation 11 cannot control the operation of these Regulations.
Regulation 11 (iv) talks of supplementary examination.
In that supplementary examination, it is open to a candidate to pass in a subject or subjects in which he has failed.
When he so passes, Clause (v) of that Regulation states that he shall be declared to have passed at the examination as a whole.
Even thereafter, if he fails in the subject or subjects at the supplementary examination and he has to appear in the examination in the failed subject or subjects at the next annual examination, Clause (vi) prescribes: i) Production of a certification; ii) In addition, if he had put a necessary attendance, a further course of study in the subject or subjects in which he had failed, the minimum number of chances as per this clause are only four.
If he fails to complete the subjects within these four chances, he will have to prosecute a further course of study in all the subjects of all parts for one year, in other words, he has to start the course afresh and appear for examination in all the 314 subjects.
Thus, it will be clear that all these Regulations talk of re admission to an examination in Order to enable the failed Candidate to undergo supplementary and subsequent examinations.
On completion of subject in any one of those examinations within the four chances, he is declared to have passed the whole examination.
On this count, it is incorrect to hold that passing in the supplementary examination relates back to the original examination.
A careful reading of Regulation 9 requires the satisfaction of the following conditions for appearing in the Second Year D.H.M.S. examination: i) The candidate had passed the First D.H.M.S. examination at the end of one year previously.
This means, there must be a gap of one year between the passing of First year examination and appearing in the Second year examination; ii) Subsequent to the passing of the examination, must have attended the courses of instruction for a period of at least one year.
Therefore, a candidate who fails in the first year examination in a subject or subjects, if he passes any supplementary examination cannot take the Second year examination at the next academic year.
This is because, one year duration had not elapsed between the passing of First year examination in the supplementary examination and taking the Second year examination.
Worse is a case where a candidate passes the First Year examination at the third or fourth attempt.
The High Court has gone wrong in its construction on Regulation 11 that if a candidate passes a supplementary examination, the insistence of one year would require the candidate to wait for one more year.
Therefore, he would inevitably have to study for the next year course from the next academic session.
No doubt, the candidate who passes the supplementary examination will have to sit idle till the next academic session.
That is his own making.
On that score, the attempted harmonious construction by the High Court cannot be supported.
The learned Solicitor General finally submits that none of the Regulations indicate 'a carry forward scheme ' of the subjects.
On the contrary, it is a case of detention every year.
Accordingly, he submits that the Civil Appeals deserve to be allowed.
Mr. Ranjit Kumar, learned counsel in opposition to this, would urge that the interpretation placed by the High court on Regulations 8 to 10 is collect.
Otherwise, no useful purpose would be served by conducting a supplementary examination.
Equally, four chances afforded to the candidate could be rendered nugatory if the interpretation as stated by the learned solicitor General is accepted.
315 Regulation 11 has to be read along with Regulations 8 to 10.
It is not correct to argue that Regulation 11 has nothing to do with admission to an examination.
As a matter of fact, declaration of result of supplementary examination of First D.H.M.S. examination was made on 31.10.1989.
The next annual examination was held in January, 1990 within 2 1/2 months.
The respondents passed the course of First and Second D.H.M.S. examinations.
The result of Second Year D.H.M.S. supplementary examination was declared in January, 1991.
In view of such an inordinate delay in the conduct of examinations, the appellant cannot contend that one year period must elapse between First and Second D.H.M.S. examinations and that the Regulations should have been strictly obeyed.
The Regulations do not say that after First D.H.M.S. examination, a student cannot study for Second D.H.M.S. course and sit for examination provisionally.
The declaration of result for the Second D.H.M.S. course takes place only after he had cleared the First D.H.M.S examination.
As rightly held by the High Court, the word 'supplementary '.
denotes supplementing to or in continuation of the annual examination.
Where , therefore, provisional admission is given for the Second Year D.H.M.S, course, the failure to complete he First D.H.M.S. examination should not be put against the respondent.
If the Regulations are so literally interpreted, that will lead to absurdity.
It will run counter to the object of providing a supplementary examination.
This interpretion is holding the field for a long time.
This was the reason why in Jaininder Mohan and Others vs The council of Homeopathic System of Medicine.Punjab (1992) 1 I.L.R. Punjab 159, the court took a view that passing in the supplementary examination will relate back to the date of annual examination.
Otherwise, as rightly pointed out by the High Court, anamolous results would follow.
In so far as the respondents have completed the examination, equities must weigh in their favour as laid down by this Court in A. Sudha vs University, of Mysore and another ; , Chandigarh Administration & Ors.v Manpreet Singh & Ors. ; , Shirish Govind Prabhudesai vs State of Maharashtra The learned counsel also relies on Orissa Homeopathic Regulations and contends that carry forward is permitted in similar Homeopathic Regulations.
In order to appreciate the respective contentions, we have to analyse the relevant Regulations relating to the Diploma Course in Homeopathy as contained Homeopathy (Diploma course) DHMS Regulations, 1983.
These Regulations are statutory in character in so far as they have come to be framed in exercise of powers conferred under Clauses (i) , (j) & (k) of Section 33 and sub section (1) of Section 316 20 of Homeopathy Central Council Act.
Under Section 20, the Central Council may prescribe the minimum standards of education in Homeopathy required for granting recognised medical qualifications by Universities, Boards and Medical Institutions in India.
Section 33 speaks of powers to make Regulations.
The relevant clauses are (i), (j) & (k).
They are to the following effect. "(i) The courses and period of study of practical training to be undertaken, the subjects of examination and the standards of proficiency therein to be obtained, in any University, Board or Medical institution for grant of recognised medical qualification; (j)the standards of staff, equipment, accommodation, training and other facilities for education in Homeopathy; (k)The conduct of professional examinations, qualifications of examiners and the conditions of admissions to such examinations;" Therefore, the Central council constituted under Section 3 of the Act has power to make Regulations under Section 33 (k) regarding the conditions of admission to the examination.
The very object of this Act is to prescribe minimum standards for admission, duration of course of training, details of curriculum and syllabus of study and the title of degree or diploma.
Since they very from State to State and even from Institute to Institute within a same State, it had become necessary to constitute a Central Council.
The Advisory Committee prescribed a course of four years.
Accordingly, in Regulation 3(i), it is provided that a Diploma Course in Homeopathy shall comprise a course of study, spread over a period of four years.
This includes the compulsory internship of six months duration after passing the final Diploma examination The Regulations contain eligibility to admission, the curriculum, the syllabus etc.in the various parts.
Part VI deals with examination.
Regulation 8 talks of First D.H.M.S. examination.
It is stated in clause (i) : "A candidate may be admitted to the First D.H.M.S. examination provided that he has regularly attended the following course of instruction, theoretical and practical for a period of not less than 12 months at a Homeopathy College to the satisfaction of the head of the college".
317 From the above, it is clear for admission to the First D.H.M.S. examination: i)a student must have regularly attended the courses of instruction, theoretical and practical; ii) for a period of not less than 12 months; iii) to the satisfaction of the head of the College.
As regards the Second D.H.M.S. examination, Regulation 9 takes care.
That states in Clause (i) : "No candidate shall be admitted to the Second D.H.M.S examination unless: a) he has passed First D.H.M.S. examination at the end of one year previously, and b) he has regularly attended the following courses of instruction both theoretical and practical in the subjects of examination for a period of at least one year subsequent to his passing First D.H.M.S. examination from a recognised Homeopathic College to the satisfaction of the head of the college.
" Here again, eligibility for admission to Second D.H.M.S. examination is based on two conditions: i) A student has passed his First D.H.M.S. examination at the end of one year previously.
This means one year must elapse between the passing of the First year examination and taking of Second Year Examination.
ii) Subsequent to the passing the First year a) he must have regularly attended the courses both theoretical and practical; (b) for a period of at least one year; (c) to the satisfaction of the head of the College.
Thus, unless and until, these two conditions are satisfied, a student is 318 ineligible for admission to the Second D.H.M.S. examination.
Clause (iii) states that the Second D.H.M.S. examination shall be held at the end of two years of D.H.M.S. course.
The Third D.H.M.S. course is provided for under Regulation 10.
That reads as follows: "No candidate shall be admitted to the Third D.H.M.S. examination unless: (a) he has passed the second D.H.M.S. examination at the end of 1 1/2 years previously, and (b) has regularly attended the following courses of instructions both theoretical and practical in subjects of examination for a period of at least 11/2 years subsequent to his passing the Second D.H.M.S examination in a recognised Homeopathic College to the satisfaction of the head of the College.
" Here again, the conditions for eligibility for admission to Third D.H.m.s examination are: i) After passing the Second D.H.M.S. examination,one and a half years must have elapsed before taking the Third D.H.M.S examination.
ii) Subsequent to the passing of the Second D.H.M.S. examination: a) he must have regularly attended the courses both theoretical and practical" b) for a period of 11/2 years; c) to the satisfaction of the college.
Thus, it will be clear that the pattern of the examination is as rightly urged by the learned Solicitor General : 12 months for First D.H.M.S. examination, 12 months for Second D.H.M.S. examination and 18 months for Third D.H.M.S examination.
These put together with six months of compulsory internship, make up the four years prescribed for the Course in Regulation 3.
One thing that carefully requires to be noticed is that all the three Regulations 319 8 to 10 speak of admission to an examination, First, Second and Third year respectively.
This is entirely different from admission to a course we find great force in this submission of the learned Solicitor General.
The course of study may consist of four years, but that has nothing to do with the scheme of examination.
Now, we come to Regulation 11.
That requires to be reproduced in full: "(i) Every candidate for admission to an examination shall send to the authority concerned his application in the prescribed form with the examination fee at least 21 days before the date fixed for the commencement of the examination.
(ii)As soon as possible after the examination the examining body shall publish a list of successful candidates arranged in the following manner: (a)the names and roll numbers of the first ten candidates in order of merit, and (b) the roll number of others arranged serially.
(iii)Every candidate shall on passing the examination receive a certificate in the form prescribed by the examining body concerned.
(iv) A candidate who appears at the examination but fails to pass in a subject or subjects may be admitted to supplementary examination in the subject or subjects of that part of the examination in which he has failed to be held ordinarily after six weeks from the publication of result of the first examination on payment of the prescribed fee along with an application in the prescribed form.
(v) If a candidate obtains pass marks in the subject or subjects at the supplementary examination or the subsequent examination, he shall be declared to have passed at the examination as a whole, (vi) If such a candidate fails to pass in the subject or subjects at the supplementary examination in the subject or subjects concerned, he may appear in that subject or subjects at the next annual examination on production of a certification in addition to the certificate required under the regulations, to the effect that he had attended to the satisfaction of the Principle,a further course of study for a period 320 of next academic year in the subject or subjects in which he had failed, provided that all the parts of the examination shall be completed within four chances including the supplementary one, to be counted from the date when the complete examination becomes due for the first time.
(vii)If a candidate fails to pass in all the subjects within the prescribed four chances, he shall be required to prosecute a further course of study in all the subjects of all parts for one year to the satisfaction of the head of the college and appear for examination in all the subjects.
Provided that if a student appearing for the Third D.H.M.S. Hom.examination has only one subject to pass at the end or prescribed chances, he shall be allowed to appear at the next examination in that particular subject and shall complete the examination with this special chance.
(viii)All examinations shall be held on such dates, time and places as the examining body may determine.
(ix) The examining body may under exceptional circumstances partially or wholly cancel any examination conducted by it under intimation to the Central Council of Homeopathy and arrange for conducting reexamination in those subjects within a period of thirty days from the date of such cancellation."
This Regulation deals with results and readmission to an examination.
A close reading of the above brings out the following: In clause (iv) as to what is to happen in the event of a candidate failing to pass in a subject or subjects is spoken to.
He may be admitted to the supplementary examination.
Such a supplementary examination is to ordinarily take place after six weeks from the publication of result of First Examination.
Supposing he passes in that subject or 'subjects in the supplementary examination he is declared to have passed at the examination as a whole.
This should obviously be so; because once he completes all the subjects, he has to necessarily be declared to have passed.
Merely on this language, "declared to have passed at the examination as a whole", we are unable to understand as to how the 321 "doctrine of relation back" could ever be invoked.
The invocation of such a doctrine leads to strange results.
When a candidate completes the subjects only in the supplementary examination, then alone, he passes the examination.
It is that pass which is declared.
If the "doctrine of relation back" is applied, it would have the effect of deeming to have passed in the annual examination, held at the end of 12 months, which on the face of it is untrue.
With this, we pass on to clause (vi) which deals with the stage where the candidate had failed in the First Annual Examination in a subject or subjects and he had not passed in that subject or subjects in the supplementary examination also.
The next annual examination arrives.
The appearance in that examination is conditioned upon production of two certificates: i)A certificate required under the Regulations to the effect that he had attended to the satisfaction of the Principle; ii)A certificate to the effect that he had undergone a further course of study for a period of next academic year in subject of subjects in which he had failed.
Whatever it is, a candidate has to complete all the subjects within four chances.
Should he fail to do so, he will have to undergo the course in all subjects for one yea, unless of course, he gets the exemption as stated in proviso to Clause (vii).
Nowhere do, we find in Regulation 11 system of carry forward '.
On the contrary, it is detention every year.
The High Court was moved by the fact that if a candidate were to pass in supplementary examination after passing the examination, he will have to remain at home till the next annual examination.
So, he is allowed to undergo a course for next academic year provisionally.
On this line of reasoning, clause (iv) & (vi) of Regulation II are sought to be "harmoniously construed '.
We are unable to accept this line of reasoning or the so called harmonious construction because it does violence to the language of the Regulation.
It clearly violates the mandatory requirements of Regulation 9.
It has already been noted as to what those requirements are.
To repeat: i) The lapse of one year period between the passing of First D.H.M.S. examination and taking the Second D.H.M.S. examination.
ii) Subsequent to the passing of the First D.H.M.S. examination to undergo the course of study for one year.
Therefore, if a candidate passes in the supplementary examination, the requirement of one year cannot be enforced.
Worse still is 322 a case of a student who passes only at the next annual examination.
Could he be allowed to take the Second D.H.M.S. examination without even completing the First?
Should he by chance pass the Second D.H.M.S. and not complete the First, since he is still one more chance to take this examination, what is to happen? The situation is absurd.
The same principle should apply to Regulation 10 where the lapse is one and half years.
The word 'supplement ' is defined in Oxford Dictionary, Seventh Edition, page 1072: "think added to remedy deficiencies; part added to book etc, with further information, or to periodical for treatment of particular matter(s) of an angle,(Math.)its deficiency from 180(of.COMPLEMENT); hence Al, ARY, (mem) adjs.(supplementay benefit).
[ME,f.L. sup (plementum f plere fill; see ment]" Therefore,the adjective 'supplementary ' means and examination to makeup the deficiencies.
it stands to reason only when deficiencies are made up, the whole becomes complete.
On this score to say that passing the supplementary examination would relate back to the annual examination will be totally incorrect.
What counts is when the whole is made up.
From that time of making up one year or one and half years must elapse for second or Third D.H.M.S. examinations as the case Amy be.
The stand of the appellants counsel as seen from letter dated 12.12.1989 is as follows: "From: Dr. P.L. Verma, Secretary, Central Council of Homeopathy, 10, Community Centre, Basant Lok, Vasant Vihar, New Delhi 110037.
TO The Chairman, The Council, Homoeopathic Systems of Medicine, 3027 28, Sector 22 D, Chandigarh.
323 Sub:Enforcement of D.H.M.S (Diploma Course) Regulation 1983 w.e.f.1983 84 Academic Sessions students demand for grant of provisional promotion with reappearance in only one subject to the next higher class even beyond supplementary examination even prior to his passing the lower class examination as a whole.
With reference to your letter No. CHSM PV 134 /89/1253 dated 29/ 30 November, 1989 on the subject noted above.
I am to say that the question of permitting to appear simultaneously for two examinations i.e. lower reappear subjects and complete subjects of the next higher class does not arise as no candidate has to be admitted to the Second D.H.M.S. examination unless he had passed the first D.H.M.S. examination at the end of one year previously and has regularly, attended the course for one year.
Similarly, no candidate shall be admitted to the Third D.H.M. section examination unless he has passed the second D.H.M.S. examination 1 1/2 years previously and has also attended the course for a period of 1 1/2 years subsequent to his passing of the Second D.H.M.S. Examination.
COUNCIL OF HOMOEOPATHIC SYSTEM OF MEDICINE 3027 28, Sector 22 D CHANDIGARH (UT) No. CHCH PV 9134/89/AT 198 200 Dated 5.2.90 Copy forwarded to the Principal, Lord Mahaveera Homeopathic Medical College, Ludhiana/Abohar/Chandigarh for information and necessary action.
This may please be notified for information of all the students under intimation to the undersigned.
The above guidelines/directions of the Central Council may please be strictly followed and observed in respect of matters indicated therein.
sd/ (R.K. Sharma) Registrar, No.CHMS/PV/134/89/AI 201 210 Dated 5.2.90.
" This stand in our opinion is correct.
If a student were to sit idle at home after passing the supplementary 324 examination that is his own making.
To avoid such a situation, the Regulation cannot be construed causing violence to the language.
These Regulations are plain enough and are susceptible only to literary interpretation.
In 'Maxwell on the Interpretation of Statutes ' 12th Edition, it is stated at page 29 as under: "Where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise.
"The decision in this case," said Lord Morris of Borth y Gest in a revenue case, "calls for a full and fair application of particular statutory language to particular facts as found.
The desirability or the undesirability of one conclusion as compared with another cannot furnish a guide in reaching a decision." (Shop and Store Developments Ltd. vs I.R.C. (1967) 1 A.C. 472).
Where, by the use of clear and unequivocal language capable of only one meaning, anything is enacted by the legislature, it must be enforced however harsh or absurd or contrary to common sense the result may be.(Cartledge vs E. Jopling & Sons, Ltd.)
The interpretation of a statue is not to be collected from any notions which may be entertained by the court as to what is just and expedient: (Gwynne vs Burnell Words are not to be construed, contrary to their meaning, as embracing or excluding cases merely because no good reason appears why they should not be embraced or excluded.
(Whitehead vs James Stott Ltd. The duty of the court is to expound the law as it stands, and to "leave the remedy (if one be resolved upon) to others." (Sutters vs Briggs We construe the Regulations as they stand without introducing any element of ambiguity or absurdity.
The manner in which the respondents have passed the examination is set out in the following tabulated statement: "C.W.P. No. 13926 of 1991 Miss Kamaljit & eight others of L.M. Homoeopathic Medical College, Ludhiana.
1st prof.Annual/88 Supp/88 Annual/89 Respondent No. Re appear Re appear Pass 325 1, Miss Kamaljit in 3 in 2 Contd.d/o Sawam subjects subjects Singh (Admitted in 1987) Resp.2, Re appear pass Sh.Narinder in 2 Contd Kumar s/o subjects Satya Pal Goyal (Admitted in 1987) Resp.No. 3 Shri Re appear pass Contd.Mohd Ramzan in 3 Thind s/o SH. subjects Moh. Yousaf (Admitted in 1987) Resp No.4 Shri Re appears Re appears pass " Naresh Kumar in 3 subjects in 2 subjects Resp.No.5 Shri Re appear Re appear pass " Jaininder Mohan in 2 in 1 s/o Shri Sham Lal subjects subject (Admitted in 1987) Resp.No. 6 Shri Re appear Re appear pass " Kulbir Singh s/o in 3 in 2 Sh.
Tattan Singh subjects subjects (Admitted in 1987) Res.No. 7 Re appear pass " Narinder Singh in1 s/o Sh.Sant subject Singh (Admitted in 1987) Res.
No. 8 Inderjit Mehta d/o Anant Ram Mehta (Admitted in 1987) Resp.No. 9 Fail Re appear pass
Tejvinder Singh, in1 s/o Jaswant Singh (Admitted in 1987) 326 Continued Part IInd Prof. (CWP No. 481of 1991)
3rd Prof. (CWP No: 13926/91) Suppl./89 Annual/90 Suppl/91 Re appear Re appear Re appear Allowed to appear in 3 in 3 in1 as per court subjects subjects subject order dt.6.9.91 by the Principal of L. Homoeopathic Medical College.
Re appear Re appear pass As per court in 3 in1 order dt.6.9.91 subjects subject (without court order)
Re appear Re appear pass Not appeared in 4 in 1 subjects subject
Re appear Re appear pass As per court in 3 in1 orderdt 6.9.91 Fail
Re appear pass As per court in 2 order subjects dt.6.9.91 Re appear Re appear pass
As per court in 1 pass Order subject dt.6.9.91 Re appear Re appear pass Allowed to in 2 in 2 appear as subjects subjects per Court order dt.6.9.91"
Mr. Ranjit Kumar pleads before us that equities must weigh in favour of students.
With reference to that plea, we hold that he students who had completed the whole course, attended all the courses of study for the three sessions of 12 months, 12 months and 18 months respectively and had passed all the examinations in all the subjects, though not in the sequential order required by the 327 regulations, it appears to us that the submission of the counsel for the respondents that they being required to go through the courses all over again and take the examinations after attending the courses afresh, might lead to hardship and might require consideration.
In the words of Anne Sophie Swetchine: "The world has no sympathy with any but positive griefs; it will pity you for what you lose, but never for what you lack.
We think that their cases may perhaps have to be examined from the point of these equities by the Council of Homeopathic System of Medicines.
The candidates who, as on today, have attended all the courses and have passed all the examinations might make an appropriate representation to the Council of Homeopathic System of Medicines (the appellant) to consider their cases.
The representation shall be filed within a period of four weeks from today.
The Council of Homeopathic System of Medicines (the appellant) will take appropriate decision within one month thereafter.
The Council in doing so shall bear in mind all the relevant circumstances, including, perhaps the spirit of the corresponding regulations under the Bihar Act, in which such sequential purpose is not insisted upon. | The respondents appeared in the first year D.H.MS (Diploma in Homeopathic Medicine and Surgery) annual examination in june,1988.They had to re appear as they did not get the required percentage of pass marks in two or more subjects.
They were permitted to join the second year class after June, 1988.
Under the interim orders of the High Court, they appeared in the second year annual examination.
Simultaneously, the respondents appeared in the first year D.H.MS.
examination and cleared all the papers.
After re appearing in one or more subjects in the second year Supplementary examination in June, 1990, they were declared passed in the 2nd year D.H.M.S. examination.
The respondents joined the third year D.H.M.S. course and completed the course of study.
When their examination forms were forwarded to the appellant Council, they declined to permit the respondents to appear in the 3rd year D.H.M.S. annual examination, because they did not complete one year course of study between passing the first D.H.M.S. examination and appearing in the second year course.
The respondents preferred a writ petition before the High Court to direct the appellants to permit them to appear in the third year DHMS examination, commencing from 3.9.1991.
Following the view taken in the decision of the Court in C.W.P. No 2307/ 88.
Gurinder pal Singh vs Punjabi University & Ors., which was followed in Harinder Kaur Chandok (Minor) v The Punjab School, Education Board through its Secretary, , the High court allowed the writ petition of the respondents.
Against that order of the High Court, the appeal (C.A.No. 2107/93) was filed by special leave.
The appellants submitted that the High Court was wrong in its construction on regulation 11 of the Homeopathy (Diploma Course) DHMS Regulations, 1983; that if a candidate passed on supplementary examination, he would have to wait till the next academic session; that none of the Regulations indicated carry forward scheme of the subjects, but on the contrary,it was a case of detention every year.
The respondents urged that the interpretation placed by the High Courts on Regulations 8 to 10 was correct; that four chances afforded to the 308 candidate could be rendered nugatory, if the interpretation as stated by the appellants was accepted; that the Regulations did not say that after First D.H.M.S. examination, a student could not study for Second D.H.M.S. course and sit for examination provisionally; that the declaration of result for the Second D.H.M.S. course took place only after a student cleared the First D.H.M.S. examination; that if the Regulations were literally interpreted, that would lead to absurdity and it would run counter to the object of providing a supplementary examination.
As the other appeals (C.A.Nos.
2108 10/93) contained identical issue, all the appeals were heard and decided together.
Allowing, the appeals, this Court, HELD:1.1.
The Regulations 8 10 of the Homeopathy (Diploma Course) DHMS Regulations, 1983 are plain enough and are susceptible only to literary interpretation.
Maxwell:Interpretation of Statutes, 12th Edition, Page 29, referred to.
1.2.For admission to the First D.H.M.S. examination: i)a student must have regularly attended the courses of instruction, theoretical and practical; ii) for a period of not less than 12 months; iii) to the satisfaction of the head of the College.
(317 B) 1.3.
Eligibility for admission to Second D.H.M.S. examination is based on two conditions: i) A student has passed his First D.H.M.S. examination at the end of one year previously.
This means one year must elapse between the passing of the First year examination and taking of Second Year Examination.
ii) Subsequent to the passing the First year 309 a) he must have regularly attended the courses both theoretical and practical; b) for a period of at least one year; c) to the satisfaction of the head of the College.
(317 F G) Thus, unless and until, these two conditions are satisfied, a student is ineligible for admission to the Second D.H.M.S. examination.
(317 H, 318 A) 1.4 The conditions for eligibility for admission to Third D.H.M.S examination are: i) After passing the Second D.H.M.S examination, one and a half years must have elapsed before taking the Third D.H.M.S. examination.
ii) Subsequent to the passing of the Second D.H.M.S. examination: a) he must have regularly attended the courses both theoretical an practical; b) for a period of 11/2 years; c) to the satisfaction of the college.
(318 F G) 1.5.
Mandatory requirements of Regulation 9 are; i) The lapse of one year period between the passing of First D.H.M.S. examination and taking the Second D.H.M.S. examination.
ii) Subsequent to the passing of the First D.H.M.S. examination to undergo the course of study for one year.
(321 G) 1.6.
Therefore, if a candidate passes in the supplementary examination, the requirement of one year cannot be enforced.
Worse still is a case of a student who passes only at the next annual examination.
Could he he allowed to take the Second D.H.M.S. examination without even completing the First? Should he by chance pass the Second D.H.M.S. and not complete the First, since he has still one more chance to take this examination, what is to happen? 310 The situation is absurd.
The same principle should apply to Regulation 10 where the lapse is one and half years.
(321 H, 322 A) 1.7.The pattern of the examination is: 12 months for First D.H.M.S. examination, 12 months for Second D.H.M.S. examination and 18 months for Third D.H.M.S examination.
These put together with six months of compulsory internship, make up the four years prescribed for the Course in Regulation 3.
(318 G) 1.8.When a candidate completes the subjects only in the supplementary examination, then alone, he passes the examination.
It is that pass which is declared.
If the "doctrine of relation back" is applied, it would have the effect of deeming to have passed in the annual examination, held at the end of 12 months, which on the face of it, is untrue.
(321 A) 1.9.Whatever it is, a candidate has to complete all the subjects within four chances.
Should he fail to do so, he will have to undergo the course in all subjects for one year unless of course, he gets the exemption as stated in proviso to Clause (vii).
In Regulation 11 there is no 'system of carry forward '.
On the contrary, it is detention every year.
Harmonious construction violates the mandatory requirements of Regulation 9.
(321 E F) 1.10.If a student were to sit idle at home after passing the supplementary examination that is his own making.
To avoid such a situation, the Regulation cannot be construed causing violence to the language.
(323 H, 324 A) 1.11.The candidates who, as on the day of Judgment of these appeals, have attended all the courses and have passed all the examinations might make an appropriate representation to the Council of Homeopathic System of Medicines (The appellant) to consider their cases.
The representation shall be filed within a period of four weeks.
The Council of Homiopathic System of Medicines (the appellant) will take appropriate decision.
(327 C) 2.
The adjective 'supplementary ' means an examination to make up the deficiencies.
Thus, it stands to reason only when deficiencies are made up, the whole becomes complete.
(322 D) Oxford Dictionary, Seventh Edition, page 1072, referred to.
(322 B) |
Appeal No. 4474 of 1992.
From the Judgment and order dated 28.7.1992 of the Andhra Pradesh High Court in W.P. No. 9315 of 1992.
WITH WRIT PETITION (CIVIL) NO. 763 OF 1992.
(Under Article 32 of the Constitution of India) A.K. Ganguli, Rakesh K. Khanna for R.P. Singh for the Appellant/ Petitioners.
C. Sitaramiah, Ms. Pushpa Reddy and Mrs. T.V.S. Narasimhachari for the Respondents.
J. CIVIL APPEAL NO.
4474 OF 1992.
The appellant is engaged in the manufacture and sale of products like cast iron pipes, man hole covers, bends etc.
For the assessment year 1989 90, the Commercial Tax Officer, Narayanguda Circle, Hyderabad levied sales tax upon the turn over relating to said products treating them as general goods.
He overruled the petitioner 's contention that the said products are declared goods liable to tax at the rate of 4% only.
The assessees ' appeal preferred before the Appellate Deputy Commissioner is still pending.
Evidently because no stay was granted pending the said appeal, a notice was issued to the appellant calling upon him to pay the tax assessed, against which notice he preferred a writ petition, being W.P. No. 9315 of 1992, in the High Court of Andhra Pradesh.
His main contention in the writ petition was that by virtue of G.O.Ms.
No. 383 Revenue (S) Department dated 17.4.1985, his products are 'declared goods ' and are, therefore, liable to tax only @4%.
The Division Bench of the High Court dismissed the writ petition following its earlier decision in Deccan Engineers vs State of Andhra Pradesh (reported in 1991, Vol.
12 A.P. Sales Tax Generals, 138: 84 STC 92).
In Deccan Engineers, it was held by the A.P. High Court that the expression ' cast iron ' in item(2)(i)of the Third Schedule to the Andhra Pradesh General Sales Tax Act does not include cast iron pipes, man hole covers and bends etc.
In this appeal, the correctness of the said view is questioned.
Third Schedule to the Andhra Pradesh General Sales Tax Act pertains to 436 "declared goods in respect of which a single point tax only is leviable under section 6".
Section 6 was enacted by the A.P. Legislature.to accord with sections 14 and 15 of the .
Item(2) of the third Schedule to the A.P. Act reads as follows: THIRD SCHEDULE (As amended upto 15th August 1987) Declared goods in respect of which a single point tax only is leviable under Section 6.
Description of goods Points of levy Rate of Tax (1) (2) (3) (4) (1) . . . . (2) Iron and steel, that is do *4 do to say; (3002) (i) pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skill scrap; (ii) steel sends (ingots, slabs, blooms and billets of all qualities, shapes and sizes); (iii)skelp bars, tin bars, sheet bars, hoe bars and sleeper bars; (iv) steel bars (rounds, rods, squares, flats, octagons and hexagons; plain and ribbed or twisted; in coil form as well as straight length); (v) steel structurals (angles, joints, channels, tees, sheet pilling sections.
Z sections or any other rolled sections); (vi) sheets, hoops, strips and skelp, both black and galvanised, hot and cold rolled, plain and corrugated in all qualities, in straight lengths and in coil form, as rolled and in revitted condition; (vii)plates both plain and chequered in all qualities; (viii)discs, rings, forgoings and steel castings; (ix) tool, alloy and special steels of any of the above categories; (x) steel melting scrap in all forms including steel skull, turnings and borings, (xi) steel tubes, both welded and seamless, of all diameters and lengths,including tube fittings; (xii)tin plates, both not dipped and electrolytic and tin free plates; (xiii)fish plate bars, bearing plate bars,crossing sleeper bars, fish plates, bearing plates, crossing sleepers and pressed steel sleepers, rails heavy and light crane rails; (xiv)wheels, tyres, axles and wheel sets; (xv) wire rods and wires rolled, drawn, galvanised, aluminised, tinned or coated such as by copper; (xvi)defectives, rejects, cuttings or end pieces of any of the above categories.
Item (2) of the Third Schedule to the A.P. Act is an exact replica of item (iv) of section 14 of the .
According to section 15 of the Central Act, 'declared goods ' cannot be taxed at a rate exceeding 4% or at more than one stage.
The pracise question that was considered in Deccan Engineering (followed in the judgment under appeal) was whether the 'cast iron castings ' manufactured by the petitioner in that case are cast iron 'within the meaning of item (2) (i) of the Third Schedule to the A.P. Act/ Item (iv) (i) of section 14 of the C.S.T. Act.
At this stage, it is necessary to a certain precisely what does 'cast iron ' mean and how are the products of the appellant manufactured. 'Cast iron ' is defined in the Concise Oxford Dictionary as "a hard alloy of iron, carbon and silicon cast in a mould".
According to New Lexicon Webster 's dictionary of English language, the word ,cast iron ' means "an iron carbon alloy produced in a blast furnace.
It contains upto 4% carbon, and is more brittle, but more easily fused, than steel.
" According to Van Nostrand 's Scientific encyclopedia, 'cast iron ' is "primarily the product of remelting and casting pig iron".
(Interestingly, the expression 'cast iron ' with a hyphen between 'cast ' and 'iron ' has been defined separately as meaning "made of cast iron".
So far as item (iv) of section 14 is concerned, the official publication spells the expression cast iron ' without a hyphen.
Though an authorised publication of the A.P. Act is not placed before us, we presume that the printing of the said expression in the private publication placed before us represents the correct rendering it is without a hyphen.) That 'cast iron ' is different from 'cast iron 438 castings ' is brought out in the following extract from the Judgment in 'Deccan Engineering ', which is equally true in the case of the appellant as well: .LM15 "The assessee manufacturers and sells various goods mentioned earlier made from cast iron which has suffered sales tax.
The controversy is whether these several goods sold by the petitioners continue to be the same declared goods covered by the aforesaid entry or are different commercial commodity liable to levy of State Sales Tax.
The case of the Revenue is that, items sold by the petitioner are, therefore, exigible to tax as a distinct commercial commodity.
It is contended by the learned counsel for the assessee that the relevant entry in section 14 of the Central Act also IIIrd Schedule of the State Act speak of cast iron including ingots, moulds and bottom plates, iron scrap etc.
which indicates that any casting made out of cast iron also should be treated as included in the entry because of the word used 'including ' in the entry.
It is further contended that the Government of India in their letters have clarified that cast iron castings are covered by cast iron and the State Government has also issued the aforesaid G.O. subsequently under Section 42(2) of the State Act clarifying that the cast iron castings are covered within the term cast iron.
" It is thus clear that 'cast iron ' is different from 'cast iron castings ' manufactured by the appellant. 'Cast iron ' is purchased by the appellant and from that ' cast iron ', he manufactures several goods, like manhole covers, bends, cast iron pipes, etc.
In other words, 'cast iron ' used in item (iv) of section 14 of the Central Act is the material out of which the petitioner 's products are manufactured.
Position remains the same, even if the appellant purchases iron and mixes it with carbon and silicon thereby deriving 'cast iron ' and then pours it into different moulds.
In sum, 1 cast iron ' is different from the cast iron pipes, manhole covers, bends etc, manufactured and sold by the appellant.
It cannot be denied, in such a situation that the products manufactured by the appellant are, in commercial parlance, different and distinct goods from the cast iron.
Indeed this aspect is not seriously disputed by Shri Ganguli, the learned counsel for the appellant.
His case is entirely based upon certain clarifications and circulars issued both by the Central and State Governments and in particular upon an order issued by the Andhra Pradesh Government under section 42(2) of the A.P. Act namely viz., G.O. Ms. No. 383 dated 17.4.1985.
It is, therefore, necessary to refer to them.
The earliest clarification is the one contained in the latter dated 28th February, 1977 from the Department of Revenue and Banking (Revenue Wing) 439 Government of India addressed to the Finance/Revenue Secretaries of all State Governments and Union Tarritories.
It reads thus: "Subject:Clarification as to whether the term ' Cast Iron ' mentioned in section 14(iv) (i) of the would cover cast Iron casting.
In continuation of the marginally noted communications and with reference to this Department 's letter No. 24/3n3 ST.
20.11.1973, I am directed to say that the question whether the expression 'cast iron ' used in Section (iv) (i) of the will include ' Cast iron casting ' has been re examined in consultation with the Directorate General of Technical Development, Chief Chemist and the Ministry of Law, Justice & Company Affairs.
This Department has been advised that the existing expression 'cast iron ' in the aforesaid section will cover 'cast iron casting also Yours faithfully, Sd/ Deputy Secretary,to the Govt.
of India.
" Pursuant to the above clarification by the Central Government, the Commissioner of Commercial Taxes, Government of Andhra Pradesh intimated all the Deputy commissioners of commercial Taxes of the State that "Cast Iron Pipes and specials should be subjected to tax as falling under "Cast Iron" liable to tax @4% at the point of first sale in the State under entry 2 of the III Schedule of A.P.G.S.T. Act.
" To the same effect is another clarification issued by the Commissioner of Commercial Taxes, Government of Andhra Pradesh to his subordinate officials on 12.3.1982.
The next clarification from the Government of India was on 3 1st January, 1984.
It appears that the Government of Haryana had written to the Central Government stating that 'cast iron castings ' cannot be treated as declared goods and requested the Ministry of Finance, Government of India to examine the same.
It was in reply to the said query that the letter dated 3 1st January, 1984 was written by the Government of India, Ministry of Finance, Department of Revenue to the Financial Commissioner and Secretary, Government of Haryana, Excise and Taxation Department.
The letter says that the matter has been considered carefully by the Department in consultation with the Ministry of Law and the Director 440 General of Technical Development.
It set out the opinion of the Ministry of Law as also the opinion of the Director General of technical Development.
The latter 's opinion reads: "Cast iron is an alloy iron of Carbon silicon and other alloying elements if required i.e. Cast Iron Castings are covered under the term Cast Iron '.
It may also be clarified that ' cast Iron ' include Gray Iron, Chilled Malleable and Nodular Iron.
Ingot Moulds and Bottom Plates are nothing but Cast Iron Castings".
After setting out the said two opinions, the Government of India expressed its opinion in the following words: "In accordance with the above advice, cast iron castings are covered under the term "Cast Iron. . . .
State Government may kindly bring this position to the notice of Sales Tax authorities of the State.
If considered necessary this may be placed before the Committee of Commissioners of Sales Tax Commercial Tax set up under this Ministry 's letter No. Receipt of this letter may please be acknowledged.
Copies of this letter were communicated to all the State Governments and Admissions of Union Territories.
On 20th July, 1984 the Government of Andhra Pradesh, Revenue (S) Department issued a memorandum referring to the aforesaid letter of the Central Government dated 31st January, 1984 and reaffirming that " 'Cast Iron Castings ' are covered within the item Cast Iron including ingot ' in sub item (i) of item No. 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act".
On the same day the Principal Secretary,to the Government, Revenue Department addressed a letter to the Secretary, Andhra Pradesh Small Scale Industries Association, Vijayawada informing the Association that "a clarification has been issued to the Commissioner of Commercial Taxes to the effect that "cast iron castings" are covered within the term "cast iron including ingot" in sub item (i) of item No. 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957.
" On 27th March, 1984, however, the Commissioner of commercial Taxes, Government of Andhra Pradesh addressed a letter to all his subordinate officers stating that the question whether 'cast iron castings ' fall within the expression, 441 `cast iron ' is pending before the High Court of Andhra Pradesh and, therefore, the collection of arrears of tax due on 'raw castings ' is stayed for a period of one year.
At the end of one year, he said, the matter will be reexamined.
On 17th April, 1985 the Government of Andhra Pradesh issued a clarification contained in G.O.Ms.
No. 383 under sub section (2) of section 42 of the A.P. Act.
It will be appropriate to set out the G.O. in full: "GOVERNMENT OF ANDHRA PRADESH ABSTRACT Andhra Pradesh General Sales Tax Act, 1957 Levy, of Sales Tat on 'Cast Iron Casting ' Clarification issued.
REVENUE (S) DEPARTMENT.
G. O. Ms. No. 383.
Dated 17.04.1985 Read the followings: 1.
2216/SI/83 4.
20.7.84, 2.
No. 2216/83 4, dt.
20.7.84 addressed to Secretary A.P. Small Scale Industries Association, Vijayawada 3.
From the CCT 's Ref.
D.O.FE.Lr.
III (3) /1490/84, dt.
24.7.1984.
Government Memo 3166/SI/84 4, dt.
13.11.1984.
From the CCT.D.O. on CCT 'section Ref.
LI/(i) /1063/82 6.
Memo No. 3166/SI/84 5, dt.
22.2.1985.
From the commissioner of Commercial Taxes, Ref.
A3/LI/1093/82 dt.
19.3.1983.
ORDER: The Andhra Pradesh Small Scale Industries Association Vijayawada requested the Government to clarify whether 'cast iron ' and 'cast iron castings ' are one and the same commercial commodity.
442 2.
This matter was examined at length by the Government of India in consultation with Ministry of Law, (Department of legal Affairs) and Director General of Techinical Development.
The Ministry of Finance, Department of Revenue, Government of India clarified, in their letter F.No.
24/10/80/ ST.
dt. 31.1.1984.
to the effect that "cast iron castings" are covered within the term "cast iron".
Government have examined in detail the legal aspects of the issue and observe that the term "cast iron including ingot, moulds, bottom plates" as in sub item (i) of item 2 in the Third Schedule to the Andhra Pradesh Central Sales Tax covers "cast iron casting" and as such "cast iron castings" is not a different commercial commodity from the commodity "cast iron including ingot, moulds, bottom plates.
Under sub section (2) of section 42 of the Andhra Pradesh General Seles Tax Act, 1957 the Government hereby clarify that the "cast castings" are covered within the term "cast iron including ingot, moulds, bottom plates" occurred in sub item (i) of item 2 of this Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957.
(emphasis added) (BY ORDER IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH) C.R. NAIR, PRINCIPAL SECRETARY TO GOVERNMENT." Section 42 of the A.P. Act confers upon the State Government the power to remove difficulties.
Sub section (i) confers the said power to meet the problems arising from transition from the previous Sales Tax Act to the present Sales Tax Act.
An order under sub section (1) is required to be published in the A.P. Gazette.
Sub section (2) is general in nature.
An order under sub section (2) is not required to be published in the A.P. Gazette.
Section 42 reads: "42 Power to remove difficulties: (1) If any difficulty arises in giving effect to the provisions of this Act in consequence of the transition to the said provisions from the 443 corresponding provisions of the Acts in force immediately before the commencement of this Act, the State Government may, by order in the Andhra Pradesh Gazettle, make such provisions as appear to them to be neccessary or expedient for removing the difficulty.
(2) If any difficulty arises in giving effect to the provisions of this Act (otherwise than in relation to the transition from the provisions of the corresponding Act in force before the commencement of this Act), the State Government may, by order make such provisions, not inconsistent with the purposes of this Act, as appear to them to be necessary or expedient for removing the difficulty.
" An order issued under section 42, is undoubtedly statutory in character.
A word about the validity of section 42 of the A.P.Act.
Section 37 of the Payment of Bonus Act conferred a similar power upon the Central Government; it further declared that any such order would be final.
It was truck down by a Constitution Bench of this Court in Jalan Trading Co. vs Mill Mazdoor Sabha ; as amounting to excessive delegation of legislative power.
However.
in a subsequent decision in Gammon India Limited etc.
vs Union of India & Ors. etc.
; , it has been explained by another Constitution Bench that the decision in Jalan Trading was influenced by the words occuring at the end of section 37 of the Payment of Bonus Act to the effect that the direction of the Government issued thereunder was final.
Inasmuch as the said words are not there in section 34 of the , it was held, section 34 cannot be said to suffer from the vice of excessive delegation of legislative power.
It is meant "for giving effect to the provisions of the Act," it was held.
Sub section (2) of section 42 of the A.P. Act does no doubt not contain the aforesaid offending words, and can not therefore be characterised as invalid.
Yet, it must be remembered that the said power can be exercised "for giving effect to the provisions of the Act", and not in derogation thereof.
As we shall presently indicate it is necessary to bear this limitation in mind while examining the effect of G.O.Ms. 3,83.
So far as clarifications kirculars issued by the Central Government and/or State Government are concerned, they represent merely their understanding of the statutory provisions.
They are not binding upon the Courts.
IT is true that those clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law.
, There can be no estoppel against the statute.
the understanding of the Government, whether in favour or against the assessee, is 444 nothing more than its understanding and opinion.
It is doubtful whether such clarifications and circulars bind the quasi judicial functioning of the authorities under the Act.
While acting in quasi judicial capacity, they are bound by law and not by any administrative instructions, opinions, clarifications or circulars.
Law is what is declared by this Court and the High Court to wit, it is for this Court and the High Court to declare what does a particular provision of statute say, and not for the executive.
of course, the Parliament/Legislature never speaks or explains what does a provision enacted by it mean.
(See Sanjeev Coke Manufacturing Company vs Mls.
Bharat Coking Coal Ltd. and another; , Now coming to G.O. Ms. 383, it is undoubtedly of a statutorily characterbut, as explained hereinbefore the power under section 42 cannot be utilised for altering the provisions of the Act but only for giving effect to the provisions of the Act.
Since the goods manufactured by the appellant are different and distinct goods from cast iron, their sale attracts the levy created by the Act.
In such a case, the government can not say, in exercise of its power under section 42 (2) that the levy created by the Act shall not be effective or operative.
In other words, the said power cannot be utilised for dispensing with the levy created by the Act, over a class of goods or a class of persons, as the case may be.
For doing that, the power of exemption conferred by section 9 of the A.P. Act has to be exercised.
Though it is not argued before us, we tried to see the possibility but we find it difficult to relate the order in G.O. Ms. 383 to the power of the Government under section 9, apart from the fact that the nature and character of the power under section 42 is different from the one conferred by Section 9.
As exemption under section 9 has to be granted not only by a notification, it is also required to be published in the Andhra Pradesh Gazette.
It is not suggested, nor is it brought to our notice, that G.O. Ms. 383 was published in the Andhra Pradesh Gazette.
This does not, however, preclude the Government of Andhra Pradesh from exercising the said power of exemption, in accordance with law, if it is so advised.
We need express no opinion on that score.
The learned counsel for the appellant brought to our notice that the very same Division Bench which rendered the decision in Deccan Engineers had rendered another decision in Tax Revision Case No. 93 of 1990 (The State of A.P. vs Pratap Steel) applying G.O. Ms. 383 and giving relief to the dealer.
It is argued that the Division Bench ought to have taken the same view in Deccan Engineers as well.
We have perused the decision in Pratap Steel.
It is a short judgment dismissing the Revision applying G.O.Ms. 383.
It does not appear that the matter was argued in the manner it was in Deccan Engineers.
The said argument, therefore, cannot advance the case of the appellant.
445 In this view of the matter in is not necessary for us to go into the question wether the word including in section 14 (iv) (i) of and item (2) (i) of the Third Schedule to the A.P. Act has the effect of making the said subclause exhaustive or otherwise.
Accordingly, we bold that the cast iron castings manufactured by the appellants do not fall within the expression 'cast iron ' in Entry 2(i) of the Third Schedule of the Andhra Pradesh General Sales Tax Act or within Section 14 (iv)(i) of the .
The appeal accordingly fails and is dismissed.
No order as to costs.
W. P. No.763 OF 1992 This writ petition preferred under Article 32 of the Constitution is directed against the notices issued by the assessing authority proposing to reopen the assessments of the petitioner/appellant with respect to earlier assessment years and also seeking to apply the principle of Deccan Engineers to the pending assessments.
For the reasons stated hereinabove this writ petition fails and is accordingly dismissed.
No costs.
G.S.B. Appeal and petition dismissed. | Section 6 of Andhra Pradesh General Sales Tax Act, 1957 provides a single point tax @ 4 % on declared goods, mentioned in the Third Schedule to that Act.
Item (2) of the Third Schedule describes the articles made of Iron & steel which fall in the category of 'declared goods '; sub item (i) of Item (2) pertains to "pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skill scrap". 'Cast iron ' is defined in the Concise Oxford Dictionary as "a hard alloy of iron, carbon and silicon cast in a mould".
On February 28,1977 the Department of Revenue & Banking (Revenue Wing) Government of India issued a letter to all Finance/ Revenue Secretaries of all State Governments and Union Territories, explaining the term 'Cast Iron ' mentioned in section 14 (iv) (i) of the .
This letter said to have been issued in consultation with the Directorate General of Technical Development,_Chief Chemist and the Ministry of Law, Justice & Company Affairs, extended the scope of the expression 'cast iron ' to "cover 'cast iron casting ' also".
Based on similar clarifications, the Department of Revenue (S) Department of the Government of Andhra Pradesh issued a clarificatory order under section 42(2) of the Act vide GOMs No. 383 dated April 17,1985 extending the scope of the expression 'cast iron ' to include "cast iron castings".
This order was also published in the State 's official Gazette.
Section 42 (2) of A.P. General Sales Tax Act empowers the State Government to make, by an order, such provisions as appear to them necessary & expedient to remove difficulty in the implementation of this Act, provided that these are not inconsistent with the provisions of the Act.
The appellant manufactures and sells products like cast iron pipes,man 434 hole covers, etc.
He claims that read with the above clarificatory orders, he is liable to pay only 4% sales Tax under Section 6 of the A.P. General Sales Tax ct But, for the assessment year 1989 90 the Commercial Tax Officer C.T.O.) Narayanaguda Circle, Hyderabad levied Sales Tax on the said products at the rate applicable to general goods.
The C.T.O. having overruled the appellant 's contentions, the.
latter appealed to the Appellate Deputy Commissioner.
During the pendency of appeal a notice was issued to the appellant calling upon him to pay the tax assessed, since no stay has been granted in appeal.
Against this notice the appellant filed a writ petition No. 9315 of 1992 in the High Court of Andhra Pradesh.
The Division Bench of the High Court rejected the appellant 's main contention that his products were covered by Item (2) (i)of the Third Schedule to the A.P. General Sales Tax Act, and dismissed the writ petition.
Vide Civil Appeal No. 4474 of 1992 (with Writ Petition(Civil) No. 763 of 1992).
The appellant questions before this Court the above view of the High Court.
Rejecting the appellant 's contentions and upholding the judgment and order of the High Court, this Court, HELD: Law is what is declared by this Court and the High Court.
An executive authority can, at best, only opine its own understanding of the statute; such opinion is not binding upon the quasi judicial functioning of the authorities under the Act.
(444 B) Sanjeev Coke Manufacturing Company vs M/s Bharat Cooking Coal lid.
and another; , , referred to.
The Government cannot use the powers, conferred by section 42 (2) of the A.P. General Sales Tax Act, to dispense with a levy created by the Act.
(444D) The Van Nostrand 's Scientific Encyclopaedia treats 'cast iron ' 'and cast iron ' (with a hyphen) as two different words.
The Act speaks of 'cast iron ' (that is without a hyphen between the two words) (437 G H) Hence, the expression 'castiron 'in Item (2) (i) of A.P. General Sales Tax Act does not include the products cast iron pipes, man hole covers, bends etc.
(437 F) Deccan Engineers vs State of Andhra Pradesh.
1991 Vo. 12 A.P. Sales Tax Journal 138 referred to. |
l Appeal Nos.
335 342/1982.
From the Judgment and Order dated 18.8.1981 of the Punjab and Haryana High Court in Regular First Appeal Nos.
2605, 2604,2606,2610,306,308, 10 and 11 of 1980.
D.V. Sehgal, L.R. Singh and Yunus Malik for the Appellants.
Ranjit Kumar and G.K. Bansal (NP) for the Respondents.
J.: By Notification published in the Haryana State Gazette on October 12,1976, under section4(1) of Land Acquisition Act 1 of 1894 for short 'the Act ', the respondent Union Territory of Chandigarh acquired a total extent of 70.09 acres of land situated in Manimajra near Chandigarh for a public purpose, namely, to set up Brick Kilns therein.
The lands comprised in different Khasra numbers within H.B. No. 375, out of which 63.09 acres are Abi cultivated lands, the rest are Barani (rainfed land) and, ghair munkin (waste land) bouldars, trenches etc.
By award dated January II, 1977, the Collector fixed a sum of Rs. 23,600 as market value of Abi, Rs. 17,000 per acre to Barani and Rs. 12,000 to Ghair Munkin lands.
On reference under section 18, the Civil Court enhanced the compensation to Rs. 33,600 per acre to Abi lands and no enhancement to other categories with solatium at 15 per cent and interest at 6 percent per annum on the 374 enhanced compensation from the date of taking possession till date of payment.
On appeal the learned Single Judge in R.F.A. No. 2605 of 1980 etc, by judgment dated August 18, 1981 confirmed the same.
Thus these appeals by special leave.
As common questions of law arise for decision, they are disposed of by common judgment.
Appellants ' contentions is that the acquired lands possessed of potential value for residential and commercial purposes and there is no justification for classification of the lands and all the lands are entitled to parity to determine the market value.
By notification dated June 30, 1976 in the same village under the same H.B. No. 375, 54.37 acres were acquired for construction of Motor Market Complex.
The Collector and the Civil Court awarded the same market values as were fixed in these appeals but the learned Single judge denied parity of market value to these lands while enhancing the market value at Rs. 75,000 per acre to the similar lands in belting No. 2 and awarded @Rs. 3, 72,200 to the lands abutting the main road upto a depth of 140 feet in other case.
Therein the Single Judge relied upon exhibit P28 of the year 1972 in which 17 marlas of land was sold @Rs. 75,000 per acre, Having relied upon the same and having enhanced the market value, the same yardstick should have been applied in awarding market value to the lands under acquisition.
The learned counsel also placed strong reliance on 6 mutation entries which would show that the market value of the lands ranges between Rs. 1,16,000 to 1,60,000 per acre and the appellants, therefore, are entitled to compensation at least @ Rs. 75,000 as claimed by them.
He also contended that having found that the lands are possessed of potential value being similar to the lands in other appeal, the appellants are entitled to parity in determination of the market value as well.
The Haryana Govt, acquired by notification dated January 8,1971 vast extent of lands in Judian Village for Mansa Housing and Commercial Complex and thereunder Abi/irrigated lands were awarded at a sum of Rs. 28,800 per acre which was confirmed by the High Court.
After five years the notification was issued on October 12, 1976, the Court should have taken note of steady rise in prices and have suitably enhanced the market value.
Since no one was appearing for the respondent, we sent for Mr. Ranjit Kumar, the previous standing counsel for the Union Territory, Chandigarh and requested him to assist the court.
Accordingly he has meticulously analysed the entire evidence and rendered valuable assistance.
He contended that the lands are situated beyond railway line on North West and 1/2 k.m.
to the motor market on the other side of the road.
The lands are nearer to Sukhna Choe (lake) at a distance of one furlong.
The mutation record is not admissible as none, connected with the sale transactions, were examined to prove the documents; the grounds for sales, comparative advantages and their respective situation.
The motor market is situated in a developed area on the Eastern side of the road and the lands in these cases are 375 located away from those lands.
Shri Ranjit also contended that lands in Judian Village for Mansa Housing and Commercial Complex were nearer to abadi possessing better amenities and they do not afford any comparable grounds.
He contended that the lands for canalisation of Sukhna Choe was acquired by notification dated March 21, 1972 and the Reference Court upheld the award of the Collector at Rs. 15,525 for Abi lands which was confirmed by the High Court.
The location being very near to the lands under requisition, they offer reasonable base to fix market value.
Notification was issued under s.6 of the Punjab New Capital (Perefery) Control Act, 1952, freezing development of the lands situated within a radious of 10 miles from Chandigarh boundary for any residential and commercial purposes.
Therefore, they are not possessed of any potential value.
The learned Judge on the same day decided both the cases upholding the award of the Civil Court in these cases while enhancing the market value in motor market cases relied on by the appellants.
He was aware of the location and differential value between two types of land.
Therefore, he was not inclined to enhance the market value of the land under acquisition.
The first question that arises for consideration is whether the High Court has committed any legal error in affirming the market value determined by the Reference Court.
The Dist, Judge, Chandigarh in L.P.J. No. 105/70 and batch, found that the total extent of the land acquired is 70.09 acres, 560 Kanal 15 mawla, out of which 63.91 (51 i Kanal) 6 Marla are Abi land and 4.22 (33 Kanal 15 Marla) is Barani land and the rest are Ghair Munkin lands.
It is admitted by the witnesses that the acquired land is nearer to the railway track and also situated at a distance of 1 1/2 k.m.
from timber and motor market.
They are situated in wide area with the population of about 3000 3500.
There are about 200 shops situated in Manimazra town.
The acquired land is towards north western side of Manimazra.
The railway line is 2 to 3 furlong from Manimaira on the northwestern side.
They are also situated near the boundary of Chandigarh and one furlong from Sukhna Choe.
It was also admitted that part of the land is situated in Sector 26.
Thus it could be seen that the lands are situated very near to Chandigarh.
Neither the appellants nor the Land Acquisition Officer had examined witnesses in proof of the sale transactions referred in mutation entries exhibit P4 to P8 on behalf of the appellants and R1 and R2 on behalf of the respondent.
It is settled law that claimant is entitled to just and reasonable compensation and under section 23 to determine the market value of the lands the prevailing prices as on the date of the publication of the notification under section 4(1), the sale transaction of the same lands or sales of lands situated in the neighbourhood would furnish as evidence of comparable sales.
The price which a hypothetical willing vendor might reasonably expects to obtain from a willing purchaser would form the basis to fix the market 376 value.
It would be possible to have reliable evidence when sale transactions are proved by either the vendor or the vendee and if either of them was not available, the attesting witness who had personal knowledge of the transaction is to be examined by producing either the original sale deed or certified copies thereof as evidence.
Under section 5 1A of the Act as amended in 1984 the certified copies have been permitted to be brought on record as evidence of sale transaction recorded therein.
The examination of the witnesses is to find that the sale transactions are bonafide and genuine transactions between willing vendor and willing vendee as reasonable prudent men and the price mentioned is not throw away price at arms length or depressed sales or brought into existence to inflate market value ,of the lands under acquisition and the sales are accommodating one.
Equally it must be brought on record the comparative nature of the lands covered under the sale deed and the acquired lands whether adjacent or actual distance or possessed of similar advantages and whether transactions themselves are genuine and bonafide trans actions.
This proposition of law, since settled law, in fairness, has not been disputed across the bar.
The contention is that at the relevant time it was not being insisted upon.
Therefore, none of the witnesses were called to prove the sale deeds or to prove the sale transactions.
Therefore , when evidence of potential value is available, the same could be considered.
We find merit in the contention.
At one time we thought of remanding the cases but we find that it would be needless prologation and the complexion on ground by now would have been completely changed.
In view of the above settled legal position and the circumstances, the documentary evidence of sale transactions or in the mutation entries on either side are clearly not admissible and therefore, they cannot be looked into, and are accordingly excluded from consideration.
The only question, therefore, is whether the lands are possessed of potential value and whether the same treatment could be meted out to Abi and Barani lands.
Ghair Munkin land stands on a different footing and, therefore, they cannot be equated with the Abi and Barani lands.
The situation of the lands as extracted here in before clearly shows that the lands are situated very close to developed Chandigarh planned city and are very near to Sukhna Lake and are also nearer to railway track.
They are situated within the freezed zone for future potential development of the city.
Thereby, it is clear that though the acquisition was for establishment of Brick Kilns, by its very nature may not immediately be capable of being used for residential or commercial purposes, but certainly possessed of potential value for future development as residential and commercial purposes.
Then what would be the reasonable market value prevailing as on the date of notification.
As rightly contended by Shri Ranjit Kumar that there is a distinction between the lands acquired for motor market or Mansa Housing Complex on one hand and the lands under acquisition on the other hand, though the lands are Abi 377 lands.
The acquired lands are situated on the western side of Manimazra Panchkula road and the motor market was situated on the other side of the road.
Therefore, the market value of the land acquired for motor market do not tender any assistance as comparable prices.
Obviously for that reason the same learned Single Judge while deciding both the appeals on the same day declined to enhance the market value to these lands while he awarded to lands in 2nd belt at Rs. 75,000 per acre.
We have no information whether any appeal was filed against that judgment.
But certainly the facts of these cases would assist us to assess a fair and reasonable compensation in fixing the market value though an amount of guess work is involved.
We are conscious of the fact that it should not be founded on feats of imagination hedged with undue emphasis of compulsory deprivation of the possession of the land of the appellants, for the exercise of State 's power of eminent domain, statutory solatium is the premium the state pays.
Therefore, the approach should be pragmatic to recompense the appellants to secure alternative lands or to invest in profitable business for rehabilitation.
It is seen that the Reference Court awarded a sum of Rs.33,600 per acre to Abi land.
There is a steady rise in prices as reflected in the judgment in the other appeals relied on by the learned counsel for appellants.
The High Court also recorded a.finding in that behalf in those appeals.
The lands are situated in the same H.B. No. 375, though at different places and distance having future potential development.
Considering the totality of the facts and circumstances we find that market value @ Rs. 42,000 per acre would be just and fair.
This value should be for Abi and for Barani lands at Rs. 38,000 per acre and the market value to ghair munkin land at Rs. 12,000 per acre awarded by the Civil Court is confirmed.
The appellants are entitle to Solatium and interest on the enhanced market value at 15 per cent and 6 per cent respectively from the date of taking possession till the date of payment as the award and the order of the Civil Court are prior to the periods mentioned in the Amendment Act 1984 came into force.
In the circumstances parties are directed to bear their own costs.
G.N. Appeals Partly allowed. | The Respondents acquired some lands for setting up Brick Kilns.
The lands consisted of Abi (cultivated land), Barani (rainfed land) and ghair munkin (waste land) and the Collector fixed the compensation @ at Rs. 23,600, Rs. 17,000 and Rs. 12,000 per acre of the respective lands.
On a reference the Civil Court enhanced the compensation to Rs.33,600 per acre for Abi lands.
No enhancement was allowed in respect of the other categories of land.
It however allowed solatium at 15 % and interest at 6 % p.a. on the enhanced compensation.
On appeal, a Single Judge of the High Court confirmed the same.
These appeals were filed against the said Judgment of the High Court.
The appellants contended that the acquired lands had the potential value for residential and commercial purposes and there was no justification for classification of the lands and all the lands shall be treated at party in determination of market value; that in a similar case, the market value was enhanced to Rs. 75,000 per acre and in view of the fact that certain mutation entries showed a market value of similar lands ranging from Rs. 1,16,000 to Rs. 1,60,000, per acre the appellants claimed for compensation of at least at Rs. 75,000 per acre.
On behalf of the Respondents it was contended that the mutation record was not admissible as no one connected with the sale transactions was examined to prove the documents, the ground for sales, comparative advantages and their respective situation; that the lands possessed comparable or better amenities and whether the lands are very near to the lands under 372 acquisition.
The compensation awarded by the Collector at the rate of Rs. 15,525 per acre was upheld by the Reference Court, and this offered ' a reasonable base to fix the market value of the lands under acquisition.
Partly allowing the appeals, this Court, HELD: 1.
Neither the appellants nor the Land Acquisition Officer had examined witnesses in proof of the sale transactions referred in the mutation entries.
It is settled law that a claimant is entitled to just and reasonable compensation under section 23, To determine the market value of the lands, it is necessary to examine witnesses to prove the prevailing prices as on the date of publication of the notification under section 4(1).
The sale transaction of the same Lands or sales of lands situated in the neighbourhood possessed of same or similar advantages would furnish as evidence of comparable sales.
It would be possible to have reliable evidence when sale transactions are proved by either the vendor or the vendee and if either of them was not available, the attesting witness who had personal knowledge of the transactions is to be examined by producing either the original sale deed or certified copies thereof as evidence.
Since at the relevant time it was not being insisted upon, none of the witnesses were called to prove the sale deeds or to prove the sale transactions.
Thus, the documentary evidence of sale transactions or the mutation entries on either side are clearly not admissible and therefore, they cannot be looked into, and are accordingly excluded from consideration.
(375 GH, 376 (H E) 2.
The situation of the lands dearly shows that the lands are situated very dose to developed Chandigarh planned city and are very near to Sukha Lake and the railway track.
They are situated within the freezed zone for future potential development of the city.
Though the acquisition was for establishment of Brick Kilns, by its very nature the lands may not immediately be capable of being used for residential or commercial purposes, but certainly possessed of potential value for future development as residential and commercial purposes.
There is a distinction between the lands acquired for Motor Market or Mansa Housing Complex on the one hand and the lands under acquisition on the other hand, though the lands are Abi lands going by the situation of the lands, the market value of the land acquired for motor market do not render any assistance as a comparable price.
This would be of assistance to assess a fair and reasonable compensation in fixing the market value though an amount of guess work is involved.
This Court is conscious of the fact that it should not be founded on feats of imagination hedged with 373 undue emphasis of compulsory deprivation of the possession of the lands of the appellant.
For the exercise of State 's power of eminent domain statutory solatium is the premium the State pays.
Therefore, the approach should he pragmatic to recompense the appellants to secure alternative lands or to invest in profitable business for rehabilitation.
It is seen that the Reference Court awarded a sum of Rs. 33,600 per acre to Abi land.
No doubt there is a steady rise in prices of lands.
Considering the totality of the facts and circumstances, the market value @ Rs. 42,000 per acre would be just and fair for Abi lands and at Rs. 38,000 per acre for Barani lands.
The market value of ghair munkin land at Rs. 12,000 per acre awarded by the Civil Court is confirmed.
The appellants are entitled to solatium and interest on the inhanced market value at 15 per cent and 6 per cent respectively from the date of taking possession till the date of payment as the award and the order of the Civil Court are prior to the periods mentioned in the Amendment Act 1984 came into force,.
(376G,H, 371 A F)) |
Appeal No. 2702 of 1984.
From the Judgment and Order dated 20.6.1984 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED (SB) 2714/83 C. Harish N. Salve, Ashok H. Desai, Miss Meenakshi Grover, Rajiv Dutta, Ravinder Narain, Miss Amrit and Miss Punita Singh for JBD & Co. for the Appellants.
A.K. Ganguli, k.
Swami, Dilip Tandon and P. Parameshwaran for the Respondents.
J.: Common questions of law arose for decision in these 8 appeals need disposal by this judgment.
The question relates to classification of "toilet soap" in Excise item 15 of the First Schedule to the Central Excise and Salt Act 1 of 1944 as amended in 1964 for short the Act '.
In addition, in C.A. Nos. 81 3/86, 3632 34/88 and 1 102/89 sequal to its finding, they claim refund of excess excise duty.
The facts in C.A. Nos. 2702/84 and 2785/84 are sufficient for disposal.
The appellants laid before Assiatant Collect or classification list claiming "toilet soaps" Kalpa and Oasis, in other appeals Jai, O.K. Moti, Rain drop, Gold and Ria as bath soaps under Tariff item 15 (1) of the First Schedule (Household).
By notice dated August 31, 1982, the Assistant Collector called upon the appellants to show cause as to why they cannot be classified under tariff item 15(2) other sorts and to levy excise duty at 15 per cent ad valorem (as then stood).
The appellants after filing their reply thereto and having had personal hearing, by proceeding dated November 27, 1982, the Asstt.
Collector classified toilet soaps as "other sorts" under tariff item 15(2) of the Schedule.
On appeal the Collector by Order dated January 21, 1983 classified them under tariff item No. 15(1) "household" On second appeal, the CEGAT by its order dated June 20, 1984 reversed the appellate order and upheld the Asstt.
Collector 's order, Same is the case with regard to all other appeals except resultant claim for refund.
In 1954 tariff item No. 15A was introduced in the First Schedule of the Act thus: "15(A) 'Soap ' all varieties of the product known commercially as soap 1.
Soap, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power or of steam for heating: (1) Soap, household and laundry: (a) Plain bars of not less than Rupees one pound in weight fives & annas four per cwt.
(b) ther sorts Rupees six & annas 382 two per cwt.
(2) Soap toilet Rupees fourteen per cwt.
(3) Soap, other then household Rupees and laundry or toilet.
fourteen per cwt.
This entry as amended in 1964 reads thus " 15 'Soap ' means all varieties of product known commercially as soap : (1)Soap, household and 20 per cent Laundary ad valorem (2) Other sorts 20 per cent ad valorem (Ad valorem rate of tarrif varies from time to time as per amendments).
Later it was amended in the year 1979 empowering the Govt.
to grant exemption under section 8 of the Act.
The details thereof are not material for the purpose of these cases.
It is seen that in 1954 in Tariff entry 15A "soap" means all varieties of the product known commercially as soap.
Item 1 provided that soap in relation to its manufacture with the aid of power or of steam for heating, they were classified as Plain bars, other sorts, toilet soaps and soap, other then husehold or laundry or toilet.
While amending the entry in 1964 the language couched therein as seen earliar is thus: 'soap ' means all varities of products known commercially as soap.
1) Soap, household and Laundry 2) "Other sorts" and graded ad valorem tariff has been prescribed.
It is seen that household and laundry soap was subjected to levy of tariff at a lesser rate than other sorts" ad valorem.
The contention of Sri Ganguli, the learned Senior counsel for the union is that statute always kept distinction between soap "household and laundry" and "other sorts".
Toilet soap was kept in the packet of other sorts.
Household and laundry soaps are being used for cleaning household articles and utensils and washing the clothes while toilet soaps are for bathing purpose.
The latter compose of diverse varieties, based on personal liking and 383 taste, are being used.
They are commercially known as other sorts but not household.
The legislative history furnishes unimpeachable evidence that soaps used for household and laundry are compendiously treated as a class and are subjected to imposition of lesser tariff.
They receive their colour from each other as compendiously known in the commercial parlance that the former are meant for use for household purposes while toilet soap are for use for bath and are subject to higher rate of tariff at par with soap for commercial and industrial purposes.
They bear higher rate of tariff.
The explanatory note appended to the Finance Bill 1964 would furnish the legislative intendment to amend the tariff item and the treatment meted out to toilet soap for tariff purpose.
It is accordingly understood by the department and also by the trade circles.
The appellants too intially treated toilet soap as other sorts but later, on legal opinion, they claimed them as household soaps.
The construction adopted by the tribunal is consistent with the standard works on soaps.
M/s Harish Salve and Ashok Desai, contended that in 1954 toilet soap was treated as an independent tariff sub item and household and laundry soaps were treated as separate entity and separately subjected to varied rates of tariff.
On amendment in 1964 toilet soap was omitted as a separate entity and brought toilet soap as part of genus, namely, soap "house hold", as a toilet soap is always a household soap.
Therefore, the reliance by revenue on varied rates of duty or departmental contemporenia expositio have no bearing.
The object of classification does not show that toilet soap is not part of the genus, "soap household" unless it is established otherwise.
The question, therefore, emerges whether "toilet soap" would be household soap within the meaning of Tariff item 15(1) of the Schedule.
Undoubtedly true, as contended by Sri Ganguli, that preceding amendment toilet soap was classified separately under sub item 2 and assessed to duty accordingly.
But by amendment the distinction was wiped out and toilet soap was brought into common hotchpoch.
So the contention that the variety of products known commercially as soaps have been enumerated or included compendiously, retaining their original colour even after the amendment made in the Finance Act, 1964 and falls into "other sorts" same genus, prima facie, though attractive, on consideration from proper perspective and in its setting in common commercial parlance, soap "toilet" appears to fall in household in sub item 1 of tariff item 15 of the Schedule.
It is true that the heading "soaps" are commercially known to be of diverse variety.
The provisions of the Tariff do not determine the relevant entity ofthe goods.
They deal whether and under what entry, the indentified entity attracts duty.
The goods are to be identified and then to find the appropriate heading, sub heading under which the identified goods/products would be classified.
To find the appropriate classification description employed in the tariff nomenclature should 384 be appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon.
For exigibility ' to excise duty the entity must be specified in positive terms under a particular tariff entry.
In its absence be deduced from a proper construction of the tariff entry.
There is neither intendment nor equity in a taxing statute.
Nothing is implied.
Neither can we insert nor anything can we delete but it should be interpreted and construed as per the words the legislature has chosen to employ.
in the Act or Rules.
There is no room for assumption or presumptions.
The object of the parliament has to be gathered from the language used in the statute.
The contention that toilet soap is commercially different from household and laundry soaps, as could be seen from the opening words of entry 15, needs careful analysis.
It is well, at the outset, to guard against confusion between the meaning and the legal effect of an expression used in a statute.
Where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation which are merely presumption in cases of ambiguity in the statute.
The court would interpret them as they stand.
The object and purpose has to be gathered from such word themselves.
Words should not be regarded as being surplus nor be rendered Otiose.
Strictly speaking there is no place in such cases for interpretation or construction except where the words of statute admit of two meanings.
The safer and more correct course to deal with a question of construction of statute is to take the words themselves and arrive, if possible, at their meaning, without, in the first place, reference to cases for theories of construction.
Let us, therefore, consider the meaning of the word soap "household".
The word household signifies a family living together.
In the simplistic language toilet soap being used by the family as household soap is too simplification to reach a conclusion.
Therefore, one has to gather its meaning in the legal setting to discover the object which the Act seeks to serve and the purpose of the amendment brought about.
The task of interpretation of the statute is not a mechanical one.
It is more than mere reading of mathametical formula.
It is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts.
it is also idle to expect that the draftman drafted it with divine prescience and perfect and unequivocal clarity.
Therefore, court would endeavour to eschew literal construction if it produces manifest absurdity or unjust result.
In Manmohad Das vs Vishnu Das; , a Constitution bench held as follows: "The ordinary rule of construction is the provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a leteral construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out".
385 In Ramavatar Budhaiprasad etc.
vs Assit.
Sales Tax Officer, Akola and Anr. ; , another Constitution Bench was to consider whether "betal leaves" are "vegetable" within the meaning of item 6 of the 11 Schedule to the M.P. Sales Tax Act.
It was contended that betal leaves are vegetable and, therefore, they are exempted from the payment of sales tax.
While construing item 6, this court held that the words must be construed not in any technical sense nor from the botanical point of view but as, understood in common parlance.
It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute.
to it".
It is to be construed as understood in common language.
Therefore, betal leaves were held to be not vegetable.
The term 'vegetables ' is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table.
The same view was reiterated in Motipur Zamindari Co. (Pvt.) Ltd. vs State of Bihar [1962] Supp. 1 SCR 498 and State of West Bengal and Ors.
vs Washi Alumed etc.
[1977]3 SCR 149.
In Washi Ahmed 's case green ginger was held to be vegetable within the meaning of the word used in common parlance.
In Motipur Zaminadari 's case it was held that sugarcane was not vegetable.
In Porritts & Spencer (Asia) Lid.
vs State of Haryana, ; this Court held that Dryer felts ' are not textiles.
In that context the principle of understanding the meaning of the word in common parlance was adopted.
In Indo International Industries vs Commissioner of Sales Tax.
U. P., ; at 297C this Court held that "it is well settled that in interpreating items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to "the scientific anti technical ' meaning of the terms or expression used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them.
If any term or expression has been defined in the (emphasis supplied) enactment then it must he understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.
In that case the clinical syringes manufactured and sold by the assessee were not considered as glassware ' falling within entry 39 of the First Schedule of the Act.
In commercial sense Glassware would never comprise of articles like clinical syringes etc., or specialised significance and utility.
Same view was reiterated in P.A. Chillai Chidambara Nadar vs Addl.
Appellate Asst.
Commissioner.
Madurai and Anr.
; that coconut is neither a fresh fruit nor a vegetable.
In khandelwal Metal Works vs Union of India, [1985] Supp. 1 SCR 750 at 774 B C this Court held that court cannot decide classification 386 of goods under Import Tariff by implication.
If rules of interpretation are made in the Act, they should be applied and interpretation would be made with their aid for classification.
The court held that brass scrap is not metal alloy.
Craises on Statute Law (7th Edition) at pace 164 specified one of the Rules of Interpretation of Statutes as extracted below: "The second Rule is that if the statute is passed with reference to a particular trade, business or transaction and, words are used therein which everybody conversent with that trade, business or transaction knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning" In Shri Bharuch Coconut Trading Co. and Ors.
vs Municipal Corporation of the city of Ahemdabad and Ors., [1992] Suppl.
1 SCC 298 this Court applied the test as "would a householder when asked to bring some fresh fruits or some vegetable for the evening meal bring Coconut too as vegetable? Obviously the answer is in the negative".
Again when a person goes to a commercial market ask for coconuts, "no one will consider brown coconut to be vegetable or fresh fruit, no householder would purchase it as a fruit.
Therefore, the meaning of the word brown coconut, whether it is a green fruit has to be understood in its ordinary commercial parlance".
Accordingly it was held that brown coconut was not green fruit.
In interpreting the statute the individual appraisal of the wisdom or unwisdom of a particular course consciously selected by the Legislature is to be put aisde.
In Hansraj Gordhan Das vs H.H. Dave.
Collector of Central Excise & Customs and Ors., [ 3 this court held that the operation of the statutory notification had to be judged not by the object which authority had in mind but by the words it had employed to effectuate the legislative interest.
The question whether the cotton textiles manufactured by handlooms are entitled to exemption, this court held to be positive.
It may be noted that marketability of the product is an essential facet to attract dutiability of the goods under the Act.
The general purpose or common use of the product though may not be conclusive but may be relevant to classify it in a tariff entry when it was not specifically enumerated in a particular entry or sub entry.
The construction of the word must yield in favour of promoting and effectuating the object and purpose of the Act.
In Dunlop India Ltd. vs Union of India & Ors. ; this Court found the entry not in residuary but placed in the parentage and relieved it from orphanage.
in Anant B. Timbodia vs Union of India, ; , this Court was to consider whether imported cloves fell with item 169 in List 8 of Appendix 6 or para 167 of chapter 8 of import and export policy 1990 93.
Para 167 of Chapter 8 of import policy clearly provided the heading Import of Spices includes cloves, cinnamon/ cassia, nupneg and Mace.
Therefore, it was held that import permit is necessary.
The doctrine of popular sense or trade or its use in making medicine as crude drug 387 was not accepted.
Dictionary meaning or meaning given in Indian Pharmaceutical Codex was not accepted as given in in view of specific enumeration.
In Superintendent of central Excise, Surat vs Vac Metal Corporaion Ltd. AIR 1986 SC 1167 when the revenue contended that metalised yarn fell within general Tariff entry 18 yarn and synthetic fibres", this court held that entry 15A (2) first schedule of Central Excise & Salt Act 's specific entry relating to articles made of plastics of "all sorts" and metalised yam wax exigible to lessor tariff duty.
In Spaco Carburettors (India) Ltd. vs Collector of Customs.
Bombay ; whether special purpose complex machine tool fell in entry 84 89 or 84,45/48, this court held, after taking into account the purpose and use of it, that it is a multipurpose machine tool and fell in item 84, 45/48 of 1st Schedule.
The contention of the Revenue which finds favour with the tribunal that the legislative history and memorandum appended to the Finance Bill would furnish aid to the construction of the word "household" soap is not apposite to the fact situation.
When there is ambiguity in the word, statement and objects the legislative history, the memorandum appended to the Bill and the speech of the mover of the Bill are relevant material to discover the intention intention of the legislature.
In Shashikant Laxman Kale and Anr.
vs Union of India and Anr.
, ; at 376 para 17 this Court held that "for determining the purpose or object of the legislation, it is permissible to look into the circumstances which prevailed at the time when _the law was made, the Statement of Objects and, Reasons of the Bill which actuated the step to provide a remedy for the then existing malady can be used for the limited purpose of appreciating the background and the antecedent state of affairs leading to the legislation.
The memorandum explaining the provisions in the Finance Bill which were not part of the 'Notes on Clauses ' appended to the Statement of Objects and Reasons of the Bill cannot be used to draw support therefrom as it is not an accurate guide of the final Act.
In that behalf this Court relied on the statement of law profounded by Francis Bennion in his Statuitory Interpretation, Second Edition, 1984 at p. 529 relied on by the appellants in this case too.
In Ajoy Kumar Bannerjee and Ors.
vs Union of India and ors.
relied on by Sri Ganguli in this behalf renders no assistance to the Revenue.
Therein the question was the object of delegated legislation.
Therein the memorandum appended to the Bill incorporating section 16 of the was considered in the context of fixation of the pay scales of the employees.
The doctrine of reading down, placing reliance on Utkal contranctors and Joinery Pvt.
and Ors.
vs State of Orissa and Ors.
; also is of no assistance to the Revenue.
The doctrine of reading down has been applied only to sustain the constitutionality of the statute which question is not before us.
There is no quarrel with the proposition that in ascertaining the meaning of the word or a clause or 388 sentence in the statute in its interpretation, everything which is logically relevant should be admissible.
It is no doubt true that the doctrine of Noscitur A Sociis, meaning thereby, that it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them i.e. when two or more words which are susceptible of analogous meaning are clubbed together, they are understood to be used in their cognate sense.
They take, as it were, their colour from each other, the meaning of the more general is restricted to a sense analogous to a less general.
The philosophy behind it is that the meaning of doubtful words may be ascertained by reference to the meaning of words associated with it.
This doctrine is broader than the doctrine of ejusdem generis.
This doctrine was accepted by this Court in catina of cases but its application is to be made to be context and the setting in which the words came to be used or associated in the statute or the statutory rule.
Equally the doctrine of ' contemporanea erpositio is also being invoked to cull out the intendment by removing ambiguity in its understanding of the statute by the executive.
This Court in a latest case Indian metals & Ferro Alloys Lid.
vs Collector of central Excise cited all the decisions upto date and applied the doctrine to the understanding by the revenue of the provisions in income tax Act ' In Desh Bandhu Gupta and Ors vs Delhi Stock Exchange ; this Court held that this principle can be invoked, though the same will not always be decisive on the question of construction.
But the contemporaneous construction placed by administrative or executive officers charged with executing the statute, although not controlling, is nevertheless entitled to considerable weight as highly persuasive.
We may also add that if the interpretation is erroneous, court would without hesitation refuse to follow such construction.
This Court also equally expressed the view that its application was in restricted sense to ancient legislation in J. K. Cotton Spinning and Weaving Mills Ltd. and Anr.
vs Union of India and Ors.
[1987] Supp.
SCC 350 and in Doypack Systems Pvt.
case ; at 1000 F to H. In State of Madhya Pradesh vs M/s. G.S. Dall and Flour Mills, [1992] Supp.
1 SCC 150 at 153 para 18, this Court doubted the application of the doctrine of contemporanea exposito as given to the construction or its applicability to a recent statute that too in the first few years of its enforcement.
In this case also the question whether toilet soap is a household soap had arisen within a short period after the Amendment Act, 1964 came into force, Therefore the understanding by the executive and its interpretation in bringing toilet soap in sub item (2) "other sorts" instead of item (1) "household" being of formative period of statutory operation the doctrine became inapplicable.
The ratio in Indo Metal case, therefore, is inapplicable.
As rightly contended by Sri Ganguli that the doctrine of placement of a particular goods in a particular tariff item or residuary i.e. parentage or orphanage i.e. in placement of toilet soaps 389 in either sub items is not attracted to the facts as it is not a case of residuary items but of sub classification within the same item.
Thus considered in the legal setting and commercial parlance we are of the considered view that "toilet soap" being of everyday household use for the purpose of the bath and having removed its separate identity which it enjoyed preceding amendment and having been not specifically included in "other sorts", it took its shelter in commercial parlance under "household".
As stated if any body goes to the market and asks for toilet soap he must ask only for household bathing purpose and not for industrial or other sorts.
Even the people dealing with it would supply it only for houshold purpose.
It may be true that Household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but household is compendiously used, toilet soap is used only by the family for bathing purpose.
Individual preference or choice or teste of a particular soap for bath is not relevant.
The soap "toilet" would, therefore fall, within the meaning the word of "household" in sub item (1) of item 15 of the Schedule.
The classification shall accordingly be adopted.
The appeals are accordingly allowed.
the cases are remitted to the primary authority to deal with the matters accordingly.
We do not propose to go into the question of refund as it is a matter to be dealt with by the authorities concerned in accordance with the law.
, The appellants shall have to apply for refund and the authorities shall be required to deal with it in accordance with law.
It is for the authority, therefore, to decide the question as per law.
In the circumstances parties are directed to bear their own costs.
V.M. Appeal allowed. | The appellant Mills claimed that the "toilet soaps" produced by them were bath soaps failing under tariff item 15 (1) of the First Schedule (Household) to the , but the Assistant Collector classified the same as "other sorts" under tariff item 15(2) of the schedule attracting higher levy of excise duty.
On appeal, the Collector held that they fell under tariff item No. 15 (1) "household".
On second appeal, the Tribunal reversed the appellate order, against which the appellant Mills preferred the instant appeals.
The appellants contended that in 1954 toilet soap was treated as an independent tariff sub item and household and laundry soaps were treated as separate entity and separately subjected to varied rates of tariff , that on amendment in 1964 toilet soap was omitted as a separate entity and brought toilet soap as part of genus, namely, soap "household", as toilet soap has always been a household soap.
The respondents contended that statute always kept distinction between soap "household and laundry" and "other sorts" and that toilet soap was kept in the packet of other sorts; that household and laundry soaps were being used for cleaning household articles and utensils and washing the clothes, while toilet soaps are for bathing purpose.
The latter, composed of diverse varieties based on personal liking and taste, are being used; and that they are commercially known as other sorts but not household.
379 Allowing the appeals, and remitting the matter to primary authority, this Court, HELD:1.1 The provisions of the Tariff do not determine the relevant entity of the goods.
They deal whether and under what entry, the identified entity attracts duty.
The goods are to be identified and then to find the appropriate heading, sub heading under which the identified goods/prod ucts would be classified.
To find the appropriate classification the description employed in the tariff nomenclature should he appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon.
For exigibility to excise duty the entity must he specified in positive terms under a particular tariff entry.
In its absence it has to be deducted from a proper construction of the tariff entry.
There is neither intendment nor equity in a taxing statute.
Nothing is implied.
It should be interpreted and construed as per the words the legislature has chosen to employ in the Act or Rules.
There is no room for assumptions or presumptions.
The object of Parliament has to be gathered from the language used in the statute.
(383 H, 384 A B) 1.2"toilet soap" being of everyday household use for the purpose of the bath and having removed its sperate identity which it enjoyed preceding amendment and having been not specifically included in 'other sorts ', it took its shelter In commercial parlance under household '.
If any body goes to the market and asked for toilet soap, he must asked any for household bathing purpose and not for industrial or other sorts.
Even the people dealing with it would supply it only for household purpose.
It may be true that household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but house hold is compendiously used, toilet soap is used only by the family for bathing purpose.
Individual preference or choice or taste of a particular soap for bath is not relevant.
The soap "toilet" would, therefore, fall within the meaning the word of "household" in sub item (1) of item 15 of the Schedule.
(384 B C,) Ajoy kumar Bannerjee and Ors.
vs Union of India and Ors.
, ; and Urkal Contractors and Joinery Pvt. Ltd. and Ors.
vs State of Orissa and Ors.
: ; , distinguished Manmohan Das v Vishnu Das; , ; Ramavatar Budhaipasad etc.
vs Asstt.
Sales Tax Officer, Akola and Anr, ; Motipur Zamindari Co. (Pvt. ) Ltd. vs State of Bihar: 380 [1962] Supp. 1 SCR 498; State of West Bengal and Ors.
vs Washi Ahmed etc.
; , ; Porritts & Spencer (Asia) Ltd. vs State of Haryana, ; ; Indo International Industries vs Commissioner of Sales Tax, U.P., ; at 297 C; P.A. Chillai Chidambara Nadar vs Addl.
Appellate Asstt.
Commissioner, Madurai and Anr., ; ; Khandelwal Metal Works vs Union of India, [1985] Supp.
1 SCR 750 at 774 B C; Shri Bharuch Coconut Trading Co. and Ors.
vs Municipal Corporation of the city of Ahmedabad and Ors., [1992] Supp. 1 SCC 298; Hansraj Gordhan Das vs H.H. Dave Assti.
Collector of Central Excise & Customs and Ors.
, ; Dunlop India Ltd. vs Union of India & Ors. ; ; Anant B. Timbodia vs Union of India; , ; Superintendent of Central Excise, Surat vs Vac Metal Corporation Ltd., AIR 1986 SC 1167; Spaco Carburettors (India) Ltd. vs Collector of Customs, Bombay, ; ; Shashikant Laxman Kale and Anr.
vs Union of India and Anr.
, ; at 376 Para 17; Mitra Prakashan Pvt. Ltd. vs Collector of Customs, para 15; Desh Bandhu Gupta and Ors.
vs Delhi Stock Exchange: ; ; J.K. Coton Spinning and Weaving Mills Ltd. and Anr.
vs Union of India and Ors., [1987] Supp.
SCC 350; Dovack Systems Pvt. Ltd. etc.
vs Union of India & Ors.
etc.[1988] 2 SCR %2 at 1000 F to H and State of Madhya Pradesh vs M/s G. section Dall and Flour Mills:, [1992] Supp.
1 SCC 150 at 153 para 18, referred to, Craises on Statute Law (7th Edition) at Page 164, referred to. |
on (c) Nos. 9835 38 of 1983.
(Under Article 32 of the Constitution of India) WITH W.P.(C)Nos.7468 7469/81,3838 39/83,5398/85,5435/85,386/84, 1489/ 86, 12691/85, 489 90/83, 81/83, 68/86 & 1065/87 Lakshmi Chandra Goyal, B.B. Sahni and Serve Mitter for the Petitioners D.P. Gupta, Solicitor General, Ms. Indu Malhotra, Ms. Aysha Khatri, Ms. V. Mohana and Ms. Nisha Bagchi for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY J.
A common question arises in this batch of writ petitions.
We may take the facts in writ petition (C) No. 9835 of 1983 filed by M/s K. B. Handicrafts Emporium & Ors., as representative of the facts in all the cases.
The petitioners are firms engaged in the manufacture and sale of handicrafts items.
They are registered Sales Tax Dealers in the State of Haryana.
They purchased raw material within the State against declaration forms ST 15 prescribed under Rule 21 of the Haryana General Sales Tax Rules read with Section 24 of the Act.
By issuing Form ST. 15, the petitioners undertook that the goods manufactured by them out of the said raw material would be sold by them either within the State or in the course of inter state trade and commerce or in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act.
A dealer issuing the said Form need not pay the purchase tax on such raw material.
After manufacturing the items of handicrafts, the petitioners say, they sold them to dealers in Delhi who, in turn, exported them out of India.
At the time of sale of handicrafts to Delhi dealers, the Delhi dealers issued Form H, prescribed under the Central Sales Tax Rules which means that the goods purchased were meant for export.
Neither party paid tax on the said sale/purchase.
457 For the assessment years in question, the Sales Tax Authorities of Haryana levied purchase tax on the purchase of raw material made by the petitioner, following the decision of the Punjab and Haryana High Court in M/s. Murli.
Manohar and Company Panipat & Ors.
V. State of Haryana & 0rs.
(Civil Writ., Petition No. 1227 of 1980), under section 9 of the Haryana General Sales Tax.
Act, 1973.
However, the assessing authority computed the tax with reference to the purchase value of the goods exported against Form H. The petitioners.
did not choose to file an appeal but directly approached this Court by way of this writ petition on the ground that in view of the decision of the Punjab and Haryana.
Hig h Court in Murli Manohar there was no point in their pursuing the remedies under the Act in that State.
Appeals were preferred in this court against the decision of the Punjab and Haryana High Court in Murli manohar which have been disposed of by this Court on October 25, 1990 (reported in ; This.
Court allowed the appeal and set aside the judgment of the High Court.
When these writ petitions came up for hearing, it was, urged by the learned counsel for the petitioners that in view of the decision of this Court in Murli Manohar the writ petitions must be allowed stria ghtway.
This was demurred to by the learned Solicitor General appearing for the respondent State.
We are of the opinion that the decision of this Court in Murli Manohardoes cover the point raised in these appeals but it is necesary to add a clarification.
Before we do that, it is necessary to state a little background.
Earlier to the.
rendering of the decision in Murli Manohar, a Bench of this.
Court comparising Sabyasachi Mukharji and Ranganathan, JJ.
held in Good year India Ltd. and Ors.
vs State ofHaryana and Anr.
[1990] 2 S.C.C.71 that where the goods manufactured are taken out of Haryana (without effecting a sale) to the branch office or depot of the Manufacturer or to the office or depot of his agent, no purchase tax can be levied under section 9 of the Act on the raw material purchased within the State and used in the manufacture of such goods.
It was held that imposing such ta would amount to levying tax on consignment, which the State Legislature was not ' competent to do.
Section 9 as it then stood, stated expressly that no such purchase tax on raw material was leviable, if the goods manufactured out of such raw material were sold either within the State or were sold in the course of inter state Trade and Commerce or were sold in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act.
MurliManohar was decided in the light.
of the law declared,in Goodyear.
Later, However, a Bench of three.
Judges comprising S.Ran anathan, vs Ramaswami, JJ.
and one of us(B.P.Jeevan Reddy, J.) held that.
Goodyear does not lay down the correct law vide Hotel Balaji and 458 Ors.
vs State of Andhra Pradesh & Ors. etc.
JT It was held in Hotel Balaji that having regard to the scheme of and the objective underlying section 9 it was competent for the State Legislature to levy purchase tax on raw material purchased within the State where the goods manufactured out of such raw material are taken out of the State (without effecting a sale within the State or otherwise than by way of aninter state sale or by way of an export sale within 'the meaning of Section 5(1) of the Central Sales Tax Act).
It was held that such a tax does not amount to consignment tax.
It is this decision in Balaji that calls for a certain clarification of the principles enunciated in Murli Manohar.
The facts in Murli Manohar Were substantially similar to the facts herein.
The dealers within the State of Haryana purchased raw material without paying tax, manufactured goods out of the same and sold the manufactured goods to dealers who in turn exported those goods out of India.
On these facts it was held by the Punjab and Haryana High Court that inasmuch as the sale to exporters was a penultimate sale falling under section 5(3) of the Central Sales Tax Act and further inasmuch as Section 9 of the State Act exempted only export sales within the meaning of section 5(1) of the Central Sales Tax Act but not the penultimate sale falling under Section 5(3), tax under Section 9 was leviable.
On appeal, this court affirmed that Section 9 of the Haryana Act (before it was amended by Haryana Act 1 of 1988) did not exempt as sale falling under Section 5(3) but exempted only a sale failing under section 5(1).
Even so, the appeal was allowed on the following reasoning "the sales made by the assesses can only fall within one of the three categories.
They are either local sales or inter state sales or export sales. . .
We are unable to conceive of a fourth category of sale which could, be neither a local sale nor an interstate sale nor an export sale.
" In other words, the decision says that there can be only three types of sales, namely, intrastate sales, inter :state sales,and export sales and no other.
A sale to an exporter would be either an intrastate sale or an inter state sale; in either case, it does not attract the purchase tax (on raw material) under Section 9 of the Haryana Act, says the decision: It is on this reasoning that the appeals were allowed inspite of the clear enunciation that the sales failing under Section 5(3) of the Central Sales Tax Act were not exempt under Section 9 of the Haryana Act, as it then stood.
The above holding is evidently influenced by the decision in Goodyear, which was good law at the time Murli Manohar was decided.
However, in the light of the decision of Hotel Balaji, it must be held that there is one more category in addition to the three categories mentioned above.
The fourth category is where a dealer in Haryana takes, his goods out of the Haryana without effecting a sale.
An illustration would serve to highlight what we say: a Haryana manufacturer takes his goods to Delhi without effecting a sale.
In Delhi.
if he finds it more profitable, 459 he will sell it to a dealer in Delhi.
Or if he finds it more profitable to sell it to an exporter in Delhi he will sell the same to such exporter.
These two sales are neither intrastate sales nor inter state sales, nor export sales within the meaning of Section 5(1) of the Central Sales Tax Act.
In one Case, it is a sale in Delhi and.
the other, it is a punultimate sale within the meaning of Section 5(3) of the Central Sales Tax Act.
According to Section 9 of the Haryapa Act, as explained in Hotel Balaji and Murli Manohar purchase tax can be levied and collected on the raw.
material purchased by the manufacturer within Haryana, which was utlised for manufacturing the goods so sold in these two situations.
We must make it clear that in a petition under Article 32 of the Constitution, it is not our province to go into facts.
As repeatedlly emphasised by this court, the.
question whether a particular sale is an intra state sale,an inter state sale ,an export sale within the meaning of section 5(1) or a penultimate sale within the meaning of section 5(3), or otherwise, is always a question of fact to be decided by the apporiate authority in the light of the principles enunciated by Courts.
In these circumstances, we content ourselves by declaring the law and leave it to be applied by the appropriate authorities.
Counsel for the petitioners says that all the sales effected by all the petitioners are inter State sales.
May be,or may not be.
We leave the matters to be, disposed of by the authorities under the Act in the light of the law declared by &.Is Court in Murli Manohar, Hotel Balaji and in this judgment.
The writ petitions are disposed of with the aforementioned clarification and, observations.
No costs.
V.P.R. Petitions disposed of. | Petitioners firms were registered sales tax dealers.
They manufactured and sold handicraft items.
As they purchased raw material within the State against declaration forms ST 15 prescribed under Rule 21 of the Haryana general Sales Tax Rules read with Section 24 of the Haryana General Sales tax Act, purchase tax was not paid.
The petitioners sold the items of handicrafts to dealers in Delhi who exported the same out of India.
As the Delhi dealers issued Form H, prescribed under the Cectral Sales Tax Rules, they did not pay tax on the said sale/purchase.
Following the High court decision in M/s. Murli Manohar and company, Panipat & ors.
vs State of Haryana & Ors.
C.W. P. No. 1227 of 1980.
The Sales Tax Authorities levied purchase tax u/s 9 of the Haryana General Sales Tax Act for the assessment years in question on the purchase of raw material made by the petitioners, computing the tax with reference ' to the purchase value of the goods exported against Form H. Hence the present writ petition before this Court was filed challenging 454 155 the impugned order of levying purchase tax.
Meanwhile this court allowed the appeals preferred against the decision of the High Court in Murli Manohar and Company 's case, setting aside the judgment of the High Court.
As a common question arose in this batch of writ petitions, all petitions heard together.
The petitioners contended that in view of the decision of this Court in Murli Manohar 1991 [1] SCC 377, the writ petitions were to be allowed.
Disposing of the writ petitions, this Court, section HELD: 1.1,.
The decision in Murli Manohar says that there can be only three types of sales, namely, intra state sales, inter state sales and export sales a nd no other.
A sale to an exporter would be either at% intrastate sale or an inter state sale; in either case, the decision says, it does not attract the purchase tax(on raw material) under Section 9 of the Haryana General Sales Tax Act.
However, in the light of the decision in Hotel Balaji, it must be held that there is one more category in addition to the three categories mentioned above.
The fourth category is where a dealer in Haryana takes his goods (out of Haryana (without effecting a sale, within the State), and effects the sale in the other State.
According to Section 9 of the Haryana Act, as explained in Hotel Balaji, purchase tax can be levied and collected on the raw material purchased by the manufacture within Haryana, which was utilised for manufacturing the goods so sold in the other State.
(458 D F) Murli Manohar case.
; , followed.
Good year India Lid.
and Ors.
vs State of Haryana and Anr.
; , referred to.
Hotel Balaji and Ors.
vs State of Andhra Pradesh & ors.
J.T. explained 2.1.
In a petition under article 32 of the Constitution it is not the province of the Supreme Court to go into facts.
As repeatedly emphasised by this Court, the question whether a particular sale is an intra state sale, an inter state sale, an export sale within the meaning of Section 5(1) or a 456 penultimate sale within the meaning of section 5(3), or otherwise, is always a question of fact to be decided by the appropriate authority in the light of the principles enunciated by Courts.
(459 C) 2.2.
In these circumstances, it is directed that the matters be disposed of by the authorities under the Act in the light of the law declared by this Court in Murli Manohar, Hotel Balaji and in this judgment.
(459 D) |
Appeal No. 4233 of 1984.
From the Judgment and Order dated 25.3.1983 of the Bombay High Court in W.P. No. 25 of 1982.
S.B. Bhasme and A.S. Bhasme for the Appellant.
Umesh Bhagwat and V.B. Joshi for the Respondent.
The Judgment of the Court was delivered by R.M. SAHAI J.
Can a statutory tenant create a licence? If the answer is in affirmative then can such licensee claim immunity from eviction in execution proceedings in view of Section 15A of this Bombay Rent Hotel and Loging House Rates Control Act 57 of 1947 (hereinafter referred to as 'the Act ')? These are questions which arise for consideration in this appeal directed against the judgment and order of the Bombay High Court.
462 What happened was that the landlord determined the tenancy of the contractual tenant in October 1966 and filed a suit for his eviction in 1967 which was decreed ex parte on 5th October 1973.
In execution of the decree the licensee obstructed and claimed to be protected licensee under Section 15A of the Act.
The objection was rejected by the executing and the appellate court.
The appellate court found that even though the first licence was, created in 1966 before determination of the tenancy for a period of six years but the second licence having been created in 1972, it was not necessary to examine the validity of the first, as second was created when contractual tenant had become statutory tenant therefore he was incapable of transferring any right or interest in favour of the licensee.
The High Court did not disturb the finding that the licence was created in 1972 but it held that creation of licence by a statutory tenant, was valid.
Consequently the licensee was in occupation of the premises as licensee on the date the Bombay Rent Act was amended and was entitled to the benefit of Section 15A of the Act.
For this reliance was placed on certain observations made by a Division Bench of that Court in Vasant Tatoba Hargude and Others vs Dikkava Mutta Pujari, to the following effect: "On this point of initial presumption as to the subsisting incidence of the tenancy, we shall have to follow the ratio of Damadilal 's case ; in preference to the decision in Anand Nivas case and shall have to proceed on the assumption that statutory tenant does ordinarily possess transferable interest in his tenancy.
" Who is a statutory tenant, what right or interest he can assign or transfer have been dealt by this Court in more that one decisions.
In Anand Nivas Private Lid vs Anandji Kalyanji 's Pedhi & others AIR 1965 SC 414 a decision rendered under Bombay Rent Act the majority held, "A person remaining in occupation of the premises let to him after the determination of or expiry of the period of the tenancy is commonly though in law not accurately, called 'a statutory tenant '.
Such a person is not a tenant at all: he has no estate or interest in the premises occupied by him.
He has merely the protection of the statute in that he cannot be turned out so long as he pays the standard rent and permitted increases, if any, and performs the other conditions of the tenancy.
His right to remain in possession after the determination of the contractual tenancy is personal: it is not capable of being transferred or assigned, and devolves on his death 463 only in the manner provided by the statute.
The right of a lessee from a landlord on the other hand is an estate or interest in the premises and in the absence of a contrant to the contrary is transferable and the premisses may be sublet by him.
But with the determination of the lease, unless the tenant acquires the right of a tenant holding over, by acceptance of rent or by assent to his continuing in possession by the landlord, the terms and conditions of the lease are extinguished, and the rights of such a person remaining in possession are governed by the statute alone.
Section 12 (1) of the Act merely recognises his right to remain in possession so long as he pays or is ready and willing to pay the standard rent and permitted increases and performs the other conditions of the tenancy, but not the right to enforce the terms and conditions of the original tenancy after it is determined.
" In Jai Singh Morarji and others vs M/s Sovani (P) Ltd., ; yet another decision from Bombay the ratio in Anand Nivas was reiterated and It was held that tenant in Section 15 of the Bombay Rent Actmeant the contractual tenant and not the statutory tenant.
Then came another decision, Damadilal and others vs Parashram and others; , on M.P. Accommodation Control Act.
It in the Court traced the genesis of the concept of statutory tenant derived from the English Rent Act but carved out an exception, where, the sanctity, of the contract ' was touched by legislation.
It was held that where the statute itself provided continuance in possession of the tenant after determination of the tenancy in some right the tenant was at par with contractual tenant.
Reason was the definition of 'tenant ' under Section (2) (i) of the Act.
It read as under: "a person by whom or on whose account or behalf for the rent of any accommodation is, or, but for a contract express or implied, would be payable for any accommodation and includes any person occupying the accommodation as a sub tenant and also any person continuing in possession after the termination of his tenancy whether before or after the commencement of this Act; but shall not include any person against whom any order or decree for eviction has been made.
" This section was construed thus, "The definition makes a person continuing in possession after the determination of his tenancy a tenant unless a decree or order for eviction has been made against him 464 thus putting him on par with a person whose contractual tenancy still subsists.
The incidents of such tenancy and a contractual tenancy must therefore be the same unless any provision of the Act conveyed a contrary intention.
That under this Act such a tenant retains an interest in the premises, not merely a personal right of occupation, will also appear from Section 14 which contains provisions restricting the tenant 's power of subletting.
Section 148 is in these terms:. . .
No such provision existed in the Bombay Rent Act.
The ratio in Damadilal 's case, therefore, could not apply to right or interest created by a statutory tenant under the Bombay Act.
The decisions in Damadilal 's case did not in any way deviate from the decisions given earlier by this Court in Anand Nivas case.
All these cases however were of sub tenants.
In 1981 this Court had an occasion to deal with the case of a licensee under the Bombay Rent Act and his rights under Section 15A of the Act.
The Bench was of the opinion that the licensee was not entitled to obstruct the eviction proceedings which had become final against the tenant as a statutory tenant could not assign or create any interest after termination of his tenancy.
It was observed in Ludhichem Agencies vs Ahmed R. vs Peer Mohamed and Anr.
1: "An agreement for licence can subsist and continue to take effect only so long as the licensor continues to enjoy a right, title or interest in the premises.
On the termination of his right, title or interest in the premises, the agreement for licence comes to an end.
If the licensor is a tenant, the agreement for licence terminates with the tenancy.
No tenant is ordinarily competent to grant a licence enduring beyond his tenancy.
On the termination of the licensor 's tenancy the licensee ceases to be a licensee.
" On facts however since the statutory tenancy too cam to an end before Section 15A was amended due to passing of the decree by the trial court the High Court distinguished this decision ignoring the material difference between the two enactments.
What was lost sight of was that the observation made by this Court in Damadilas 's case at page 2234 to the following effect, "We find it difficult to appreciate how in this country we can proceed on the basis that a tenant whose contractual tenancy has determined but who is protected against eviction by the statute, has no right of property but only a personal right to remain in occupation, without ascertaining what his rights 465 are under the statute. . .
It is not possible to claim that the "sanctity" of contract cannot be touched by legislation.
Were on the language of the Section as it stood under that Act.
Therefore, in absence of any legislation touching the contract it appears to be settled that contractual tenant is left with no transferable right after determination of his tenancy.
In our opinion the learned judge in drawing an inference from Ludhichem Agencies (supra) that, 'a licence by a statutory tenant would continue to subsist 'lawfully till it was terminated and therefore if on the facts of that case the decree of ejectment against Saraswatibai had been made after 1.2.1973, then the licence in favour of the petitioners could have been considered to the subsisting on 1.2.1973,.
committed an error of law.
Section 15A reads as under: "15A (1)Notwithstanding anything contained elsewhere in this Act or anything contrary in any other law for the time being in force, or in any con tract, where any person is on the lst day of February 1973, in occupation of any premises or any part thereof which is not less that a room as a licensee thereof, he shall on that date he deemed to have become, for the purposes of this Act, the tenant of the landlord in respect of the premises or part thereof in his occupation.
(2)The provisions of sub section (1) shall not affect in any manner the operation of sub section (1) of Section 15 after the date aforesaid.
" The section brought into force with effect from 1st February 1973 undoubtedly protected a licensee form eviction.
But it could operate in his favour only if he was in occupation of the premises on the date the Act came into force as a licensee.
It is, thus, not mere occupation but occupation as licensee which has been statutorily protected.
In other words the law would operate in favour of a person who held the premises under valid licence.
A valid licence could be created, as explained earlier, by a contractual tenant or by a statutory tenant if he continued at par with contractual tenant by operation of legislation.
In absence of any such provision in the Bombay Rent Act the licence created in favour of licensee by the statutory tenant could riot render the respondent, a licensee within the meaning of Section 15A of the Act.
466 Even a valid licence stands revoked in circumstances mentioned in Section 62 of the Indian Easements Act.
Its clause (a) reads as under: "62.
A license is deemed to be revoked (a)when, from a cause preceding the grant of it, the grantor ceases to have any interest in the property affected by the license:" The licence was granted by the contractual tenant in 1972.
But his tenancy had been determined by the landlord in 1966.
He thus had become statutory tenant.
He did not, in law had any assignable interest on the date he created the licence.
The grantor therefore from a cause preceding the grant had ceased to have any interest, and was incapable of creating any valid licence unless he could be deemed to be at par with the contractual tenant by any provision in the statute.
In absence of any such provision in the Bombay Rent Act the licence was invalid and stood revoked.
The occupation of the respondent thus was not as licensee within the meaning of Section 15A of the Act.
In the result this appeal succeeds and is allowed.
The order passed by the High Court in the Writ Petition is set aside and it shall stand dismissed.
In the circumstances of the case, however, there shall be no order as to costs.
V.M. Pretition dismissed. | The appellant landlord determined the tenancy of the contractual tenant in 1966 and filed a suit for his eviction.
The suit was decreed ex parte.
In execution proceedings the licensee obstructed and claimed to be protected licensee under Section 15A of the Bombay Rent Hotel and Lodging House Rates Control Act, 1947.
The objection was rejected by the executing Court.
The appellate Court confirmed the same holding that even though the first licence was, created in 1966 before determination of the tenancy for a period of six years and the second licence having been created in 1972, it was not necessary to examine the validity of the first, as the second one was created when contractual tenant had become statutory tenant, and therefore, he was incapable of transferring any right or interest in favour of the licensee.
On appeal, the High Court upheld the finding of the appellate court that the licence was created in 1972 It also held that creation of licence by a statutory tenant, was valid.
Being aggrieved by the judgment of the High Court, the appellant landlord preferred an appeal, before the Court.
Allowing the appeal, this Court, HELD: 1.1 In the absence of any legislation touching the contract, a contractual tenant is left with no transferable right after determination of his tenancy.
(465 B) 1.2 The law would operate in favour of a person who held the premises under valid licence.
A valid licence could be created, by a contractual tenant or by a statutory tenant if he continued at par with contractual tenant by 461 operation of legislation.
(465 G) 1.3In the instant case, the licence was granted by the contractual tenant in 1972.
But his tenancy had been determined by the landlord in 1966.
He thus had become statutory tenant.
He did not, in law had any assignable interest on the date he created the licence.
The grantor, therefore, from a cause preceding the grant had ceased to have any interest, and was incapable of creating any valid licence unless he could be deemed to be at par with the contractual tenant by any provision in the Statute.
In absence of any such provision in the Bombay Rent Act, the licence was invalid and stood revoked.
The occupation of the respondent thus was not as licensee within the meaning of Section 15A of the Act.
(466 B C) Vasant Tatoba Hargude and Ors.
vs Dikkaya Muttaya Pujari: , approved.
Anand Nivas Private Ltd. vs Anandji Kalyanji 's Pedhi & Others, AIR 1965 SC 414; Jai Singh Morarji and others vs M/s Sovani (P) Ltd., ; ; Damadilal and others vs Parashram and Others, ; and Luadhichem Agencies vs Ahmed R. vs Peer Mohamed and Anr., 1, referred to. |
Appeal No. 2485 of 1992.
From the Judgment and Order dated 8.10.1991 of the Calcutta High Court in F.M.A.T. No. 2532 of 1991.
P.S. Poti and Rathin Das for the Appellants.
Dr. Shankar Ghosh, Raj Kumar Gupta and P.C. Kapur for the Respondents.
J. Special leave granted.
487 This appeal arises against the judgment dated October 8, '1991 of the ' Division Bench of the Calcutta High Court made in F.M.A.T. No. 2532 of 1991.
The first respondent, a limited Company filed under article 226 of the constitution of India Civil Order No. 16339 (W) of 1988 for a mandamus to refrain the appellants from giving effect to the vesting of the lands in Dag No. 1, Khatian No., 10, Tauzi No. 56, J.L. No. 26, Mouza Chowkgaria within P.S. Kasba, admeasuring 128.40 acres and to take possession of tank fisheries lying therein pursuant to the provisions of West Bengal Estate Acquisition Act, of 1954, for short 'the Act '.
The learned Single Judge directed an action under Sec.
10(2) of the Act after giving an opportunity to the respondents and to take possession of the said lands pursuant thereto.
On appeal the Division Bench in the impugned judgment held that the appellants should take action under the West Bengal Land Reforms Act, 1955 within a period of two months from the date of the said judgment and on its failure, the respondents would be at liberty to deal with and dispose of the lands in its own manner.
Until then the appellants were restrained to take possession of the land.
Feeling aggrieved against the said direction the above appeal under article 136 has been filed.
The Revenue Officer found from finally published record of rights that the lands in question were classified as 'Beel ' (marshy land) and tank fisheries would he classified as 'Beel Mash Khas '.
The learned Single Judge and the Division Bench of the High Court found that when the Revenue Officer initiated proceedings to revise the old Jama Rs. 1230.
9 Anas in three Jamas of Rs. 1,188 and odd in khata No. 102; Rs. 396 and odd in khata No. 128 and Rs. 3024 and odd in khata No. 131.
the respondent succeeded in his appeal under Sec.
44(3) of the Act holding the lands to be 'Tank fisheries ' and that, therefore, old Jama was to be maintained.
So the Division Bench directed to take action under the Land Reforms Act.
Shri P.S. Poti, learned Senior Counsel for the appellants contended that by operation of Secs.
4 and 5 of the Act, fisheries being one of the interests that stood extinguished and vested in the State Govt.
Free of all incumbrances with effect from June 1, 1956, the respondents have lost right, title and interest therein.
Section 6 only enables an intermediary to retain possession of certain enumerated lands which includes "tank fisheries" provided he makes an application in form 'B ' within the specified time expressing his intention to retain the lands.
Since the respondent had failed to do so the entire lands including tank fisheries stood vested in the state.
As per the entries in the record of rights the lands are only Beel (Marshy lands) and not tank fisheries and, therefore, even the exercise of the option to retain possession is not available.
Even assuming that the lands are tank fisheries, what was saved from the operation of the Act is the entitlement of the respondent to hold 488 the land as a tenant without any interest therein except the right to remain in khas (physical) possession subject to such terms and conditions as may be prescribed by the Govt.
and payment of rent.
Since the respondent raised a dispute the learned single Judge rightly directed an enquiry under Sec. 10 (2) in this behalf and to take action pursuant to its result under Sec.
10(1).
The Division Bench committed gravest error in treating that the decision of the Tribunal under Sec.
44(3) relating to Jama to be final and the lands to be tank fisheries and that the respondent is entitled to retain khas possession with all right, title and interest therein as an owner.
The direction given to initiate the action under the Land Reforms Act 1955 within the specified period and on failure thereto liberty given to the respondent to alienate the lands is beyond the relief sought in the writ petition.
Therefore, the Division Bench committed manifest error of law warranting interference.
Dr. Ghosh, learned senior counsel for the respondents, contended that initially Devendra Nath Dey Sarkar purchased the lands from Harkishan Mondal, the original Zamindar in 1911 and from him the respondents had purchased the leasehold rights in 1937 and ever since they have been using the lands as tank fisheries.
When notification under Sec. 4 was issued, the lands were being used as.
tank fisheries.
Despite its vesting, by operation of Sec.
6(2) the respondent has right to retain possession as an owner.
In support thereof he placed reliance on State of U.P. vs Krishna Gopal & Anr.
[1988] Suppl.
2 SCR 391, State of West BengaI vs Atul Krishna Shaw & Anr.
[1990] Supp. 1 SCR 91 and Sasanka Sekhar Maity & Ors.
vs Union of India ; He further contended that the liability of dispossession of the respondent from the lands would arise only if the possession is found to be unlawful.
But by operation of Sees.
6(2) and 10(5) the possession is lawful.
The order of the Appellate Tribunal passed in 1957 under section 44(3) having been allowed to become final and the civil suit for declaration that it is Beel and not tank fisheries having filed by the State and got dismissed, concludes that the lands in question are only "tank fisheries".
By operation of Subsec.
(2) for Sec.
6 of the Act the respondent is entitled to retain possession and the action for dispossession under Sec.
10 (1) is illegal.
The Division Bench therefore, rightly directed to initiate proceedings under the Land Reforms Act and to take action thereunder.
Admittedly the Act came into force on February 12,1954.
Notification under Secs.
4(1) and (3) was published in the prescribed manner specifying the date of vesting of the estate and had come into effect from June 1, 1956.
By operation of sub sec.
(1) of Sec.
5 the estate and all the rights of intermediaries including fisheries in the estate shall stand determined and ceased and stood vested in the State free from all incumbrances.
"Incumbrance" defined under Sec. 2(h) of the Act means 'in relation to estates and rights of intermediaries therein, does not 489 include the rights of a raiyat or of an under raiyat or of a non agricultural tenant, but shall, except in the case of land allowed to be retained by an intermediary under the provisions of sec.
6, include all rights or interests of whatever nature, belonging to intermediaries or other persons, which relates to lands comprised in estates or to the produce thereof.
Therefore, title to, rights or interests in lands which include fisheries held by an intermediary shall stand extinguished and ceased and stood vested in the state free of all incumbrances.
The respondents being purchasers of lease hold interest in tank fisheries, as per their own case, it also stood extin guished.
But, however, since the appellant treated the respondent as an intermediary, we proceed on that footing.
The exceptions engrafted in the incumbrance and exempted from the operation of Sections 4 and 5 are only the rights of a raiyat or of an under raiyat or of a non agricultural tenant and the right of retention of possession allowed to an intermediary under Sec.6 of the Act.
All other rights, interest of whatever nature or little belonging to the intermediaries or other persons who hold the lands under lease from intermediary should also stood extinguished.
All grants and confirmation of title, to estates and rights therein, to which the declaration of vesting applies and which were made in favour of intermediaries shall stand dismissed and ceased by operation of Sec.
5(1) (b) of the Act, Section 6 postulates by a non obstanti clause that notwithstanding anything contained in secs.
4 and 5 an intermediary shall, except in the cases mentioned in the proviso to sub sec.
(2) but subject to the other provisions of that sub sec., be intitled "to retain with effect from the date of vesting", various kinds of lands like homestead etc.
enumerated therein including 'tank fisheries ' covered by clause (e) thereto.
The explanation of 'tank fisheries ' means, "a reservior or place for the storage of the water, whether formed naturally of by excavation or by construction of embankments, which is being used for pisciculture or for fishing, together with the sub soil and the banks of such reservoir or place, except such portion of the banks as are included in a homestead or in a garden or orchard and includes any right or pisciculture or fishing in such reservoir or place".
Therefore, if lands comprised of tank fisheries whether naturally formed or by excavation or by construction of embankments being used for pisciculture or fishing, the intermediaries became entitled to retain possession, despite the intermediaries having been divested of right, title and interest therein.
This is made manifest by Sec.
10(5) of the Act which postulates that 'nothing in this section shall authorise the Collector to take khas possession of any estate or of any right of an intermediary therein, which may be retained under sec.6 '.
Sub sec.
(2) of Sec. 6 declares that, "An intermediary who is entitled to retain possession of any land under sub sec.(1) shall "be deemed to hold such land" directly under the State from the date of vesting as a tenant, subject to such terms and conditions as may be prescribed and subject to payment of such rent as may be determined under the provisions of this 490 Act and as entered in the record of rights finally published under Chapter V except that no rent shall be payable for land referred to in clause (h) or (i), provided that if any tank fishery or any land comprised in a tea garden, orchard, mill, factory or workshop was held immediately before the date of vesting under lease, such lease shall be deemed to have been given by the State Govt.
On the same terms and conditions as immediately before such date, subject to such modification therein as the State Govt.
may think fit to make '.
On the issue of notification under Sec.49, Sec. 52 prescribed procedure to deal with raiyats and under raiyats covered in Chapter 11 etc.
It says that the provisions in Chapter II shall with such modification as may be necessary apply mutatis mutandis to raiyats or under raiyats as if such raiyats or non raiyats were intermediaries and the land held by them were estates and such a person holding under a raiyat or an under raiyat were a raiyat for the purpose of clauses (c) and (d) of Sec.5, provided that, where a raiyat or an under raiyat retains under sec.6 any land comprised in a holding, then notwithstanding anything to the contrary contained in sub sec.
(2) of sec.6, then he shall pay the rent as prescribed in clauses (a) to (d) thereto.
Under Sec.5(c) every raiyat holding any land under an intermediary shall hold the same directly under the state as if the state had been the intermediary and on the same terms and conditions as immediately before the date of vesting.
Thus the right, title and interest of a raiyat or under raiyat in the lands in his possession and enjoyment are saved.
By operation of law they became full owners thereof subject to the terms and conditions that maybe imposed under Sec. 52 and payment of Jama existing on the date of notification or revised from time to time and finally entered in Record of Rights.
The pre existing rights of the intermediaries in the estate to which the declaration applied shall stand vested in the State free from all incumbrances.
Section 6 does not have the effect of divesting the state of the vested right, title and interest of the intermediary.
One of the rights i.e. possession held by the intermediaries is the only interest saved by Sec.6.
from the operation of Secs.
4 and 5.
The fishery rights also stood vested.
The pre existing rights, title and interest therein also shall stand determined as against the state and ceased.
The Collector had symbolic possession under Sec. 10.
But by use of non obstanti clause in Sec.6 (1) the respondent became entitled to retain khas possession of tank fisheries, and he shall hold tank fisheries directly under the state on such prescribed terms and conditions and subject to payment of such rent as may be determined under the Act from time to time as finally entered in Record of Rights.
If any lease by the intermediary of any tank fisheries granted prior to the date of vesting, by operation of the proviso to sub sec.
(2) of Sec. 6, the lease shall be deemed to have been given by the State Govt.
On the same terms and conditions and subject to such modification 491 therein as the State Govt. may think fit.
Such holding of the land by the intermediary of the tank fishery shall be as a tenant.
The word 'retain ' has been defined in Black 's Law Dictionary, 6th Edition, page 1316 to mean 'to continue to hold, have, use, recognise, etc.
and to keep '.
In Collings English Dictionary at page 1244 'retain ' has been defined as 'to keep in one 's possession, to be able to hold or contain, to hold in position, to keep for one 's future use as by paying a retainer or nominal charges '.
In Webster Comprehensive Dictionary International Edition, Volume II, at page 1075, the word 'retain ' has been defined, 'to keep or continue to keep in one 's possession '.
Section 10(2) of the Act empowers the Collector, after his taking charge of the estate and the interest of the intermediaries under Sec.
10(1), to issue a written order serving in the prescribed manner requiring the intermediary or any person in possession (khas or symbolic) of any such estate or any interest to give up such possession by a date to be specified in the order which shall not be earlier than 60 days from the date of service of the order, etc.
Sub section 5 of Sec.
10 prohibits him to take khas possession of any right of intermediary in the estate retained under Sec.6.
The conjoint operational conspectus assists us to conclude that the preexisting right, title and interest in the lands situated in an eatate stood extinguished and ceased to have effect on and from notified date i.e. June 1, 1956 and stood vested in the state free from all incumbrances.
The non obstanti clause under Sec.6 excluded from the operation of sees.
4 and 5 only of the interest of the respondent to retain physical possession of the lands covered by Sec.6, subject to Sec 6 (2).
The intermediary by operation of Sec.
10(2) shall be required to submit in form 'B ' within 60 days from the date of issuing notice under Sec.
10 (1) of his intention to retain possession of the tank fisheries.
On such submission of Form 'B ', the Collector without dispossessing him/it shall be entitled to prescribe such terms and conditions to which the intermediary or the lessee shall be bound and hold the tank fishery and shall remain in possession, using the tank fisheries for pisciculture or for fishing and subject to payment of such rent as may be determined under the Act and finally entered in the Records of Rights.
Under Sec. 39 in Chapter V, the State Govt has to carry out the purpose of the Act.
It shall prepare the Records of Rights in respect of the lands in an estate in any district or a part of a district in the manner prescribed therein.
Section 44 provides the procedure for publication of the draft and final Record of Rights prepared or "revised".
Sub section (1) thereof postulates that when a Record of Rights has been prepared or "revised" the Revenue Officer was enjoined to have it published in the prescribed manner.
On receipt of objections, if any, made 492 regarding any entry therein or any ommission thereof, he shall consider the same and is enjoined to pass an order under Sec.5A of the Act.
By operation of the proviso to sub sec.
(1) of Sec.
44 the order so passed under Sec.
5A shall be final, subject to the order of the appellate Tribunal under Sec. 44 (3) and during the continuance of that order it is not liable to be reopened.
The respondent is not right in its contention, as found favour with the High Court, that entries once made shall be final and can never be revised.
The word 'revised ' under sub sec.
(1) of Sec.
44 indicates that the State Govt.
or its officers shall be entitled to revise from time to time the Record of Rights and to make necessary entries or corrections in the relevant columns of Record of Rights in its settlement operations or as per exigency envisaged under the Act and the rules made there the order under Sec.
44(3) becomes final so long as there is no revision effected.
The question of res judicate therefore, does not arise and the previous appellate order does not preclude the authorities to revise the Record of Rights.
The Division Bench of the High Court, therefore, is not right in its conclusion that the order passed by the appellate authority under Sec.
44(3) is final and the authorities have no jurisdiction to revise the Record of Rights.
After the act was amended by Act 33 of 1973, Sec.
57B was brought on statute which had barred the jurisdiction of the civil courts and exclusive jurisdiction has been conferred on the revenue authorities to deal with the matters arising under the Act.
So the dismissal of the suit as having been abated is of little consequence.
The appellants contend that even on the date of vesting the lands in question are "Beel" lands and that it is not tank fisheries.
The entries in the record of the rights disclose that the lands in question are being used as homestead or for agricultural purpose and that, therefore, it is not tank fishery.
The respondents disputed the Govt.
's stand and so it is a disputed question of fact.
We do not propose to go into, nor decide the same.
It is true, as rightly contended by Dr. Ghosh, that the lands once retained under Sec.6 by the intermediary and accepted by the authorities pursuant to form 'B ' declaration, the intermediary is entitled to retain possession and is not liable to dispossession so long as he complies with the terms and conditions, if any, imposed and the rent imposed is being paid.
The avowed object of Act is to divest the pre existing right, title and interest of the intermediary in the lands situated in an estate in a district or part of the district and shall stand divested from the Zamindar or intermediary except of a raiyat or under raiyat or non agricultural tenant.
Notwithstanding such divestment thereof the intermediary has been empowered to hold and retain possession directly under the state and hold it as a tenant, subject to such terms and conditions and subject to payment of rent as may be determined under the Act.
Therefore, the entitlement to retain possession of the land i.e. tank fisheries in this case is not absolute but hedged with the conditions precedent of expressing his intention to retain 493 possession by filing form 'B ' within 60 days and abiding to comply with such terms and conditions as may be imposed and also payment of rent.
By operation of the explanation to Sec.
6(1) (e) "tank fisheries" not only it must be a tank fishery at the date of vesting, but it must also continue to be used for pisciculture or for fishing.
The emphasis on 'being used ' obviously is that the tank fisheries should be continued to be used for public purpose, namely the fish seedling or fish must be made available for public consumption.
Dr. Ghosh is right that the crucial date is the date of vesting with regard to tank fishery also.
Not only that the intermediary shall hold the tank fishery on the date of vesting as tank fishery but continue to hold and use the same thereafter for pisciculture or fishing as explained in explanation 6(1) (e) of the Act.
Subsequent conversion of the land as tank fisheries is not material.
Whether, as a fact, it was used as a tank fishery on the date of vesting i.e. June 1, 1956 and being continued to be used as such or converted later on is a question of fact to be adjudicated after giving reasonable opportunity to the respondents.
Equally whether the respondents exercised the option to retain possession of tank fishery within 60 days from the date of publication of notification under section 4 or the notice under Sec.
10(1), etc., is also a question of fact to be determined.
In Saroj Kumar Bose vs Kanailal Mondal & Ors.
the facts were that the predecessor in interest of the respondents took permanent lease of fishery right without sub soil rights under a registered lease deed prior to the Act came into force and they continued to remain in possession and was using the lands as tank fishery.
The lassor, filed a suit for recovery of rent together with interest.
The appellant lessee resisted the suit liability contending that the tank fishery stood vested in the State and that, therefore, he was absolved of his liability to pay rent to the lessors.
The trial court decreed the suit.
On appeal, it was confirmed.
Dismissing the appeal, this court held that by operation of sec.6 of the act the right to retain possession of tank fishery by an intermediary was saved and that, therefore, the lessor continued as an intermediary to remain in khas possession.
In spite of the estate vested in the State, the tank fishery continued to remain in possession of the lessor.
In that context it was held, as relied on by Dr. Ghosh, that khas possession is not a necessary condition for retaining the property by intermediary.
State had recognised the plaintiffs as tenant by accepting rent from them.
Therefore, it was held that interest of the plaintiff did not vest in the State either.
In State of West Bengal vs Atul Krishna Shaw & Anr.
[1990] Supp. 1 SCR page 90, by a bench of this court to which one of us (K. Ramaswamy,J.) was a member, the facts were that after the estate vested in the state, the tank fisheries continued to remain in possessions of the respondent intermediaries.
Suo moto 494 proceedings were taken for correction of the classification of lands on the grounds that the plots were wrongly recorded as fishery plots.
The respondents objected to the re classification contending that they were continuing to cultivate pisciculture in the lands.
The claim of the respondents was negatived by the Settlement Officer.
On appeal, the Tribunal reversed the order of the Settlement Officer and confirmed the original classification as tank fishery.
On a writ petition filed in the High Court by the State, it was dismissed in limine.
While allowing the appeal, this court held that the crucial date for consideration whether the lands were being used as tank fishery was the date of the vesting and subsequent conversion was not material and that by operation of Sec 6 (2) of the Act, the tank fishery stood excluded from the operation of Sec. 4 and Sec. 5 of the Act.
Placing reliance on the findings at p. 101A & B, namely, 'Therefore, when by means of reservoir or a place for storage of water whether formed naturally or by excavation or by construction of embankment, is being used for pisciculture or for fishing is obviously a continous process as a source of livelihood, would be 'tank fisheries ' within the meaning of Sec.6 (1) (e) '.
Such tanks stand excluded from the operation of Sections 4 and 5 and the crucial date is the date of vesting.
As seen earlier the effect of the operation of Secs.4 and 5 is divesting the intermediaries of his pre existing right, title and interest in the estate except those which were exempted from the operation of the Act.
One of the exemptions is retention of the possession of the lands covered by Sec 6 of the Act.
See 6(1) (e), tand fisheries is one such.
Sub section (2) amplifies its effect.
Sub section '(2) transposes the pre existing possessory right of the retained lands of an intermediary of tank fisheries into holder of it as a tenant without any interest therein.
By fiction of law the respondent was transposed as "holder" of the possession directly under the State as tenant, subject to such terms and conditions as may be specified and subject to payment of rent as may be determined from time to time.
Therefore, what was saved by non obstenti clause of Sec.6(1) & (2) of the Act is the right of retention.
of the Physical (Khas) Possession of tank fisheries.
What was intended in Atul Kishan Shaw 's case was that Sec.
6(2)saved the retention of possession of tank fisheries and not divesting the state of the vested rights etc.
in the estate.
In South Indian States of A.P. and Tamil Nadu etc.
of the Madras Province, Madras Estate (Abolition and Conversion into Raiyatvari) Act, 26 of 1948 is in operation.
After the states reorganisation, in Tamil Nadu it is called Tamil Nadu Act and in Andhra Pradesh it is called Andhra Pradesh (Andhra Area) Act.
Thereunder Sec.
II provides procedure to grant raiyatvari patta to a raiyat in occupation.
Section 3(2) (d) proviso gives statutory protection to a raiyat from dispossession till raiytavari patta has been granted , Sees.
12 to 14 give right to landholder to obtain patta and see 15.
empowers the settlement officer to grant 495 patta to the landholders.
Section 19 provides that "where any raiyat or non raiyat land has been sold by any landholder for non agricultural purpose before first day of July, 1945, the buyers shall be entitled to keep the land subject to payment by him to the Govt.
of the raiyatvari assessment or ground rent which may be imposed upon the land and under the proviso it was declared that sale was not void or illegal under any law in force at that time.
The object of those provisions is to confer raiyatvari rights on person in occupation be it raiyat or landholder absolutely with no further conditions.
Thereafter he is entitled to use the raiyati land as if he is the owner thereof and the liability is to pay only land assessment or cist.
There is no limitation on the nature of user of the land.
But the language in the Act appears to be different.
As regards the raiyat or under raiyat they are treated differently from intermediary.
As regards the raiyat and non raiyat is concerned his pre existing right, title and interest in the land was not abolished and he is entitled to retain all his boundle of rights as intermediary directly under the state subject to the orders passed as per the procedure prescribed under Sec.52 and the relevant rules and payment of rent.
But in the case of an intermediary, he has been given only right to retain possession under Sec.
6 of the homestead lands or land comprised in or appertaining to buildings and structures, 25 acres of agricultural lands in khas possession, factories, workshops, tank fisheries or other enumerated properties etc.
without any interest therein and subject to the terms and conditions that may be imposed and payment of rent excising or revised as per the provisions relevant thereto.
Sub section (2) of Sec.
6 expressly postulates that if he holds the tank fisheries should be for continued for use as tank fisheries and it would be subject to such terms and conditions and subject to payment of rent as may be fixed.
The holding of the land is as a tenant, the emphasis is that his possession is without any interest in the land.
Under T.P. Act a tenant has leasehold interest in the land.
But in Sec. 6 (2) as a tenant for the purpose of payment of the rent and retention of possession and appears to be nothing more.
As regards tank fishery is concerned, though exemption has been granted, it is subject to the condition of continued user for pisciculture of fishing.
From the scheme of the Act it would appear that the intermediary or the lessee gets no absolute right in the tank fisheries which were already divested but to remain in khas possession and to enjoy the usufruct thereof i.e. for pisciculture or fishing without any interest or sub soil rights and subject to such terms and conditions and subjects to payment of rent as prescribed under the Act, but not as owner thereof.
The direction, therefore, by the High Court that the respondents are entitled to dispose of the land is contrary to and in negation of the scheme of the Act and Rules.
Therefore, it is manifestly illegal.
The appeal is accordingly allowed.
The order of the Division Bench of the High Court is set aside.
The direction of the Single Judge is restored.
The appellant 496 is free to issue notice to the respondent under Sec.
10(2) of the Act and conduct an enquiry into and find: (1) on the date of the vesting whether the lands were being used for pisciculture or fishing i.e. tank fisheries; (2) whether the respondent had submitted form 'B ' within the prescribed time exercising the option to retain possession of the lands in question as tank fisheries; and (3) whether the respondent is continuing to use the lands in question as tank fisheries.
Reasonable opportunities shall be given to the respondents to prove its/their case.
On the enquiry if it is found that the lands are not tank fisheries as on the date of the vesting or that the respondent had not submitted option in Form 'B ' to retain possession of the lands as tank fisheries within the prescribed period, then the lands stood vested in the state free from all incumbrances and authorities are entitled to take possession of the land under Sec.
10(1) read with Sec.
10(3).
In case if it finds that the lands were being used as tank fisheries as on the date of vesting and that the respondents exercised the option within the time to retain possession and is continuing to use the tank fishery for pisciculture or for fishing; and if it has been continuing in possession of tank fishery, it is free to impose, if not already impossed such terms and conditions as may be necessary to ensure continued use of tank fishery for pisciculture or for fishing, subject to payment of such rent as may be fixed or revised and ultimately entered in the Record of Rights.
In case the respondent commits contravention thereof, it is open to the state to resume possession.
In case the respondent is not using the tank fishery for pisciculture or for fishing or alienated the lands it is open to the appellants to take possession of the lands and all sales if made by the respondents do not bind the state.
The appeal is accordingly allowed with the above modification and the rule absolute issued by the learned single Judge of the High Court will stand modified to the above extent and the writ petition is disposed of accordingly.
In the circumstances parties are directed to bear their own costs throughout.
Appeal allowed. | Respondent Company filed a writ application in the High Court to refrain the appellants from giving effect to the vesting of the lands in question and to take possession of tank fisheries lying therein.
The Single Judge directed an action under section 10(2) of the West Bengal Estate Acquisition Act, 1953 and to take possession of the lands pursuant thereto giving an opportunity to the respondents.
The Division Bench on appeal held that appellants should take action under the West Bengal Land Reforms Act, 1955 within a period of two months of its judgment, failing which the respondents would he at liberty to deal with and dispose of the lands and until then the appellants were restrained to take possession of the lands.
The Single Judge and the Division Bench found that the Revenue Officer initiated proceedings to revise the old Jama of lands as he found from record of rights that lands were classified as 'Beel ' (marshy land) and the appeal of the respondent under Section 44(3) of the Act was allowed holding that the lands being 'tank fisheries ' old Jama was to be maintained.
481 482 ` The present appeal by special leave was filed against the judgment of the Division Bench of the High Court contending that by operation of sections 4 and 5 of the West Bengal Estate Acquisition Act, fisheries being one of the interests that stood extinguished and vested in the State Govt.
free of all incumbrances with effect from 1.6.1956, the respondents lost right, title and interest therein; that since the respondent failed to make an application in form 'B ' within the specified time expressing his intention to retain the lands, the entire lands including tank fisheries stood vested in the State; that as per the entries in the record of rights the lands were only Beel (Marshy lands)and not tank fisheries and, therefore, even the exercise of the option to retain possession was not available; that since the respondent raised a dispute, the Single Judge rightly directed an enquiry under section 10(2) and to take action pursuant to its result under section 10(1); that the Division Bench committed manifest error in treating that the decision of the Tribunal under section 44(3) relating to jama to be final and the lands to be tank fisheries and that the respondent was entitled to retain khas possession with all right, tide and interest therein as an owner; and that the direction given to initiate the action under the West Bengal Land Reforms Act, 1955 within the specified period and on failure thereto liberty given to the respondent to alienate the lands was beyond the relief sought in the writ petition.
The respondents submitted that they purchased the leasehold rights in 1937 from the earliest purchaser of the lands who purchased the same from the original Zamindar and since then the respondents were using the lands as tank fisheries; that when notification under section 4 was issued, the lands were being used as tank fisheries; that despite its vesting, by operation of section 6(2), the respondent had right to retain possession as an owner; and the action for dispossession under section 10(1) was illegal; that the liability of dispossession of the respondent from the lands would arise only if the possession was found to be unlawful; and that the Division Bench, therefore, rightly directed to initiate proceedings under the West Bengal Land Reforms Act and to take action thereunder.
Allowing the appeal, this Court, HELD:1.1.
By operation of sub sec.
(1) of Sec.
5 the estate and all the rights of intermediaries including fisheries in the estate shall stand determined and ceased and stood vested in the State free from all incumbrances.
(488 G) 483 1.2."Incumbrance" defined under Sec.
2(h)of the Act means 'in relation to estates and rights of intermediaries therein, does not include the rights of a raiyat or of an under raiyat or of a non agricultural tenant, but shall, except in the case of land allowed to be retained by an intermediary under the provisions of sec.
6, include all rights or interests of whatever nature, belonging to intermediaries or other persons, which relates to lands com prised in estates or to the produce there of.
Therefore, tide to, rights or interests in lands which include fisheries held by an intermediary shall stand extinguished and ceased and stood vested in the state free of all incumbrances.
(488 H, 489 A) 1.3.The exceptions engrafted in the incumbrance and exempted from the operation of Sections 4 and 5 are only the rights of a raiyat or of an underraiyat or of a non agricultural tenant and the right of retention of possession allowed to an intermediary under Sec.
6 of the Act All other rights, interest of whatever nature or tide belonging to the intermediaries or other persons who hold the lands under lease from intermediary should also stood extinguished.
(489 C) 1.4.All grants and confirmation of title, to estates and rights therein, to which the declaration of vesting applies and which were made in favour of intermediaries shall stand determined and ceased by operation of Sec.
5(1) (b) of the Act.
(489 D) 1.5.The respondents being purchasers of lease hold interest in tank fisheries? it also stood extinguished.
1.6.The pre existing right, tide and interest in the lands situated in an estate stood extinguished and ceased to have effect on and from notified date i.e. June 1, 1956 and stood vested in the State free from all incumbrances.
The non obstanti clause under Sec. 6 excluded from the operation of secs.
4 and 5 only of the interest of the respondent to retain physical possession of the lands covered by Sec. 6, subject to sec.
The intermediary by operation of Sec.
10(2) shall be required to submit in form 'B ' within 60 days from the date of issuing notice under Sec.
10(1) of his intention to retain possession of the tank fisheries.
On such submission of Form 'B ', the Collector without dispossessing him/it shall be entitled to prescribe such terms and conditions to which the intermediary or the leasee shall be bound and hold the tank fishery and shall remain in possession, using the tank fisheries for pisciculture or for fishing and subject to payment of such rent as may be determined under the Act and 484 finally entered in the Records of Rights.
(491 E F) 1.7.
The lands once retained under Sec.
by the intermediary and accepted by the authorities pursuant to form 'B ' declaration, the intermediary is entitled to retain possession and is not liable to dispossession so long as he complies with the terms and conditions, if any, imposed and the rent imposed is being paid.
(492 E) 1.8.
The avowed object of Act is to divest the pre existing right, tide and interest of the intermediary in the lands situated in an estate in a district or part of the district and shall stand divested from the Zamindar or intermediary except of a raiyat or under raiyat or non agricultural tenant.
Notwithstanding such divestment thereof the intermediary has been empowered to hold and retain possession directly under the State and hold it as a tenant, subject to such terms and conditions and subject to payment of rent as may be determined under the Act.
Therefore, the entitlement to retain possession of the land i.e tank fisheries in this case is not absolute but hedged with the conditions precedent of expressing his intention to retain possession by filing form 'B 'within 60 days and abiding to comply with such terms and conditions as may be imposed and also payment of rent.
(492 GH, 443 A) 1.9.
By operation of the explanation to Sec.
6(1) (e) "tank fisheries" not only it must be a tank fishery at the date of vesting, but it must also continue to be used for pisciculture or for fishing.
The emphasis on 'being used ' obviously is that the tank fisheries should be continued to be used for public purpose, namely the fish seedling or fish must be made available for public consumption.
(493 B) 1.10.
The intermediary shall hold the tank fishery on the date of vesting as tank fishery but continue to hold and use the same thereafter for pisciculture or fishing as explained in explanation 6(1) (e) of the Act.
Subsequent conversion of the land as tank fisheries is not material.
(493 D) State of U.P. vs Krishna Gopal & Anr., [1988] Supp.
2SCR 391 and Sasanka Sekhar Maity & Ors.
v Union of India, ; , cited.
Saroj Kumar Bose v Kanailal Mondal & Ors., [1985]2 SCR 393 and State of West Bengal v Atul Krishna Shaw & Anr., [1990] Supp. 1 SCR 901, explained.
485 1.11.
The word 'revised ' under sub sec.
(1) of Sec.
44 indicates that the State Govt.
or its officers shall be entitled to revise from time to time the Record of Rights and to make necessary entries or corrections in the relevant columns of Record of Rights in its settlement operations or as per exigency envisaged under the Act and the rules made therein.
The order under Sec.
44(3) becomes final so long as there is no revision effected.
The question of res judicata, therefore, does not arise and the previous appellate order does not preclude the authorities to revise the Record of Rights.
(492 B) 1.12.
The Division Bench of the High Court is not right in its conclusion that the order passed by the appellate authority under Sec. 44 (3) is final and the authorities have no jurisdiction to revise the Record of Rights.
(492 C) 1.13.
Sub section(2) of Sec. 6 expressly postulates that if he holds the tank fisheries should be for continued for use as tank fisheries and it would be subject to such terms and conditions and subject to payment of rent as may be fixed.
The holding of the land is as a tenant, the emphasis is that his possession is without any interest in the land.
Under T.P Act a tenant has lease hold interest in the land.
But in Sec.6(2) as a tenant for the purpose of payment of the rent and retention of possession and appears to he nothing more.
As regards tank fishery is concerned, though exemption has been granted, it is subject to the condition of continued user for pisciculture or fishing.
(495 E) 1.14.
From the scheme of the Act it would appear that the intermediary or the lessee gets no absolute right in the tank fisheries which were already divested but to remain in khas possession and to enjoy the usufruct thereof i.e. for pisciculture or fishing without any interest or sub soil rights and subject to such terms and conditions and subject to payment of rent as prescribed under the Act, but not as owner thereof.
The direction, therefore,by the High Court that the respondents are entitled to dispose of the land is contrary to and in negation of the scheme of the Act and Rules.
Therefore, it is manifestly illegal.
(495 G) 1.15.
The appellant is free to issue notice to the respondent under Sec.
10 (2) of the Act and conduct an enquiry into and rind: (1) on the date of the vesting whether the lands were being used for pisciculture or fishing i.e. tank fisheries; (2) whether the respondent had submitted form `B ' within the prescribed time exercising the option 486 to retain possession of the lands in question as tank fisheries; and (3) whether the respondent is continuing to use the lands in question as tank fisheries.
Reasonable opportunities shall be given to the respondents to prove its/their case.
(496 A B) 1.16.On the enquiry if it is found that the lands are not tank L1.16.On the enquiry if it is found that the lands are not tank L1.16.On the enquiry if it is found that the lands are not tank fisheries as on the date of vesting or that the respondent had not submitted option in Form `B ' to retain possession of the lands as tank fisheries within the prescribed period, then the lands stood vested in the State free from all incumbrances and authorities are entitled to take possession of the land under Sec.
10(1) read with Sec.
10(3).
In case if it rinds that the lands were being used as tank fisheries as on the date of vesting and that the respondents exercised the option within the time to retain possession and is continuing to use the tank fishery for pisciculture or for fishing; and if it has been continuing in possession of tank fishery, It is free to impose, if not already imposed, such terms and conditions as may be necessary to ensure continued use of tank fishery for pisciculture or for fishing, subject to payment of such rent as may be fixed or revised and ultimately entered in the Record of Rights.
In case, the respondent commits contravention thereof, it is open to the State to resume possession.
In case the respondent is not using the tank fishery for pisciculture or for fishing or alienated the lands it is open to the appellants to take possession of the lands and all sales if made by the respondents do not bind the State.
(496 C E) |
ivil Appeal No.2560 of 1988.
From the Judgment and Order dated 12.1.1988 of the Madhya Pradesh High Court in Misc.
No. 685 of 1987.
AND Civil Appeal No. 1639 of 1988.
From the Judgment and Order dated 8.6.1987 of the Madhya Pradesh High Court in Misc.
Petition No. 1488 of 1987.
G.L. Sanghi, M.N. Krishmani, Diwan Balak Ram and R.K. Singh for the Appellant in C.A. No. 2560 of 1988.
Rajender Sachar, Sanjay Sareen, Vivek Gambhir, S.K. Gambhir for the Appellant in C.A. No. 1639 of 1988.
Ashwani Kumar, T.C. Sharma and S.N. Khare for the Respondents.
The Judgment of the Court was delivered by SEN, J.
These two appeals by special leave brought from the judgments and orders of the Madhya Pradesh High Court dated June 8, 1987 and January 12, 1988 dismissing the writ PG NO 284 petitions filed by each of the appellants, substantially involve a question as to the interpretation of Rule 10 of the Madhya Pradesh Selection for Post Graduation Course (Clinical, Para clinical and Non clinical Courses) in Medical Colleges of Madhya Pradesh Rules, 1984 ( 'Rules ' for short).
The question raised is one of moment as it involves the right to admission to a seat in the Post Graduate course in Medicine & Surgery in a Medical college (hereinafter referred to as the PG course in MD/MS) falling vacant 'in the midst of ', or 'towards the end of ', an academic year which, we believe, is a problem facing all the States.
First the facts.
In these cases, the facts are not in dispute.
In Dr. Ajay Pradhan 's case, for the academic year 1986 87 commencing from September 1986, there were nine seats reserved for the post graduate course in the clinical subject of General Medicine for the G.R. Medical College, Gwalior.
All the nine seats were filled by the Dean, Medical College from amongst candidates strictly on the basis of merit i.e. by candidates placed at serial Nos. 1 to 9 on the recommendation of the College and Hospital Council.
The appellant Dr. Ajay Pradhan who was placed at serial No. 15 obviously could not be given admission to the P.G. course in M.D. in General Medicine and was instead placed at serial No. 6 in the waiting list.
Later on, he was given admission to the Diploma course in Radiology on 4. 10.86 and he duly joined that course on 6.10.96 but failed to appear at the examination.
On 11.7.87 Dr. Arun Yadav, one Of the Selected candidates, who stood first in the merit list and was admitted to the P.G. course in M.D. in General Medicine met with a tragic death in a road accident.
Inasmuch as his death occurred towards the end of the academic year, the authorities took no steps to fill up the seat.
However, on the death of Dr. Arun Yadav, the appellant staked a claim to fill up the vacant seat under r. 10 of the Rules on the ground that the candidates placed above him in the merit list had been rendered ineligible having either opted for the Diploma course in Radiology or had left their house job.
That claim of his having been turned down he moved the Gwalior Bench of the High Court under article 226 of the Constitution.
A Division Bench of the High Court by its order dated January 12, 1988 dismissed the writ petition holding that the claim of the appellant in terms of r. 10 was misconceived.
The facts in Dr. Sanjay Kumar Shrivastava 's case are these.
For the academic year 1986 87 commencing from August 1986, there were five seats reserved for the P.G. course in M.S. in Obstetrics and Gynaecology for the Medical College, Jabalpur.
On March 2, 1987, the State Government passed an PG NO 285 order transferring the seat occupied by Dr. Smt.
Dhurupkar in Obstetrics and Gynaecology from the Medical College, Jabalpur to Medical College, Bhopal with a view to accommodate her and presumably because such transfer involved financial implications.
On her transfer to Medical College, Bhopal, Dr. Smt.
Dhurupkar continued to draw her stipend of Rs.800 per month reserved against one of the five seats in that discipline for Medical College, Jabalpur.
The appellant Dr. Sanjay Kumar Shrivastava, who was placed at Serial No. 7 in the waiting list moved the authorities seeking admission to the P.G. course in Obstetrics and Gynaecology in Medical College, Jabalpur contending that the seat had fallen vacant because of the transfer of Dr. Smt.
Dhurupkar and had therefore become available in terms of r. 10 of the Rules.
The authorities having disallowed his claim, the appellant moved the High Court by a petition under article 226 of the Constitution.
The High Court by its order dated June 8, l987 dismissed the writ petition in limine holding that 'the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her and hence the same, in fact, was not available.
The main question that falls for determination in these appeals is whether in terms of r. 10 of the Rules there is a right to admission to a seat in the PG course in MD/MS falling vacant in a medical college 'in the midst of ' or 'towards the end of ' an academic year to which it pertains.
A further question arises in one of these appeals as to whether the State Government has the power to transfer a seat in any of the disciplines in the PG course in MD/MS reserved for a medical college to another medical college in the State in order to accommodate a particular post graduate student.
The Medical Council of India constituted under the and one of whose duties is to prescribe the minimum standards of medical education, made recommendations on February 12/13, 1971 prescribing uniform standards for post graduate medical education throughout India which having been approved by the Government of India and as revised from time to time, have the status of Regulations under section 33 of the Act.
The Regulations framed by the Medical Council of India provide inter alia for the different specialities for which PG courses in MD/MS as also Diploma courses in certain disciplines may be conducted, and the norms for admission of students to the PG courses in MD/MS as also to the Diploma courses.
According to the Regulations framed by the Medical Council of India, the student teacher ratio for the PG course in MD/MS is to be maintained at 1:1.
The relevant regulation prescribing a student teacher ratio at 1:1 for PG NO 286 the PG course in MD/MS made with a view to maintain the minimum standards of medical education for the PG course in MD/MS insorfar as relevant, is as follows: "General (1) For M.D./M.S. degree in clinical subjects, there shall be proper training in basic medical sciences related to the disciplines concerned as well as paper in these subjects at the examination.
In the case of M.D. & M.S. in basic medical sciences there should be training in applied aspect of the subject and a paper on the subject.
(2) In all post graduate courses, whether clinical or basic medical sciences, preventive and social aspects should be emphasised.
(3) This should be a part of the examination in the degree courses as this gives training in research methodology.
(4) The student teacher ratio should be such that the number of post graduate teachers to the number of post graduate students admitted per year be maintained at 1:1.
For the proper training of the post graduate students, there should be a limit to the number of student admitted per year.
For this purpose every unit should consist of atleast 3 full time post graduate teachers and can admit not more than 3 students for post graduate teachers in the unit is more than three then the number of students can be increased proportionately.
For this purpose one student should associate with one post graduate teacher.
(5) The selection of post graduates both for degree and diploma courses should be strictly on the basis of academic merit." In most of the States rules have been framed by the various State Governments under article 162 of the Constitution regulating the manner of admission of students to the PG course of studies in MD/MS in the medical college in the State.
The number of seats available for the PG courses in PG NO 287 MD/MS and for the Diploma courses in various disciplines is therefore limited.
There cannot be increase in the number of seats without the sanction of the Medical Council of India and without corresponding increase in the strength of the teaching staff, which necessarily involves financial implications.
The whole controversy turns on the purport and effect of r. 10 of the Rules prescribing the manner in which seats available in any particular year are to be filed, and is in these terms: "10.
The seats available in any particular year will be filled up in that year.
No candidates will be admitted against the seats remaining vacant from previous year.
" We must interpret r. 10 by the written text.
If the precise words used are plain and unambiguous, we are bound to construe than in their ordinary sense and give them full effect.
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 alternative methods of construction.
Where the language is explicit its consequences are for Parliament, and not for the Courts, to consider.
"Where the language of an Act is clear and explicit", said Viscount Simon in King Emperor vs Bensari Lal Sarma, LR (1945) 72 Ia 57 at p. 70, "we must give effect to it whatever may be the consequences for in that case the words of the statute speak the intention of the legislature".
We do not see why the same rule of construction should not apply to the Rules framed by the State Governments under article 162 of the Constitution.
On a plain construction, r. 10 is in two parts.
The power to admit a student under the first part arises when a seat falls vacant in a particular year.
The words 'filled up in that year ' necessarily qualify the preceding words 'the seats available in any particular year '.
It must logically follow that a necessary concomitant of the power under the first part of r. 10 is the 'availability ' of the seat being filled up in the academic year to which it pertains.
The words 'filled up in that year 'which follow clearly imply that the vacancy cannot be carried over to the next academic year or years.
That construction of ours is reinforced by the second part of r. 10 which, by the use of negative language, clearly creates a bar against the seat being filled up in the next or succeeding academic year.
What is implicit in the first part of r. 10 is made explicit in the second part.
The use of the negative words in the second part 'No candidates will be admitted . etc. ' are clearly PG NO 288 prohibitory in nature and exclude the applicability of the carry for ward rule.
It follows that if a seat falls vacant for any reason, namely, that the candidte selected in order of merit does not join the PG course in MD MS in a medical college or by reason of his death or otherwise, and due to inaction on the part of the authorities the seat is not filled up in the academic year to which it pertains, there is no question of the vacancy being carried forward to the next academic year.
Rule 10 is a specific provision made for the benefit of the merit candidates who are placed in the waiting list.
Normally, the question" of a seat being filled up must arise at the commencement of the academic year or soon thereafter.
In our considered opinion on the terms of r. 10 as it exists, no other view is possible.
When a seat falls vacant in any particular academic year there is a corresponding duty cast on the authorities to take immediate steps to fill up the same.
There is no question of a right of admission to a seat falling vacant in the midst of, or towards the end of, the academic year.
As per the Regulations framed by the Medical Council of India, the PG course in MD/MS is a three years ' course including one year 's house job.
This is followed by a two years ' degree course.
The two years ' degree course in a medical college as prescribed by the Medical Council of India is a period of intensive training.
A post graduate student has not only to write a dissertation or thesis under the supervision of the Professor or Associate Professor who is his guide, but has also to take part in seminars, group discussions, clinical meetings besides attending classes.
There is also emphasis on in service training and not on didactic lectures.
The in service training requires the student to be a resident in the campus and he has the graded responsibility in the management and treatment of patients entrusted to his care.
For this purpose, adequate number of posts of clinical residents or tutors are created.
The period also includes adequate training in the basic sciences of Anatomy, Physiology, Bio Chemistry, Bio Physics.
Pharmacology and Pathology in all aspects relevant to the speciality concerned.
He is also required to participate in the teaching and training programmes of under graduate students or interns in their subjects.
The examination for the PG course in MD/MS consists of (i) thesis or dissertation, (ii) written papers.
(iii) clinical, oral and practical examination.
There are four theory papers for the post graduate degree examination, of which one has to be on Applied Basic Sciences.
The clinical examination is aimed at eliciting the knowledge of the student to undertake independent work as a Specialist.
The oral and practical examinations are meant to test his knowledge on PG NO 289 investigative procedures, techniques and other aspects of the speciality.
The syllabus prescribed by the Medical Council of India for the PG course in MD/MS as also the student teacher ratio of 1:1 virtually negate the right to admission to a seat falling vacant in the midst of or towards the end of the academic year to which it pertains.
In Ajay Pradhan 's case, the High Court dismissed the writ petition principally on the ground that in terms of r. 10 of the Rules he was not entitled to any relief.
Dr. T.N. Singh, J. speaking for himself and Ram Murti Rastogi, J. construed the words 'filled up in that year ' in r. 10 as meaning that a vacancy in any particular academic year must be filled up in that year.
According to him, the power to admit a student under r. 10 must be availed of either before the academic year commences or very soon thereafter, so that a candidate placed in the waiting list admitted under r. 10 does not suffer serious loss of study due to belated admission.
Further he rightly observes, the second part of r. 10 mandates that if any seat has not been filled up in the academic year to which it pertains, the exercise cannot be undertaken in the succeeding year and it furnishes the rationale behind the provision, and said: "An academic course cannot be compressed to accommodate any particular candidate who comes late.
Because, no separate or 'special ' arrangement can be made for a latecomer for imparting instructions to him.
Any other view would not make a reasonable reading or construction of the Rule in its context and setting for each candidate has to be not only examined periodically with respect to instructions imparted, the pre requisite therefore has also to be fulfilled by rendering instructions to him during the whole period of the course.
We have no doubt that when a seat is allotted a date has to be specified by which it has to be availed.
Therefore, it shall not be deemed 'filled up ' if it is not availed.
Indeed, it would then become the duty of the concerned authority to fill up the same by offering it to any other eligible candidate according to merit.
In such a case, a decision has obviously to be taken to do so either before the session commences or very soon thereafter so that the new comer does not suffer serious loss of studies due to belated admission.
" We are in complete agreement with the view expressed by the learned Judge.
PG NO 290 We shall now deal with a couple of decisions to which we were referred to by learned counsel for the appellants during the course of their arguments.
It was submitted that the High Court has consistently been taking a view that it has the power as well as the duty to issue an appropriate writ, direction or order for the 'backlog ' of seats to be filled up whenever it finds that the authorities have acted in violation of the norms prescribed by the relevant rules and a deserving candidate has been wrongly denied admission to such a professional course of studies.
It seemingly appears to be so, but on closer scrutiny the decisions relied upon are clearly distinguishable on facts.
There are three decisions we must mention: Dr. Mrs. Urmilla Shukla vs State of M.P. & Ors., (Misc.
Petition No. 297/83 decided on 17.4.84); Rekha Saxena vs State of M.P. & Ors., and Dr. Sunil Gajendragadkar vs State of M.P., (Misc.
Petition No. 57/85 decided on 11.3.85).
In Dr. Urmilla Shukla 's case, the facts were these.
Dr. Mrs. Urmilla Shukla had applied for admission to the PG course in MS in Gynaecology and Obstetrics as well as to the Diploma course in that discipline in G.R. Medical College, Gwalior for the academic year 1983 84.
It was not in dispute that there were 7 Lecturers in Obstetrics & Gynaecology in that College and as such 7 students had to be admitted for the PG course in MS in Gynaecology and Obstetrics.
As per r. 2.2 of the Rules the State Government had fixed the ratio of 2/3rd for the merit candidates and 1/3rd for the candidates in Government Service as Assistant Surgeons or equivalent posts, for admission to Post Graduate course in Gynaecology.
No rules had been framed for working out the ratio of 2/3rd and 1/3rd.
Dr. Mrs. Urmilla Shukla stood fifth in the merit list.
However, the authorities did not select her for the studies in MS course in Obstetrics & Gynaecology for the academic session starting from August 1983 but gave her admission to the Diploma course.
She made a representation that she should have been given admission to the PG course in MS in Obstetrics & Gynaecology and not to the Diploma course, contending that there was no justification now the ratio of 4:3 had been worked out.
The Government however rejected the representation and there upon she moved the High Court.
The High Court allowed the writ petition and struck down the decision of the State Government dated August 30, 1983 fixing the ratio at 4:3 as being wholly arbitrary and without any rational basis, and held that the ratio should have been 5:2.
C.P. Sen, J. speaking for himself and R.C. Shrivastava, J. explained that 2/3rd of 7 came to 4.666 while 1/3rd was 2.333.
and the question was now the figure had to be rounded PG NO 291 off for filling up the 7 seats.
The learned Judge explained that the proper method would be that if the figure is more than half the same has to be rounded off as 1 while if the figure is less than half it is not to be reckoned.
The High Court accordingly issued a writ in the nature of mandamus directing the Government to give admission to Dr. Mrs. Urmilla Shukla to the Post Graduate course in Obstetrics & Gynaecology and permit her to appear at the MS examination in that discipline.
It is however necessary to observe that the learned Judge mentioned that out of 7 seats for the PG course of studies in Obstetrics & Gynaecology, one seat had been kept vacant probably because of the filing of the writ petition by Dr. Mrs. Urmilla Shukla and therefore there could be no impediment to the grant of admission to her and cited a precedent under similar circumstances during the earlier year.
Dr. Miss Sushma Dixit had been admitted to the MS course in Obstetrics & Gynaecology because one of the candidates selected had gone abroad without permission and her admission had been cancelled.
He further pointed out that Dr. Mrs. Urmilla Shukla was pursuing her studies in the Diploma course in Obstetrics & Gynaecology and the syllabus in the MS in that discipline for the first year was the same and therefore there could be no difficulty in her way in determining the percentage of attendance to make her eligible to appear at the examination.
The decision in Dr. Mrs. Urmilla Shukla 's case therefore turned on its own facts.
The decision in Rekha Saxena 's case was an aftermath of the decision in Dr. Mrs. Urmilla Shukla 's case Dr. Rekha Sexena had applied for admission only to the Diploma course in Gynaecology & Obstetrics and she rightly contended that the ratio for the P.G. course in MG between merit candidates and Assistant Surgeons should have been 5:2 and she being placed at serial No. 4 in the merit list, should have been admitted to the Diploma course.
She complained that after Dr. Urmilla Shukla was given admission to the MS course, she made an application that she be given provisional admission to the Diploma course on the assurance that if ultimately Dr. Urmilla Shukla had to come back to the Diploma course she would walk out and further that she could not claim any stipend for the period of her studies, and that though the High Court allowed the writ petition of Dr. Urmilla Shukla and the College Council recommended her case for admission to the Diploma course, the authorities turned down her claim on the ground that she could not be given admission in 1984 against the quota for the academic year 1983 84.
The petitioner in her rejoinder pointed out the instance of Dr. Miss Sushma Dixit who was given admission to the MS course in Gynaecology & Obstetrics in the month of March 1983 PG NO 292 though she was doing her Diploma course for the academic year 1982 83, and made a grievance that she was being discriminated against as the authorities were adopting different yardsticks in her case.
In the return filed by the State Government, the facts were not disputed.
All that was said was that against the aforesaid judgment of the High Court in Dr. Mrs. Urmilla Shukla 's case, the State Government had taken an appeal to the Supreme Court and therefore her seat in the Diploma course was kept vacant and had not been declared to be available for any other candidate.
Upon this basis, it was asserted that as there was no seat vacant, no admission could be granted to Dr. Rekha Saxena.
At the hearing of the writ petition the Government 's appeal in Dr. Mrs. Urmilla Shukla 's case was still pending.
G.L Oza, Actg.
speaking for himself and Rampal Singh, J. allowed the writ petition and directed that the petitioner Dr. Rekha Saxena be given provisional admission to the Diploma course in the vacancy caused on admission being granted to Dr. Mrs. Urmilla Shukla to the MS course.
The High Court repelled the contention that the petitioner was a candidate for admission to a course for the academic year 1983 84 and could not be admitted in the year 1984, and observed: "It is strange that this request of the petitioner dated 26.8.1983 was ultimately turned down by the respondents by an order dated 25.4.1984, practically eight months after this prayer was made by the petitioner.
This delay in taking a decision on such matters when every day that passes in the life of a professional candidate is materially speaks volumes about the efficiency of this department and the rejection is on this basis that the petitioner was selected for the year 1983 and could not be admitted in the year 1984.
This logic of this order, it appears, is not defended in the return and a new defence has been raised in the return that as the case of Dr. Smt.
Urmilla Shukla is not yet finally decided and is pending in the Supreme Court, the seat has not been declared vacant although it is not disputed that the seat is and was vacant in fact.
It is peculiar that if Dr. Smt.
Urmilla Shukla could be given a provisional admission, why the petitioner could not have been given provisional admission immediately when she had herself offered in terms which would throw no liability on the respondents if ultimately she had to go back, but it appears that her application was not considered and ultimately practically major part of the session was wasted PG NO 293 and then the refusal was on the ground of delay for which the authorities themselves were responsible.
It is, therefore, plain that this kind of attitude could not be justified.
" It was then observed: "It is also interesting that in fact the selection of a candidate for admission to a course is for the academic session which is August 1983 to August 1984 and, therefore, when this order in April 1984 was passed, the session was still in the offing and if the petitioner was granted admission, there was no question of consideration of merit for the year 1984.
It is also plain that the seat remained vacant as Dr. Smt.
Urmilla Shukla had been admitted in the M.S. Course. ' ' Incidentally, the High Court was not impressed with the submission made on behalf of the Government that there was no declaration that the seat in the Diploma course had fallen vacant and therefore there was no question of giving admission to the petitioner, observing that formal declaration of vacancy was too abstract a concept to deprive a candidate admission to the P.G. Course or Diploma course to which he is entitled, merely on the ground that the vacancy pertained to the academic year which had gone by or that no additional seat in the new year could be created without sanction of the Medical Council of India.
In coming to the conclusion that it did, the High Court mainly relied on certain observation made by this Court in Punjab Engineering College vs Sanjay Gulati & Ors., ; , and in particular to the following observations: "Those who infringe the rules must pay for their lapse and the wrong done to the deserving students who ought to have been admitted has to be rectified.
The best solution under the circumstances is to ensure that the strength of seats is increased in proportion to the wrong admissions made.
" We need not enter into this controversy.
What is of significance is that in Rekha Saxena 's case the seat occupied by Dr. Urmilla Shukla in the Diploma course in Obstetrics & Gynaecology was kept vacant and therefore there was no legal impediment for the High Court to have issued a direction for the admission of Dr. Rekha Saxena.
PG NO 294 In Sunil Gajendragadkar 's case, the facts were more or less these.
One Dr. Laxmi Jain did not join the P.G. course in MD in General Medicine for the academic year 1983 84 and the College Council on December 22, 1984 decided to cancel her admission w.e.f.
August 1, 1984.
But the vacancy caused thereby was not notified or advertised.
The High Court relying on Rekha Saxena 's case repelled the contention of the Government based on r. 10 that a seat falling vacant in a particular year can only be filled up in that year and the Sunil Gajendragadkar could not be admitted in the academic session 1983 84 which commenced from August 2, 1983.
Oza, CJ.
speaking for himself and Ram Pal Singh, J. repelled the contention of the Government that the petitioner being a candidate for admission to the P.G. course in MD in General Medicine for the academic year 1983 84, could not be considered for admission in the year 1984 85 relying on the earlier decision in Rekha Sexena 's case based on the observation of this Court in Punjab Engineering College that "those who infringe the rules must pay for their lapse and the wrong done to the deserving students who ought to have been admitted has to be rectified.
The best solution under the circumstances is to ensure that the strength of seats is increased in proportion to the wrong admissions made", and quoted from Rekhu Saxena 's case: "In the present case, as it is clear that in the vacancy of Dr. Urmilla Shukla the petitioner was entitled to admission immediately in August l983 itself, and if the respondents had chosen to keep her away by not considering her prayer, it could not be contended that now it is too late for her to be admitted.
" The learned Chief Justice largely relied on the concept of justice and fairness.
He adverted to the fact that the College Council took a decision on December 22, 1984 creating a vacancy w.e.f. August 1, 1984 i.e. commencement of the next academic session.
Although Dr. Laxmi Jain did not join the P.G. course in MD in General Medicine in August 1983, her seat was in fact vacant, but due to apathy and lethargy of the authorities no steps were taken to fill up the seat in that year in terms of r. 10.
On the language of r. 10, we find it difficult to sustain the action of the authorities in making the seat available from August 1, 1984 i.e. commencement of the next academic year, or the view expressed by the High Court.
In the appeal preferred by Dr. Sanjay Kumar Shrivastava, it is conceded by learned counsel appearing for the State Government that there is no provision which empowered the PG NO 295 State Government to transfer a seat in the P.G. course in MD/MS reserved for a medical college to another medical college.
It must therefore follow that the High Court was obviously wrong in holding that the seat occupied by Smt.
Dhurupkar had been transferred with her when the same was, in fact, available.
On the construction that we place on r. 10 of the Rules, the appellants are not entitled to any relief.
Obviously, the seat that became vacant in the academic year 1986 87 cannot now filed in terms of r. 10.
We wish to impress upon the State Government of Madhya Pradesh the desirability of taking immediate steps under r. 10 of the Rules to fill up the vacancy in the P.G. course in MD/MS or the diploma course of studies in a particular discipline, the moment the seat in a medical college in that discipline is available in a medical college in any particular academic year.
The State Government should ensure that the authorities charged with the duty of granting admission to students under r. 10 of the Rules must act with due promptitude, and should not by their lethargy or inaction deprive an otherwise meritorious candidate admission to such a higher course of studies to which he was otherwise entitled.
Perhaps, the solution lies in making a suitable provision in the Rules providing for a reasonable period, say fifteen days, within which the authorities ought to exercise their powers under r. 10 of the Rules, failing which the seat available would be deemed to have been filled by the candidate placed first in the waiting list strictly according to merit.
In the result, the appeals must fail and are dismissed.
There shall be no order as to costs.
R.S.S. Appeals dismissed. | A seat in the P.G. course in M.D. in the G.N. Medical College, Gwalior, fell vacant due to the death of a student.
The appellant, Dr. Sanjay Pradhan, staked a claim to this seat under rule 10 of the Madhya Pradesh Selection for Post Graduation Courses (Clinical, Para clinical and Non clinical Courses) in Medical Colleges of Madhya Pradesh Rules, 1984.
Inasmuch as the vacancy arose towards the end of the academic year, the authorities took no steps to fill it up.
The appellant 's writ petition was dismissed By the M.P. High Court.
The High Court construed the words 'filled up in that year ' in r. 10 as meaning that a vacancy in any particular academic year must be filed up in that year.
One seat in the P.G. Course in M.S., which was occupied by Dr. Smt.
Dhurupkar, was transferred from Medical College, Jabalpur, to Medical College, Bhopal, with a view to accommodate her.
The appellant, Dr. Sanjay Kumar, moved the authorities seeking admission against that seat contending that the seat had become available in terms of r. 10.
The authorities disallowed his claim.
His writ petition was dismissed by the High Court in limine holding that the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her and hence the seat, in fact, was not available.
It was submitted before this Court that the High Court has consistently been taking a view that it has the power as well as the duty to issue an appropriate writ, direction or order for the 'backlog ' of seats to be filled up whenever it finds that the authorities have acted in violation of the norms prescribed by the relevant rules and a deserving candidate has been wrongly denied admission to such a professional course of studies.
PG NO 281 PG NO 282 Dismissing the appeals, it was, HELD: (1) Rule 10 must be interpreted by the written text.
If the precise words used are plain and un ambiguous, the Court is bound to construe them in their ordinary sense and give them full effect.
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 alternative methods of construction.
Where the language is explicit its consequences are for parliament, and not for the Courts, to consider.
[287C D] (2) On a plain construction, rule 10 stipulates that if a seat falls vacant for any reason, and due to inaction on the part of the authorities the seat is not filled up in the academic year to which it pertains, there is no question of the vacancy being carried forward to the next academic year.
[288A B] (3) Normally, the question of a seat being filled up must arise at the commencement of the academic year or soon thereafter.
When a seat falls vacant in any particular academic year there is a corresponding duty cast on the authorities to take immediate steps to fill up the same.
There is no question of a right of admission to a seat falling vacant in the midst of or towards the end of, the academic year.
[288C] (4) it is conceded by learned counsel appearing for the State Government that there is no provision which empowered the State Government to transfer a seat in the M.S. course in MD/MS reserved for a medical college to another medical college.
It must therefore follow that the High Court was obviously wrong in holding that the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her when the seat was, in fact, available.
[285C D] (5) On the construction placed on r. 10 of the Rules, the appellants are not entitled to any relief.
Obviously, the seat that became vacant in the academic year 1986 87 cannot now be filed in terms of section 10.
[295B] (6) It is impressed upon the State Government the desirability of taking immediate steps under rule 10 of the Rules to fill up the vacancy in the P.G. Course in MD/MS or the Diploma course of studies in a particular discipline, the moment the seat in that discipline is available in any particular academic year.
[295C D] PG NO 283 (7) The State Government should ensure that the authorities charged with the duty of granting admission to students under rule 10 of the Rules act with due promptitude, and should not by their lethargy or inaction deprive or otherwise meritorious candidate admission to such a higher course of studies to which he was otherwise entitled.
Perhaps, the solution lies in making a suitable provision in the Rules providing for a reasonable period, say fifteen days, within which the authorities ought to exercise their power under rule 10 of the Rules, failing which the seat available would be deemed to have been filled by the candidate placed first in the waiting list strictly according to merit.
[295D E] King Emperor vs Bensari Lal Sarma, LR (1945) 72 IA 57; Dr. Mrs. Urmilla Shukla vs State of M.P., Misc.
Petition No. 297/83 decided by M.P. High Court on 17.4.84; Rekha Saxena vs State of M.P., [l985] MPLJ 142; Dr. Sunil Gajendragadkar vs State of M.P. (Misc.
Petition No. 57/85 decided by M.P. High Court on 11.3.85. |
minal Appeal Nos.
420 22 of 1993.
From the Judgment and Order dated 31.8.1992 of the Kerala High Court in Crl.
R.P. Nos.
665/91 and 666/91 and Crl.
M.C. 832 of 1992.
AND Criminal Appeal No. 423 of 1993.
From the Judgment and Order dated 15.12.1992 of the Kerala High Court in Crl.
M.C. No. 1192 of 1992.
T.S. Krishna Murthy Iyer and M.T. George for the Petitioner in C.A. Nos.
420 22/93 and for the Respondents in C.A. No. 423/93.
G. Ramaswamy, John Joseph, P.S. Nayar, K.V. Sree Kumar, K. Raghunath and T.G.N. Nair for the Appellant in C.A. No. 423/93 and for the Respondents in C.A. Nos.
420 422/93.
J.: Special Leave granted.
Untramelled by questions of fact the learned Senior counsel on both sides neatly presented question of law whether "sandlewood oil" is forest produce within the meaning of Section 2 (f) (1) of the Kerala Forest Act, 1961 for short the Act '.
When proceedings were laid under section 51 (1) of the Act against the respondents in Special Leave Petition (Crl.) Nos.
27 29 of 1992, they questioned the jurisdiction of the court in C.C. Nos. 145 and 148 of 1988.
Eschewing delineation of intermediary proceedings went on from the start of prosecution, the High Court in exercise of its power under section 482 of the Code of Criminal Procedure, 1973 for short 'the Code ' by order dated August 31, 1992, reported in Mohammed Aliv.
Forest Range Officer, quashed the complaint holding that Sandal Wood Oil is not 'wood oil ' as defined in s.2 (f) (i) of the Act.
So it is not a forest produce.
Thus these appeals by Special leave.
When same question subsequently arose, other learned Single Judge doubting the correctness of aforesaid judgment referred the matter to the division bench which by order dated December 15, 1992, reported in Khushboo Enterprises vs Forest Range officer, held that Sandalwool Oil is a forest produce within the meaning of S.2 (f) (1) of the Act.
Thus the appeal in the other case.
The Forest Conservation Act, 1980 aims to prevent depleting forests, conservation thereof and protection of wild life in the country to maintain ecological balance.
The State, Acts regulate preservation of forest and forest produce to supplement the Central Act.
The Act prescribes procedure for preservation of the forest and regulates possession of the forest produce, failing of trees in the forest area and removal from the forest or reserved forest area by transit permits etc.
When Sandalwood Oil either was found in transit or in possession of the manufacturers, it was seized in the respective cases and laid the complaints under section 5 1 (1) (or contravention thereof.
As said earlier the jurisdictional question was raised on the premise that Sandal Wood Oil is not a wood oil as defined under section 2(f) (1) of the Act.
The question, therefore, emerges whether Sandalwood Oil is a wood oil.
S.2(f) defines forest produce thus: "Section 2(f) 'forest produce ' includes: (i)the following whether found in or brought from, a forest or not 502 that is, to say timber, charcoal, wood oil, gum, resin, natural varnish, bark, lac, fibres and roots of sandalwood and rosewood; and (ii)the following when found in or brought from aforest, that is to say a)trees and leaves, flowers and fruits and all other parts or produce not here in before mentioned, of trees.
b)plants not being trees including grass, creapers, reeds and moss and all parts or produce of such plants; c) silk cocoons, honey and wax, and d) peat, surface soil, rock and minerals (including lime stone, laterite), mineral oils and all products of mines or quarries".
A reading thereof do indicate that the forest produce whether found in or ,brought from a forest or not is a forest produce which include, that is to say, the 'enumerated items in Clauses 1 and 11 "wood oil" is one of the enumerate items as well as roots of sandalwood and rosewood.
The contention of Sri G. Ramaswami, the learned Senior counsel for the accused is that technical Dictiontries, Botanical Tax Books and expert opinion would bring out a demonstrable distinction between wood oil and sandalwood oil.
The wood oil is a natural produce of the forest directly derived as an exudation from living trees in the forest belonging to the family of the Dipterocarpucoae trees while sandal wood oil is a bye product from sandalwood (Santalum Album) by industrial process.
Wood oil is produced by making a hole on the trunk of the living tree commonly known as "oil trees" or "wood oil trees".
This family of trees are variously known in different parts of South India but they relate to Dipterocarpucoae family.
Wood oil is gathered by heating the hole in the trunk to induce exudation of the olec resin from the tree and commercially dealt with as wood oil which is a cheap substance in the commercial world used solely for the purpose of painting planks of wood or wooden vessels floating in the sea.
The physio chemical properties of wood oil are distinct and different from other oil.
Sandal wood oil would be produced only at factory level and that too by mechanised process utilising the heart wood and roots of sandal wood trees removed from the forest as a raw material.
Sandal wood oil is having very high commercial value and it is mainly used in manufacturing perfumery and 503 cosmetic items of different types and grades.
The production of sandal wood oil is being carried out as industry, either by licence by the individuals or the state government as its monopoly like Karnataka State, in a larger scale or as a small scale business.
It is further contended that the meaning of the word "wood oil" defined in section 2 (f) (1) must receive its colour from its context and connotation.
When the legislature used the word 'that is to say 'the wood oil and other natural growth referred to in the definition it would only mean natural bye product directly drawn from the trees.
The Learned Single Judge had rightly construed the meaning of the word 'wood oil ' and held that sandal wood oil being the bye product derived commercially manufacturing process is not wood oil.
The division bench committed manifest error in its construction of the word 'wood oil 'to include sandal wood oil.
Sri Krishna Murthy Iyer, the learned Senior counsel for the respondents on the other hand, refuted the contention arguing that inclusive definition of forest produce must receive extended meaning.
It must also be construed in the context in which it is used and the purpose the Act seeks to serve and the family to which sandal wool oil belongs being an essential oil would include wood oil.
The expression wood oil being a technical and part of inclusive definition has to be construed in its technical sense and in an exhaustive manner.
It cannot be restricted in a narrow circumference as was done by the learned Single Judge so as to defeat the object and purpose of the Act.
Extraction of sandal wood oil even by mechanised process would nonetheless be a wood oil.
He laid emphasis on the word 'timber ' defined in section 2(k) which include 'Sandal wood ', being a forest produce the oil extracted therefrom would also be within the meaning of the word `wood oil '.
The restricted meaning canvassed by the counsel would defeat the purpose of the Act and the literal interpretation giving narrow meaning to the word wood oil ' should be excluded.
Ex facie the argument of Sri Ramaswami backed by material, though is alluring, deeper probe denied its acceptance.
Undoubtedly, the Karnataka Forest Act, 1963 incorporated in its definition of forest produce Sandalwood oil after the word "wood oil" and the legislature in Andhra Pradesh and Tamilnadu, like the Act, do not specifically incorporate Sandalwood oil in the definition of forest produce.
From this could it be concluded, if it be otherwise interpretable, that wood oil would not include Sandalwood oil as well.
Undoubtedly Stedman 's Medical Dictionary (23rd Edition) defined at page 1576, wood oil as gurjan balsam and gurjan balsam defined at p. 156 to mean wood oil oleo resin from Dipterocarpus alatus (family Dipterocarpuceae), a tree of India and other regions of Southern Asia.
Similar meaning was given in Concise Chemical and Technical Dictionary edited by H. Bennett (Fourth Edition) at page 1217; Scientific Treatises on the subject by Ernest Guenther in volume 6; Edward Balfour in his 'Cryclopaedia of India ' and of Eastern and Southern Asia; R.N. Khori in his 'Materia Medica of 504 India and their Therapeutics ' and ' Pharmacographia Indica ' by Willim Dymock defined wood oil in the same strain.
All these technical literatures were concerned in finding out physio chemical properties contained in wood oil and the source from which they are drawn for use in industrial purposes.
The literal interpretation given therein if given acceptance would lead to manifest frustration of the purpose of the Act.
In its interpretation we have to keep at the back of our mind the purpose which the Act and the Parent Act (Forest Conservation Act) seek to subserve.
J.F. Dastru equally in his 'Medical Plants of India and Pakistan 'tread into the same path and given construction to wood oil in the context of its exudation obtained from the trunk of the trees belonging to the family of Dipterocarpaceae as an oleoresin or gurjan balsam.
There would be no quarrel on that behalf.
It must be noted in this context that there are several types of essential oils in India, the important being Sandalwood oil, agar wood oil, deodar oil and pine oil, apart from oleo resin and wood oil derived from exudation from living trees in the forest area.
These essential oils are obtained from any of forest wood.
Sandalwood as observed by the High Court is forest produce.
Even its roots thereof are also included as forest produce.
They are also timber within the meaning of Section 2(k) of the Act.
The purpose of the Act is to conserve forest wealth which is very dear for preservation to maintain ecology.
Forest produce defined under section 2(f) is an inclusive definition.
It is settled law that the word 'include ' is generally used as a word of extension.
When used in an interpretation clause, it seeks to enlarge the meaning of the words or pharases occuring in the body of the Statute.
Craies on Statute Law, Seventh Edition at p. 64 stated the construction to be adopted to the meanings of the words and pharases that "The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves.
If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense.
The words themselves alone do in such a case best declare the intention of the law giver",.
At p. 214 it is stated that an interpretation clause which extends the meaning of a word does not take away its ordinary meaning.
An interpretation clause of the inclusive definition is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that word that would be properly applicable, but to enable the word as used in the Act, when there is nothing in the context or the subject matter to the contrary, to be applied to some things to which it would not ordinarily be applicable. .
An interpretation clause should be used for the purpose of interpreting word which are ambiguous or equivocal, and not so as to disturb the meaning of such as are plain.
At p. 216 it is stated that another important rule with regard to the effect of an interpretation clause is, that an interpretation clause is not to be taken as substituting one set of words for another, or as strictly defining what the meaning 505 of the term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances require that it should be so construed.
This Court in Babu Manmohan Das Shah & Ors.
vs Bishun Das [ ; adopting the ordinary rule of construction stated that "the provisions of a statute must be construed in accordance with the language used therein unless there are compelling reasons such as where the literal construction would reduce the Act to absurdity or prevent manifest legislative purpose from being carried out".
The question therein was the interpretation of the phrase "materially altered the accommodation or is likely substantially to diminish its value" in the construction to a shop.
In that context this court laid that cardinal principle of statutory construction referred to hereinbefore would apply.
In State of Madhya Pradesh vs M. V. Narasimhan; , the definition of 'public, servant ' in S.21 I.P.C. was amended and clause 12 thereof was brought on statute.
The Prevention of Corruption Act, 1947 created its own provisions as specific offences of criminal misconduct which is different from the offence of bribery defined in the Indian Penal Code.
When similar definition was not given under the P.C. Act, 1947 the contention was raised that the respondent cannot be prosecuted not being a public servant under the P.C. Act.
This court while holding that definition of public servant was incorporated in P.C. Act by necessary implication of public servant defined in Cl. 12 of S.21 I.P.C. and held that P.C. Act is supplemental to I.P.C. and that, therefore, both would deal with the same offence.
Accordingly, the respondent was held to be public servant coming within the definition of P.C. Act.
This court adopted the doctrine of purposive interpretation to prevent corruption, a penal offence.
In Municipal Corporation of Greater Bombay vs Indian Oil Corporation; , this Court adopted purposive construction in the definition of the word 'building ' for the purpose of levy of property tax under the Bombay Municipal Corporation Act to include oil storage tanks to be "building" and held that the language of a statutory provision is not static vehicle of ideas and concepts and as ideas and concepts change, as they are bound to do in any country like ours with the establishment of a democratic structure based on agalitarian values, the meaning and content of the statutory provision undergo a change.
The law does not operate in a vaccum.
It cannot be interpreted without taking into account the social, economic and political setting in which it is intended to operate.
The Judge has to inject flesh and blood in the dry skeleton provided by the legislature and invest it with a meaning which will harmonise the law with the prevailing concepts and values and make it an effective instrument for delivering justice.
The word include in the definition under section 2(f) would show that it did 506 not intened to exclude what was ordinarily and in common parlance be spoken of wood oil.
The expression being technical and being part of an inclusive definition has to be construed in its technical sense but in an exhaustive manner, it cannot be restricted in such a manner so as to defeat the principle object and purpose of the Act.
The process by which the oil is extracted is not decisive as oil may be extracted by natural process of exudation or it may be extracted by subjecting to chemical or mechanical process and Sandalwood (Santalum Album) are cut into pieces.
Its heart wood and roots of Sandalwood trees removed from the forest are used as a raw material at a factory level that too by mechanised process to extract sandalwood oil.
The purpose for which the oil is used is not decisive.
Therefore, the word wood oil used in the Act will require purposive interpretation drawing the context in which the words are used and its meaning will have to be discovered having regard to the intention and object which legislature seeks to subserve.
The restricted meaning sought to put up by the accused would frustrate the object and the literal interpretation would defeat the meaning.
The Legislature does not intend to restrict the word wood oil nor we find any compelling circumstances in the Act to olive restricted meaning that only oil derived from Dipterocarpus trees to be wood oil as contended for the accused and found acceptance to the learned single Judge.
The purposive interpretation would aid conservation of sandle wood, a valuable forest wealth, prevent illicit failing and transportation of them and makes the manufacturers of sandlewood oil accountable to the possession of sandlewood trees or chips or roots etc.
Incorporation of sandlewood oil abundentecatela in Karnataka Act and absence thereof in sister Acts operating in South India does not detract from giving its due meaning.
The expert opinion is only an opinion evidence on either side and does not aid us in interpretation.
This court in Adity Mills vs Union of India, ; did not adopt the dictionary meaning as it may be to some extent delussive guide to interpret entries in Central Excise and Salt Act.
In Kishan Lal vs State of Rajasthan, ; to which one of us, Sahai, J, was member, this court was to consider the word 'Sugar ' whether under Rajasthan Agricultrual Produce Marketing Act, 1961 an agricultural produce.
It was contended that the Khandsari Sugar was not an agricultural produce.
Repelling that contention, this Court held that the word agricultural produce include all produce whether agricultural, horticultural, animal husbandary or otherwise as specified in the schedule.
The legislative power to add or include and define a word even artificially, apart, the definition which is not exhaustive but inclusive neither exclude any item produced in mills or factories nor it confines its width to produce from soil.
If that be the construction then all items of animal husbandry shall stand excluded.
It further overlooks the expression "or otherwise as specified in the Schedule".
Accordingly it was held that Khandsari Sugar is an agricultural produce under that Act.
In State of Bombay & Ors.
vs The Hospital Mazdoor Sabha & Ors.
; this court adopted purposive approach 507 in interpreting the word 'industry ' in section 2(j) of the Industrial Disputes Act, and held that the Legislature in defining the word 'industry ' in s.2 (j) of the Act deliberately used term of wide import in its first clause and referring to several other industries in the second in an inclusive way obviously denoting extention.
The conventional meaning attributed to trade or business was eschewed even in the absence of profit motive.
It was held that hospital was an industry.
Therefore, the ratio, far from helping the accused, is consistent with the view we have expressed above.
In South Gujarat Roofing Tiles Manufacturers Association and Anr.
vs State of Gujarat and Anr.
, ; the inclusive definition was construed in the context of the explanation given to Entry 22.
It was held, therefore, that the word 'pottery ' does not include tiles industry for the purpose of Minimum Wages Act.
The ratio therein renders little assistance to the accused.
In Rathi Khandsari Udyog and Ors.
vs State of U.P. and Ors.
; , , this court held that the words not defined may be construed in the popular sense in which it is being commonly used in commercial parlance.
The ratio is not apposite to the fact situation.
Similarly the construction placing reliance on the passage at p. 164 of Craies on Statute Law that the word is to be construed in the sense in which it is being understood in trade, business or transaction known to the trade is also inapplicable to the factual context.
In Fatesang Gimba Vasava and Ors.
vs State of Gujarat and ors.
, the division bench construed whether bamboo would include in its ambit cut pieces in the context and the purpose the Act sought to serve the tribals in the forest area.
Privilege was granted to the tribals to remove certain forest produce from forest area for sale to supplement their livelihood.
When toplas, supdas and palas made out of bamboo chips were being taken out for sale, they were sought to be prosecuted.
It was challenged by the tribals.
In that context the division bench held that though bamboo is a forest produce, the Bamboo chips of the specified description do not fall within the definition of forest produce.
Accordingly it was interpreted, from the context and purposive approach of the word 'forest produce '.
Accordingly the ratio therein does not assist the accused.
The Andhra Pradesh High Court, relied for the accused, had not correctly laid the law in Kangundi Industrial works, Kuppam vs The Govt.
of A.P.
Accordingly we hold that Sandalwood oil is wood oil within the meaning of section 2 (f) (i) of the Act.
Therefore, it is a forest produce.
Necessary conclusion is that the Trial Court has jurisdiction to proceed with the trial.
It is for the Trial Court to find whether the offence as imputed to the accused has been made out the trial.
We need express no opinion at this stage.
The appeals of the State are allowed and the appeal of the accused is dismissed.
R.P. Appeals dismissed/allowed. | The Kerala Forest Act, 1961 regulates preservation of forests and forest produce.
Section 2(f) (i) defines forest produce which includes wood oil.
The respondents in Crl.
Appeals Nos.
420422 of 1993 were found manufacturing/in possession of sandalwood oil.
Proceedings under section 52 (1) of the Act were initiated against them.
They filed applications under section 482, Cr.
P.C. before the High Court challenging the jurisdiction of the trial court on the premise that sandalwood oil was not wood oil as defined under section 2(f) (i) of the Act The High Court allowed the case of the respondents and quashed the complaint*.
Subsequently in another case involving the same controversy, a Division Bench of the High Court held that sandalwood oil was a forest produce within the meaning of section 2(f) (i) of the Act.
**The State and tile accused challenged the respective judgments in the appeals by special leave.
It was contended on behalf of the accused that sandalwood oil is not a forest produce inasmuch as there is a distinction between wood oil and sandalwood oil wood oil is a natural produce of forest directly derived as an exudation from living trees in the forest whereas sandalwood oil is a bye product from sandalwood by industrial process utilising the heart wood and 497 498 roots of sandalwood trees removed from the forest as a raw material.
The State contended that extraction of sandalwood oil even by mechanical process would nonetheless be a wood oil; and that since the word 'timber ' defined under section 2 (k) of the Act includes 'sandalwood ' being a forest produce, the oil extracted therefrom would also he within the meaning of the word 'wood oil '.
On the question: whether sandalwood oil is a forest produce within the meaning of section 2(f) (i) of the Kerala Forest Act, 1961.
Allowing the appeals of the State and dismissing the other appeal, this Court, HELD: 1.1 Sandalwood oil is wood oil within the meaning of s.2(f) (i) of the Kerala Forest Act, 1961.
Therefore, it is a forest produce.
(507 G) * Mohammed Ali vs Forest Range Officer: , overruled **Khushboo Enterprises vs Forest Range Officer. , approved.
Kangundi Industrial Works.
Kuppam vs The Govt.
of A.P. , disapproved.
1.2 Sandalwood is forest produce.
Even its roots are also included as forest produce.
They are also 'timber 'within the meaning of section 2(k) of the Act.
(504 D) 1.3 Forest produce as defined in s.2 (f) of the Act, whether found in or brought from a forest or not is a forest produce which include, that is to say, the enumerated items in clauses (1) and (ii).
"Wood oil" is one of the enumerated items as are roots of sandalwood and rose wood.
(502 E) 2.1 The word "wood oil" used in the Act will require purposive interpretation drawing the context in which the words are used and its meaning will have to be discovered having regard to the intention and object which legislature seeks to subserve.
The purposive interpretation would aid conservation of sandal wood, a valuable forest wealth, prevent illicit felling and transportation of them and makes the manufacturers of sandalwood oil 499 accountable to the possession of sandalwood trees or chips or roots etc.
(506C D) Municipal Corporation of Greater Bombay vs Indian Oil Corporation, ; ; State of Bombay & Ors.
vs The Hospital Mazdoor Sabha & Ors, ; and State of Madhya Pradesh vs M. V Narasimhan, 1197512 SCC, relied on.
2.2 The Legislature does not intend to restrict the word 'wood oil ' nor are there any compelling circumstances in the Act to give restricted meaning that only oil derived from Dipterocarpus trees would be wood oil.
The literal interpretation if given acceptance would lead to manifest frustration of the purpose of the Act.
(506 D) Aditya Mills vs Union of India, [1988] 4SCC315, and Babu Manmohan Das Shah & Ors.
vs Bishun Das, ; , referred to.
Rathi Khandsari Udyog and Ors vs State of U.P. & Ors, [1985]2SCC 485, inapplicable.
Craies on Statute law.
Seventh Edition, referred to.
Stedman 's Medical Dictionan, (23rd Edition), Concise Chemical and Technical Dictionary (Fourth edition); 'Scientific Treatises ' (Vol. 6) by Ernest Guenther; 'Cyclopaedia of India and of Eastern and Southern Asia ' by Edward Balfour; 'Materia Medica of India and their Therapeutics ' by R.N. Khori, Pharma cographia Indica by William Dymock and 'Medical Plants of India and Pakistan ' by J.F. Dastru, referred to.
2.3 The expert opinion is only an opinion evidence on either side and does not aid in interpretation.
(506 E) 3.1 Forest produce defined under section 2(f) of the Act is an inclusive definition.
It is settled law that the word 'include ' is generally used as a word of extension.
When used in an interpretation clause, it seeks to enlarge the meaning of the words or phrases occurring in the body of the statute.
(504 D) 3.2 The word 'include ' in the definition under section 2(f) would show that it did not intend to exclude what.
was ordinarily and in common parlance to be spoken of wood oil.
The expression being technical and being part of an 500 inclusive definition has to be construed in its technical sense but in an exhaustive manner, it cannot be restricted in such a manner so as to defeat the principal object and purpose of the Act (505 H, 506 A) Kishan Lal vs State of Rajasthan, ; and South Gujarat Roofing Tiles Manufacturers Assn.
& Anr.
vs State of Gujarat and Anr.
, ; , referred to.
Fatesang Gimba Vasava & Ors vs State of Gujarat & Ors., , distinguished.
The process by which the oil is extracted is not decisive as oil may be extracted by natural process of exudation or it may be extracted by subjecting to chemical or mechanical process.
The purpose for which the oil is used is also not decisive.
(506 B) 5.
The trial court has jurisdiction to proceed with the trial.
It is for the trial court to find whether the offence as amputed to the accused has been made out at the trial.
(507 G) |
Appeal No. 1452 of 1987.
From the Judgment and Order dated 10.7.1986 of the Kamataka High Court in I.T.R.C. No. 198 of 1987.
WITH C.A. Nos. 4462/89, 1822, 1902, 1465/87, 675, 658, 4461/89, 6093/90, 6204/ 90, 6092.
and 6092 A of 1990.
H. Salve, P.H. Parekh, Ms. Meenakshi Grover, R. Nariman, Ms. R. Gill and Ms. Simi Kr.
for the Appellants.
B.B. Ahuja, Ranbir Chandra and Ms. A. Subhasini for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY J.
These appeals are preferred against the judgment of the Karnataka High Court answering the question referred to it, at the instance of the revenue, in favour of the revenue and against the assessee.
The question referred under section 256 of the Income Tax Act, 196 1, read as follows: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 1, 79, 742 could not be disallowed under section 40 (c) of the Income Tax Act, 1961." (The above question related to Assessment Year 1974 75.
The question referred for A.Y. 1975 76 was identical except in the matter of amount).
Since the facts in all the appeals are identical it would be sufficient to notice the facts in C.A. Nos. 6092 and 6092A/90 (Prakash Beedies (P) Lid.
vs Commr.
of Income Tax.
Karnataka, Bangalore).
Prior to 15.7.1992, a partnership firm called K.M. Anand Prabhu & Sons, Mangalore, consisting of three partners K.M. Vishnudas Prabhu, K.M. Ramdas Prabhu and K.M. Shankar Prabhu was engaged inter alia in the business of manufacturing and sale of beedies under the brand name 'Mangalore Prakash Beedies '.
On May 20, 1972 a Private limited company called Prakash Beedies 609 Limited (the assessee appellant herein), was incorporated with its registered off ice at Manoalore.
One of its objects was to take over business of the aforesaid firm.
Under an agreement dated July 15, 1972 between the firm and the company, the firm sold its rights and assets to the company on the terms and conditions set out therein.
Clause 4(a) of the agreement, which alone is material for the purposes of these appeals reads: "(a) For the use of the trade name the Company shall pay royalty to the Vendor at the rate of 10ps.
for every thousand beedies sold by the Company by using the trade name of the Vendor.
The royalty shall be worked out at the end of each quarter ending on March, June, September and December, on the sales made during each quarter.
The royalty fixed hereby shall not be varied for a period of one year and may be reviewed and/or revised thereafter wards from time to time".
The assessee was making payments to the firm every year on account of royalty in terms of said clause.
The three partners aforesaid of the firm were also the directors of the assessee company.
For the assessment years 1974 75 and 1975 76, the assessee claimed deduction of the amount paid by it to the firm on account of royalty in terms of clause 4(a) of the agreement.
The amounts paid during the accounting years relevant to the said assessment years were Rs. 3, 16, 526 and Rs. 3, 95, 742 respectively.
The I.T.O. allowed the deductions as claimed.
In exercise of the powers conferred on him by Section 263, the Commissioner of Income Tax initiated (suo moto) proceedings for revising the said assessments in so far as the aforesaid deductions were concerned.
After hearing the assessee, he passed orders on September 16, 1976 whereunder he disallowed payments to the firm over and above the ceiling prescribed in Section 40(c).
The assessee preferred appeals to the Tribunal against the orders of the I.T.O, The appeals were allowed and the orders of the I.T.O. restored.
On reference, the High Court answered to question in the negative i.e., in favour of the revenue and against the assessee, on the following reasoning : the three directors of the assessee company were also the partners in the firm to which royalty payments were made.
In law, a firm has no separate legal existence; it is not a juristic person or a distinct legal entity.
It is merely a collection or association of the individuals for carrying 610 on a business.
Merely because the firm is an assessable entity under the Income Tax Act it does not follow that it is a juristic or legal entity.
It must, therefore, be held that the payments made to the firm are in reality payments made to the directors.
Such payments clearly attract and fall within the mischief of Section 40(c).
The Commissioner was right in saying so and the opinion of the Tribunal to the contrary is unsustainable in law.
In these appeals, S/Shri Harish N.Salve and Rohinton Nariman assailed the correctness of the view taken by the High Court.
They submitted firstly that the payments were made not to the directors of the assessee but to a firm which was a separate entity.
A payment to a firm is not ipso facto a payment to the partners, directly or indirectly.
In a firm there may be other partners besides the directors of the assessee company.
It may also happen that the firm has no income to distribute because of the losses incurred by it which are set off against the income so received.
The High Court was in error in holding that payment to a firm is a payment to the partners.
Assuming that a partnership firm is not a separate juristic entity distinct from its partners, even so the payments were made to the said three persons not in their capacity as directors (qua directors) but in consideration of a valuable right parted by them in favour of the assessee company.
Such payments do not and cannot fall within the mischief of Section4O(c).
Section 40(c) was never intended to take in such payments.
A company may take on lease the house of its directors for its legitimate business purposes and pay rent which is reasonable having regard to the market conditions, or it may pay even less than the market rate of rent.
Whether the rent paid by the company to its director in such a case falls within Section 40(c), ask the counsel.
Another illustration given by the counsel is where a director supplies raw material to the assessee company for a price which is the appropriate market price.
Would such payment also fall under section 40(c), they ask.
The Budget speech of the Finance Minister in the Parliament, while introducing the said provision, is relied upon in support of their contention.
It is also argued that the words "remuneration, benefit or amenity" occurring in Section 40(c) must be read having regard to the context in which they occur applying the principle NOSCITORA SPCOOS (recognition of associated words).
If so read, the payments in question can never fall within the ambit of the said words.
Shri Ahuja, the learned counsel for the Revenue justified the reasoning and approach of the High Court having regard to the clear language employed in clause (c).
The genuineness or validity of the agreement between the assessee company and the firm is not disputed.
The factum of payments made on account of royalty in terms of clause 4(a) of the said agreement is also not disputed.
It is also 611 not disputed that in the beedi trade, brand name carries significant business value.
It is necessary to keep this factual context in mind while examining the question at issue.
Section 40(c) read as follows during the relevant assessment years "40.
Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income charge able under the head" profits and gains of business or profession", (a). . (b). . (c) in the case of any company (i) any expenditure which results directly or indirectly in the provision of any remuneration of benefit or amenity to director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, (ii) any expenditure or allowance in respect of any assets of the company used by any person referred to in sub clause (i) either wholly or partly for his own purposes of benefit, if in the opinion of the Income tax Officer any such expenditure or allowance as is mentioned in sub clause (i) and (ii) is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom, so, however, that the deduction in respect of the aggregate of such expenditure and allowance in respect of any one person referred to in sub clause (i) shall, in no case, exceed (A) where such expenditure or allowance relates to a period exceeding eleven months comprised in the previous year, the amount of seventy two thousand rupees; (B) where such expenditure of allowance relates to a period not exceeding eleven months comprised in the previous year, an amount calculated at the rate of six thousand rupees for each month or part thereof comprised in that period: 612 Provided that in case where such person is also and employee of the company for any period comprised in the previous year, expenditure of the nature referred to in clauses (i), (ii), (iii) and (iv) of the second proviso to clause (a) of sub section (5) of section 40A shall not be taken into account for the purposes of sub clause (A) or subclause (B), as the case may be; (iii) * * * * Explanation.
The provisions of this clause shall apply notwithstanding that any amount not to be allowed under this clause is included in the total income of any person referred to in sub clause (i);" The Budget speech of the Finance Minister, in so far as it mentions the reasons for introduction of clause (c) of Section 40, reads as follows: "I am firmly of the view that the fiscal instrument must be deployed to discourage payment of high salaries and remunerations which go ill with the norms of egalitarian society.
I accordingly propose to impose a calling on the remuneration of company employees which would be deductible in the computation of taxable profits.
The ceiling is being set at Rs. 5,000 per month.
Together with the existing ceiling of Rs. 1,000 per month in the case of perquisites, the allowable overall ceiling on remuneration and perquisites, for purposes of taxation, will be at Rs. 6,000 per month. . . " The object behind the provision undoubtedly was to discourage and disallow "payment of high salaries and remunerations which go ill with the norms of egalitarian society".
The provision was, of course, not confined to the directors. ' It took in relatives of directors, persons having substantial interest in the company and their relatives.
The clause vested in the I.T.O. the power to determine whether any such expenditure or allowances as is mentioned in the said clause was excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom.
In addition to it, a ceiling was also prescribed beyond which such expenditure or allowance could not go in any event.
At this juncture, it would be appropriate to notice the provision contained in sub section (2) of Sec 40A. Clause, A provides that where the assessee incurs any expenditure in respect of which payment has been made or is to be made to any 613 person referred to in clause (b) of the sub section, and the Income tax Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction.
Clause (b) mentions the categories of persons to whom the provision in clause (a) applies.
It includes directors of the company and their relatives among others.
Clause b) also takes in any payment to any company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has substantial, interest in the business or profession of the assessee.
In short, the net is cast very wide to ensure that excessive or unreasonable payments are not made to the persons in control of the affairs of the assessee in the name of paying for the goods, services and facilities rendered, supplied or extended by them, as the case may be.
That the payments made by the assessee company to the firm on account of royalty in terms of clause (4) (a) of the agreement fall within the meaning of the expression 'expenditure ' in sub clause (i) of clause (c) is not disputed.
The observations in CIT, Bombay.
vs M/s. Indian Engineering and Commercial Corporation Private Uinited (Civil Appeal Nos. 1583 and 1584 (NT) of 1977 decided on 13.4.1993 by us reported in ; do not say otherwise.
That case arose under Section 40(A) (5).
The payments in question were made to the directors by way of commission on sales.
The question was whether the said payments fell within sub clause (ii) of clause (a) of sub section (5) of section 40(A).
It was held that they did not.
While holding so it was observed that it is difficult to say that payment of certain cash amount by way of commission on sales, directly to an employee, can be said to fall within the words 'where the assessee incurs any expenditure which results directly or indirectly '.
" The said observations were made in response to the Revenue 's argument that the said payment constituted 'perquisites ' within the meaning of sub clause (ii) of clause (a) of Section 40(A) (5).
The observations are clearly confined to the said sub clause and have no relevance to any other provision in the Act.
The observations cannot be read dissociated from their context.
Coming back to the provisions of Section 4O(c) and the facts of the case before us the only question is whether the royalty payments to the firm fell within clause (c).
We assume for the purpose of this argument that in this case, payments to firm were payments to partners.
Even so, we think that the said payments did not fall within clause (C).
The payments were made in consideration of a valuable right parted by the partners/ directors of the assessee company in favour of the assessee.
SO long a,, the agreement whereunder the said payments were made is not held to be a mere 614 device or a mere screen, the said payments cannot be treated as payments made to the directors as directors (qua directors).
The payments were made by way of consideration for allowing the assessee to use a valuable right belonging to them viz., the brand name.
Such a payment may be liable to be scrutinised under subsection (2) of Section 40(A), but it certainly did not fall within the four corners of Section 40(c).
In T. T Ltd. vs LTO., Bangalore 1, a Bench of Karnataka High Court comprising D.M. Chandrashekhar, CJ.
and E.S. Venkataramiah,J. has taken a view which accords with the one taken by us.
Speaking for the Bench, E.S. Venkataramiah, J. (as he then was) observed: "A close reading of the above provision shows that section 40(c) refers to an expenditure in curred by making periodical payments to person mentioned in that clause apparently for any personal service that may be rendered by him.
It cannot have any reference to payments made by the assessee for all kinds of "services or facilities" referred to in section 4OA(2) (a).
It is argued that the proviso thereto suggests that any expenditure incurred for any kind of service which is referred to in the main part of section 40A (2) (a) and the expenditure referred to in section 40(c) belong to the same category.
This contention is not correct.
The expression "services" in section 40A (2) (a) is an expression of wider import. . .
If the remuneration, benefit or amenity referred to in section 40(c) is treated as the same as what is paid in return for "the goods, services or facilities" then irrespective of the fair market value of the goods, services and facilities provided by a person who may be a director or a person who has a substantial interest in the company or a relative of the director or of such person, as the case may be, only a maximum of Rs. 72,000 can be allowed to be deducted in computing the income of the company in any one year.
We do not think that Parliament ever intended that such a result should follow.
The goods, services and facilities referred to in section 40A (2) (a) are those which have a market value and which are commercial in character.
Many of the services and facilities referred to above are those which are nowadays provided by independent organisations. ' The said decision has been followed by the Punjab and Haryana High Court in Commissioner of Income Tax, Patiala vs Avon Cycles (P) Ltd. , The Calcutta High Court has also taken a similar view in India Jute Co. Ltd vs 615 Commr of Income Tax Mr. Ahuja, learned counsel for the Revenue submitted that the argument of the assessee that only the payments made to directors as directors fall within clause (c) and not the other payments, becomes inapt when the payments are made to the relative,,, of the directors or to persons holding substantial interest in the assessee company or their relatives.
The ceilinG prescribed in clause (c) cannot also be applied to such persons says the counsel.
The answer perhaps lies in the clause itself in the power vested in the I.T.O. to determine whether any expenditure or allowance is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by the assessee or accruing therefrom.
Any payment to a relative of a director or other persons mentioned in clause (c) will necessarily be examined applying the above test and if it is found that they are unwarranted, unreasonable or excessive, they will be disallowed.
Since such a situation does not arise herein, we need not pursue the argument further.
For the above reasons, we are of the opinion that the judgment under appeal cannot be sustained.
It must he held that the payments in question did not fall within section 40(c).
Accordingly, the appeals are allowed, the judgment of the High Court is set aside and the question referred to the High Court is answered in the affirmative, i.e., in favour of the assessee and against the revenue.
No costs.
U.J. R. Appeal allowed. | A partnership firm consisting of three partners was engaged inter alia in the business of manufacturing and sale of beedies under the brand name "Mangalore Prakash Beedies".
On May 20,1972 a private limited company called prakash beedies Ltd. the assessee appellant was incorporated.
One of its objects was to take over the business of the aforesaid firms which it did under an agreement dated 15 July 1972 whereby the firms sold its rights and assets to the company.
For the use of the trade name, a royalty at 10p.
for every 1000 beedies was to be paid by the company to the firm.
This payment was made ever year by the assesse on account of royalty.
The three partners of the firms were also directors of the company.
The relevant assessment years were 1974 75 and 1975 76.
The facts in the other appeals are similar.
The assessee claimed deduction of the amount paid by it as royalty.
The ITO allowed the deductions as claimed.
The CIT in stio motu proceedings disallow the aforesaid deductions.
On appeal, the tribunal restored the order of the ITO.
On reference, the High Court answered in fan,our of the revenue as the three directors of the assessee company were also partners in the firm.
It held that in law, a firm is merely a collection or association of individuals for carrying on a business.
Merely because the firm is an assessable entity, under the Income Tax Act, it does not follow that it is a juristic or legal entity.
It must therefore be held that the payments to the firm were in reality made to the 607 directors, thus attracting section 40 (c).
Before this Court, it was contended for the assessee that payment to a firm is not ipso fact payment to the partners, directly or indirectly.
In any event, the payments were made to the three persons not in their capacity of directors (qua directors).
but in consideration of a valuable right parted by them in favour of the assessee company.
section 40(c) was never intended to take in such payments.
They relied on the budget speech of the Finance Minister and argued that the principle of interpretation noscitor a sociis must be applied to the words "remuneration, benefit or amenity".
The genuineness or validity of the agreement, the factum of payments as royalty, and that the brand name carries significant business value was not disputed.
The question before this Court was whether the royalty payments fail within section 40(c).
Allowing the appeal, this Court, HELD : 1.
Even assuming that the payments to firm were payments to partners, the said payments did not fall within section 40(c).
The payment, . were made In consideration of a valuable right parted by the firm/partners/ directors of the assessee company in favour of the assessee.
So long as the agreement whereunder the said payments were made is not held to be a mere device or a mere screen, the said payments cannot be treated as payments made to the directors (qua directors).
(613 H, 614 A) The payments were made by way of consideration for allowing the to use a valuable right belonging to them viz. the brand name.
Such a payment may be liable to be scrutinised under sub section.
(2) of section 40 (A), but it certainly did not fall within the four corners of section 40(c).
(614 A) T.T. (Pvt.) Ltd. vs ITO Bangalore , approved.
CIT Patiale vs Avon Cycles (p) Ltd. and India Jute Co. Ltd. vs CIT , referred to. 2.
The power vested in the ITO is to determine whether any expenditure of allowance is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by the assessee or 608 accruing therefrom.
Any payment to a relative of a director or other persons mentioned in clause (c) will necessarily be examined applying the above test and if it is found that they are unwarranted, unreasonable or excessive, they will be disallowed.
Such a situation does not arise herein.
(615 C) CIT, Bombay vs M/s. Indian Engineering and Commercial Corporation (p) Ltd. [1983] distinguished.
JT 683. |
iminal Appeal No '400 of 1993.
From the Judgment land order dated 3.6.
1992 of the Punjab and Haryana High Court in Criminal Revision No. 443 of 1990.
P. Chadambaram, Mukul Rohtagi, Ms. Bina Gupta and Ms. Monika Mohil for the Appellants.
N.N. Goswamy, Y.D. Mahajan and N.D. Garg for the Respondent.
The Judgments of the Court were delivered by K. RAMASWAMYJ: Special leave granted.
The appellant, accused No. 2 in p.
(CBI) No. 40/2, dated February 18, 1985, F.I.R. No. RC No. 2 to 4/1983 dated March 4,1983 and P.S. SPE/CBI/CTU (E) I/New Delhi, Dist.
Delhi and four other namely, V.P. Anand, Baldev Raj Sharma, Bansi La] and Ranjit KumarMarwah are accused in the said case.
It is the prosecution case that the accused hatched a conspiracy at Chandigarh to cheat Punjab National Bank for short 'PNB '.
In furtherance thereof V.P. Anand floated three New Link Enterprises and M/s. Moonlight Industries in the name of Baldev Raj Sharms, his employee and M/s. Guru Nanak Industries in the name of Bansi Lal, yet another employee.
He opened current accounts in their respective names in the P.N.B. at Chandigarh.
In furtherance of the conspiracy and in confabulation with V.P. Anand, the appellant, Ajay Aggarwal, a non resident Indian at Dubai who is running M/s. Sales International, Dubai, agreed to and got credit facility by way of Foreign Letters of Credit Nos.
4069 p, 4070 p and 4084 p, issued proforma invoices of the said concern and addresses to PNB through Guru Nanak Industries and New Link Enterprises.
Ranjit Marwah, the 5th accused, Manager of P.N.B., In charge, of foreign exchange department confabulated with the accused, issued Foreign Letter of Credit in violation of import policy.
The Bills of Lading were addressed to PNB at Chandigarh.
The cable confirmation of P.N.B. was sent to M/ s Sales International by P.N.B., Chandigarh for confirmation of discrepancy.
The appellant had confirmed correctness thereof in the name of V.P. Anand.
Placing reliance thereon authority letter was issued by P.N.B., Chandigarh and cables were sent subsequent thereto to remit the amounts to Emirates National Bank Ltd. through Irving Trust Company.
V.P. Anand was present on September 16, 1981 at Dubai and at his instance the Emirats National Bank, Dubai informed the 551 P.N.B., Chandigarh that the discrepancy in the document adeptable to V.P. Anand and claimed to have inspected the goods on board in vessel, M.V. Atefeh.
On receipt of the information from the Sales International, Dubai, full amount in US Dollars 4, 39,200 was credited against all the three Letters of Credit on discount basis.
During investigation it was found that Vessel M.V. Atefeh was a nonexistent one and three Foreicn Letters of Credit were fabricated on the basis of false and forged shipping documents submitted by the appellant, Ajay Aggarwal to the Emirates National Bank, Dubai.
Thus the P.N. B. was cheated of an amount of Rs. 40,30,329.
Accordingly charge sheet was laid against the appellant.
and others for offences punishable under sections 120B read with Sections 420 (Cheating), 468 (Forgery) and 471 using as genuine (Forged documents), I.P.C.
The Chief Judicial Magistrate, Chandigarh by his order dated January 11, 1990 discharged all, the accused of the offences on the ground that conspiracy and the acts done in furtherance thereof had taken place outside India and, therefore the sanction under section 188 Criminal Procedure Code, 1973 for short the 'Code ' is mandatory.
Since no such sanction was produced the prosecution is not maintainable.
On revision, the High Court of Punjab and Haryana in Criminal Revision No. 443 of 1990 by order dated June 3, 1992 held, that the conspiracy had taken place at Chandigarh.
The overt acts committed in pursuance of that conspiracy at Dubai constituted offences under sections 420, 467 and 471, I.P.C., are all triable at Chandigarh without previous sanction of the central Govt.
The order of discharge, therefore, was set aside and the appellant and other accused were directed to be present through their counsel in person in the Trial Court on July 17,1992 to enable the court to take further proceedings in accordance with law.
This appeal has been filed by the appellant alone under article 136 of the constitution.
Sri Chidambaram, learned Senior counsel contended that the appellant was not a privy to the conspiracy.
He was an N.I.R. businessman at Dubai.
He never visited Chandigarh.
Even assuming for the sake of argument that conspiracy had taken place and all act committed in furtherance thereof were also at Dubai.
The transaction through, bank is only bank to bank transaction.
Even assuming that some of the offences were committed in India since as per the prosecution case itself that part of the conspiracy and related offences were committed at Dubai, by operation of Section 188 read with the proviso thereto with a non obstanti clause, absence of sanction by the Central Govt.
knocks of the bottom of the jurisdiction of the courts in India to take cognisance of or to enquire into of try the accused.
He placed strong reliance on 1.
Fakhrulla khan and Ors.
vs Emperor AIR 1935 Mad. 326, In re M.L. Verghese AIR 1947 MAD.
352, kailash Sharma vs State [1973] Crl.
Law Journal 1021 and K. Satwant Singh vs State of Punjab ; Sri Goswami, the learned senior counsel for the respondents contended that the conspiracy to cheat.
PNB was hatched at Chandigarh.
All the accused committed 552 overt acts in furtherance.
All the accused committed overt acts in furtherance on the conspiracy at Chandigarh and, therefore, the sanction of the Central Govt.
is not necessary.
The High Court had rightly recorded those findings.
There is no need to obtain sanction under section 188 of the Code.
The diverse contentions give rise to the primary question whether the sanction of the Central Govt.
as required under proviso to section 188 of the Code is necessary.
Section 188 of the Code reads thus "Offence committed outside India when an offence is committed outside India (a) by a citizen of India, whether on the high seas or elsewhere; or (b) by a person, not being such citizen, on any ship or aircraft registered in India, he may be dealt with in respect of such offence asif it had been committed at any place within India at which he may be found: Provided that, notwithstanding anything in any of the preceding sections of this Chapter, no such offence shall be inquired into or tried in India except.
with the previous sanction of the Central Government".
Section 3, IPC prescribes punishment of offences committed beyond, but which by law may be tried with, India, It provided that any person liable, by any Indian law, to be tried for an offence committed beyond India shall be dealt with according to the provisions of this Code for any act committed beyond India in the same manner as if such act had been committed within India.
Section 4 extends its territorial operation postulating that IPC shall apply to any offence committed by (1) any citizen of India in any place without any beyond India; (2) any person on any ship or aircraft registered in India wherever it may be.
Explanation in this section the word offence ' includes every act committed outside India which, if committed in India, would be punishable under this Code. 553 Illustration A, who is a citizen of India, commits a Murder in Uganda.
He can be tried and convicted of murder in any place in India in which he may be found.
The Code of Criminal Procedure extends to whole of India except the State of Jammu & Kashmir and except chapters 8, 10 and 11, the other provisions of the Code shall not apply to the State of Nagaland and to the tribal area.
However, the State Govt. has been empowered, by a notification, to apply all other provisions of the Code or any of them to the whole or part of the State of Nagaland and such other tribal areas, with supplemental, incidental or consequential modifications, as may be specified in the notification.
Therefore, the Code also has territorial operation.
The Code is to consolidate and amend the law relating to criminal procedure.
Section 188 was suitably amended pursuant to the recommendation made by the Law Commission.
Chapter VIII deals with jurisdiction of the courts in inquiries and trials.
Section 177 postulates that every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed but exceptions have been engrafted in subsequent sections in the Chapter.
Section 179 provides venue for trial or enquiry at the place where the act is done or consequences ensued.
So inquiry or trial may be had by a Court within whose local jurisdiction such thing has been done or such consequence has ensued.
Section 188 by fiction dealt offences conumitted by a citizen of India or a foreigner outside India or on high seas or elsewhere or on any ship or aircraft registered in India.
Such person was directed to be dealt with, in respect of such offences, as if be had committed at any place within India at which he may be found.
But the proviso thereto puts and embargo that notwithstanding anything in any of the preceding sections of this Chapter have been done such offences shall not be inquired into or tried in India except with the previous sanction of the Central Govt.
Judicial power of a State extends to the punishment of all offences against the municipal laws of the State by whomsoever committed within the territory.
It also has the power to punish all such offences wherever committed by its citizen.
The general principle of international law is that every person be it a citizen or foreigner who is found within a foreign State is subjected to, and is punishable by, its law.
Otherwise the criminal law could not be administered according to any civilised system of jurisprudence.
Sections 177 to 186 deal with the venue or the place of the enquiry or trial of crimes.
Section 177 reiterates the well established common law rule that the proper and ordinary situs for the trial of a crime is the area of jurisdiction in which the acts occurred and are alleged to constitute the crime.
But this rule is subject to several well recognised exceptions and some of those exceptions have been engrafted in subsequent sections in the chapter of the Code.
554 Therefore, the provisions in Chapter VIII are elastic and not peremptory.
In consequence there with Sections 218 to 223 of the code would also deal with exceptions engrafted in the Code.
Therefore, they do permit enquiry or trial of a particular offence along with other offences at a common trial in one court so that the court having jurisdiction to try an offence gets jurisdiction to try other offence committed or consequences thereof has ensued.
The procedure is hand maid to substantive justice, namely, to bring the offenders to justice to meet out punishment under IPC or special law as the case may be, in accordance with the procedure prescribed under the Code or special procedure under that Act constituting the offence.
The question is whether prior sanction of the Central Govt.
Is necessary for the offence of 'conspiracy under proviso to section 188 of the Code to take cognizance of an offence punishable under section 120 B etc.
I.P.C. or to proceed with trial.
In Chapter VA, conspiracy was brought on statute by the Amendment Act, 1913 (8 of 1913).
Section 120 A of the I.P.C. defines 'conspiracy ' to mean that when two or more persons agree to do, or cause to be done an ilegal act, or an act which is not illegal by illegal means such an agreement is designated as "criminal conspiracy".
No agreement except an agreement to commit an offence shall amount to a criminal conspiracy, unless some act besides the agreement is done by one or more parties to such agreement in furtherance thereof.
Section 120 B of the I.P.C. prescribes punishment for criminal conspiracy.
It is not necessary that each conspirator must know all the details or the scheme nor be a participant at every stage.
It is necessary that they should agree for design or object of the conspiracy.
Conspiracy is conceived as having three elements: (1) agreement (2) between two or more persons by whom the agreement is effected , and (3) a criminal object, which may be either the ultimate aim of the agreement, or may constitute the means, or one of the means by which that aim is to be accomplished.
It is immaterial whether this is found in the ultimate objects.
The common law definition of criminal conspiracy was stated first by Lord Denman in jones case that an indictment for conspiracy must "charge a conspiracy to do an unlawful act by unlawful means" and was elaborated by Willies, J. on behalf of the judges while referring the question to the House of Lords in Mulcahy vs Reg and the House of Lords in unanimous decision reiterated in Quinn vs Leathem ; at 528) as under: A conspiracy consists not merely in the intention of two or more, but in the agreement.
of two or more to do ,in unlawful act, or to do a lawful act by unlawful means.
So long as such a design rests in intention only it is not indictable, When two agree to carry it into 555 effect, the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable of for a criminal object or for the use of criminal means".
This Court in B. G. Barsay vs The State of Bombay [1962] 2 SCR at 229, held "The (list of the offence is an agreement to break the law.
The parties to such an agreement will be guilty of criminal conspiracy, though the illegal act agreed to be done has not been done.
So too, it is an ingredient of the offence that all the parties should agree to do a single illegal act.
It may comprise the commission of a number of acts.
Under section 43 of the Indian Penal Code, an act would be illegal if fit is an offence or if it is prohibited by law".
In Yashpal vs State of Punjab the rule was laid as follows "The very agreement, concert or league is the ingredient of the offence.
It is not necessary that all the conspirators must know each and every detail of the conspiracy as long as they are co participators in the main object of the conspiracy.
There may be so many devices and techniques adopted to achieve the common goal of the conspiracy and there may be division of performances in the chain of actions with one object to achieve the real end of which every collaborator must be aware and in which each one of them must be interested.
There must be unity of object or purpose but there may be plurality of means sometimes even unknown to one another, amongst the conspirators.
In achieving the goal several offences may be committed by some of the conspirators even unknown to the others.
The only relevant factor is that all means adopted and illegal acts done must be and purported to be in furtherance of the object of the conspiracy even though there may be sometimes misfire or over shooting by some of the conspirators".
In Mohammed Usman.
Mohammad Hussain Manivar & Anr.
vs State of Maharashtra ; , it was held that for an offence under section 120B IPC, the prosecution need not necessarily prove that the conspirators expressly 556 agreed to do or cause to be done the illegal act.
the agreement may be proved by necessary implication.
In Noor Mohammed Yusuf Momin vs State of Maharashtra ; , it was held that section 120 B IPC makes the criminal conspiracy as a substantive offence which offence postulates an agreement between two or more persons to do or cause to be done an act by illegal means.
If the offence itself is to commit an offence, no further steps are needed to be proved to carry the agreement into effect.
In R. K. Dalmia & Anr.
vs The Delhi Administration It 963] 1 SCR 253, it was further held that it is not necessary that each member of a conspiracy must know all the details of the conspiracy.
In Shivanarayan Laxminarayan & Ors.
State of Mahrashtra & Ors. , this court emphasized that a conspiracy is always hatched in secrecy and it is impossible to adduce direct evidence of the same.
The offence can be only proved largely from the inferences drawn from acts or illegal omission committed by the conspirators in pursuance of a common design.
The question then is whether conspiracy is continuing offence.
Conspiracy to commit crime it self is punishable as a substantive offence and every individual offence committed pursuant to the conspiracy is separate and distinct offence to which individual offenders are liable to punishment, independent of the conspiracy.
Yet, in our considered view, the agreement does not come to an end with its making, but would endure till it is accomplished or abandoned or proved abortive.
Being a continuing offence, if any acts or omissions which constitutes an offence, are done in India or outside its territory the conspirators continuing to be parties to the conspiracy and since part of the acts were done in India, they would obviate the need to obtain sanction of the Central Govt.
all of them need not be present in India nor continue to remain in India.
In lennart Schussler & Anr.
vs Director of Enforcement & Anr. ; , a Constitution Bench of this Court was to consider the question of conspiracy in the setting of the facts, stated thus "A. 2 was the Managing Director of the Rayala Corporation Ltd. Which manufactures Halda Typewriters.
A. 1 was an Export Manager of ASSAB.
A. 1 and A.2 conspired that A.2 would purchase material on behalf of his Company from ASSAB instead of M/s Atvidaberos, which provided raw material.
A.2 was to over invoice the value of the goods by 40 per cent of true value and that he should be paid the difference of 40 per cent on account of the aforesaid over invoicing by crediting it to A.2 's personal account at Stockholm in a Swedish Bank and requested A. 1 to help him in opening the account in Swenska Handles Banken, Sweden and to have further 557 deposits to his personal account from ASSAB.
A. 1 agreed to act as requested by A.2 and A.2 made arrangements with ASSAB to intimate to A. 1 the various amounts credited to A.2 's account and asked A. 1 to keep a watch over the correctness of the account and ' to further intimate to him the account position from time to time through unofficial channels and whenever A. 1 come to India.
A. 1 agreed to comply with this request.
This agreement was entered into between the parties in the year 1963 at Stockholm and again in Madras in the year 1965.
The question was whether Sec.
120 B of the Indian Penal Code was attracted to these facts".
Per majority, Jaganmohan Reddy, J. held that the gist of the offence defined in section 120 A IPC, which is itself punishable as a substantive offence is the very agreement between two or more persons to do or cause to be done an illegal act or legal act by illegal means, subject, however, to the proviso that where the agreement is not an agreement to commit an offence, the agreement does not amount to a conspiracy unless it is followed up by an overt act done by one or more persons in pursuance of such an agreement.
There must be a meeting of minds in the doing of the illegal act or the doing of a legal act by illegal means.
in furtherance of the conspiracy, certain persons are induced to do an unlawful act without the knowledge of the conspiracy or the plot they cannot be held to be conspirators, though they may be guilty of an offence pertaining to the specific unlawful act.
The offence of conspiracy is complete when two or more conspirators have agreed to do or cause to be done an act which is itself an offence, in which case no overt act need be established.
It was contended in that regard that several acts which constitute to make an offence under section 120 B may be split up in parts and the criminal liability of A. 1 must only be judged with regard to the part played by him.
He merely agreed to help A.2 to open an account in the Swedish Bank, having the amounts lying to the credit of A.2 with Atvidaberg to that account and to help A.2 by keeping a watch over the account.
Therefore, it does not amount to a criminal conspiracy.
While negating the argument, this court held thus: "It appears to us that this is not a justifiable contention, because what has to be seen is whether the agreement between A. 1 and A.2 is a conspiracy to do or continue to do something which is illegal and, if it is, it is immaterial whether the agreement to do any of the acts in furtherance of the commission of the offence do not strictly amount to an offence.
the entire agreement must be viewed as a whole and it has to be ascertained as to what in fact the conspirators intended to do or the object they wanted to achieve".
558 Thus, this court, though not in the context of jurisdictional issue, held that the agreement not illegal at its inception would become illegal by subsequent conduct and an agreement to do an illegal act or to do a legal act by illegal means, must be viewed as a whole and not in isolation.
It was also implied that the agreement shall continuing till the object is achieved.
The agreement does not get terminated by merely entering into an agreement but it continues to subsist till the object is either achieved or terminated or abandoned.
In Abdul Kader vs State AIR 1964 Bombay 133, a conspiracy was formed in South Africa by appellants to cheat persons by dishonestly inducing them to deliver money in the Indian currency by using forced documents and the acts of cheating were committed in India.
When the accused were charged with the offence of conspiracy, it was contended that the conspiracy was entered into and was completed in South Africa and, therefore, the Indian Courts had no jurisdiction to try the accused for the offence of conspiracy.
The Division Bench held that though the conspiracy was entered in a foreign country and was completed as soon as the agreement was made, yet it was treated to be a continuous offence and the persons continued to be parties to the conspiracy when they committed acts in India.
Accordingly, it was held that the Indian Courts had jurisdiction to try the offence of conspiracy.
In U.S. vs Kissal ; , Holmes, J. held that conspiracy is a continuous offence and stated "is a perversion of natural thought and of natural language to call such continuous co operation of a cinema to graphic series of distinct conspiracies rather than to call it a single one. a conspiracy is a partnership in criminal purposes.
That as such it may have continuation in time.
is shown by the rule that overt act by one partner may be the act of all without any new agreement specifically directed to that act".
In Ford vs U. section ; at 620 to 622, Tuft, C.J. held that conspiracy is a continuing offence.
In Director of public Prosecutions vs Door and Ors.
1973 Appeal Cases 807 (H.L.), the five respondents hatched a plan abroad, i.e. Belgium and Morocco and worked out the details to import cannabis into the United States via England, In pursuance thereof two vans with cannabis concealed in them were shipped from Morocco to Southampton; the other van was traced at Liverspool, from where the vans were to have been shipped to America and the cannabis in it was found.
They were charged among other offences with conspiracy to import dangerous drugs.
At the trial, the respondents contended that the Courts in England had no jurisdiction to try them on the count of conspiracy since the conspiracy had been entered into abroad.
While rejecting the contention, Lord Wilberforce held (at page 817) "The present case involves international elements the accused are 559 aliens and the conspiracy was initiated abroad but there can be no question here of any breach of any rules of international law if the) are prosecuted in this country.
Under the objective territorial principle ( use the terminology of the Harward Research in Inter national Law) or the principle of University (For the prevention of the trade in narcotics falls within this description)or both, the courts of this country have a clear right, if not a duty, to prosecute in accordance with our municipal law.
The position as it is under the international law it not, however, determinative of the question whether, unde r our municipal law, the acts committed amount to a crime.
That has to be decided on different principles.
If conspiracy to import drugs were a statutory offence, the question whether foreign conspiracies were included would be decided upon the terms of the statute.
Since it is (if at all) a common law offence, this question must be decided upon principle and authority In my opinion, the key to a decision for or against the offence charged can be found in an answer to the question why the common law treats certain actions as crimes.
And one answer must certainly be because the actions in question are a threat to the Queen 's peace or as we would now perhaps say, to society.
Judged by this test, there is every reason for, and none that I can see against, the prosecution.
Con spiracies are intended to be carried into effect, and one reason why, in addition to individual prosecution of each participant, conspiracy charges are brought is because criminal action organised and executed, in concert is more dangerous than an individual breach of law.
Why, then, restrain from prosecution where the relevant concert was, initially, formed outside the United Kingoom?.
The truth is that, in the normal case of a conspiracy carried out, or partly carried out, in this country, the location of the formation of the agreement is irrelevant; the attack upon the laws of this country is identical wherever the conspirators happened to commit; the "conspiracy" is a complex formed indeed, but not separately completed, at the first meeting of the plotters".
Viscount Dilhorne at page 823 laid the rule that: "a conspiracy does not end with the making of the agreement.
It will continue so long as there are two or more parties to it intending to carry out the design.
It would be highly unreal to say that the conspiracy to carry out the Gunpower plot was completed when the conspirators met and agreed to the plot at Catesby".
561 in my view, be considered contrary to the rules of international comity for the forces of law and order in England to protect the Queen 's peace by arresting them and putting them in trial for conspiracy whether they are British subjects or foreigners and whether or not conspiracy is a crime under the law of the country in which the conspiracy was born".
At page 835 it was held that the respondents conspired together in England notwithstanding the fact that they were abroad when they entered into the agreement which was the essence of the conspiracy.
That agreement was and remained a continuing agreement and they continued to conspire until the offence they were conspiring to commit was in fact committed.
Accordingly, it was held that the conspiracy, though entered into abroad, was committed in England and the courts in England and jurisdiction.
The ratio emphasizes that acts done in furtherance of continuing conspiracy constitute part of the cause of action and performance of it gives jurisdiction for English Courts to try the accused.
In Trecy vs Director of Public Prosecutions 1971 Appeal Cases 537 at 563 to ,(H. L.).
the facts of the case were that the appellant therein posted in the Isle of Wright a letter written by him and addressed to Mrs. X in West Germany demanding money with menaces.
The letter was received by Mrs. X in West Germany.
The appellant was charged with black mail indictable section 21 of the Theft Act, 1968.
While denying the offence, it was contended that the courts in England were devoted of jurisdiction.
Over ruling the said objection, Lord Diplock at page 562 observed: "The State is under a correlative duty to those who owe obedience to its laws to protect their interests and one of the purposes of criminal law is to afford such protection by determining by threat of punishment conducted by other persons which is calculated to hand to those interests.
Comity gives no right to a State to insist that any person may with immunity do physical acts in its own territory which have harmful consequences to persons within the territory of another state.
It may be under no obligation in comity to punish those acts itself, but it has no ground from complaint in international law if the State in which the harmful consequences had their effect punishes, when they do enter its territories, persons who did such acts".
Prof. Williams, Glanville in his article "Venue and the Ambit of Criminal Law at 528 stated thus: 562 "Sometimes the problem of determining the place of the crime is assisted by the doctrine of the continuing crime.
Some crimes are regarded as being of a continuing nature, and they may accordingly be prosecuted in any jurisdiction in which they are partly committed the partial commission being, in the eye of the law, a total commission '.
In the context of conspiracy under the caption inchoate crimes" It was stated: "The general principle seems to be that jurisdiction over an inchoate crime appertains to the State that would have had jurisdiction had the crime been consummated".
Commenting upon the ratio laid down in Board of Trade vs Owen [1957] Appeal Cases 602, he stated at page 534 thus "The seems to follow owen as logical corollary that our courts will assume jurisdiction to punish a conspiracy entered into abroad to commit a crime here.
Although the general principle is that crime committed abroad do not become punishable here merely because their evil effects occur here, there may be an exception for inchoate crimes aimed against persons in this country.
Since conspiracy is the widest and vaguest of the inchoate crimes, it seems clearly that the rule for conspiracy must apply to more limited crimes of incitement and attempt also".
At page 535 he further stated that "the rule of inchoate crimes is therefore an exception from the general principle of territorial jurisdiction.
The crime is wholly committed in the State A, yet is justiciable also in State B".
At page 535 he elucidated that "certain exceptions are recognised or suggested".
Lord Tucker in own 's case (supra) illustrated that a conspiracy D 2 England to violate the laws of a foreign country might be justiciable here if the preferments the conspiracy charged would produce a public mischief within the State or injure a person here by causing him damage, abroad".
At page 536 be stated that "as another exception from the rule in Board of, Trade vs Owen (supra it seems from the earlier decision that a conspiracy entered into here will be punishable if the conspirators contem plates that the illegality may be performed either within British jurisdiction or abroad even though, in the event, the illegality is performed abroad".
His statement of law now receives acceptance by House of Lords in Doot 's case.
563 In Halsbury 's Law of England, third edition, vol.
10, page 327, para 602, while dealing with continuing offence it was stated as under: "A criminal enterprise may consist of continuing act which is done in more places than one or of a series of acts which are done in several places.
In such cases, though there is one criminal enterprise, there may be several crimes, and a crime is committed in each place where a complete criminal act is performed although the act may be only a part of the enterprise".
It was further elucidated in para 603 that: "What constitutes a complete criminal act is determined by the nature of the crime.
Thus, as regards continuing acts, in the case of sending by post or otherwise a libellous or threatening letter, or a letter to provoke a breach of the peace, a crime is committed, both where the letter is posted or otherwise sent, and also where it is received, and the venue may be laid in either place.
Archbold in Criminal Pleadings, Evidence and Practice, 42nd edition (1985) Chapter 23, in para 28 32 at p. 2281, Wright on Conspiracies and Agreements at pages 73 74, Smith on Crimes at page 239 and Russel on Crime, 12th edition, page 613 stated that conspiracy is a continuing offence and liable to prosecution at the place of making the agreement and also in the country where the acts are committed.
Thus, an agreement between two or more persons to do an illegal act or legal acts by illegal means is criminal conspiracy.
If the agreement is not an agreement to commit an offence, it does not amount to conspiracy unless it is followed up by an overt act done by one or more persons in furtherance of the agreement.
The offence is complete as soon as there is meeting of minds and unity of purpose between the conspirators to do that illegal act or legal act by illegal means.
Conspiracy itself is a substantive offence and is distinct from the offence to commit which the conspiracy is entered into.
It is undoubted that the general conspiracy is distinct from number of separate offences committed while executing the offence of conspiracy.
Each act constitutes separate offence punishable, independent of the conspiracy.
The law had developed several or different models or technics to broach the scope of conspiracy.
One such model is that of a chain, where each party performs even without knowledge of other a role that aids succeeding parties in accomplishing the criminal objectives of the conspiracy.
An illustration, of a single conspiracy, its parts bound together as links in a chain, is 564 the process of procuring and distributing narcotics or an illegal foreign drug for sale in different parts of the (,lobe.
In such a case, smugglers, middlemen and retailers are privies to a single conspiracy to smuggle and distribute narcotics.
The smugglers knew that the middlemen must sell to retailers , and the retailers knew that the middlemen must buy of importers of someone or another.
Thus the conspirators at one end of the chain knew that the unlawful business would not, and could not, stop with their buyers, and those at the other end knew that it had not begun with their settlers.
The accused embarked upon a venture in all parts of which each was a participant and an abettor in the sense that, the success of the part with which he was immediately concerned, was dependent upon the success of the whole.
It should also be considered as a spoke in the hub.
There is a rim to bind all the spokes to gather in a single conspiracy.
It is not material that a rim is found only when there is proof that each spoke was aware of one another 's existence but that all promoted in furtherance of some single illegal objective.
The traditional concept of single agreement can also accommodate the situation where a well defined group conspires to commit multiple crimes so long as all these crimes are the objects of the same agreement or continuous conspiratorial relationship, and the conspiracy continues to subsist though it was entered in the first instance.
Take for instance that three persons hatched a conspiracy in country 'A ' to kill 'D ' in country 'B ' with explosive substance.
As far as conspiracy is concerned, it is complete in country 'A ' one of them pursuant thereto carried the explosive substance and hands it over to third one in the country 'B ' who implants at a place where 'D ' frequents and got exploded with remote control. 'D ' may be killed or escape or may be diffused.
The conspiracy continues till it is executed in country 'B ' or frustrated.
Therefore, it is a continuing act and all are liable for conspiracy in country 'B ' though first two are liable to murder with aid of section 120 B and the last one is liable under section 302 or 307 IPC, as the case may be.
Conspiracy may be considered to be a march under a banner and a person may join or drop out in the march without the necessity of the change in the text on the banner.
In the comity of International Law, in these days, committing offences on international scale is a common feature.
The offence of conspiracy would be a useful weapon and there would exist no conflict in municipal laws and the doctrine of autrefoes convict or acquit would extend to such offences.
The comity of nations are duty bound to apprehend the conspirators as soon as they set their feet on the country territorial limits and nip the offence in the bud.
A conspiracy thus, is a continuing offence and continues to subsist and committed wherever one of the conspirators does an act or series of acts.
So long aits performance continues, it is a continuing offence till it is executed or rescinded or frustrated by choice or necessity.
A crime is complete as soon as the agreement is made, but it is not a thing of the moment.
It does not end with the making of the 565 agreement.
It will continue so long as there are two or more parties to it intending to carry into effect the design.
Its continuance is a threat to the society against which it was aimed at and would be dealt with as soon as that jurisdiction can properly claim the power to do so.
The conspiracy designed or agreed abroad will have the same effect as in India, when part of the acts, pursuant to the agreement are agreed to be finalised or done, attempted or even frustrated and vice versa.
In K. Satwant Singh vs The State of Punjab ; , a Constitution Bench of this Court was to consider as to when section 188 of the Code would be applicable to a case.
The facts therein was that the appellant had cheated the Govt.
of Burma whose office was at Shimla punishable under section 420 IPC.
The accused contended that the part of the act was done at Kohlapur where payment was to be made and on that basis the court at Shimla had no jurisdiction to try the offence without prior sanction of the political agent.
Considering that question this court held that if the offence of cheating was committed outside British India, the sanction would be necessary but on facts it was held that: "It seems to us, on the facts established in this case, that no part of the offence of cheating was committed by the appellant outside British India.
His false representation to the Govt.
of Burma that money was due to him was at a place in British India which induced that govt.
to order payment of his claims.
In fact, he was paid at Lahore at his own request by means of cheques on the Branch of the Imperial Bank of India at Lahore.
The delivery of the property of the Govt.
of Burma, namely, the money, was made at Lahore, a place in Brithsh India, an d we cannot regard, in the circumstances of the present case, the posting of the cheques at Kohlapur either as delivery of property to the appellant at Kohlapur or payment of his claims at Kohlapur.
The entire argument founded on the provisions of section 188 of the Code, therefore, fails.
Far from helping the appellant the ratio establishes that if an offence was committed in India the need to obtain sanction under section 188 is obviated.
In Purshottamdas Dalmia vs Stale of West Bengal ; , this court, when the appellant was charged with offences punishable under sections 120B, 466 and 477, the appellant contended that offence of conspiracy was entered into at Calcutta the offences of using the forged documents was committed at Madras.
Therefore, the court at Calcutta had no jurisdiction to try the offence under section 471 read with section 466, EPC, even though committed in pursuance of the conspiracy and in course of the same transaction.
This court held that the desirability of trying the offences of alit 566 he overt acts committed in pursuance of a conspiracy together is obvious and sections 177 and 239 of the Code leave no manner of doubt that the court which has the jurisdiction to try the offence of criminal conspiracy has also the jurisdiction to try all the overt acts committed in pursuance of it even though outside its territorial jurisdiction.
In LN.
Mukherjee vs The State of Madras ; , it was further held that the court having jurisdiction to try the offences committed in pursuance of the conspiracy, has also the jurisdiction to try the offence of criminal conspiracy, even though it was committed outside its territorial jurisdiction.
This view was further reiterated in R.K. Dalmia vs Delhi Administration ; at 273 and Banwari Lal Jhunjhunwala and Ors.
vs Union of India and Anr.
1963] supp.
2 SCR 338.
Therein it was held that the court trying an accused for offence of conspiracy is competent to try him for offences committed in pursuance of that conspiracy irrespective of the fact whether or not overt acts have been committed within its territorial jurisdiction.
The charges framed therein under section 409 read with sections 120B, 420, IPC and section 5(1) (D) read with section 5(2) of the Prevention of Corruption Act were upheld.
Thus we hold that sanction under section 188 is not a condition precedent to take cognizance of the offence.
If need be it could be obtained before trial begins.
Conspiracy was initially hatched at Chandigarh and though itself is a completed offence, being continuing offence, even accepting appellant 's case that he was at Dubai and part of conspiracy and overt acts in furtherance thereof had taken place at Dubai and partly at Chandigarh; and in consequence thereof other offences had been ensued.
Since the.
offences have been committed during the continuing course of transaction culminated in cheating P.N.B. at Chandigarh, the need to obtain sanction for various offences under proviso to section 188 is obviated.
Therefore, there is no need to obtain sanction from Central Govt.
The case may be different if the offences were committed out side India and are completed in themselves without conspiracy.
Perhaps that question may be different for which we express no opinion on the facts of this case.
The ratio in Fakhruila Khan has no application to the facts in this case.
Therein the accused were charged for offences under section 420, 419, 467 and 468 and the offences were committed in native State, Mysore.
As a result the courts in British India i.e. Madras province had no jurisdiction to try the offence without prior sanction.
Equally in Verghese 's case the offences charged under section 409, IPC had also, been taken place outside British India.
Therefore, it was held that the sanction under s, 188 was necessary.
The ratio in Kailash Sharma 's case is not good at law.
The appeal is accordingly dismissed.
R.M. SAHAI J.
While agreeing with Brother Ramaswamy, J., I propose to add a few words.
Prosecution of the appellant under Section 120B read with Section 420 and 471 of the Indian Penal Code (in brief 'IPC ') was assailed for 567 absence of sanction under Section 188 of the Criminal Procedure Code (in brief 'Cr. P. C. ').
Two submissions were advanced, one that even though criminal conspiracy was itself an offence but if another offence was committed in pursuance of it outside India then sanction was necessary; second an offence is constituted of a number of ingredients and even if one of them was committed outside the country Section 188 of the Cr.
P.C. was attracted.
Language of the section is plain and simple.
It operates where an offence is committed by a citizen of India outside the country.
Requirements are, therefore, one commission of an offence; second by an Indian citizen; and third that it should have been committed outside the country.
Out of the three there is no dispute that the appellant is an Indian citizen.
But so far the other two are concerned the allegations in the complaint are that the conspiracy to forge and cheat the bank was hatched by the appellant and others in India.
Whether it was so or not, cannot be gone into at this stage.
What is the claim then? Two fold one the appellant was in Dubai at the relevant time when the offence is alleged to have been committed.
Second, since the bills of lading and exchange were prepared and were submitted to the Emirates National Bank at Dubai and the Payment too was received at Emirates National Bank in Dubai, the alleged offence of forgery and cheating were committed outside India.
Is that so? Can the offence of conspiracy or cheating or forgery on these allegations be said to have been committed outside the country? Substantive law of extra territory in respect of criminal offences is provided for by Section 4 of the IPC and the procedure to inquire and try it is contained the Section 188 Cr.
P.C. Effect of these sections is that an offence committed by an Indian citizen, outside the country is deemed to have been committed in India.
Proviso to Section 188 Cr.
P.C. however provides the safeguard for the NRI to guard against any unwarranted harassment by directing, "that, notwithstanding anything in any of the preceding sections of this Chapter, no such offence shall be inquired into or tried in India except with the previous sanction of the Central Government.
" Since the proviso begins with a non obstinate clause its observance is mandatory.
But is would come into play only if the principal clause is applicable, namely, it is established that an offence as defined in clause 'n ' of Section 2 of the Cr.
P.C. has been committed and it has been committed outside the country.
What has to be examined at this stage is if the claim of the appellant that the offence under Section 120B read with Section 420 and Section 471 of the IPC were committed outside the country.
An offence is defined in the Cr.
P.C. to mean an 568 act or omission made punishable by any law for the time being in force.
None of the offences for which the appellant has been charged has residence as one of its ingredients.
The jurisdiction to inquire or try vests under Section 177 in the Court in whose local jurisdiction the offence is committed.
It is thus the commission of offence and not the residence of the accused which is decisive of jurisdiction.
When two or more persons agree to do or cause to be done an illegal act or an act which is illegal by illegal means such agreement is designated a criminal conspiracy under Section 120A of the IPC.
The ingredients of the offence is agreement and not the residence.
meeting of minds of more than two persons is the primary requirement.
Even if it is assumed that the appellant was at Dubai and he entered into an agreement with his counterpart sitting in India to do an illegal act in India the offence of conspiracy came into being when agreement was reached between the two.
The two minds met when talks oral or in writing took place in India.
Therefore, the offence of conspiracy cannot be said to have been committed outside the country.
In Mobarik Ali Ahmed vs The State of Bombay. ; this court while dealing with the question of jurisdiction of the Courts to try an offence of cheating committed by a foreign national held that the offence of cheating took place only when representation was made by the accused sitting in Karachi to the complaints sitting in Bombay.
The argument founded on corporeal presence was rejected and it was observed: "What is, therefore, to be seen is whether there is any reason to think that a foreigner not corporeally present at the time of the commission of the commission of the offence does not fall within the range of persons punishable therefor under the Code.
It appears to us that the answer must be in the negative unless there is any recognised legal principle on which such exclusion can be founded or the language of the Code compels such a construction".
If a foreign national is amenable to jurisdiction under Section 179 of the Cr.
P.C. a NRI cannot claim that the offence shall be deemed to have been committed outside the country merely because he was not physically present.
Preparation of bill of lading at Dubai or payment at Dubai were not isolated acts.
They were part of chain activities between the appellant and his associates with whom he entered into agreement to cheat the bank at Chandigarh.
Any isolated act or omission committed at Dubai was insufficient to constitute an offence.
The illegal act of dishonestly inducing the bank at Chandigarh was committed not by preparation of bill at Dubai but its presentation in pursuance of agreement to cheat.
The submission thus founded was on residence or on preparation of bills of lading or encashment at Dubai are of no consequence.
569 Nor is there any merit in the submission that even part of the offence would attract Section 189 as the section operates when offence is committed outside India.
An offence is committed when all the ingredients are satisfied.
The section having used the word offence it cannot be understood as part of the offence.
Section 179 Cr.
P.C. empowers a court to try an offence either at a place where the offence is committed or the consequences ensue.
On the allegations in the complaint the act or omissions were committed in India.
In any case the consequence of conspiracy, cheating and forging having taken place at Chandigarh the offence was not committed outside the country therefore the provisions of Sec.
188 Cr.
P.C. were not attracted.
ORDER For reasons given by us in our concurring but separate orders the appeal fails and is dismissed.
Parties shall bear their own costs.
Appeal dismissed. | The prosecution case was that the appellant, a non resident Indian at Dubai, hatched a conspiracy along with four others to cheat the Bank at Chandigarh.
in furtherance of the conspiracy, the appellant got credit facility by way of Foreign Letters of Credit and issued proforma invoices of his concern and addressed to the Bank through the establishments of other accused.
The Manager of the Bank, another accused, in confabulation with 544 the appellant and other accused, being in charge of foreign exchange department, issued Foreign letter of Credit in violation of import policy.
The Bills of Lading were addressed to the Bank.
The cable confirmation of the Bank was sent to appellant 's concern at Dubai for confirmation of discrepancy.
The appellant confirmed correctness thereof.
Placing reliance thereon, authority letter was issued by the Bank and cables were sent subsequent thereto to remit the amount .
to the Dubai Bank through one Irving Trust Company, At the instance of accused Anand, The Dubai Bank informed the Bankat Chandigarh that the discrepancy in the document adaptable to accused Anand and claimed to have inspected the goods on board in the vessel.
On receipt of the information from the appellant 's concern at Dubai, full amount is US Dollars 4,39,200 was credited against all the three Letters of Credit on discount basis.
The investigation established that the vessel was a non existent one and three Foreign Letters of Credit were fabricated on the basis of false and forged shipping documents submitted by the appellant to the Dubai Bank.
Thus the Bank at Chandigarh was cheated of an amount of Rs. 40,30,329.
The accused were charge sheeted under section read with sections 420, 468, and 471, IPC.
The Trial Court discharged all the accused of the offenses on the ground that conspiracy and the acts done in furtherance thereof had taken place outside India and as no sanction under section 188, Code of Criminal Procedure 1973 was produced, the prosecution was not maintainable.
The High Court in revision held that the conspiracy took place at Chandigarh and the overt acts committed In pursuance of that conspiracy at Dubai constituted offences under sections 420,467 and 471 IPC., and they were triable at Chandigarh without previous sanction of the Central Govt.
The High Court setting aside the order of discharge of the trial Court, directed to continue further proceedings in accordance with law.
That order of the High Court was challenged under this appeal under Article 136 of the Constitution.
The appellant contended that he was not a privy to the conspiracy and the conspiracy did not take place at Chandigarh; and that even assuming that some of the offences were committed in India, by operation of section 188 read with the proviso thereto with a non obstanti clause, absence of sanction by the 545 Central Govt.
barred the jurisdiction of the Courts in India to take cognisance of or to enquire into or try the accused.
The respondents submitted that the conspiracy to cheat the Bank was hatched at Chandigarh; that all the accused committed over acts in furtherance of the conspiracy at Chandigarh and therefore, the sanction of the Central Govt.
was not necessary.
Dismissing the appeal, this Court, HELD: Per K. Ramaswarmy, J. 1.01.
Judicial power of a State extends to the punishment of all offences against the municipal laws of the State by whomsoever committed within the territory.
It also has the power to punish all such offences wherever committed by its citizen.
The general principle of international law is that every person be it a citizen or foreigner who is found within a foreign State is subjected to, and is punishable by, its law.
Otherwise the criminal law could not be administered according to any civilised system of jurisprudence.
(553F) 1.02.
Conspiracy may he considered to be a march under a banner and a person may join or drop out in the march without the necessity of the change in the text on the banner.
In the comity of International Law, in these days, commiting offences on international scale is a common feature.
The offence of conspiracy would be a useful weapon and there would exist no contact in municipal laws and the doctrine of autrefois convict or acquit would extend to such offences.
The comity of nations are duty bound to apprehend the conspirators as soon as they set their feet on the country territorial limits and nip the offence in the bud.
(564 F G) 2.01.
Section 120 A of the I.P.C. defines 'conspiracy ' to mean that when two or more persons agree to do, or cause to be done an illegal act, or an act which is not illegal by illegal means such an agreement is designated as criminal conspiracy".
No agreement except an agreement to commit an offence shall amount to a criminal conspiracy, unless some act besides the agreement is done by one or more parties to such agreement in furtherance thereof.
(557 C) 546 2.02.
Section 120 B of the I.P.C. prescribes punishment for criminal conspiracy.
It is not necessary that each conspirator must know all the details of the scheme nor be a participant at every state.
It is necessary that they should agree for design or object of the conspiracy.
Conspiracy is conceived as having three elements: (1) agreement (2) between two or more persons by whom the agreement is effected; and (3) a criminal object, which may be either the ultimate aim of the agreement, or may constitute the means, or one of the means by which that aim is to be accomplished.
It is immaterial whether this is found in the ultimate objects.
(554 E) 2.03.
Conspiracy to commit a crime itself is punishable as a substantive offence and every individual offence committed pursuant to the conspiracy is separate and distinct offence to which individual offenders are liable to punishment, independent of the conspiracy.
(556 D) 2.04.
The agreement does not come to an end with it .
making, but would endure till it is accomplished or abandoned or proved abortive.
Being a continuing offence, if any acts or omissions which constitute an offence are done in India or outside its territory the conspirators continuing to be parties to the conspiracy and since part of the acts were done in India, they would obviate the need to obtain sanction of the Central Govt.
All of them need not he present in India nor continue to remain in India.
(556 E) 2.05.
An agreement between two or more persons to do an illegal act or legal acts by illegal means is criminal conspiracy.
If the agreement is not an agreement to commit an offence, it does not amount to conspiracy unless it is followed up by an overt act done by one or more persons in furtherance of the agreement.
The offence is complete as soon as there is meeting of minds and unity of purpose between the conspirators to de that illegal act or legal act by illegal means.
Conspiracy itself is a substantive offence and is distinct from the offence to commit which the conspiracy is entered into.
It is undoubted that the general conspiracy is distinct from number of separate offences committed while executing the offence of conspiracy.
Each act constitutes separate offence punishable, independent of the conspiracy.
(563 F G) "Jones 'Case, 1832 B & A D 345; Mulcahy vs Reg., (1868) L.R. ; Quinn vs Leathem, ; at 528; B.G. Barsay.
vs The State of Bombay, ; Yashpal vs The State of Punjab, ; Mohammed Usman, Mohamned Hussain Manivar & Anr.v.
State of Maharashtra, [1981] 3SCR 68;Noor 547 Mohammad Yasuf Monin vs State of Maharashtra, ; ; R.K. Dalmia & Anr.
vs The Delhi Administration, ; ; Shivanarayan Laxminarayan & Ors.
vs State of Maharashtra & Ors.
and Lennari Schussler & Anr.
vs Director of Enforcement & Anr., 1197012SCR 760, referred to. 2.06.
A conspiracy is a continuing offence and continues to subsist and committed wherever one of the conspirators does an act or series of facts.
So long as it ; performance continues, it is a continuing offence till it is executed or rescinded or frustrated by choice or necessity A crime is complete as soon as the agreement is made, but it is not a thing of the moment It does not end with the making of the agreement.
It will continue so long as there are two or more parties to it intending to carry into effect the design.
Its continuance is a threat to the society against which it was aimed at and would be dealt with as soon as that jurisdiction can properly claim the power to do so.
The conspiracy designed or agreed abroad will have the same effect as in India,.
when part of the acts, pursuant to the agreement are agreed to be finalised or done, attempted or even frustrated and vice versa.
(564 H, 565 A) Abdul Kader vs State.
AIR 1964 Bombay 133; U.S. vs Kissal, ; ; Ford vs U.S., ; at 620 to 622; Director of Public Prosecutions vs Doot and Ors., (1973) Appeal Cases 807 (H.L); Treacy vs Director of Public Prosecutions, (1971) Appeal Cases 537 at 563 (H.L.) and Board of Trade vs Owen.
(1957) Appeal Cases 602, referred to.
Prof. Williams, Glanville: "Vanue and the Ambit of Criminal Law", at 528; Halsbury 's Law of England, third edition Vol.
page 327, Para 6O2; Archobold:Criminal pleadings.
Evidence and Practice 42nd edition, [1985] Chapter 23, In para 28 32 at page 2281; Writ: Conspiracies and Agreements, at pages 73 74; Smith: Crimes, at page 239 and Russel; Crime, 12th edition, page 613, referred to. 2.07.
Sanction under section 188 is not a condition precedent to take cognizance of the offence.
If need be it could he obtained before trial begins.
Conspiracy was initially hatcher at Chandigarh and though its elf is a completed offence, being continuing offence, even accepting appellant 's case that he was at Dubai and part of conspiracy and overt acts in furtherance 548 thereof had taken place at Dubai and partly at Chandigar and in consequence thereof other offences had been ensued.
Since the offences have been committed during the continuing course of transaction culminates in cheating P.N.B. at Chandigarh, the need to obtain sanction for various officer under proviso to section 188 is obviated.
Therefore, there is no need to obtain sanction from Central Govt.
The case may he different if the offences were committed out side India and are completed in themselves without conspiracy.
(566 D E) K. Satwant Singh vs The State of Punjab, ; ; In Re M. L Verghese, AIR 1947 Mad. 352; T. Fakhulla Khan and Ors.
vs Emperor, AIR 1935 Mad. 326; Kailash Sharma vs State, 1973 Crl.
law journal 1021, distinguished.
Purshottamdas Dalmia vs State of Bengal, ; ; L.N. Mukherjee vs The State of Madras, ; ; R.K. Dalmia vs Delhi Administration ; at 273; Banwari Lal Jhunjhunwala and Ors vs Union of India and Anr., [1963] Supp. 2 SCR 338, referred to.
Per R.M. Sahai, J. (Concurring) 1.1.
Language of the section 188, Code of Criminal Procedure is plain and simple.
It operates where an offence is committed by a citizen of India outside the country.
Requirements are, therefore, one commission of an offence; second by an Indian citizen; and third that it should have been committed outside the country.
(567 D) 1.2.
Substantive law of extra territory in respect of criminal offences is provided for by Section 4 of the IPC and the procedure to inquire and try it is contained in Section 1 88 Cr.
P.C. Effect of these sections is that an offence committed by an Indian citizen outside the country is deemed to have been committed in India.
(567 E) 1.3.
Since the proviso to Section 188, Cr.
P.C. begin .
with a non obstinate clause its observance is mandatory.
But it would come into play only if the principal clause is applicable, namely, it is established that an offence as defined in dause 'n 'of Section 2 of the Cr.
P.C. has been committed and it has been committed outside the country.
(567 G) 549 1.4.
What has to be examined at this stage is if the claim of the appellant that the offence under Section 120B read with Section 420 and Section 471 of the IPC were committed outside the country.
An offence is deemed in the Cr.
P.C. to mean an Act or omission made punishable by any law for the time being in force.
None of the offences for which the appellant has been charged has residence as one of its ingredients.
(567 H, 568 A) 1.5.
The jurisdiction to inquire or try vests under Section 177 in the Court in whose local jurisdiction the offence is committed.
It is thus the commission of offence and not the residence of the accused which is decisive of jurisdiction.
When two or more persons agree to do or cause to be done an illegal act or an act which is illegal by illegal means such agreement is designated a criminal conspiracy under Section 120A of the IPC.
The ingredients of the offence is agreement and not the residence.
Meeting of minds of more than two persons is the primary requirement Even if it is assumed that the appellant was at Dubai and he entered into an agreement with his counterpart sifting in India to do an illegal act in India the offence of conspiracy came into being when agreement was reached between the two.
The two minds met when talks oral or in writing took place in India.
Therefore, the offence of conspiracy cannot be said to have been committed outside the country.
(568 B C) 1.6.
If a foreign national is amenable to jurisdiction under Section 179 of the Cr.
P.C. a NRI cannot claim that the offence shall be deemed to have been committed outside the country merely because he was not physically present (568 F) Mobarik Ali Ahmed vs The State of Bombay, ; , referred to.
An offence is committed when all the ingredients are satisfied.
The section having used the word 'offence ' it cannot be understood as part of the offence.
Section 179 Cr.
P.C. empowers a court to try an offence either at a place where the offence is committed or the consequences ensue.
On the allegations in the complaint the act or omissions were committed in India.
In any case the consequence of conspiracy, cheating and forging having taken place at Chandigarh the offence was not committed outside the country therefore the provisions of Sec.
188 Cr.
P.C. were not attracted.
(569 B) |
Appeal No.241 of 1993.
From the Judgment and Order dated 9.10.1991 of the Punjab and Haryana High Court in Civil Writ Petition No. 5727 of 1991.
Harish N. Salve Jagdish Singh Kuhar, and A.K. Mahajan for the Appellant.
Ujagar Singh, Ms. Naresh Bakshi R.S. Yadav and G.K. Bansal for the Respondents.
The Judgment of the Court was delivered by S.C. AGRAWAL ,J.
: This appeal relates to the inter se seniority of the appellant and respondent No. 3 in the punjab Superior Judicial Service (hereinafter referred to as 'The Service ').
The appellant and respondent No. 3 were both appointed to the Service on May 26, 1986 on the basis of selection by direct recruitment.
The appellant belongs to the general category whereas respondent No. 3 is a Mazhbi Sikh, which is a Schedule Caste in Punjab.
The recruitment to the Service is governed by Punjab Superior Judicial Service Rules, 1963 (hereinafter referred to as 'The Rules ').
By Rule 8 A, which was inserted in the rules by notification dated June 14,1977, the instructions issued by the State Government from time to time in relation to reservation of appointments or posts for Scheduled Castes and Backward Classes were made applicable for the purpose of making appointments to the posts in the Service.
The orders of the State Government relating to persons belonging to Scheduled Castes in this regard which have a bearing in this appeal are as follows (1) Letter dated June 6, 1974 from the Secretary to the Government of Punjab, Welfare of Scheduled Castes and Backward Classes Department to all Heads of Department etc.
It was communicated that it had been decided to increase the percentage of reservation in direct recruitment in all services from 20% to 25% in the case of members of Scheduled Castes and from 2% to 5% in the case of members belonging to Backward Classes.
In the said letter, it was also indicated 599 that the vacancies to be reserved for the members of Scheduled Castes in a lot of 100 vacancies would be at the points specified below 1, 5, 9, 13, 17, 21, 25, 29, 33, 37, 41, 45, 49, 53, 57, 61, 65, 69, 73, 77, 8 1, 85, 89, 93 and 97 and so on.
It was also directed that the Roster already existing would not be abondoned, but would now be maintained in continuation from the vacancy in the existing Roster last filled up according to the new pattern of reservation that has been prescribed in the earlier paragraphs in the said letter.
(2) Circular dated November 19,1974 relates to carrying forward of reservation for members of Scheduled Castes/Backward Classes.
It was directed that "the reservation should be carried forward from vacancy to vacancy in the same block until a Scheduled Caste or a Backward Class person, as the case may be, is appointed or promoted in the same block.
It was further directed that if all the vacancies in any block determined on the basis of prescribed Roster are filled up by other category person due to non availability of Scheduled Castes or Backward Classes persons, the reservation should be carried forward to the subsequent blocks.
The said letter required that the reservation should be carried forward from vacancy to vacancy in each block and from block to block until the carried forward vacancies are filled up by the members of the Scheduled Castes or Backward Classes.
It was also provided that only one reserved vacancy out of the carried forward vacancies should be filled in a block of appropriate Roster in addition to the normal reserved point of the block.
(3) Letter dated May 5, 1975, from the Secretary to the Government, Punjab, Welfare of Scheduled Castes & Backward Classes Department addressed to all Heads of Departments etc.
It was communicated that the Government have decided that henceforth, 50% vacancies of the quota reserved for Scheduled Casstes should be offered to Balmikis and Mazhbi Sikhs, if available, as a first preference from amongst the Scheduled Castes candidates.
(4) Letter dated.
April 8, 1980 addressed by the Under Secretary to the Government of Punjab, Welfare Department Reservation Cell, to all Heads of Departments etc.
The position with regard to the implementation of instructions regarding reservation for Mazhbi Sikhs and Balmikis under the letter dated May 5, 1975 was clarified as follows "i) Combined merit list can be disturbed while giving appointment 600 to the candidate belonging to Balmikis and Mazhbi Sikhs.
ii) On the basis of 50% reservation the first reserved vacancy can be offered to Balmikis and Mazhbi Sikhs although his name may be below in the merit list.
iii)On the basis of 50% reservation, Balmikis and Mazhbi Sikhs 1, 3, 5 and so on reserved vacancies shall go to the candidates of these castes if available and 2,4, 6 and so on reserved vacancies shall go to other Scheduled Castes candidates.
It is clarified here that these instructions are to be implemented when the names of the candidates of Balmikis and Mazhbi Sikhs are included in the merit list after selection.
If no candidate belonging to these communities has been selected or less candidate selected then the reserved vacancy should be filled up from amongst the other Scheduled Castes candidates meaning thereby no reserve vacancy reserved for Balmkis and Mazhbi Sikhs should be carried forward." After the introduction of Rule 8 A in the Rules, four persons were appointed by way of direct recruitment to the Service in the year 1979.
One out of them, Shri Balwant Rai, belonged to a Scheduled Caste (other than Balmikis or Mazhbi Sikhs).
Thereafter, in 1981, one post fell vacant but no person belonging to a Scheduled Caste 'could be selected and the candidate belonging to general category was appointed against the said post.
In the year 1982, selection was made for two posts but only one person could be selected and he also belonged to the general category and no person belonging to a Scheduled Caste was available for appointment.
In 1986, six persons including the appellant and respondent No.3 were appointed on the basis of direct recruitment.
Out of those six persons, four belonged to the general category and two belonged to Scheduled Caste.
One of the two persons was Shri G.S. Sarma who belonged to a Scheduled Caste other then Balmikis or Mazhbi Sikhs.
In the merit list for the said selection the appellant was placed at No. 1, Shri G.S. Sarma was at No. 2 and respondent No. 3 was at No. 5.
As per the Roster, Shri G.S. Samra was placed at Point No.7, the appellant at Point No.8 and respondent No. 3 at Point No. 9.
After joining the Service, Shri G.S. Samra resigned from the same and had ceased to be a member of the Service prior to April 1, 1988.
In the tentative seniority list of the members of the Service as on April 1, 601 1988, the appellant was placed at Serial No. 52 and respondent No. 3 was placed at Serial No.53.
Respondent No.3 submitted a representation against his placement in the seniority list and claimed that he should be placed against the post reserved for Scheduled Caste at Serial No. 5 in the Roster and on that basis he should be given the seniority of the year of 198 1.
He also submitted that since he is a Mazhbi Sikh, he is entitled to preference over Shri G.S. Samra who belonged to a Scheduled Caste other than Balmikis and Mazhbi Sikhs, and he claimed that he should have been placed at Point No.7 in the Roster and Shri G.S. Samra should have been placed at Point No. 9 and on that basis also respondent No. 3 is senior to the appellant.
Representation was also invited from the appellant.
in this regard.
After considering the said representations the High Court, on its administrative side, decided that the respondent No. 3 was entitled to be placed above Shri G.S. Samra in view of the Circular Letter dated May 5, 1975 and that he should have been placed against Point No. 7 in the roster and Shri G.S. Samra should have been placed against Point No.9 in the Roster.
On that basis the seniority list was revised and respondent No.3 was placed at Serial No. 52 while the appellant were placed at Serial No. 53.
Feeling aggrieved by the revision in the seniority, the appellant filed a writ petition in the High Court which was dismissed by the High Court by judgment and order October 9, 199 1.
This appeal is directed against the said judgment of the High Court.
There is no dispute that appellant has been rightly assigned Point No. 8.
If Respondent No. 3 has to be assigned Point No.7 as found by the High Court, then he would be senior to the appellant but if Respondent No. 3 is assigned Point No. 9 then appellant would be senior to Respondent No. 3 It is, therefore, necessary to determine whether respondent No. 3 is entitled to be placed at Point No. 7 in the Roster in place of Shri G.S. Samra who should be placed at Point No.9 or that the respondent no.3 should be assigned Point No.9 of the Roster.
The said question requires consideration of the various orders relating to reservation for Scheduled Castes to which reference has been made earlier.
As indicated earlier by letter dated June 6, 1974 points 1, 5, 9, 13, 17, 21, 25, 29, 33, 37,41, 45, 49, 53, 57, 6 1, 65, 69, 73, 77, 81, 85, 89, 93 and 97 in the Roster are reserved for members of Scheduled Castes.
By letter dated May 5, 1975, 50% of the vacancies of the quota reserved for Scheduled Castes are required to be offered to Balmikis and Mazhbi Sikhs, if available, as a first preference from amongst the Scheduled Castes candidates.
In view of the clarifications contained in the letter dated April 8, 1980 on the basis of 50% reservation the first reserved vacancy can be offered to Balmikis and Mazhbi Sikhs although his name may be below in the merit list and on the basis of 50% reservation, amongst the vacancies reserved for Scheduled Caste, vacancies 1, 3, 5 and so on would go to Balmikis and Mazhbi Sikhs, if available, and reserved vacancies 2, 4, 6 and so on would go to other Scheduled 602 Castes candidates.
It has also been clarified that if no candidate belonging to the communities of Balmikis and Mazhbi Sikhs was selected or less number of candidates were selected then the reserved vacancies should be filled up amongst the other Scheduled Castes candidates and that no vacancy reserved for Balmikis and Mazhbi Sikhs should be carried forward.
In view of the aforesaid clarifications out of the posts reserved for Scheduled Castes in the Roster, there was reservation for Balmikis and Mazhbi Sikhs on the posts against the following points in the Roster 1, 9, 17, 25, 33, 41, 49, 57, 65, 73, 81, 89, and 97.
There was reservation for members of Scheduled Castes other than Balmikis and Mazhbi Sikhs on the posts against the following points in the Roster: 5, 13, 21, 29, 37, 45, 53, 61, 69, 77, 85, and 93.
The learned counsel for the appellant has urged that since these orders relating to reservation for Scheduled Castes became applicable to the Service with effect from June 14, 1977, when Rule 8 A was inserted, all appointments to the Service after June 14, 1977 have to be made in accordance with these orders.
The submission is that the first appointment, by direct recruitment, of a person belonging to the Scheduled Castes was of Shri Balwant Rai made in 1979.
That was at point No. 1 in the Roster.
That should have gone to a Balmiki or a Mazhbi Sikh but since no person belonging to those communities was available, Shri Balwant Rai, who belongs to a Scheduled Caste other than Balmikis and Mazhbi Sikhs, was appointed.
It has been further urged that in view of the clarification contained in the letter dated April 8.
1980, a vacancy reserved for Balmikis and Mazhbi Sikhs is not required to be carried forward and the Balmikis and Mazhbi Sikhs cannot claim reservation in respect of the next vacancy at Point No. 5 which was reserved for Scheduled Castes other than Balmikis and Mazhbi Sikhs and they can only claim the vacancy that was reserved for Balmikis or Mazhbi Sikhs at point No.9.
It was submitted that Shri G.S. Samra who belonged to a Scheduled Caste other than Balmikis and Mazhbi Sikhs was entitled to be appointed against the reserved vacancy at Point No.5 reserved for a candidate belonging to a Scheduled Caste other than Balmikis and mazhbi Sikhs but since at the time of selections that were made in the years 1981 and 1982, no person belonging to a Scheduled Caste was available.
The vacancy at Point No. 5 reserved for Scheduled Castes was carried forward to point No. 7 and Shri G.S. Samra had to be adjusted at point No.7 in the Roster.
The submission is that respondent No. 3, being a Mazhbi Sikh, could not claim to be placed at point No. 7 in the Roster against a vacancy which was reserved for a candidate belonging to a Scheduled Castes other than Balmikis and 603 Mazhbi Sikhs and he could be only placed against the vacancy at point No.9 in the Roster.
The learned counsel for the respondent No.3 on the other hand has urged that in view of the order dated May 5, 1975, 50% vacancies of the quota reserved for Scheduled Castes have to be offered to Balmikis and Mazhbi Sikhs and since Shri Balwant Rai belonging to a Scheduled Caste other than Balmikis and Mazhbi Sikhs had been appointed in 1979, the next post should go to Balmikis and Mazhbi Sikhs, and on that basis, respondent No.3 was entitled to be appointed against the second post at point No. 7 of the Roster and Shri G.S. Samra could only be appointed against third post at point No.9 in the roster.
In the alternative, it was urged that the order dated April 8, 1980 could only have prospective operation with effect from the date of issue of the said order and the sub roster indicated by the said order could be given effect to only from that date and on that basis the first post reserved for Scheduled Castes should go to Balmikis or Mazhbi Sikhs and on that basis also respondent No.3 was entitled to be placed against point No.7 in the 100point roster and Shri G.S. Samra against point No.9 in the said roster.
From a parusal of the letter dated April 8,1980, we find that it gives clarifications on certain doubts that had been created by some Departments in the matter of implementation of the instructions contained in the earlier letter dated May 5,1975.
Since the said letter dated April 8,1980 is only clarificatory in nature, there is no question of its having an operation independent of the instructions contained in the letter dated May 5, 1975 and the clarifications contained in the letter dated April 8, 1980 have to be read as a part of the instructions contained in the earlier letter dated May 5, 1975.
In this context it may be stated that according to the principles of statutory construction a statute which is explanatory or clarificatory of the earlier enactment is usually held to be restrospective.
(See: Craies on Statute Law, 7th Ed., p. 58).
It must, therefore, be held that all appointments against vacancies reserved for Scheduled Castes made after May 5, 1975 (after May 14, 1977 in so far as the Service is concerned), have to be made in accordance with the instructions as contained in the letter dated May 5, 1975 as clarified by letter dated April 8, 1980.
On that view, the appointment of Shri Balwant Rai in 1979 has to be treated to be an appointment made under the said instructions and operation of these instructions cannot be postponed till April 8, 1980.
If the matter is considered in this light then the sub roster as indicated in the letter dated April 8, 1980 would have to be applied in respect of the post on which Shri Balwant Rai was appointed in 1979 and the said appointment has to be regarded as having been made against the vacancy at point No 1.
in the the roster which was reserved for Balmikis or Mazhbi Sikhs but since no Balmiki or Mazhbi 604 Sikh was selected for that post, the said vacancy was assigned to Shri Balwant Rai who belonged to a scheduled Caste other than a Balmiki or Mazhbi Sikh.
The said vacancy which was reserved for Balmikis or Mazhbi Sikhs could not be carried forward in view of the directions contained in the letter dated April 8, 1980.
The next post reserved for Scheduled Castes at point No. 5 in the roster was meant for a person belonging to a Scheduled Caste other than Balmikis and Mazhbi Sikhs.
In the selections that were made in 1981 and 1982 no person belonging to a Scheduled Caste was selected and, therefore, posts at Points nos.
5 and 6 in the Roster became available to candidates in the general category and the vacancy at Point no.5 reserved for Scheduled Castes was carried forward to point No.7 In 1986, two persons belonging to Scheduled Castes, namely Shri G.S. Samra and respondent No.3 were selected.
Shri G.S. Samra belonged to a Scheduled Caste other than Balmiki and Mazhbi Sikh whereas respondent No. 3 was a Mazhbi Sikh.
Since the post at point No.5 which had been carried forward to point No.7 was reserved for a candidate belonging to a Scheduled Caste other than Balmiki or Mazhbi Sikh it had to be assigned to Shri G.S. Samra falling in that category and respondent No. 3 who was a azhbi Sikh could only be appointed against the reserved vacancy at point No.9 in the Roster.
Respondent No. 3 can not claim that the vacancy at Point No.7 should be assigned to him.
If respondent No.3 is adjusted against the vacancy at Point No. 9 in the Roster, he has to be placed in seniority below the appellant who was appointed against point No. 8 in the Roster.
In the judgment under appeal, the High Court has placed reliance on the instructions dated March 6, 1961 and the decision of this Court in Jagjit Singh vs State of Punjab, ; The instructions dated March 6, 1961 deal with a situation where the services of a Government Servant belonging to Scheduled Castes/Tribes and Backward Classes are terminated and a resultant vacant occurred.
It has been directed as under "With a view to safeguard the interests of the members of the Scheduled Castes/Tribes and Backward Classes, it has been decided that if the services of a Government Servant belonging to Scheduled Castes/Tribes or Backward Classes are terminated, the resultant vacancy should not be included in the normal pool of vacancies to be filled in accordance with the Block System but should be filled up on ad hoc basis from the candidates belonging to these castes and classes.
In other words the intention is that the posts vacated by members of Scheduled Castes/Tribes and Backward classes should remain earmarked and be filled up by members belonging to these Classes.
" 605 In Jagjit Singh 's case, this Court was dealing with appointments to the Punjab Civil Service (Executive Branch).
These selection was made for appointment against 12 vacancies in the said Service and other vacancies in the Allied Services.
Two of the vacancies in the Punjab Civil Service were reserved for Scheduled Castes candidates.
Three persons were selected from among the members of Scheduled Castes.
The appellant in the said appeal was at third place in the merit list of the Scheduled Castes candidates.
The first two candidates on the merit list were appointed and the appellant was appointed on the post of "A" Class Tehsildar in one of the Allied Services.
Subsequently, one of the two candidates who had been appointed to the Punjab Civil Service resigned his office and a question arose as to whether the appellant was entitled to be appointed to the Punjab Civil Service against the vacancy arising on account of resignation of the Scheduled Castes candidate who had been appointed earlier.
The appellant laid his claim for such appointment on the basis of the instructions contained in the circular of March 6, 196 1.
The said claim of the appellant was upheld by this Court and it was held that the resultant vacancy caused by resignation of one of the Scheduled Castes candidate should have gone to the appellant.
The Circular dated March 6, 1961 and the decision in Jagjit Singh vs State of Punjab (supra) do not have a bearing on the question in controversy in the instant case because here there is no dispute that the respondent No.3 has been appointed against the post reserved for members of Scheduled Castes and the question is about the inter se placement of two persons appointed against vacancies reserved for Scheduled Caste candidates.
The Circular dated March 6, 1961 does not deal with the said question and it has to be dealt with on the basis of the instructions contained in the orders dated May 5, 1975 and April 8, 1980.
For the reasons aforementioned the appeal is allowed, the judgment and the order of the High Court dated October 9, 1991 is set aside.
The Civil Writ Petition filed by the appellant in the High Court is allowed and it is declared that respondent No.3 can only be treated to have been appointed against the vacancy at Point no.9 in the Roster and on that basis he must be placed below the appellant in the seniority list.
Respondent No.2 is directed to revise the seniority list of the members of the Service accordingly.
The appellant would be entitled to conse quential benefits if any, accruing to him as a result of such revision in the seniority.
The parties are left to bear their own costs.
N.V.K. Appeal allowed. | Recruitment to the Punjab Superior Judicial Service was governed by the Punjab Superior Judicial Service Rules, 1963.
Rule 8 A inserted in the said rules by notification dated June 14, 1977 provided that instructions issued by the State Government from time to time in relation to reservation of appointments for posts for Scheduled Castes and Backward Classes were applicable for appointments to posts in the Service.
The Secretary to the Government of Punjab, Welfare of Scheduled Castes and Backward Classes Department by letter dated June 6, 1974 Informed all Heads of Department etc.
that it had been decided to increase the percentage of reservation in direct recruitment in all services from 20% to 25 % in the case of members of Scheduled Castes and from 2% to 5 % in the case of members belonging to Backward Classes, and Indicated the vacancies to be reserved for the members of Scheduled Castes in a lot of 100 vacancies and specified the points.
It also directed that the Roster already existing would not be abandoned, but would now be maintained in continuation from the vacancy in the existing Roster last filled up according to the new pattern of reservation.
Circular dated November 19, 1974 made provision for carrying forward of reservation for members of Scheduled Castes/Backward Classes, and directed that the reservation should be carried forward form vacancy to vacancy in the same block until a Scheduled Caste or a Backward Class person is appointed or promoted in the same block, and that the reservation should be carried from vacancy to vacancy in each Mock and from block to block until the carried forward vacancies are filled up.
594 By letter dated May 5,1975 the Secretary to the Government, Welfare Department Communicated to all Heads of Department ; that the Government has decided that henceforth, 50% vacancies of the quata reserved for Scheduled Castes should be offered to Balmikis and Mazhbi Sikhs as a first preference from amongst the Scheduled Castes candidate, .
The Under Secretary, Welfare Department Reservation Cell by his letter dated April 8,1980, clarified the position with regard to the implementation of instructions regarding reservation for Mazhbi Sikhs and Balmikis contained in the aforesaid letter dated May 5,1975, the Clarification was to the effect that : (1) the combined merit list can be disturbed while giving appointment to the candidate belonging to Balmikis and MazhbiSikhs; (ii) the first reserved vacancy can he offered to Balmikis and Mazhbi Sikhs although their name may be below in the merit list, and (iii) on the basis of 50% reservation Bal mikis and Mazhbi Sikhs 1,3,5 and so on reserved vacancies shall go to the candidates of these castes if available and 2,4,6 and so on reserved vacancies shall go to other Scheduled Castes candidates.
After introduction of Rule 8 A in the Punjab Superior Judicial Service Rules, four persons were appointed by way of direct recruitment to the Service in the year 1979.
One of them, Shri Balwant Rai, belonged to a Scheduled Caste (other then Balmikis or Mazhbi Sikhs).
Thereafter, in 1981 one post fell vacant but no person belonging to a Scheduled Caste could be selected and candidate belonging to general category was appointed against the said post In 1982, selection was made for two posts but only one person could he selected and he also belonged to the general category and no person belonging to a Scheduled Caste was available for appointment.
In 1986, six persons including the appellant and respondent No. 3 were appointed on the basis of direct recruitment.
Out of those six persons, four belonged to the general category and two belonged to Scheduled Castes.
One of the two persons was Shri G.S. Samra who belonged to a Scheduled Caste other than Balmikis or Mazhbi Sikh.
In the merit list for the said selection the appellant was placed at No. 1, Shri G.S. Samra at No. 2, and respondent No. 3 at No. 5.
As per the Roster, Shri G.S. Samra was placed at Point No. 7, the appellant at Point No. 8 and respondent No. 3 at Point No. 9.
After joining the Service, Shri G.S. Samra resigned and had ceased to be a member of the service prior.
to April, 1, 1988.
In the tentative seniority list as on April 1, 1988,the appellant was placed at serial No. 52 and respondent No.3 was placed at serial No. 53.
Respondent 595 No. 3 submitted a representation against his placement in the seniority list and claimed that he should be placed against the post reserved for scheduled castes at Serial No. 5 in the Roster and on that basis be given the seniority of the year of 1981, and that since he is a Mazhbi Sikh, he is entitled to preference over Shri G.S. Samra who belonged to a Scheduled Caste other than Balmikis and Mazhbi Sikhs, and he claimed that he should have been placed at Point No. 7 in the Roster and Shri G.S. Samra should have been placed at Point No. 9 and on that basis also respondent No. 3 is senior to the appellant.
Representation was also invited from the appellant in this regard.
After considering the representations the High Court decided that respondent No. 3 was entitled to he placed above Shri G.S. Samra in view of the Circular Letter dated May 5, 1975 and that he should have been placed against Point No. 7 in the roster and Shri G.S. Samra should have been placed against Point No. 9 in the Roster, In the revised seniority list Respondent No. 3 was placed at Serial No. 52 while the appellant was placed at Serial No. 53.
Aggrieved by the aforesaid decision the appellant filed a Writ petition in the High Court which was dismissed.
The appellant appealed to this Court and contended that the first appointment, by direct recruitment, of a person belonging to the Scheduled Castes was of Shri Balwant Rai made in 1979, that was at Point No. 1 in the Roster, and should have gone to a Balmiki or Mazhbi Sikh but since no person belonging to these communities was available Shri Balwant Rai who belonged to a Scheduled Caste was appointed.
Relying on the clarification contained in the letter dated April 8, 1980 it was submitted that the vacancy at Point No. 5 reserved for Scheduled Castes was to be carried forwarded to point No. 7 and Shri G.S. Samra had to he adjusted at Point No. 7 in the Roster, that respondent No.3 being a Mazhbi Sikh could not claim to be placed at Point No. 7 against a vacancy which was reserved for a candidate belonging to Scheduled Castes other than Balmikis and Mazhbi Sikhs and that he could the before be only placed against the vacancy at Point No. 9 in the Roster.
The appeal was contested on behalf of Respondent No. 3 who urged that in view of the order dated May 5,1975,50% vacancies of the quota reserved for Scheduled Castes have to be offered to Balmikis and Mazhbi Sikhs and since Shri Balwant Rai belonging to a Scheduled Coste other than Balmikis & Mazhbi Sikhs had been appointed in 1979, the next post should go to Balmikis and Mazhbi sikhs, and on that basis, respondent No. 3 was entitled to be appointed against the second post at point No.7 of the Roster and Shri 596 GS.
Samra could only be appointed against third post at Point No. 9 in the Roster.
It was also urged that the clarification contained in the letter dated April 8, 1980 could only have prospective operation with effect from the date of its issue, and the sub roster indicated therein could be given effect to only from that date, and on that basis also respondent No3 was entitled to be placed against Point No. 7 in the 100 point roster and Shri GS.
Samra against Point No. 9 in the said roster.
Allowing the appeal and setting aside the judgment of the High Court, this Court, HELD : 1. (a).
There is no dispute in the instant case, that respondent No3 has been appointed against the post reserved for members of Scheduled Castes and the question is about the inter se placement of two persons appointed against vacancies reserved for Scheduled Caste candidates.
The Circular dated March 6, 1961 does not deal with the said question and it has to be dealt with on the basis of the instructions contained in the orders dated May 5,1975 and April 8,1980.
(605 E) Jagjit Singh vs State of Punjab, ; , explained and distinguished.
1.(b).
Respondent No.3 can only be treated to have been appointed against the vacancy at point No. 9 in the Roster and on that basis he must be placid below the appellant in the seniority list.
Respondent No 2 is directed to revise the seniority list of the members of the Service accordingly.
The appellant would be entitled to consequential benefits accruing as a result of revision in the seniority.
(605 F) 2.
The letter dated April 8, 1980 gives clarifications on certain doubts that had been created by some Departments in the matter of implementation of the instructions contained in the earlier letter dated May 5,1975.
Since the said letter dated April 8, 1980 is only clarificatory in nature there is no question of its having an operation independent of the instructions contained in the letter dated May 5, 1975 and the clarifications contained in the letter dated April 8,1980 have to be read as a part of the instructions contained in the earlier letter dated May 5, 1975.
(603 E) 3.
A statute which is explanatory or clarificatory of the earlier enactment is usually held to be retrospective.
597 Craies on Statute Law 7th Edn.
p. 58, relied on.
(603 F) 4.
All appointments against vacancies reserved for Scheduled Castes made after May 5,1975 (after May 14,1977 in so far as the Punjab Superior Judicial Service is concerned) have to be made in accordance with the instructions as contained in the letter dated May 5, 1975 as clarified by letter dated April 8, 1980.
(603 F) 5.
The appointment of Shri Balwant Rai in 1979 has to be treated to be an appointment made under the said instructions and operation of these instructions cannot be postponed till April 8, 1980.
The sub roster as indicated in the letter dated April 8, 1980 would have to be applied in respect of the post on which Shri Balwant Rai was appointed in 1979 and the said appointment has to be regarded as having been made against the vacancy at Point No. 1 in the roster which was reserved for Balmikis or Mazhbi Sikhs but since no Balmiki or Mazhbi Sikh was selected for that post, the said vacancy was assigned to Shri Balwant Rai who belonged to a Scheduled Caste other than a Balmiki or Sikh.
(603 H, 604 A) 6.
The vacancy at Point No. 1 which was reserved for Balmikis or Mazhbi Sikhs could not he carried forward in view of the directions contained in the letter dated April 8, 1980.
(604 A) 7.
The next post reserved for Scheduled Castes at Point No. 5 in the roster was meant for a person belonging to a Scheduled Caste other than Balmikis and Mazhbi Sikhs.
(604 A) 8.
In the selections that were made in 1981 and 1982 no person belonging to a Scheduled Caste was selected and, therefore, posts at Point Nos. 5 and 6 in the Roster became available to candidates in the general category and the vacancy at Point No. 5 reserved for Scheduled Castes was carried forward to point No. 7.
(604 B) 9.
In 1986, two persons belonging to Scheduled Castes, namely Shri G.S Samra and respondent No. 3 were selected.
(604 B) 10.
Since the post appoint No. 5 which had been carried forward to point No. 7 was reserved for a candidate belonging to a Scheduled Caste other than Balmiki or Mazhbi Sikh it had to be assigned to Shri G.S. Samra falling in that category and respondent No.3 who was a Mazhbi Sikh could only be ap 598 pointed against the reserved vacancy at Point No. 9 in the Roster.
Respondent No.3 can not claim that the vacancy at Point No.7 should be assigned to him.
If respondent No.3.
is adjusted against the vacancy at Point No.9 in the Roster, he has to be placed in seniority below the appellant who was appointed against Point No. 8 in the Roster.
(604 C) |
DICTION: Civil Appeal No. 8670 of 1983.
From the JudGment and Order dated 3. 9. 1982 of the Punjab and Haryana HiGh Court in ReGular First Appeal No. 1 105 of 198 1.
WITH C.A. Nos. 8634 to 86 58/83 and 8660 62/83, 8665 to 8669/83 and 8671 72/ 83 Prem Prasad Juneja and R.S. Sodhi for the Appellants.
H.M. Singh for G.K. Bansal for the Respondents.
648 The Judgment of the Court was delivered by K. RAMASWAMY, J.
The common questions of law arose for decision in these appeals.
Hence they are disposed of together.
Notification under section 4 (1) of the Land Acquisition Act 1 of 1984 was published in the Punjab State Gazette on January 27, 1978 acquiring 89 acres 4 canals and 12 marlas of land situated in Dhuri village for public purpose, namely to set up new Mandi Township.
The. appellants claimed at the rate of Rs. 30.000 per Bighabut Land Acquisition Officer after classifying the lands into six blocks A to F, awarded market value ranging between Rs. 30,000 to Rs. 6,000 acre.
On reference under section 18 of the Act, the District Judge, Sangrur in his judgment dated May 13, 1981 disagreed with the classification and found that all the lands are possessed of the same quality.
Relying on sale deeds, exhibit p 3 dated September4,1972, p 5 dated June 14,1976, p 2 dated February 23, 1977 and p 4 dated July 15, 1977, all small extents, he calculated at an average of Rs. 1300 per Biswa and awarded to the lands belonging to Jaswant Kaur Baldev Singh and Gurdev Singh at the rate of Rs. 1,000 per Biswael finding that their lands are abutting Abadi (village) and for the rest awarded at the rate of Rs. 800 per Biswa with statutory solatium at 15% and interest of 6% per annum on enhanced compensation.
Dissatisfied therewith the State filed the appeals and against disallowed claims, the claimants in one batch filed appeals and in another batch filed cross objections.
The learned Single Judge relied on exhibit p3 and p 5 filed by the claimants and exhibit R 4 and R 6 filed by the State as comparable instances and calculated the average which worked out at Rs. 750 per Biswa.
He found that the lands are possessed of potential value for further building purposes.
Therefore, he carved out belting at a depth of 100 ft. from the main road to those lands, deducted 1/3rd towards developmental charges and awarded the market value at the rate of Rs. 750 to the land situated abutting to the main road to the depth of 100 ft. and for the balance lands at the rate of Rs.500 per Biswa.
The State appeals were allowed and of the claimants and cross objection were dismissed.
The Division Bench confirmed the judgment of the learned Single Judge.
The claimants filed these appeals by special leave.
In the first batch no witness has been examined, but in the second batch witnesses were said to have been examined in proof of these documents but their evidence was not made part of the record.
Equally of the sale deeds.
It is seen that the documents in the second batch p top 1 include those filed in the first batch.
exhibit p 5 is dated Sept. 4, 1972, in which 20 Biswas of land was sold for Ice Factory.
It was situated in the town itself.
The price fetched therein was Rs. 20,000 Therefore, it worked out at the rate of Rs. 1,000 per Biswa.
exhibit p10 is dated August 25, 1975, 7 Biswas of land in Dhaula village was sold for Rs. 649 75,000 which works out at rate of Rs. 1071 per Biswa.
exhibit p 7 is dated June 14,.
1976,3 Bighas 16 Biswas of land situated at Dhularoad side was sold for Rs. 4,500 which works out at the rate of Rs. 1285 per Biswa.
Ex.p 8 dated June 15, 1977 is for 4 Biswas of land at Dhula road sold for Rs. 4,000 which works out at Rs. 1,000 per Biswa.
exhibit p 4 is dated Feb. 23, 1977,3 Biswas of land in the heart of the town Dhuri was sold for Rs. 6,000 which works out to Rs. 2,000 per Biswa.
exhibit p 6 is dated may 18,1977, one Bigha7 Biswas were sold for Rs. 1,000, which works out to Rs. 370 per Biswa.
This land is away from the town and also from the acquired land.
exhibit p 9 is dated July 12, 1977, 15 Biswas of land were sold for Rs. 24,000 working out at the rate of Rs. 1,600 per Biswa.
Based thereon it was contended that exhibit p 9 fetches the highest market value and is nearer to the date of notification and would offer comparable price.
The High Court ought to have fixed market value at that rate.
The High Court committed illegality in relying on two sale deeds of the claimants and two mutation entries on behalf of the state in working out the average.
Therefore, fixation of the market value is illegal.
The mutations are not admissible as neither sale deeds were filed not any body connected with them are examined.
The question, therefore, is whether these sale transactions would reflect the prevailing market value of the land of the total extent of 90 acres.
It is seen that in the first batch no one was examined to prove the documents.
In the second batch though witnesses were said to have been examined, the evidence is not on record.
Neither the reference court nor the High Court discussed the evidence and no finding was given.
So we do not have the advantage of any findings in that behalf.
The state filed 5 mutation entries which were marked.
The sale entries exhibit
R 6 is of October 4,1977 and exhibit R 5 of November 13, 1977.
The rates of lands in Saledeeds executed between March 7, 1977 to November 13, 1977, i.e. R 2 on 7.3.77, R 3 on 8.6.77, R 4 on 31.8.77 and R 5 on 30.11.77 work out between Rs. 83 to Rs. 450 per Biswa.
It is settled law that to determine the market value of the land under section 23(1) of the Act the sales of the land under requisition, if any, or the sales in the neighbourhood lands that possessed of same or similar potentialities or fertility or other advantageous features would furnish basis to determine just and fair market value on the premise of hypothetical willing vendor and willing vendee.
The willing vendor who would offer the land and willing vendee who would agree to purchase the land as a prudent man in normal market conditions as on the date of the notification or near about the date of the notification is the acid test.
It is also settled law that the sale and purchase of lands at a throw away price at arm 's length or depressed sales or fecal of sales brought into existence in quick succession to inflate the market value would not offer any basis to determine just market value.
In order to adjudge whether sales are bonafide sales between willing vendor and 650 willing vendee and whether the consideration mentioned in deed was, in fact and really passed on under transaction '.
whether the lands covered by sale deeds and relied on, possessed of same or similar potentialities or fertilities or advantageous features would be brought on record only by examining the vendor or the vendee or if neither of them is available, the attesting witness who has personal knowledge of the bargain and passing of the consideration are mandatory.
Vide Periyar & Pareekanni Rubbers Ltd. vs State of Kerala wherein this court surveyed the entire case Law in that respect.
Since none has been examined in the first batch the sale transactions referred to either by the state or by the claimants cannot be relied upon.
In the second batch since the evidence has not been referred to by the courts below nor discussed by them nor we have the advantage to go through the same, we cannot rely on the same to further enhance the market value.
Therefore, we are left with no option.
but to reject those sale deeds.
Moreover, except exhibit p 9 all other sale deeds are of very small extents.
This court consistently has taken the view in Collecior of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015 Mirza Naushery voan Khan & Anr.
vs Collector (Land Acquisition).
Hyderbad ; ; Rain Rattan & Ors.
vs State of U. P. Smt.
Kaushalya Devi Bogra & Ors.v.
Land Acquisition officer, Aurangabad & Anr. ; ; Padma.
Uppal vs State of Punjab & Ors.
; , Administrator General of West Bengal vs Collector.
Varanasi ; and Special Tehsildar, Land Acquisition vs A. Mangala Glowri [1991]4 SCC 218 that sale deeds of small extents being retail price do not offer comparable basis to fix compensation when large block of land is acquired.
To an intending bonafide purchaser if such block of 90 acre is offered for sale, would he agree to purchase at retail price or far less value? Under no circumstance he would agree to purchase at retail prices mentioned above.
In view of the settled legal position the saledeeds, sought to be relied upon, do not give us any basis to determine the market value.
Every endeavour would be made to fix fair and reasonable market value.
If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transaction between willing vendor and vendee then it may be considered but reasonable margin must be given in fixing whole sale price.
Therefore, all the documents except p 9 are rejected.
The next contention is that the sale deed exhibit p 9 by which 15 Biswas were sold for Rs. 24,000 which works out at the rate of Rs. 1,600 per Biswa and whether this hiohest price should be given to the appellants.
As stated earlier we have no evidence before us as to under what circumstances this document came to be executed and what is the distance between the lands and for what purpose the land was sold and what is the 651 comparable nature of the land, fertility and potentialities of the land, etc.
The contention relying on state of Madras v.A.M.Ranjan & Anr.
[1976] 3SCR35 that highest value should be fixed cannot be accepted in view of the consistent late.
view of this court.
In Collector of lakhimppur 's case (supra), this court accepted the principle of average, but however, rejected the small extent of the lands arid enhancement based on the average at Rs. 15,000 per Bigha was reduced to Rs. 10.000 per Bicha.
In Smt.
Kausalya Devi 's case (supra), this court noted that large extent of land in the developed Aurangabad town was acquired for Medical College, accepted the principle of average worked out by the reference court, varying between Rs. 2.25 to Rs. 5.00 per sq. yard and this court ultimately fixed the market value at the rate of Rs. 1.50 per sq. yard.
In Administrator General of West Bengal 's case (supra) this court upheld rejection of the small plots of lands and accepted two sale deeds of large extent working out the average rate at Rs. 500 per Decimal and ultimately reference court fixed the market value at the rate of Rs. 200 per Decimal.
It is, therefore, clear that the court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to determine market value.
Thereafter the average price has to be worked out.
It would be seen that this court has taken consistent view of working out average and further deductions have been made in fixing just and fair market value when large chunk of the land was acquired.
We respectfully agree and adhere to the principle and we find no compelling reason to divert the stream or arrest the consistence.
The question then is whether the reduction of the market value by the learned Single Judge is warranted on facts and under law.
In his judoment the learned Judge found that the acquired lands are situated between railway line on the one side and link road going from Dhuri to Sarona on the other side.
On the third side it is surrounded by the in habited area of Dhuri town.
A small portion in Khasra No. 2585 was abutting the Dhola road and the rest of the acquired land is just behind the inhabited area.
While acquiring these lands the Govt.
have excluded the built up area.
He also found that there is tendency of extension of Abadi village towards acquired lands.
Therefore, he found that the lands arepossessed of "Potential value for being housed for urban purpose in the near future and, therefore, had to be valued as such" Thus we have the evidence that the lands are possessed of potential value for being used for building purposes.
In fact, the acquisition itself is for construction of Mandi Township.
The principle of belting is perfectly legal and unexception 652 ble as the lands abutting the main road upto a specified depth, depending on actual material on record, would fetch higher market rate than the lands situated a interior area.
However, on facts of this case the belting is not warranted for the reason that as seen on three sides there exist roads and abutting the village.
As per the plan as found by the High Court there exists a road cutting across the acquired lands.
Therefore, there is not only access on three sides but also to interior lands.
Thus in our view belting and fixation of differential rates of value is not justified.
The next question is what would be the reasonable and just market value the lands were likely to fetch.
In view of the fact that there is no evidence available and since the High Court found that the lands are possessed of potential value the rate of Rs. 1,000 per Biswa as awarded by civil court to the lands abutting abadi and the lands upto a depth of 100 ft is upheld.
In view of the preceding finding we hold that the fixation of uniform rate of Rs. 1,000 per Biswa is legal.
It is seen that this acquired land of 90 acres is undoubtedly undeveloped area and necessarily requires development by laying the roads, parks, drainage, lighting and other civic amenities.
In Brig.
Sahib Singh Kalha & Ors.
vs Amritsar Improvement Trust & Ors. and Administrator General of West, Bengal 's case (supra) this court deducted 53% of the undeveloped lands towards developmental charges while fixing market value at decimal rate etc.
towards amenities.
In Special Tehsildar Land Acquisition, Vishakapatnam 's case,(supra) this court made deduction at 1/3rd.
The appellant placed reliance on Bhagwathula Swamnana & Ors.
vs Special Tahsildar Land Acquisition.
Visakhapatnam ; where this court did not deduct any land towards developmental charges.
But in that case it was found that the lands acquired are situated in fully developed area.
On those circumstances this court did not deduct any land towards developmental charges.
It is seen that the consistent view of this court now is that deduction of at least 1/3rd is necessary towards developmental charges.
Therefore, we uphold deduction of 1/3rd towards development charges from the market value and determine the market value at Rs. 670 per Biswa.
The learned judge while deducting 1/3rd fixed market value at Rs. 759 of frontage lands and Rs. 500 to interior land.
Rs. 750 is obvious mistake, but the state did not take any action to have itch corrected not filed appeals.
Fixation of Rs. 750 per Biswa of lands from road upto a depth of 100 ft. became final.
So we cannot interfere or correct it in claimants appeal.
But for the rest of the lands we award Rs. 670 per Biswa.
with solatium at 15% and interest at 6% on the enhanced market value from the date of taking possession till date of payment.
653 The appeals are accordingly allowed to the above extent.
In the circum stances parties are directed to bear their own costs. | Notification under section 4 for acquisition of 89 Acres 4 Kanals and 12 Marlas of land in a village in Punjab, published on January 27, 1978.
Appellants claimed compensation Rs. 30,000 per Bigha i.e. Rs. 1500 per Biswa, on the ground that 15 Biswas of land situated near the acquired land had been sold on July 12,1977, for Rs. 24,000 which works out to Rs. 1600 per Biswa.
Land Acquisition Collector classified the acquired land In 6 blocks and awarded Market Value ranging between Rs. 30,000 to Rs, 6000 per acre.
In reference under Section 18, the District Judge disagreed with classification.
The learned Judge, relying on sale deeds dated September 4,1972, June 14, 1976, February 23, 1977 and July 15, 1977, all for small extents, awarded compensation @ Rs. 800 for the rest of land, besides solatium and interest.
Appeals filed in the High Court by State of Punjab and by one batch of claimants.
Another batch of claimants filed cross objections.
The learned Single Judge allowed appeals filed by the State and dismissed appeals and cross objections of the claimants.
Market Value was determined, on working out average price on the basis of sale deeds dated September 4,1972 and June 14, 1976 filed by claimants and mutation entries dated August 31, 1977 and October 4,1977 filed by the State.
Belting was carved at depth of 100 Ft.
from main road and deduction of 1/3rd was made towards development charges.
Consequently market value determined @ Rs. 750 per Biswa for land abutting main road and @ Rs. 500 per Biswa for the rest of land.
Judgment and order of the learned Single Judge was confirmed by Division Bench.
Claimants, by special leave petition filed appeals for higher compensation.
This court determined market value at Rs. 1000 per Biswa and allowing the appeals to that extent, HELD It is settled law that to determine market value of the land, the sales of land under requisition if any or the sales in the neighborhood lands, 646 that possessed of same or similar features or fertility or other advantageous features would furnish basis to fix just and fair market value.
(649 E) The price for which the willing vender would offer the land and willing vendee would agree to purchase it, as a prudent man in normal market conditions, as on date of notification or near about the date, is acid test to fix market value.
Sales and purchases of land at throw away price at arms length or depressed sales or facade of sales made in quick succession to inflate market value do not offer any basis to determine just Market Value.
(649 F) In order to adjudge, whether sales are bonafide, whether consideration mentioned in the deed was infect and really passed, whether the lands covered by sale deeds and relied on possessed of same or similar potentialities or fertilities or advantageous features would be brought out on record only by examination of the vendor or the vendee or if neither of them is available, the attesting witness, who has personal knowledge of the bargain and passing of consideration.
Hence it is mandatory.
(650 A) Periyar & Pareekanni Rubbers Ltd. vs State of Kerala: Sale deeds of small extents being retail price do not offer comparable basis to fix compensation, when large block is acquired.
If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transactions, then it may be considered but reasonable margin must be given in fixing wholesale price.
(650 E) Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Mirza Nausherwoan Khan & Another vs Collector (Land Acquisition) Hyderabad ; ; Ram Rattan & Others vs State of Uttar Pradesh ; Smt.
Kaushalya Devi Bogra & Others vs Land Acquisition Officer, Aurangabad Others ; ; Administrator General of West Bengal vs Collector Varanasi ; and Special Tehsildar Land Acquisition vs A Mangal Gowri Court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to 647 determine market value.
The after average price has to be worked out and the contention that highest value should be fixed cannot he accepted.
(651 D) State of Madras vs A.M. Ranjan & Another ; ; Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Sint.
Kaushalva Devi Bogra & Others vs Land Acquisition Officer, Aurangabad & Another ; and Administrator General of West Bangal vs Collector, Varanasi ; The Principle of belting is perfectly legal and unexceptionable, as the lands abutting the main road up to a specified depth depending on factual material on record, would fetch higher market value than lands situated in interior area.
(652 A) If the acquired land is undeveloped, deduction of at least 1/ 3rd, is necessary towards development charges.
(652 F) Brig.
Sahib Singh Kalha & Others vs Amritsar Improvement Trust & Others ; Administrator General of West Bengal vs Collector Varanasi ; ; Special Tehsildar, Land Acquisition vs A. Mangal Gowri ; and Bhagwathula Swamnanna & Others vs Special Tehsildar Land Acquisition Visakhapatnam ; |
minal Appeal No. 830 of 1985.
From the Judgment and Order dated 30.7.85 of the Allahabad High Court in Crl.
Revision No. 1937 of 1983.
M.S. Gujral, A.K. Srivastava and Serva Mitter for the Appellant.
R.C. Verma and A.S. Pundit.for the Respondent.
The appellant, was convicted under Sections 120 B, 419, 420, 468, and 471 of the Penal Code.
lie was sentenced to undergo rigorous imprisonments for different periods under the aforesaid Sections.
The appeal filed on behalf of the appellant was dismissed by the learned additional Sessions Judge, Ghaziabad.
The High Court, on revision application being filed on behalf of the appellant set aside his conviction under Section 120 B, but the conviction and sentence under other Sections mentioned above passed by the trial Court were affirmed.
According to the prosecution case, the appellant, established a firm by the name of Seemak Industrial Corporation at Ghaziabad.
The account in the bank was opened in the name of one Vijai Kumar and the aforesaid Industrial Corporation was registered in the Sales Tax Department.
The appellant applied for loan before the U.P. Small Industries Corporation and got a sum of Rs. 39,352.50, in the name of Seemak Industrial Corporation.
Later it was discovered that the aforesaid Seemak Industrial Corporation, was a fake concern and the appellant had cheated, even the U.P. Small Industries Corporation, in respect of the amount advanced by them.
The Trial Court, the Appellate Court as well as the High Court have gone into details of the materials on record for purpose of holding, that the charges framed against the appellant had been established and as such there was no occasion to interfere with the conviction and sentence passed against him.
So far the present appeal is concerned, leave was granted as early as in the year 1985 by this Court, but it has been listed for hearing after about 8 years.
The learned Counsel.
appearing for the appellant, after some arguments on merit confined his submissions to the question of sentence only.
lie pointed out that offences aforesaid had been committed by the appellant, as early as in the year 1973, more than 20 years from now and as such a compassionate view should be taken of the whole matter especially when the amount in respect of which the offences are alleged to have been committed is not excessive.
He pointed out that the appellant has remained in jail for some time, in pursuance of the order of conviction and sentence and as such he need not be sent to jail again.
An affidavit detailing the mitigating circumstances has also been filed by the appellant before us.
Taking all facts and circumstances into consideration, by our order dated 26th April, 1993 we directed the appellant to first deposit an amount of Rs. 40,000 (the loan amount) with the U.P. Small Industries Corporation Ltd. Pursuant to that order Rs. 40.000 has been deposited with the U.P. Small Industries Corporation Ltd., on 4 5 1993 and original receipt granted by the Manager of the said Corporation was produced before us.
The zerox copy, of the said original receipt has been kept on record and the original returned to the learned counsel for the appellant.
An affidavit has also been filed on behalf 'of the appellant stating about 902 the aforesaid deposit.
In the peculiar facts and circumstances of the case while maintaining the conviction of the appellant, we reduce the sentence of imprisonment under different Sections mentioned above to the period already undergone by him.
The appellant, shall however pay a fine of Rs. 2,000 and in default of payment thereof, he shall undergo rigorous imprisonment for a period of one month.
The appeal is allowed in part.
The deposit of Rs. 40,000 made by the appellant with the U.P. Small Industries Corporation Ltd., shall be adjusted towards the amount advanced by the said Corporation to the appellant.
The Corporation shall of course be at liberty to take steps for realisation of any further sum.
which may be due.
against the appellant.
U.R. Appeal partly allowed. | The appellant was charged with cheating the U.P. Industrial Corporation of Rs. 39,352.50 by registering a take concern, and taking in its name.
Three courts concurrently found the charges against him established.
On the question of sentence, it was contended that more than 20 % cars had elapsed; the amount involved was not excessive and other mitigating circumstances were placed (in the record.
Partly allowing the appeal, this Court HELD:1.
The appellant had deposited Rs. 40,000/ (the loan amount) as directed.
(901 G) 2.
In the peculiar facts and circumstances of the case, conviction maintained but sentence of imprisonment reduced to the period already undergone, and a fine of Rs. 2,000/ , or one month R.I. in lieu thereof.
(902 B) |
minal Appeal No. 443 of 1993.
From the Judgment and Order dated 22.4.92 of the Calcutta High Court in Crl.
Revision No. 800/92.
A.K. Sen, S.C. Ghosh, Rajiv K. Dutta and B.B. Tawakley for the Appellant.
Amlan Ghosh and Ranjan Mukherjee for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
leave granted.
The appellant herein was, married to second respondent on 16th January, 1990 according to Hindu Rites and Customs.
They lived together for sometime until second respondent left the matrimonial home to reside with her parents in order to prepare for Higher Secondary Examination which commenced on 5.4.90 920 and continued upto 10.5.90.
In the month of April, 1990 she conceived, on coming to know that she was pregnant, the appellant and the family members did not want her to beget a child.
Therefore she was forced to undergo abortion which was refused by the second respondent.
During the stay She was meted out cruetreatment both physically and mentally.
She came back to the matrimonial home during Durga Pooja in the month of October, 1990.
A female child was born on 3.1.91.
She filed a petition under section 125 Cr.
P.C. before the Learned Chief Judicial Magistrate, Alipore in Misc.
Case No. 143 of 1991 both for herself and the child.
By an order dated 14.8.91 which was passed ex parte he awarded a sum of Rs. 300 per mansum to the mother and Rs. 200 to the child.
Against that order, he moved a revision to the High Court.
That revision is pending as 1837 of 199 1.
Thereafter the petitioner filed a Crl.
Case No. 143 of 1991 for blood group test of the second respondent and the child.
In that proceeding the petitioner herein disputed the paternity of the child and prayed for blood group test of the child to prove that he was not the father of the child.
According to him if that could be established he would not be liable to pay maintenance.
That application was dismissed on two grounds: (i) there were other methods in the Evidence Act to disprove the paternity (ii) moreover it is settled law that medical test cannot be conclusive of paternity.
Aggrieved by this order, a revision was preferred before the High Court.
Dismissing the revision it was held that section 112 of the Evidence Act says where during the continuance of valid marriage if a child is born that is a conclusive proof about the legitimacy.
This section would constitute a stumbling block in the way of the petitioner getting his paternity disproved by blood group test.
The English law permitting blood test for determining the paternity of legitimacy could not be applied in view of section 112 of the Evidence Act.
Therefore it must be concluded that section 112 read with section 4 of the said Act debars evidence except in cases of non access for disproving the presumption of legitimacy and paternity.
It is the contention of Mr. Ashok Sen, learned counsel for the appellant that the only way for the father to disprove the paternity is by blood group test.
Having regard to the development of medical jurisprudence to deny that request to the appellant will be unreasonable.
As a matter of fact, in England, this is commonly resorted to as it will leave no room for doubt.
In 1968 (1) All England Reports p. 20 Re. 1 it was held that even without the consent of the guardian ad litem, the court had power to order an infant be subjected to a blood group test.
921 There is no justification for the court below to refuse the same on the ground that section 112 of the Evidence Act would be an obstacle in seeking relief of blood group test.
Before we deal with the arguments, we will examine the law as available in England.
At the beginning of the century scientists established that human blood had certain characteristics which could be genetically transmitted.
The first recognised system was ABO blood group.
The blood group of a child is determined by the parents ' genetic make up but the number of possibilities is such, that it is not possible to prove that certain individuals are the father on the basis of comparing blood groups, only, that they are not the father.
By 1930s other immunological test became available.
As a result the possibility of establishing paternity increased.
An attempt by way of statutory provision to make blood test compulsory in En land failed in 1938.
However, in 1957 the Affiliation Proceedings Act was passed.
Under that Act, it was assumed that a man was the father once a sexual relationship with the mother at the time of conception was proven unless he could show another man had intercourse with her at that time.
Failing the father 's attempt, the mother 's evidence had to be corroborated by facts such as blood test etc.
Under the Act either party could ask for a blood test and either was entitled to refuse to take part, although only the mother can apply for maintenance.
The Family Reforms Act, 1969 conferred powers on the court to direct taking blood test in civil proceedings in paternity cases.
Courts were able to give directions for the use of the blood test and taking blood samples from the child, the mother and any person alleged to be the father.
Since the passing of 1969 Act the general practice has been to use blood tests when paternity is in issue.
However, it is to be stated the court cannot order a person to submit to tests but can draw adverse inferences from a refusal to do so.
Now under the Fan lily Reforms Act, 1987 in keeping with modern thinking on the continuing and shared responsibility of parenthood, 'parentage ' rather than paternity has to be determined before the court.
Fathers as well as mothers can apply for maintenance.
Therefore contests can include mothers denial of paternity.
This Act finally removed the legal aid for corroboration of mother 's statement of paternity.
Two cases may be usefully referred to: Re L Lord Denning M.R. [1968] All England Reports p. 20 stated thus 922 "but they can say positively that a given man cannot be the father, because the blood groups of his and the child are so different." (emphasis supplied).
In B.R.B. vs J.B. [1968] 2 All England Reports 1023 applied this dictum and held as under: "The Country court judge will refer it to a High Court Judge as a matter suitable for ancillary relief, and the High Court Judge can order the blood test.
Likewise, of course, a magistrate 's court has no power to order a blood test against the will of the parties.
The magistrate can only do it by consent of those concerned, namely, the grown ups and the mother on behalf of the child; but, nevertheless, if any of them does not consent, the magistrate can take that refusal into account1 adhere to the view which expressed in Re L. that (6) "If an adult unreasonably refuses to have a blood test, or to allow a child to have one, I think that it is open to the court in any civil proceedings (no matter whether it be a paternity issue or an affiliation summons,or a custody proceedings) to take his refusalas evidence against him, and may draw an inference there from adverse to him.
This is simple common sense." "The conclusion of the whole matter is that a judge of the High Court has power to order a blood test whenever it is in the best interests of the child.
The judges can be trusted to exercise this discretion wisely.
I would set no limit, condition or bounds to the way in which judges exercise their discretion.
To object of the court always is to find out the truth.
When scientific advances give us fresh means of ascertaining it, we should not hesitate to use those means whenever the occasion requires." "Having heard full argument on the case, lam satisfied beyond any reasonable doubt (to use the expression used in rebutting the presumption as to legitimacy) that LORD DENNING, M.R., was right in saying that such an order may be made in any case where the child is made a party to the proceedings and in the opinion of the judge of the High Court it is in the child 's best interests that it should be made.
" 923 As regard United States the law as stated in Forensic Sciences edited by Cyril H. Wecht is as under: Parentage testing is the major (but not the exclusive) involvement of forensic serology in civil cases.
The majority of disputed parentage cases involve disputed paternity, although an occasional disputed maternity, or baby mix up case does arise, and can be solved using the tools of forensic serology described in this chapter.
Blood typing has been used to help resolve paternity cases since the mid 1920 'section According to Latters, there were 3,000 cases tested in Berlin in 1924, and Schiff and Boyd said that the first case went to court in Berlin in 1924.
Ottenberg, in this country published paternity exclusion tables in 192 1, as did Dyke in England in 1922.
It took somewhat longer to satisfy the courts, both in Europe and in country, that parentage exclusions based upon blood grouping were completely valid.
Wiener said that he had obtained an exclusion in a paternity case in this country which reached the courts early in 1933.
In January of 1934, Justice Steinbrink of the New York Supreme Court in Brooklyn ordered that blood tests be performed in a disputed paternity action, using a s precedent a decision by the Italian Supreme Court of Cassation, but his order was reversed upon appeal.
Soon afterward, however, laws were passed in a number of states providing the courts with statutory authority to order blood testing in disputed paternity cases.
Paternity testing has developed somewhat more slowly in the Unitted States than in certain of the European countries, but today the differences in the number of systems employed, and judicial acceptance of the results, are no longer that great.
A number of authorities have recently reviewed the subject of paternity testing in some detail, and in some cases have summarized the results of large number of cases that they have investigated.
Walker points out that failure to exclude a man, even at the 95 percent level of paternity exclusion does not mean that the alleged father is proven to be biologic father, because absolute proof of paternity cannot be established by any known blood test available.
Although this fact is well known and appreciated by workers it), the field of blood grouping and by attorneys active in this area, it is not generally understood by the lay public.
However, blood group 924 serology, using proven genetic marker systems, represents the most accurate scientific information concerning paternity and is so recognised in the United States, as well as in a number of countries abroad.
" In India there is no special statute governing this.
Neither the Criminal Procedure Code nor the Evidence Act empowers the court to direct such a test to be made.
In 1951 (1) Madras Law Journal p.58O Polavarapu Venkteswarlu, minor by guardian and mother Hanwnamma vs Polavarapu Subbayya in that case the application was preferred under section 151 of the Code of Civil Procedure invoking the inherent powers of the Court to direct a blood test.
The learned judge was of the following view: Section 15 1, Civil Procedure Code, has been introduced in to the Statute book to give effect to the inherent powers.
of Courts as expounded by Woodroffe, J., in Hukum Chand Boid vs Kamalan and Singh.
Such powers can only be exercised ex debito justice and not on the mere invocation of parties or on the mere volition of courts.
There is no procedure either in the Civil Procedure Code or in the Indian Evidence Act which provides for a test of the kind sought to be taken by the defendant in the present case.
It is said by Mr. Ramakrishna for the respondent before m e that in England this sort of test is resorted to by Courts where the question of non access in connection with an issue of legitimacy arises for consideration.
My attention has been drawn by learned counsel to page 69 of Taylor 's Principles and Practice of Medical Jurisprudence, Volume 2, where it is stated thus : "In Wilson vs Wilson, Lancet [1942] 1. 570, evidence was given that the husband 's group was OM, that the wife 's was BM and that the child 's was ABN.
The Court held that the husband was not the father of child, and granted a decree for nullity." "It is also pointed out by learned counsel that in the text books on Medical Jurisprudence and Toxicology by Rai Bahadur Jaising P. Moi, (8th Edition), at page 94, reference is made to a case decided by a Criminal Court at Mercare in June, 194 1, in which the paternity and maternity of the child being under dispute, the Court resorted to the results of the blood grouping test." 925 That may be.
But I am not in any event satisfied that if the parties are unwilling to offer their blood for a test of this kind this Court can force them to do so.
" The same view was taken by the Kerala High Court in Vasu vs Santha 1975 Kerala Law Times p. 533 as "A special protection is given by the law to the status of legitimacy in India.
The law is very strict regarding the type of the evidence which can be let in to rebut the presumption of legitimacy of a child.
Even proof that the mother committed adultery with any number of men will not of itself suffice for proving the illegitimacy of the child.
If she had access to her husband during the time the child could have been begotten the law will not countenance any attempt on the part of the husband to prove that the child is not actually his.
The presumption of law of legitimacy of a child will not be lightly repelled.
It will not be allowed to be broken or shaken by a mere balance of probability.
The evidence of non access for the purpose of repelling it must be strong, distinct, satisfactory and conclusive see Morris vs Davies; , The standard of proof in this regard is similar to the standard of proof of guilt in a criminal case.
These rigours are justified by considerations of public policy for there are a variety of reasons why a child 's status is not to be triffled with.
The stigma of illegitimacy is very severe and we have not any of the protective legislations as in England t o protect illegitimate children.
No doubt, this may in some cases require a husband to maintain children of whom he is probably not their father.
But, the legislature alone can change the rigour of the law and not the court.
The court cannot base a conclusion on evidence different from that required by the law or decide on a balance of probability which will be the result if blood test evidence is accepted.
There is an aspect of the matter also.
Before a blood test of a person is ordered his consert is required.
The reason is that this test is a constraint on his personal liberty and cannot be carried out without his consent.
Whether even a legislature can compel a blood test is doubtful.
Here no consent is given by any of the respondents.
It is also doubtful whether a guardian ad litem can give this consent.
Therefore, in these circumstances, the learned Munsiff was right in 926 refusing the prayer for a blood test of the appellant and respondents 2 and 3.
The learned Judge is also correct in holding that there was no illegality in refusing a blood test.
The maximum that can be done where a party refuses to have a blood test is to draw an adverse inference (see in this connection Subayya Gounder vs Bhoopala, AIR 1959 Madras 396, and the earlier decision of the same court in Venkateswarlu vs Subbayya AIR 1951 Madras 910.
Such an adverse inference which has only a very little relevance here will not advance the appellants case to any extent.
He has to prove that he had no opportunity to have any sexual intercourse with the 1st respondent at a time when these children could have been begotten.
That is the only proof that is permitted under section II 2 to dislodge the conclusive presumption enjoined by the Section.
" In Hargavind Soni vs Ramdulari AIR 1986 MP at 57 held as: "The blood grouping test is a perfect test to determine questions of disputed paternity of a child and can be relied upon by Courts as a circumstantial evidence.
But no person can be compelled to give a sample of blood for blood grouping test against his will and no adverse inference can be drawn against him for this refusal.
" Blood grouping test is a useful test to determine the question of disputed paternity.
It can be relied upon by courts as a circumstantial evidence which ultimately excludes a certain invididual as a father of the child.
However, it requires to be carefully noted no person can be compelled to give sample of blood for analysis against her will and no adverse inference can be drawn against her for this refusal.
In Raghunath vs Shardabai , it was observed blood grouping test have their limitation, they cannot possibly establish paternity, they can only indicate its possibilities.
In Bhartiraj vs Sumesh Sachdeo & Ors., held as: "Discussing the evidentiary value of blood tests for determining paternity, Rayden on Divorce, (1983) Vol. 1) p. 1054 has this to say "Medical Science is able to analyse the blood of individuals 927 into definite groups: and by examining the blood of a given man and a child to determine whether the man could or could not be the father.
Blood tests cannot show positively that any man is father, but they can show positively that a given man could or could not be the father.
It is obviously the latter aspect the proves most valuable in determining paternity, that is, the exclusion aspect for once it is determined that a man could not be the father, he is thereby automatically excluded from considerations of paternity.
When a man is not the father of a child, it has been said that there is at least a 70 per cent chance that if blood tests are taken they will show.
positively he is not the father, and in some cases the chance is even higher: between two giver men who have had sexual intercourse with.
the mother at the time of conception, both of whom undergo blood tests, it has likewise been said that there is a 80 per cent chance that the tests will show that one of them is not the father with the irresistible inference that the other is the father.
The position which emerges on reference to these authoritative texts is that depending on the type of litigation, samples of blood, when subjected to skilled scientific examination, can sometimes supply helpful evidence on various issues, to exclude a particular parentage set up in the case.
But the consideration remains that the party asserting the claim to have a child and the rival set of parents put to blood test must establish his right so to do.
The court exercises protective jurisdiction on behalf of an infant.
In my considered opinion it would be unjust and not fair either to direct a test for a collateral reason to assist a litigant in his or her claim.
The child cannot be allowed to suffer because of his incapacity; the aim is to ensure that he gets his rights.
If in a case the court has reason to believe that the application for blood test is of a fishing nature or designed for some ulterior motive, it would be justified in not acceding to such a prayer." "The above is the dicta laid down by the various High Courts.
In matters of this kind the court must have regard to section 112 of the Evidence Act.
This section is based on the well known maxim pater est quem nuptioe demonstrant (he is the father whom the marriage indicates).
The presumption of legitimacy is this, that a child born of a married woman is deemed to be legitimate, it throws on the person who is interested in making out the illegitimacy, the whole burden of proving it.
The law presumes both that a marriage ceremony is valid, any that every 928 person is legitimate.
Marriage or filiation (parentage) may be presumed, the law in general presuming against vice and immoratility.
" It is a rebuttable presumption of law that a child born.
during the lawful wedlock is legitimate, and that access occurred between the parents.
This presumption can only be displaced by a strong preponderannce of evidence, and not by a mere balance of probabilities.
In Smt.
Dukhtar Jahan vs Mohammed Faroog ; this court held.
"Section II 2 lays down that if a person was born during the continuance of a valid marriage between his mother and any man or within two hundren and eighty days after its dissolution and the mother remains unmarried, it shall be taken as conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at anytime when he could have been begotten.
This rule of law based on the dictates of justice has always made the courts incline towards upholding the legitimacy of a child unless the facts are so compulsive and clinching as to necessarily warrant a finding that the child could not at all have been begotten to the father and as such a legitimation of the child would result in rank injustice to the father.
Courts have always desisted from lightly or hastily rendering a verdict and that too, on the basts of slender materials, which will have the effect of branding a child as a bastard and its mother an unchaste woman.
" This section requires the party disputing the paternity to prove non access in order to dispel the presumption. "Access" and "non access" mean the existence or non existence of opportunities for sexual intercourse; it does not mean actual cohabitation.
The effect of this section is this: there is a presumption and a very strong one though a reubttable one.
Conclusive proof means as laid down under section 4 of the Evidence Act.
From the above discussion it emerges: (1) that courts in India cannot order blood test as matter of course; 929 (2) wherever applications are made for such prayers in order to have roving inquiry, the prayer for blood test cannot be entertained.
(3) There must be a strong primafacie case in that the husband must establish non access in order to dispel the presumption arising under section 112 of the Evidence Act.
(4) The court must carefully examine as to what would be the consequence of ordering the blood test; whether it will have the effect of branding a child as a bastard and the mother as an unchaste woman.
(5) No one can be compelled to give sample of blood for analysis.
Examined in the light of the above, we find no difficulty in upholding the impugned order of the High Court, confirming the order of the Addl.
Chief Judicial Magistrate, Alipore in rejecting the application for blood test.
We find the purpose of the application is nothing more than to avoid payment of maintenance, without making any ground whatever to have recourse to the test.
Accordingly Criminal Appeal will stand dismissed.
Cr, M.P.No.
2224/93 in S.L.P.(cr No. 2648/92 filed by Respondent No. 2 will stand allowed.
She is permitted to withdraw the amount without furnishing any Security.
R.P. S.L.P. dismissed. | Respondent No. 2 was married to the appellant.
She went to reside with her parents in order to prepare for Higher Secondary Examination.
In the meantime she conceived.
The appellant and his family members asked her to undergo abortion but she refused, and a child was born to her.
In a petition under section 125, Cr.
P.C. riled by respondent No. 2, against her husband, the wife and the child were granted maintenance.
The appellant, disputing the paternity of the child, riled a criminal miscellaneous application for blood group test (if respondent No. 2 and the child.
It was claimed that if it was established that he was not father of the child he would not be liable to pay the maintenance.
The application was dismissed.
Appellant 's revision application was also rejected by the High Court.
The appellant filed the appeal by special leave.
Dismissing the appeal, this Court 918 HELD: 1.1 Courts is India cannot order blood group test as a matter of course.
Unlike the English law* in India there is no special statute governing this.
Neither the Criminal Procedure Code nor the Evidence Act empowers the court ; to direct such a test, *Affiliation Proceedings Act.
, 1957; Family Reforms Act.
, 1969; Family Reforms Act, 1987.
1.2 Wherever applications are made for blood group test in order to have roving inquiry, the prayer cannot be entertained.
Bhartiraj vs Sumesh Sachdeo & Ors: , approved.
2.1 Section 112 read with s.4 of the Evidence Act debars evidence except in cases of non access for disproving the presumption of legitimacy and paternity.
It is a rebuttable presumption of lam, that a child born during the lawful wedlock is legitimate, and that access occurred between the parties.
This presumption can only be displaced by a strong preponderance of evidence and not by a mere balance of probabilities.
2.2 There must be a strong prima facie case in that the husband must establish non access in order to dispel the presumption arising under section 112 of the Evidence Act.
Vasu vs Santha: [1975] Kerala Law Times 533 and Raghunath vs Shardabai, , referred to.
Morris vs Davies ; cited.
3 The Court must carefully examine as to what would be the consequence of ordering the blood test; whether it will have the effect of branding a child as a bastard and the mother as an unchaste woman.
Dikhtar Jahan vs Mohammed Faroog.
; , referred to.
4.1 Blood group test is a useful test to determine the question of disputed paternity.
It can be relied upon by courts as a circumstantial evidence which ultimately excludes a certain individual as a father of the child.
4.2 No person can be compelled to give sample of blood for analysis and no adverse inference can he drawn against a person on account of such refusal.
919 Hargovind Soni vs Ramdulari, AIR [1986] M.P. 57, approved.
Vasu vs Santha, [1975] Kerala Law Times 533, Polavarapu Venkeeswarlu vs Polavarapu Subbayya, , referred to.
Subayya Gounder vs Bhoopala, AIR [1959] Madras 396; Venkateswarlu vs Subbayya, AIR [1951] Madras 910; Hukum Chand Boid vs Kamalan and Singh, Cal. 927, cited.
Wilson vs Wilson, Lancet [1942] 1.570; Re L 1968 [1] All England Reports 20; B. R. B. vs J. B., [1968] 2 All Eng.
Reports 1023, referred to Tauylor 's 'Principles and Practice of Medical Jurisprudence (Vol. 2); 'Medical Jurisprudence and Toxicology (8th Edition) by Rai Bahadur Jaising P. Mod, cited.
`Forensic Sciences ' edited by Cyril H. Wecht, referred to.
In the instant case the purpose of the application for blood group test was nothing more than to avoid payment of maintenance, without making any ground whatever to have recourse to the test.
The High Court was right in confirming the order of the court below rejecting the application. |
Appeal Nos.
2863 65 of 1993.
From the Judgment and Order dated 21.2.91 of the Kerala High Court in C.M.P. No. 2170/90, 596/91, 597/91 in M.F.A. No. 518 of 1981.
WITH Civil Appeal No. 2960 of 1993.
K.K. Venugopal, G. Ramaswamy, M.N. Krishnamani, K.P. Dandapani E.M.S. Anam, P.N. Puri, A.T.M. Sampath, Pravir Choudhary for the Petitioner/ Appellant.
Shanti Bhushan.
Joshph Vellapall vs R.K.Jain, A Mariarputham, for M/s A. Mariarputham and Mrs. Aruna Mathur for Mrs. Aruna Mathur & Co. for the respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
How far could we protect the interests of subscribers who had subscribed to a chit run by a subsidiary company of the appellant ordered to be wound up when allegedly subscriptions were made good by them not merely out of their hard savings but also of sums got by even, pledging and selling the jewelleries and ornaments of their wives, in the fond hope of getting a lumpsum amount on a future date, to meet the expenses of marriages in the family or health hazards of family members and the like, is the issue that really bothered us at the hearing of the appeals.
About 15 years ago the subsidiary company under winding up, diverted the amount of rupees ten crores received by it by way of chit subscriptions to its holding, company (the appellant) resulting in its inability to pay the subscribers, when they became entitled to (yet the prize amounts.
When some of the subscribers approached the High Court and succeeded in getting the subsidiary company wound up, the appellant holding company appeared in Court and prayed for an opportunity to be given to it to revive its subsidiary company.
That prayer was accepted by a Division Bench of The Kerala High Court in the case of Suarshan Chits (India) Ltd., vs G.S. Pilai ILR 1983 vol.
1 Kerala p. 700.
The Division 906 Bench approved the scheme of compromise and arrangement under Sec. 391 of the .
Consequently, it ordered the winding up order to be held in abeyance on condition that the holding company shall execute a security bond to cover subsidiary company 's liability to the extent of a sum of Rs. 10.40 crores owed to its subscribers.
It also directed the holding company to pay off that amount within a period of five years.
Restriction was also placed on alienation of any property by tile holding, company without obtaining prior permission of the Court.
Arrangement was made for managing, affairs of the appellant company as well.
Apart from the Board of Directors an Additional Director was nominated to supervise and keep a watch on the affairs of the company.
Since than the appellant company is run as directed by the High Court but neither the subscribers are paid, as a body of creditors, not the entire amount of rupees ten crores and odd is paid by the appellant to the subsidiary company.
True, that out of nearly one lakh subscribers.
twenty nine thousand and odd subscribers only remain unpaid.
But, that is hardly satisfactory.
Regret is that more than one third of the subscribers remain unpaid even after ten years from the date the High Court ordered the winding up to be in abeyance.
Payment of rupees two crores and odd by the holding company which had the benefit of ten crores and odd rupees for the last 15 years, which amount by any standard is equivalent to fifty crores of rupees of today, we must state, is a poor consolation, for the holding company to claim that all steps to discharge its obligations is taken.
Having noticed in brief, how matters have proceeded, we shall advert to the dispute which has arisen in respect of an offer now made by the holding company to sell 20.79 acres of land for paying the creditors.
Whatever that be, one situation which has been brought about is, its successful attempt in involving, many subscribers who had formed themselves into a creditors association and an owner of a factory adjoining the disputed land, in litigation which has reached this Court more than once.
It is unfortunate that a company which had volunteered to pay ten crores of rupees with in a period of five years has successfully evaded the payment by offering a pittance.
From the date of offer in 1987 six ears have elapsed but no amount worth consideration, appears to have been paid to the subscribers.
We consider it unnecessary to recount in detail the offer made by Ramaswamy Udayar, the appellant in the other appeal, counter offer made by the creditors association, delay in payment by the association, extension of time by this Court for payment by the association, withdrawal of offer by the holding company in the meantime as the High Court had after detailed examination accepted the offer of creditors association for purchase of disputed land and rejection of the claim of Udayar.
Nor do we consider it necessary to deal with rival submission made by learned senior counsel appearing for respective parties, although we heard them at length, as in our opinion that rupees fifty two lakhs and odd the total amount for which the land 907 has to be sold could hardly be sufficient to relieve the agony of the body of subscribers for whose benefit the entire exercise was undertaken by the High Court.
As we have understood the matter, there may be a grain of truth in the allegation that it is Estate Dealers with vested interests who are interfering and in fact the amount paid by the creditors association is of estate dealers.
It may also.
be true that the total membership of the association is not even 5% of the unpaid subscribers.
In the said circumstances and taking into consideration the board consensus reached among learned counsel as to what needs to be done, we decide the two appeals, one filed by the holding company for release of the land and other by Udayar for accepting his bid on the following terms and conditions: (1)The holding company shall deposit with the official Receiver or Assignee concerned a sum equivalent to the deposited sum on which the High Court was pleased to direct sale deed to be executed in favour of the creditors association together with 25% interest minus the interest, if any earned by the deposit made, calculated on the deposited amount, from the date of deposit till 31st July, 1993, within a period of three months from today.
(2) Out of the amount of sale price of the land already deposited by the creditors Association and the interest if any earned thereon plus the sums of money to be deposited by the holding company under the above term and condition (1), a sum equivalent to the amount deposited by creditors Association, together with interest at 25% thereon from the date of deposit upto 31s t July, 1993 shall be refunded to the creditors association in lieu of their claim for disputed land being, given up.
The balance amount shall remain the benefit of general body of creditors of the subsidiary compa (3) The holding company shall pay the entire outstanding de (amounts) payable to the subscribers who were members of creditors association on the date when their claim applications w decided by the Kerala High Court, together with interest there of 12 percent from the date of decision till 31st July, 1993, within same period, namely, three months.
This amount too shall deposited with the receiver for immediate payment to those cre 908 tors subscribers for giving discharge of their claims against the subsidiary company.
(4) In case the above terms and conditions as to deposits to be made by the holding company are complied with.
within the period allowed, for which no extension of time shall be granted, then the disputed land offered for sale by the holding company and purchased by creditor 's associations shall stand released in its holding company 's) favour.
If such deposits are not made, the sale in favour of creditors company shall stand confirmed.
(5) An offer was made by the appellant in Appeal No. 6614 of 1991 that the land being adjacent to its factory he was willing to pay even rupees five lakhs per acre.
Therefore, on release if the land is sold, it shall be sold, as and when such occasion arises, for a price not less than five lakhs per acre.
The amount so realised shall also be deposited by the holding company with the receiver for distribution among general body of creditors of the subsidiary company in discharge of its obligations to pay of the creditors of the subsidiary company.
(6) (a) The receiver shall further take steps to see that the holding company fulfils its obligations and pays the entire balance within a period of one year from 31st August, 1993.
(b) In case of failure to clear the dues of all the subscribers it shall be open to any unpaid subscriber to approach the High Court for recalling the order passed by the High Court in 1983 directing the winding up to be put in abeyance.
(c) It shall also be open to the unpaid subscribers to approach the High Court for th e aforesaid reasons mentioned in clause (b) to take steps to get the amount realised from assets of the holding company.
If such an application is made it shall be disposed of by the High Court expeditiously in accordance with law after hearing, parties concerned.
Both the appeals are decided accordingly.
The parties shall bear their own costs.
R.P Appeals disposed of. | A subsidiary company of the appellant holding company (C.A. No. 2866 of 1993) diverted to the appellant rupees ten crores received by it by way of chit subscriptions.
It failed to pay the subscribers the prize money.
When some of the subscribers initiated winding up proceedings against the subsidiary company the appellant appeared before the High Court and undertook the liability of the subsidiary company to an extent of a sum of Rs 10.40 Crores to the subscribers.
The High Court approved the scheme of compromise and arrangement under section 391 of the and directed the winding up order to be held in abeyance on the condition that the appellant holding company would pay off the amount or Rs. 10.40 Crores to the subscribers, within five years.
It also restricted alienation (of any property by the holding company.
Without obtaining prior permission (of the Court.
Even ten %,Cars after the order of the High Court, more than one third of the subscribers remained unpaid.
Meanwhile the appellant company took steps to sell 20.79 acres of land to pay the Creditors.
The appellant in C.A.No. 2863 65 (if 1973 made an offer where as the respondent creditors ' association made a counter offer.
The High Court accepted the (offer of Creditors ' association.
Hence the appeals by special leave.
Disposing of the appeals, this Court gave the following 904 Directions : 1.
The holding company shall deposit with the official Receiver fir Assignee concerned a sum equivalent to the deposited sum on which the High Court had directed sale deed to be executed in favour of the creditors association together with 25% interest minus the interest, if any earned by the deposit, made, calculated (in the deposited amount, from the date of deposit till 31st.
July, 1993, within a period of three months.
Out of the amount mentioned in condition (1) above, a sum equivalent to the amount deposited by creditors Association, together with interest at 25% thereon from the date of deposit upto 31st July, 1993 shall be refunded to the creditors association in lieu of their claim for the disputed land being given up.
The balance amount shall remain for the benefit of general body of creditors of the subsidiary company.
Tile holding company shall pay through the receiver the entire outstanding debts payable to the subscribers who were members of the creditors association on the date when their claim applications were decided by the High Court, together with interest thereon at 12 per cent from the date of decision till 31st July, 1993.
In case the above terms and conditions are complied with, within the period allowed then the disputed land offered for sale by the holding company and purchased by creditors ' associations shall stand released in holding company 's favour.
If such deposits are not made, the sale in favour of creditors company shall stand confirmed 5.
In view of the offer made by the appellant in Appeals No. 2863 65 of 1993, the land on its release shall be sold, for a price not less titan five lakhs per acre.
The amount so realised shall also be deposited of the holding company with the receiver for distribution among general body of creditors of the subsidiary, company.
The receiver shall further take steps to see that the holding company fulfils its obligations and pays the entire balance within a period of one year from 31st August, 1993.
In case of failure to clear the dues of all tile subscribers it shall he open to an%.
unpaid subscriber to approach the High Court for recalling the order passed by the High Court for in 1983 direction the winding up to be plot in abeyance, as well as to the steps to get the amount realised front assets of 905 the holding company.
If such an application is made it shall be disposed of by the High Court expeditiously in accordance with law after hearing parties concerned. |
Appeals Nos. 722 and 723 of 1993.
From the Judgment and Order dated 13.11.92 of the Allahabad High Court in W.P. Nos.
688 & 1246 of 1992.
WITH CIVIL APPEALS NOS.
386 and 387 of 1993 From the Judgment and Order dated 13.11.92 of the Allahabad High Court in W. P. Nos. 8 19 and 888 of 1992.
Rajiv Dhawan, P.K. Dey and Rakesh Gosian, Ms. Rani Jethmalani, (N.P.) for the Appellants in C.A. Nos.
722 23/93.
R.P. Saxena for the Appellants in C.A. Nos. 386 87/93.
Yogeshwar Prasad and Ms. Rachna Gupta for the Respondent.
J The appellants in Civil Appeals Nos.
722 & 723 of 1993 had been appointed as Assistant District Government Counsel (Criminal) to appear in different criminal cases, on behalf of the State, in different Courts in the District of Moradabad.
They filed the connected Writ Applications before the High Court against the decision of the State Government, refusing to extend their term for a farther period of three years, which were dismissed by the High Court.
It appears that the appellants.
except appellant No. 3, Gopal Sharma. had been appointed by Government Order dated 25.2.91.
as Assistant District Government Counsel (Criminal) in the District of Moradabad, in accordance with the provisions of Section 24 of the Criminal Procedure Code (hereinafter referred to as "the Code") and the Legal Remembrancer Manual (hereinafter referred to as "the Manual") against the substantive vacancies.
Appellant No. 3, however, had been appointed on 13.12.1990.
The last date of the tenure of the appellants, other than appellant No. 3, as mentioned in the aforesaid Government Order dated 25.
2.1991 was 31.12.199 1.
The tenure of appellant No. 3 was up to 13.12.199 1.
It is not in dispute that before the expiry of the term aforesaid, the District Judge, Moradabad, by his letter dated 27.12.1991 recommended the names of appellants for extension of their terms.
The District Judge prepared two lists i.e. 'A ' and 'B '.
List 'A ' contained the name of those lawyers "whose work and conduct has been approved for their extension as Government Counsel", whereas List `B ' contained the names of the remaining Government Counsel, who in the opinion of the District Judge were "average lawyers".
The names of the appellants are in List 'A ' The District Judge requested the District Magistrate.
Moradabad.
to send his recommendation to the State Government for extension of the term of tile Government Counsel, mentioned in List 'A '.
The District Magistrate.
after receipt of the recommendation of the District Judge aforesaid, by a communication dated 2.1.92, did not recommended the names of the appellants, for extension of their terms, saying that on the inquiry at his level, "reputation, professional work, behaviour and conduct of the above mentioned Government Counsel was not found in accordance with public interest".
It may be mentioned that on 28.12.9 1. tile State Government had extended the terms of the appellants till further orders.
Ultimately, without assigning any reason, the extension recommended by the District Judge was rejected by the State Government, which decision is the subject matter of the controversy in the present appeals.
In the State of U.P., the Manual is an authoritative compilation of the government orders and instructions for the conduct of legal affairs of the State Government.
Para 1.00 of Chapter VII gives the details of the Law Officers of the Government which includes the Government Counsel (Civil, Revenue, Criminal) 975 along with many others like Judicial Secretary and Legislative Secretary.
The Chapter VII of the contains the procedure in respect of appointment and conditions of engagements of District Government Counsel.
The District Officer is required it) consider all the applications received.
in consultation with the District Judge and to submit in order of preference the names of ' the legal practitioners, along with the opinion of the District Judge on tile suitability and merit of each candidate to the State Government giving due wightage to the claim of the existing incumbents, if any.
After the receipt of such recommendations, the Legal Remembrancer is required is required to submit the said recommendations with his own opinion for the orders of the State Government.
In Para 7.06 of the Manual, the procedure regarding the appointment and renewal has been prescribed "7.06.
Appointment and renewal (1) The legal practitioner finally selected by the Government may be appointed District Government Counsel for one year from the date of his taking over charge.
(2)At the end of the aforesaid periodic the District Officer after consulting the District Judge shall submit a report on his work and conduct to the legal Rememberancer together with the statement of work done in Form No. 9.
Should his work or conduct be found to he unsatisfactory the matter shall be reported to the Government for orders.
If the report in respect of his work and conduct is satisfac tory, he may be furnished with a deed of engagement in Form No. 1 for a term not exceeding three years.
On his first engagement a copy of Form No.2 shall he supplied to him and lie shall complete and return it to the legal Remembrancer for record.
(3)The appointment of any legal practitioner as a District Government Counsel is only professional engagement terminable at will on either side and is not appointment to a post under the government.
Accordingly the government reserves the power to terminate the appointment of any District Government Counsel at any time without assigning any cause.
" Para 7.08 contains the procedure for renewal after expiry of the original term: "7.08.
Renewal of term (1) At least three months before the expiry 976 of the term of a District Government Counsel, the District Officer shall after consulting tile District Judge and considering, his past record of work, conduct and age, report to the Legal Remembrancer together with the statement of work done by him in Form No.9 whether in his opinion the term of appointment of such counsel should be renewed or not.
A copy of the opinion of the District Judge should also he sent along with the recommendations of the District Officer.
(2)Where recommendation for the extension of the term of a District Government Counsel is made for a specified period only the reasons therefore shall also he stated by the District Officer.
(3) While forwarding, his recommendation for renewal of the term District Government Counsel (i) the District Judge shall give an estimate of the quality of the Counsel 's work from the judicial standpoint, keeping, in view the different aspects of a lawyers capacity as.
it is manifested before him in conducting, State cases, and specially his professional conduct.
(ii) the District Officer shall give his report about the suitability of the District Government Counsel from the administrative point of view, his public reputation in general his character.
integrity and professional conduct.
(4) If the Government agrees with the recommendations of the District Officer for the renewal of the term of the Government Counsel, it may pass orders for re appointing him for a period not exceeding three years.
(5) If the government decides not to re appoint a Government Counsel, the Legal Remembrancer may call upon the District Office r to forward fresh recommendations in the manner laid down in para 7.03.
(6) The procedure prescribed in this para shall be followed on the expiry of every successive period of renewed appointment of a 977 Dist Government Counsel.
Note : The renewal beyond 60 years of age shall depend upon continuous good work, sound integarity and physical fitness of the Counsel.
It was pointed out on behalf of the appellants, that any legal practitioner finally selected by the Government may be appointed as District Government Counsel for one year from the date of his taking over charge, but in view of Para 7.06 of the Manual at the end of the aforesaid period the District Magistrate after consulting the District Judge has to submit a report on his work and conduct to the Legal Remembrancer in the form prescribed.
If the report in respect of his workand conduct is satisfactory, then such Counsel shall be furnished with a deed of engagement in form No. 1 for a term not exceeding three years.
Para 7.08 of the Manual contains the procedure for renewal of the term of the District Government Counsel after the expiry of original term.
It requires the District Officer at least three months before the expity of the term of a District Government Counsel to report to the Legal Rmembrancer after consulting the District Judge and considering the past record of work conduct and age of such District Government Counsel.
If the Government agrees with the recommendation it may pass an Order re appointing him for a period not exceeding three years.
The stand of the appellants is that in view of Para 7.06(2), the appointment of any legal practitioner as a District Governemnt Counsel, does not automatically come to an end rather it indicates and element of continuity and that is why Para 7.06(2) requires the District Officer at the end of period of one year to submit a report after consulting the District Judge concerned in respect of the work and conduct of such District Government Counsel to the Legal Remembrancer in a form prescribed.
If the report in respect of work and conduct is satisfactory then such District Government Counsel shall be furnished with a deed of engagement in a form prescribed for a term not exceeding three years.
As such after the period of one year if the engagement for a further period upto three years is not given, it amounts to a stigma.
On behalf of the appellants attention of this Court was drawn to a letter addressed to the District Magistrate by Dr. Nepal Singh, M. L.C., the District President of the party then in power recommending the names of other Government Counsel for renewal/extension of their term.
It was pointed out that in respect of all those persons.
The District Magistrate has recommended for extension.
There is however, no material before us to show that the District 978 Magistrate was influenced by the said letter in any manner.
A part form that the persons so resommended by the District Magistrate were not impleded as respondents to the Writ applications.
As such we are not inclined to go into this aspect.
The different paragraphs of the Manual aforesaid were examined in detail in the case of Kumari Shrilekha Vidyarthi vs State of U. P. , in connection with an order dated February 6, 1990 issued by the State of U. P. terminating the appointments of all Government Counlsel ( Civil Criminal and Revenue) in all the districts of the State of U.P. with effect from February 28, 1990 and directing the preparation of fresh panels for making appointments in places of the existing incumbents.
while quashing such general order it was said: Viewed in any manner the impugned circular dated February 6, 1990 is arbitrary.
It terminates all the appointments of Government Counsel in the districts of the State of Uttar Pradesh by an omnibus order even though these appointments were all individual.
No common reason applicable to all of them justifying their termination in one stroke on a reasonable ground has been shown.
The submission on behalf of the State of UttarPradesh at the hearing that many of them were likely to be re appointed is by itself ample proof of the fact that there was total non application of mind to the individual cases before issuing the general order terminating all the appointments.
This was done in spite of the clear provisions in the L. R. manual lying down detailed procedure for appointment, termination and renewal of tenure and the requirement to first consider the existiong incumbent for renewal of his tenure and to take steps for a fresh appointment in his place only if the existing incumbent is notfound suitable in comparison to more suitable persons available for appointment at the time of renewal.
In the case of existing appointees a decision has to be first reached about their non suitability for renewal before deciding to take steps for making fresh appointments to replace them.
None of these steps were taken and no materialhas been produced to show that any existing incumbent was found unsuitable for the office on objective assessment before the decision to replace all by fresh appointees was taken.
The prescribed procedure laid down in the L.R. Manual which has to regulate exercise of this power was tatally igonered.
In the present case it appears to be an admitted position that appointments of the appellants as assistant District Government Counsel (Criminal) is governed 978 979 .LM0 by Section 24 of the Code, as well different paragraphs of Chapter VII of the Manual.
It was not disputed on behalf of the State, that appellants shall be deemed to be Additional Public Prosecutors within the meaning of Section 24 of the Code, although in the order of appointment they have been designated as Assistant District Government Counsel (Criminal).
The procedure prescribed in the Manual can be observed and followed as supplemental to the provisions of Section 24 of the Code.
Needless to say that, if there is any conflict, then Section 24 of the Code being statutory in nature will override the procedure prescribed in the Manual.
The relevant part of Section 24 is as such "24.
Public Prosecutors (1) For every High Court, the Central Government of the State shall, after consultation with the High Court, appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors, for conducting in such Court, any prosecution,appeal or other proceedings on behalf of the Central Government or State Government, as the case may be.
(2). . . . (3) For every district, the State Government shall appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors for the district: Provided that the Public Prosecutor or Additional Public Prosecutor appointed for one district may he appointed also to be a Public Prosecutor as the case may be for another district.
(4)The District Magistrate shall, in consultation with the Sessions Judge, prepare a panel of names of persons, who are.
in his opinion, fit to he appointed as Public Prosecutors or Additional Public Prosecutors for the district.
(5) No Person shall be appointed by the State Government as the Public Prosecutor or Additional Public Prosecutor for the district unless his name appears in the panel of names prepared by the District Magistrate under sub section (4).
" The Code prescribes the procedure for appointment of Public Prosecutor and Additional Public Prosecutor, for the High Court and the District Courts by the State Government.
The framers of the Code, were conscious of the fact, that the Public Prosecutor and the Additional Public Prosecutor have an important role, 980 while prosecuting on behalf of the State, accused persons, who are alleged to have committed one or the other offence.
Because of that, provisions have been made for their selection in the Code.
It is for the Sessions Judge to assessee the merit and professional conduct of the persons recommended for such appointments and the District Magistrate to express his opinion on the suitability of persons so recommended, from the administrative point of view.
Sub section (5) of Section 24 provides that no person shall be appointed by the State Government as the Public prosecutor or as an Additional Public Prosecutor "unless his name appears in the panel of names prepared by the District Magistrate under sub section (4)".
The aforesaid section requires an effective and real consultation between the Sessions Judge and the District Magistrate, about the merit and suitability of person it) he appointed as Public Prosecutor or as an Additional Public Prosecutor.
That is why it requires, a panel of names of persons, to be prepared by the District Magistrate in consultation with the Sessions Judge.
The same is the position so far the Manual is concerned.
It enumerates in detail, how for purpose of initial appointment extension or renewal, the District Judge who is also the Session Judge, is to give his estimate of the quality of the work of the Counsel from the judicial Standpoint and the District Officer i.e. the District Magistrate is to report about the suitability, of such person, from administrative point of view.
On behalf of the State, our attention was drawn to the expression "in his opinion" occurring in sub section (4) of Section 24 of the Code.
It was urged that as the Code vests power in the District Magistrate to consider the suitability of the person concerned, for appointment, according, to his opinion, there is not much scope of judicial review by Courts, unless a clear case of malice on the part of the District Magistrate is made out.
In view of the series of judgments of this Court in Barium Chemicals Ltd vs Company Law Board, ; ; State of Assam Bhatrai Kala Bhandar Ltd.
AIR , Rohtas Industries Ltd. vs S.D. Agarwal; , , The Purtapur Company Ltd. vs Cane Commissioner of Bihar AIR 1970 SC 1896 and M.A. Rasheed vs The State of Kerala; , , it is almost settled that, although power has been vested in a particular authority, in subjective term:, still judicial review is permissible.
In the present case the District & Session Judge strongly recommended extension for the appellants, saying that so far their work and conduct were concerned, the same had been approved.
But the District Magistrate, simply said that on the inquiry at his level "reputation, professional work, behaviour and conductor the appellants as government counsel was not found in accordance with the public interest".
The quality of the Counsel ' work has to be judged and assessed 981 by the District & Sessions Judge.
The District Magistrate is required to consider the suitability of such person, from the administrative point of view.
According to us, in view of the strong recommendation about the quality of the appellants ' professional work, the District Magistrate should have applied his mind in consultation with the Sessions Judge.
in respect of each individual case.
instead of making a general and identical comment against all the appellants.
Apart from that the mandate of sub section (4) of Section 24 is that "the District Magistrate shall, in constitution with the Session Judge, prepare a panel of names of persons".
Sub section (5) of Section 24 prescribes a statutory bar that no person shall be appointed by the State Government as the Public Prosecutor or Additional Public Prosecutor for the district "unless his name appears in the panel of names prepared by the District Magistrate under sub section (4)".
When sub section (4) and sub section (5) of Section 24 of the Code, speak about preparation of a panel, out of which appointments against the posts of Prosecutor or Additional Public Prosecutor have to he made.
then the Sessions Judge and the District Magistrate are required to consult and discuss the names of the persons fit to be included in the panel and to include such names in the panel.
The expressions "panel of names of persons", do not mean that some names are to be suggested by the Sessions Judge and some comments are to be made, in respect of those names by the District Magistrate, without proper consultation and discussion over such names.
The statutory mandate ought to have been complied with by the District Magistrate and the Sessions Judge in its true spirit.
In the facts of the present case, no such panel appears to have been prepared by the District Magistrate in terms of sub section (4) of Section 24.
As Section 24 of the Code does not speak about extension or renewal of the term of the person so appointed, the same procedure, as provided under sub section (4) of Section 24 of the Code, has to be followed.
In the present case the District Magistrate instead of having an effective and real consultation with the District & Sessions Judge simply made some vague and general comments against the appellants, which cannot be held to he the compliance of the requirement of subsection (4) of Section 24.
In the case of Kumari Shrilankha Vidyarthi (supra), this Court was not concerned with the question regarding the extension/renewal of the terms of the Government Counsel.
The primary question which was examined by this Court in that case, was as to whether it was open to the State Government by the impugned circular dated February 6, 1990.
to terminate appointments of all the Government Counsel in the different districts of the State, by an omnibus order, even though those appointments were all individual.
It was held that any such exercise of power by the State Government cannot satisfy the test of Article 14 of the Constitution 982 and as such was unreasonable and arbitrary.
In that connection reference was made to the Manual aforesaid and it was pointed out that the said Manual has laid down detailed procedure for appointment, termination and renewal of the tenure of the District Government Counsel.
It was pointed out, that different paragraphs of the Manual require, first to consider the existing incumbents for extension and renewal of their tenure and to take steps for fresh appointment in their place, if the existing incumbents were not found suitable in comparison to more suitable persons available for appointment at the time of the renewal.
As already mentioned above.
Section 24 of the Code does not speak about the extension or renewal of the term (if the Public Prosecutor or Additional Public Prosecutor.
But after the expiry of the term of the appointment of persons concerned.
it requires the same statutory exercise, in which either new persons are appointed or those who have been working as Public Prosecutor or Additional Public Prosecutor.
are again appointed by the State Government, for a fresh term.
The procedure prescribed in the Manual to the extant it is not in conflict with the provisions of Section 24.
shall he deemed to be supplementing the statutory provisions.
But merely because there is a provision for extension or renewal of the term, the same cannot he claimed as a matter of right.
It is true that none of the appellants can claim, as a matter of right, that their terms should have been extended or that they should be appointed against the existing vacancies but certainly they can make a grievance that either they have not received the Pair treatment by the appointing authority or that the procedure prescribed in the Code and in the Manual aforesaid.
have not been followed.
While exercising the power of judicial review even in respect of appointment of members of the legal profession as District Government Counsel the Court can examine whether there was any infirmity in the "decision making process.
" Of course, while doing so the Court cannot substitute its own judgment over the final decision taken in respect of selection of persons for those posts.
It was said in the case of Chief Constable of the North Wales Plice vs Evans.(1982) ; "The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according Pair treatment.
reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.
" In the facts of the present case, the procedure prescribed by Section 24 of the Code have not been followed by the District Magistrate.
There is nothing on the 983 records of the case to show that any panel as required by sub section (4) of Section 24 was prepared by the District Magistrate in consultation with the District & Sessions Judge.
The District Magistrate simply made some general comment in respect of the appellants.
When the District & Sessions Judge had put them in List 'A ' of his recommendation.
According, to us, this shall not amount to either the compliance of 'sub section (4) of Section 24 of the Code or Para 7.06(2) of the Manual.
It appears there has been no effective or real consultation between the Sessions Judge and the District Magistrate for preparation of the panel, as contemplated.
by sub section (4) of Section 24 of the Code.
The members of the legal profession are required to maintain high standard of legal ethics and dignity of profession.
They are not supposed to solicit work or seek mandamus from courts in matters of professional engagements.
We have been persuaded to interfere in these matters to a limited extent, as we are satisfied that there is patent infraction of the statutory provisions of the Code.
As we are of the view that the District Magistrate has not performed his statutory duty as enjoined by law, the appeals of the appellants have to be allowed.
In the result, the appeals are allowed.
We direct the District Magistrate, Moradabad, to perform his statutory duty afresh.
in accordance with the requirement of Section 24 of the Code read with the relevant paragraphs of Chapter VII of the Manual, which are not inconsistent with Section 24 of the Code.
so far the appellants are concerned, if the vacancies are still there.
The necessary steps shall be taken preferably within four months from the date of this judgment.
the State Government shall thereafter perform its part in accordance with Section 24 and different paragraphs of the Manual which are applicable in the facts and circum stances of the case.
We make it clear that we are not expressing any opinion on the merit of the claim of the appellants to get extension or appointment against the posts of Assistant District Government Counsel (Criminal).
There will he no order as to costs.
CIVIL APPEALS NOS.
386 & 387 OF 1993 So far the appellants of these appeals are concerned, their names were put under List 'B ' by the District & Sessions Judge in his recommendation saying that they were "average lawyers".
Their case stands on a different footing.
The District & Sessions Judge.
who is required to express his opinion on the merit and the conduct of the persons recommended for appointment or extension of the period 984 as District Government Counsel, has expressed the opinion that appellants are "average lawyers" and has put them in List B.
In other words, neither the District & Sessions Judge has recommended the case of the appellants of these appeals for extension nor the District Magistrate.
Their case cannot be treated at par with the appellants of the other appeals.
In such as situation, no useful purpose will be served by directing the District Magistrate to perform his statutory duty as required by sub section (4)of Section 24 of the Code again, even the respect of these appellants.
Accordingly, these appeals are dismissed.
there will be no orders as to costs.
V.P.R, C.A. Nos. 722 and 723/93 allowed.
C.A. Nos. 386 and 387/93 dismissed. | On 25.2.91 the appellants except appellant No. 3 were appointed as Assistant District Government Counsel (Criminal) in accordance with the provisions of Section 24 of the Criminal Procedure Code and the Legal Remembrancer Manual.
The appellant No.3 was appointed on 13.12.1990.
The last date of the tenure of the appellants, except appellant No.3, was 31.12.1991, where as the tenure of appellant No.3 was upto 13.12.1991.
Before 970 the expiry of their terms, the District Judge, preparing two lists, 'A ' and `B ' recommended the appellants ' names for extension of their tenures.
List `A ' contained the names of Lawyers (including the appellants), whose work and conduct was approved for their extension, whereas List 'B ' contained the remaining names of the lawyers (including appellants in C.A. Nos. 386, 387/ 1993) who were considered as 'average lawyers '.
The District Judge requested the District Magistrate to send his recommendation to the State Government.
The District Magistrate did not recommend the appellants ' names as their reputation, professional work, behaviour and conduct was not found in accordance with public interest.
On 28.12.1991 the State Government extended the terms of the appellants till further orders.
Later without assigning any reason, the extension recommended by the District Judge was rejected by the State Government.
The appellants filed writ petitions in the High Court against the Government 's decision.
The High Court dismissed their writ applications, against which the present appeals were filed by special leave before this Court.
C.A. Nos. 386 & 387 OF 1993.
The appellants ' names were included in the List 'B ' prepared by the District Judge.
The State Government rejected the recommendation of the District Judge, without assigning any reason.
The writ petitions preferred by them in the High Court were dismissed.
Hence these appeals by special leave.
As there was a common issue arose in these appeals, same were heard and decided together.
The appellants contended that in view of Para 7.06(2) of the Legal Remembrancer Manual the appointment of any legal practitioner as a District Government Counsel did not automatically come to an end.
The State submitted that as Section 24(4) of the Code of Criminal Procedure vested power in the District Magistrate to consider the suitability of the person concerned, for appointment, according to his opinion, as such there was not much scope of judicial review by Courts, unless a clear case of malice on the part of the District Magistrate was made out.
971 Allowing the Civil Appeals Nos. 722 and 723 of 1993 and dismissing the Civil Appeal Nos. 386 and 387 of 1993, this Court.
HELD:1.1.
When sub section (4) and sub section (5) of Section 24 of the Code of Criminal Procedure, speak about preparation of a panel, out of which appointments against the posts of Prosecutor or Additional Public Prosecutor have to be made, then the Sessions Judge and the District Magistrate are required to consult and discuss the names of the persons fit to be included in the panel and to include such names in the panel.
1.2.The expressions "panel of names of persons", do not mean that some names are to be suggested by the Sessions Judge and some comments are to be made, in respect of those names by the District Magistrate, without proper consultation and discussion over such names.
The statutory mandate ought to have been complied with by the District Magistrate and the Sessions Judge in its true spirit.
1.3.Section 24 of the Code does not speak about the extension or renewal of the terms of the Public Prosecutor or Additional Public Prosecutor.
But after the expiry of the term of the appointment of persons concerned, it requires the same statutory exercise, in which either new persons are appointed or those who have working as Public Prosecutor or Additional Public Prosecutor, are again appointed by the State Government, for a fresh term.
The procedure prescribed in the Manual to the extent it is not in conflict with the provisions of Section 24, shall be deemed to be supplementing the statutory provisions.
But merely because there is a provision for extension or renewal of the term, the same cannot be claimed as a matter of right.
1.4.While exercising the power of judicial review even_in respect of appointment of members of the legal profession as District Government Counsel, the Court can examine whether there was any infirmity in the "decision making process".
Of course, while doing so, the Court cannot substitute its own judgment over the final decision taken in respect of selection of persons for those posts.
Chief Constable of the North Wales Police vs Evans, [1982]3 All E.R. 141, referred to.
1.5.In the facts of the present case, the procedure prescribed by Section 24 of the Code have not been followed by the District Magistrate.
There is 972 nothing on the records of the case to show that any panel, as required by sub section (4) of Section 24, was prepared by the District Magistrate in consul"on with the District & Sessions Judge.
The District Magistrate simply made some general comment in respect of the appellants, when the District & Sessions Judge had put them in List 'A ' of his recommendation.
This shall not amount to either the compliance of sub section (4) of Section 24 of the Code or Para 7.06(2) of the Manual.
It appears there has been no effective or real consultation between the Sessions Judge and the District Magistrate for preparation of the panel, as contemplated by sub section (4) of Section 24 of the Code.
1.6.The members of the legal profession are required to maintain high standard of legal ethics and dignity of profession.
They are not supposed to solicit work or seek mandamus from courts in matters of professional engagements.
1.7.In view of the strong recommendation about the quality of the appellant 's professional work, the District Magistrate should have Applied his mind in consultation with the Sessions Judge, in respect of each individual case, instead of making a general and identical comment against all the appellants.
1.8.As the District Magistrate has not performed his statutory duty as enjoined by law, the appeals of the appellants have to allowed.
1.9.The District Magistrate is directed to perform his statutory duty afresh, in accordance with the requirement of Section 24 of the Code read with the relevant paragraphs of Chapter VII of the Manual, which are not inconsistent with Section 24 of the Code, so far the appellants are concerned, if the vacancies are still there.
The necessary steps shall be taken preferably within four months from the date of this judgment.
The State Government shall thereafter perform its part in accordance with Section 24 and different paragraphs of the Manual which are applicable in the facts and circum stances of the case.
Kumari Shrilekha Vidyarthi vs State of U.P., , referred to.
2.The District & Sessions Judge, who is required to express his opinion ton the merit and the conduct of the persons recommended for appointment or extension of the period as District Government Counsel, has expressed the 973 opinion that appellants (in C. As.
386 387 of 93) are "average lawyers", and has put them in List 'B '.
In other words, neither the District & Sessions Judge has recommended the case of the appellants of these appeals for extension nor the District Magistrate.
Their case cannot be treated at par with the appellants of the other appeals.
In such a situation, no useful purpose will be served by directing the District Magistrate to perform his statutory duty, as required by sub section (4) of Section 24 of the Code again, even in respect of these appellants.
3.Although power has been vested in a particular authority, in subjective terms still judicial review is permissible.
Barium Chemicals Ltd, vs Company Law Board, AIR ; State of Assam vs Bharat Kala Bhandar Ltd , AIR ; Rohtas Industries Ltd. vs S.D. Agarwal, AIR ; The Purtabpur Company Ltd. vs Call e Commissioner of Bihar, AIR [1970] SC 1989 and; M.A. Rasheed vs The State of Kerala, AIR , relied on. |
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